August 2005

The degree of devastation does not begin to register.  I have been following Ernie the Attorney’s front-line, first-hand posts about living through Katrina and her aftermath.  The simple story of his daughter’s 16th birthday party on Saturday and her not knowing where her friends are now moved me to tears because it is clear her story is just one of countless stories of lives changed dramatically and most likely permanently.  One has to wonder whether the area will ever really recover.

I feel like I should do something.  I just don’t know what. Lord knows there will be lawyers who can’t lawyer, clients with special needs and so on.  Offering to help seems self-serving but it is one way to reach out.

There will be an enormous need for money, water, and other basics.  Here’s another way to reach out: American Red Cross

We have all heard (or been heard) inside counsel bemoan the performance of a lawyer or a law firm.  Such laments invariably beg the question, “why not change?”  One barrier frequently mentioned is the cost of switching counsel.  In the vein, I draw your attention to an excellent post by Rees Morrison in his Law Department Management blog.  His conclusion is that “such concerns are over-rated.”  I tend to agree, and for many of the same reasons.

In addition to the points Rees raises, however, there are a couple of others worth considering.  First, the “learning curve” process is one that fits perfectly with a fixed fee concept, allowing inside counsel to know exactly what the cost will be.  Likewise, fee agreements with respect to the balance of the case should be much easier to negotiate.  In other words, there is no excuse for inside counsel to be left wondering how much new counsel will cost.  The only issue should be whether the change is worth it.

Last point.  Given the ease with which such a situation plays into an alternative fee agreement, I encourage inside counsel to think beyond the immediate case and consider whether the opportunity at hand is really an opportunity to experiment with alternative fee arrangements so you will know whether such arrangements are within your comfort zone and help solve some of the problems you may have with outside counsel.

Today’s Wall Street Journal contains a fullsome report on the $253 million verdict against Merck in the first Vioxx trial.  Two things jumped out at me as being significant from a client perspective standpoint.  First, the jurors referenced the absence of Merck CEO and another senior executive from the courtroom.  They gave videotaped testimony.  What, a reasonable shareholder may wonder, could be more important than testifying live in a trial that sets the table for tens of thousands of other trials and billions of dollars in litigation and judgment expense.  How is it possible that Merck’s lawyers failed to convince their clients of the importance of spending a few days in the courtroom?

The other thing of concern was the failure of the trial lawyers to educate the jurors about Merck’s scientific themes.  One juror compared the presentation the sound Charlie Brown’s teacher makes on TV-“wah, wah, wah.”  William Bowen, an outside director at the company, is quoted as saying the company will seek ways in future trials “to make basic scientific points as simple as possible.”  I hope it was not news to Merck that they needed to do that it in this case.  If Merck didn’t run its scientific themes and evidence past 30 or more different mock jurors or other panels of lay people to be certain, absolutely certain, that every lay person in America could understand their trial themes, the trial lawyers woefully served their clients.

Finally, although not technically a service issue, I sure hope Merck’s commitment to try every case was a strategy reached over the objection of outside counsel.  They could have settled a whole lot of cases for $26 million ( the amount the verdict likely will be reduced to) and its willingness would have no greater impact of the likelihood of future claims than this verdict will have.  Goodwill could have been maintained.  Publicity could have been kept to a minimum. 

The litigation math is interesting:  Assume 5,000 cases.  Assume half are dismissed.  Assume Merck keeps its commitment to try everyone.  2,500 trials.  Merck wins 9 of every 10.  250 losses at an average of $5 million a piece.  Thats $1.250 billion.  But winning 90% is not likely, so let’s assume they win half (again, pretty generous).  1,250 trials at $5 million.  $6.250 billion, not including legal fees.  Then you can start figuring what will happen if the $5 million turns out to be more like $10 million.  Or toss in a few punitive damage verdicts.  The numbers are staggering.  I can only hope for the sake of Merck’s shareholders that this “damn the torpedos, try every case” rhetoric is somebody’s idea of a public relations ploy and not what the insiders really are thinking.

Dennis Kennedy has a nice post on Intel’s new advertisement for lawyers on the benefits of mobile computing.  So I followed the link he provided and went to the right column as he directed.  Finally, I hit the “Explore Legal Demo” link and Intel’s ad popped up. And what does Intel say?  “You need to be more efficient.  You need to increase billable hours.  You need an edge.”  There is a whole section of this ad devoted to increasing billable hours.

Here’s the rub.  Efficiency should provide a benefit to a client in the form of lower billable hours, or at least the same billable hours in a shorter time frame.  But someone who knows a lot about selling to lawyers believes that focusing on “more billable hours” is a good sales pitch.

I wonder if clients react positively when they see ads like this talking about ways for outside counsel to bill more hours to their matters.

I read several postings this morning about the continued importance of email marketing.  Compare this post from Larry Bodine with this one from Tom Kane.  In my view both are right in their views, but both ignored the critical common ground of client focus.  Tom is absolutely right that clients are innundated with email drivel from many sources and that the last thing most want is another email marketing piece from a lawyer.  Larry is right about just how effective good email marketing can be.  My contribution to the discussion?  First, make sure anything you send out is substantively valuable.  There is nothing worse (well, maybe a lobotomy) than getting email that says nothing other than “look at me!”  Content counts for a huge percentage of positive reaction.   Second, for current clients, ask whether they are interested in receiving your emails and let them look at one or two to make a judgment.  Asking counts for a lot.  It shows your sensitivity to the volume of email traffic they must navigate and puts the control in their hands, not yours.  For prospects, the same can’t happen, at least until you’re getting close.  But I promise, if your content is valuable, people will want to read what you have to say.

We had just concluded a couple of days of arbitration, with more to go.  We met with our clients and some others in the early evening, after which we broke up.  Our client and a another were going to dinner at a place where getting a cab afterwards would not be automatic.  My colleague immediately and without prompting offered to arrange for a car to meet the diners at the restaurant when they were done.  I smiled to myself.  I was clearly in the presence of someone who “gets it.”  And a terrific trial partner to boot.

Nice profile on Joel Henning of Hildebrandt in the Front And Center column of the Sunday Chicago Tribune business section.  Most of it is background or Chicago-focused, but I did like this Q and A:

    Q:          Some attorneys are leaving the profession because they can’t compete against billing cheaters–lawyers who inflate their monthly billable hours.  Can anything be done to curb this?

    A.            I’m encouraging corporate general counsel not to put up with that kind of nonsense any longer.  Right now, I’m working with a $30 billion company.  They’re demanding they be treated better, with a consistent team to work on their matters and a competitive price,  not necessarily the cheapest, but competitive.

So his answer acknowledges the problem, and then makes it look as if corporate general counsel are not demanding enough.  I agree, but I hope he’s really encouraging them to demand much more than a steady team and a competitive price.  At the sake of repeating myself, in-house counsel have enormous power.  They have what every outside lawyer seeks–business.  Demand more and I believe you’ll get it.  Maybe not from your current counsel, but from someone just as good who won’t take your business for granted.

Gerry Riskin, author of the Amazing Firms, Amazing Practices blog picked up on a recent Wall Street Journal article about how depositions require a skill set that leaders don’t use in their normal job.  The post is worth your reading.  Gerry takes the issue from one of deposition training and makes an interesting observation about how the skill sets lawyers rely on to succeed in their profession really hurt the management of the business of the law firm.  According to Gerry:

Lawyers must be highly critical and analytical when creating or improving documents or winding their way through the strategy of litigation. These are essential behaviors for lawyering but lousy for managing or being managed. Therefore, unless attorneys become aware of their propensities, they will bring this mode of behavior into all they do, including how they react to management, whether firm-wide or at the practice-group, industry-group or client-team level. Support professionals like Chief Marketing Officers walk away from encounters bewildered and frustrated by these strange (to them) lawyering behaviors that people outside the profession rarely exhibit (especially in corporate settings).

My friends have heard me make this same point, albeit less effectively than Gerry.  I’ve tried to draw on the lawyer’s propensity for doing things only after every possible risk has been analyzed and planned out of the matter under consideration.  Of course, dealing with every possible issue in this manner usually leaves reading the Sunday paper as the only non-contentious course.  Businesses take risks, lawyers avoid them.  Its not a comfortable mix.  Add in the out-dated legal structure of most firms, and you have the “herding cats” problem that has been discussed elsewhere.  Gerry puts it this way:

Leadership requires “followership” which means that the more an internal meeting resembles a deposition (“examination for discovery” in many jurisdictions) the less productive the business meeting will be.

“Followership” is not a normal attribute of many lawyers.  In the business world, it is the norm.  Even people with leadership skills know how to follow.  The chain-of-command is not a notion limited the military.  Presidents are higher up the ladder than Vice Presidents.  Organizational charts and reporting structures can take on too much importance, but they do have value.  The help identify the ultimate leader. 

Law firms should consider hierarchy: it could actually help improve performance.  Hierarchy would help lawyers focus on what they ought to be focusing on-providing great service to the firm’s clients.  The business people should be doing the business and calling on the practicing lawyers when appropriate and needed.  This avoids the “too many cooks in the kitchen/herding cats” problem.

If you read Gerry’s post, you know he believes it can be done.  I am not that sanguine about the problem.  I look forward to being able to talk to Gerry about his experiences that lead him to his viewpoint.

 

I was reading the latest issue of Law Firm Inc. (one of my “must reads”) and stopped at the “On Management” column about client interviews.  I started reading, but had to stop.  The article made too much sense.  Every article about client interviews makes too much sense.

We’ve been doing client interviews for nearly five years.  They are incredibly significant to the strength of our firm’s relationships with our clients.  So why the title of this post?  Its this:  if people haven’t picked up on this by now, they never will.  And just like people who refuse to give out their home telephone numbers, it works out much the better for moi.

Seriously, if you wonder, ask your clients if they would like to be interviewed.  Every client with whom we’ve discussed the matter heartily endorses the process.

 

Corporate Legal Times reports on the 200 largest legal departments.  At the end of the report is a breakdown by industry of the number of attorneys in a company per billion dollars in revenue.  For example, in the Aerospace and Defense category, the listed companies average 4 lawyers per billion dollars in revenue.  Here are some others:

          Commercial Banks                   6 lawyers

           Forest and Paper Products     4

           Pharmaceuticals                       6

            Tobacco                                 3

             Industrial Manufacturing         3

             Automobile                          1

One lawyer per billion dollars!  Far and away the most extraordinary ratio in the group.   What is going on with the auto industry?