Law School Education
Join us on LawBiz Forum in the discussion about legal education and the current reexamination of its efficacy for teaching management skills for success. Will the law school tumble into the morass of being a trade school (heaven forbib!) by including such skills in its curriculum? Let us know what you think ...
Law practice and golf
If you're a golf fan, you've just witnessed an outstanding competition. Whether you support Tiger Woods or are turned off by his personal challenges, you have to admit that he causes the sport of golf to be viewed by many more people than when he's not playing.
I just read an article about a study that suggests that other golfers do not play to their potential when Tiger plays because they think he will win the tournament. Rather than the competition bringing out the best of everyone, others seem to do worse, giving up before they begin.
And, the same is true in law firms ... when associates "give up," believing the "star associate" will get the prime assignment. This is counter-intuitive to me. What has been your experience?
The End of Lawyers?
Richard Susskind has written a book suggesting that lawyers may become obsolete unless we make some dramatic changes.
I see nothing unusual about his conclusion … that legal work will be unbundled and that the work that is more mundane and routine will be systematized and perhaps even automated. Technology advances provide us with opportunities that didn’t exist before. We can, today, create better product for less money. Technology is only one aspect. Globalization is another. And this isn’t just for the large law firms. A client of mine, in Texas, opened an office in India for the specific purpose of document review and document production – it’s done for less money more quickly … And he can get a faster turnaround because of the time difference.
Law is slow coming to this process. My background is in manufacturing. I’ve owned and operated several companies. In order to retain prices, not to increase prices, we would do everything we could to automate. When automation, reducing the amount of labor costs, would go no further, we reduced the size of the container. For example, we would go from 32 oz to a 22 oz jar or a 10 gal. container to a 5 gal. container.
When we have time of challenge as we do now or changes in our economy and culture, we have the opportunity to innovate for improvements in products and services. We have the opportunity to create new demand. I see this beginning to happen in our parts of our economy. It will have to happen in the legal profession, nay the legal business (The Business of Law®), if we are to continue to serve our public as we know.
Even Big Solo can fail
Failure can be experienced by small firms as well as large firms. In the case of Dreier, the real shame is not that Dreier failed - he committed fraud and there is nothing new about fraudulent conduct causing failure ... and even jail. The sad part of this tale is what happens to other lawyers working in the Dreier firm.
What is to be learned here involves the impact on other lawyers who worked in the firm. Assume for the moment that every lawyer new to Dreier did his/her due diligence to learn about Dreier's practice, his administrative polices (including malpractice coverage), and other factors of the practice in order to decide whether the lawyer wanted to join Dreier as an associate.
Now, these lawyers focus on the practice, leaving all else to Dreier. There was no follow up. For example, the associates didn't know that Dreier let his malpractice insurance coverage lapse ... which now puts all these other lawyers at risk when clients sue the "firm" and its members who worked on their matters.
Bottom line moral: What are you, the associate, doing to make sure your firm's principal is running the practice properly ... sufficiently well that your professional and personal liability will be protected? The fact that you don't "own" the practice does not mean you have the luxury of ignoring the business principles needed to protect yourself and grow your own career.
Panic attack
The economic crises has finally hit home. People I know are talking about October and November as being months when the world stopped! ... and they couldn't get off. No one seems to know what is going to happen next.
I met yesterday with managing partners of several major law firms in my Managing Partners Roundtable.
They all agreed, they have never seen changes as we're currently experiencing. The top most law firms are freezing compensation increases for next year; they are moving away from lock-step bonus systems and even reducing bonuses for this year; and they are hiring smaller "classes."
The previous wisdom was that the economic impact for law firms would not be felt until the second half of 2009. But, these leading law firms are saying the impact is being felt now. This year's revenue will be down by 15% to 25%. There is no standard except this one: Everyone is experiencing change; most are seeing economic results that are less than last year; and everyone is unsure about next year's patterns.
And smaller law firms, and sole practitioners, though more nimble and better able to reduce expenses, are equally unsure about what to do to protect themselves without "cutting the meat" from their law firm and jeopardizing their future recovery.
In this crazy environment, panic attacks are easy to come by. Richard M. Weber has some cogent counsel for these hard times:
“While I don’t give investment advice, I’ll share with you my own reaction to the current crisis. After my “Sell, I tell you, Sell” panic subsides, I look at all my resources for retirement and begin to settle down. My house is nowhere near “paid off,” but the monthly mortgage payment is within my budget and its intrinsic value is still more than the mortgage principal. I have sufficient life, health, and disability insurance to protect our family from the economic damage those kinds of disasters can create. I have a year’s living expenses in cash (and yes, I’ve checked to make sure that FDIC insurance covers those accounts). More important than all of these resources, however, I realize that I have marketable skills, a number of clients who value those skills and actually pay me, and no particular desire to retire next week to “go fishing.” So my investment account statements remain unopened in a desk drawer, I only glance at the bad news at the top of the Business Section of my daily newspaper, and I get back to the task at hand: taking pride in my work and applying myself to it as diligently as I know how.”
Panic attacks come from the "fear of fear." To counteract this fear, look at observable behavior. Look at the facts. Check your reality. What is happening now; review your financial resources. Project financial requirements for the next twelve months. Look at your health. As they say in the airline business, put your oxygen mask on first, before seeking to help your neighbor. You can work through anything so long as you retain good health. Talk to members of your support system, family and others who have the expertise to provide advice to help you.
And, take a deep breath. Things could be worse, we could be living in a war zone. History tells us that life consists of cycles ... though we are in a nasty one now, things will get better.
The Power of Nice
Unlike Leo Durocher's famous statement that "nice guys finish last," she believes that "nice girls finish first." After all, she asserts, people like to buy from people they like ... And we generally don't like people who are not nice to us. Kaplan says it's easier to be mean and gruff. It takes a special effort to be nice. Paraphrasing a saying my mother used so often, "You get more with honey than with vinegar."
This seems so obvious to me, but obviously is something that our profession finds so difficult to understand. Many Bars have adopted "Lawyer Civility Codes." Why should this even be needed? Quoting an infamous source, "Why can't we all just get along?" Why is it that we need be rude and obnoxious to our adversaries? Do we truly believe that such conduct will win us points or cause our client's position to be moved forward? On the contrary, such behavior often merely entrenches the opposition further. Being nice, courteous and kind requires neither that we be a doormat nor that we cave in to our adversary's position ... we can stand forthright to advocate our client's interest and position, yet still be civil and nice.
Again paraphrasing, "Try it, you might like it." Certainly, there will be reduced stress all around.
P.S. This works with colleagues and staff as well.
Social networking - Even for Airstreams
How about going to a Vintage Airstream Rally with no Airstream? That’s just what we did! Our vintage (1969) 27' Airstream Overlander was broad-sided on December 30th last year and then totaled by the insurance company earlier this year. Thus, we are bereft. I use that word advisedly. My wife really is bereft at not having our SteSpot at ready!
But, despite that, we went to Albuquerque this week-end to spend time with folks that we’ve gotten to know and like ... and view others’ vintage rigs. Our “new” vintage 1968 28' Airstream Ambassador is currently under construction and we thought that perhaps we'll see things we just must have in the new trailer.
How can I use the two words, vintage and new, in the same context? Well, the skin of the trailer is 1968, but the inside will be all new. We have stripped it to the ground, literally, and started over with brand new equipment. So, my wife’s passion for old will appear to the world as an old skin buffed to a bright sheen and my enjoyment of the new will be inside, which is where I spend my time.
In the meantime, we’ve met more folks and, as my wife said, “networked” with the Airstream world. Or in the context of lawyers’ recent awareness, expanded our “social network.”
Whether you social network in LinkedIn, MyFacebook, or other social networks, or meet people at places you frequent or in activities you love to do, connecting with people is the way to build your law practice. People seek people they like; they do business with people they like; they like to do business with people who have similar interests. What’s yours? What are you doing to extend the reach of your passions and the people who will know to refer business to you when they have challenges you can address?
Lawyers core competency - Must we specialize or be incompetent?
Railroads, in the early 20th century, considered themselves to be in the railroad industry and therefore ignored both the new car industry and the airplane industry. Here, in the reverse, they mis-calculated. They were in the transportation industry, not the railroad industry ... and the other forms of transportation “ate their lunch.”
In the case of media stars, what is their core competency? Does Oprah know how to evaluate politicians more than the average American voter? Does she risk her high status by moving into the political arena? What would happen to Lance Armstrong, the renowned winner of the Tour de France, and his efforts on behalf of cancer victims, if he were to take sides in politics? Would he have the same moral authority?
What happens to lawyers when they seek to be all things to all people? Do we need to focus on limited areas of practice, to enhance our competencies and our credibility with clients? There is tremendous learning required to be competent in any given area of practice. Can one lawyer maintain his/her competence in many areas at the same time? Can one truly be a general practitioner in today’s world, or must a group of lawyers gather together in one firm or one network to offer multiple skills to clients?
Cash flow of lawyers is impacted by insurance proposal
Still, the question I asked earlier in this series has yet to be answered by the Board of Governors! Why is it that shareholders of law professional corporations do not have to disclose that they do not have malpractice insurance? Or, at least meaningful malpractice insurance? All they need to do is sign a piece of paper saying that they will be responsible for the first $50,000 of a malpractice judgment. There is no financial statement required, no verification of financial ability and no insurance policy required under the current rules; nor is there any such requirement under the new proposed rule!
And why is this fair in the minds of the Governors supporting this proposal?
Is the billable hour a trap? A contrarian perspective.
Because of his comments, I began to think about this subject in a way different than I have ever done in the past. I want to share some of my revelations as, perhaps, a catalyst for your further consideration on what clearly is a very important issue.
First, is the billable hour truly a trap? Or is the desire for economic rewards in a society whose cost of living continues to increase the real trap? Lawyers, no different from any other segment of our economy, want to earn a “reasonable” living. In fact, if asked, most lawyers would admit they would like to earn as much as possible. Just look at the many lawyers both in large firms and boutique firms who accept million (multi-million?) dollar annual compensation packages. And consider the many lateral moves by lawyers made primarily for their personal economic betterment.
Second, the assertion that our ethics rules are promulgated to resolve clients’ problems as cheaply and efficiently as possible just is not true. Our rules maintain a certain amount of decorum and boundaries to assure that we fight for our clients within the same sandbox and don’t sneak in an 800 pound gorilla. Nothing more, nothing less. For example, there is no punishment to the lawyer who refuses to discuss settlement ... until the time of trial. In the meantime, both sides have rolled up many thousands of dollars in wasted legal fees ... despite both sides being able to closely predict the outcome of the matter in question. There is no requirement that legal work be outsourced, either to India or to another law firm down the street with less overhead and lower fee structure.
Third, lawyers are not the hardest working folks in our economy. Yes, some are. But, I came from industry. I worked in a family business. I owned and operated several manufacturing ventures. I knew long hours before I ever practiced law. Talk to the CEO of companies and they will regale you with stories of long hours and hard work. Lawyers do not have a monopoly on hard work.
The billable hour is only a method of accounting; it is not the reason we work long hours. We work long hours because we love what we do; we love helping people; and we want to earn more money to better take care of our loved ones. Billable hours merely provide a method of accountability for those clients who may not see the value of what we do. If clients, in fact, fail to understand our value, we have failed to properly communicate with them and we have failed to understand the value to the client of what we do.
If we use a different method of accounting, such as “value billing” or fixed fees or any of a number of other methods, and we fail to have the “value conversation” with our client, they will continue to fail to understand what we do, why we do it, and how we helped them. And, they will then procrastinate or refuse altogether to pay our bills. And, we will continue to work long hours ... if that is our proclivity ... because we want to do more and earn more.
Lawyers wanting to do better for themselves drives much of what they do. President Bleich said the Bar helps lawyers only to better serve the public. So, too, I believe that lawyers will change their billing approach only when they understand how it will benefit them. Protecting the public will not be the motivator, though it may be the sales pitch used to attract more lawyers to a different method of billing. Remember the airline mantra, put your oxygen mask on first and then attend to your children.
Finally, President Bleich suggests that we must act as a profession. Years ago, in focus studies done by the State Bar of California, I learned that people view the profession one lawyer at a time, usually their own rather than the opposing lawyer. So, I ask President Bleich if he is billing his clients still based on hours, or is he billing his clients based on value? Has he followed the example of Patrick Lamb, an attorney in Chicago, who left a well-respected firm in order to open another law firm whose billing goals are based on value? This is one lawyer at a time.
President Bleich raises an important issue. I respectfully disagree, however, with the framing of the issue. I don’t think it’s a matter of the billing method used, but rather of failing to have the discussion about the value of the matter to the client ... and the consequences that would follow from an open and candid conversation with the client about value.
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Solo lawyers and malpractice insurance debate
But, President Bleich counters this philosophy, however, in his very next column (April 2008) when he says “The work of the State Bar ultimately is to protect the public and to ensure that the people of California have access to the legal help they need. Although the bar (sic) provides benefits and other services to lawyers, it does this not as an end in itself, but instead to help lawyers better serve the public ...”
It appears quite clear from his comments that he believes the Bar has only one goal, to serve the public. What happened to the Board’s pronouncements two years ago when then President Jim Heiting said the Bar has two, co-equal goals, one to protect the public and the other to protect its members, lawyers, who need help in many different areas in order to be more effective and efficient in delivering legal services to the public? Has one of these two symbiotic, intertwined priorities now been abandoned? Seems to be ... especially if we believe that helping lawyers is only a means to an end, not a co-equal end!
Again, I ask why this group of lawyers have been singled out? California Business & Professions Code 6171 (b) and Law Corporation Rules created thereunder allow professional corporations to escape this requirement!!!! Under Rule IV of the California Rules, shareholders of a professional corporation can sign a simple statement that they will be responsible for paying malpractice judgments. Do this, and you don’t need malpractice insurance! The last time I checked, a sole practitioner is personally liable for any such judgments anyway ... So why do we need to have the current proposal adopted by the Board of Governors? Why is a group of 30,000 sole and small firm practitioners being harassed?
There continues to be no evidence that mandatory disclosure of whether a lawyer has malpractice coverage is necessary to “serve the public.” There is only anecdotal suggestions. But this commentary appears on both sides of the issue as is evident in Letters to the Editor of the California Bar Journal. Continuing to pursue this action infers that sole practitioners without malpractice insurance are “bad” people. Yet, this group of lawyers is not subject to more malpractice claims than others. They are good lawyers, just economically challenged by the cost of malpractice insurance.
There has never been a suggestion that the Board is controlled by the insurance industry. But, it is true that the Bar receives many revenue dollars from the industry. And, contrary to President Bleich’s inference, the current Bar insurance programs do not claim to provide lower cost insurance to California lawyers. In fact, to this date, when asked, those on the insurance committee will admit that there are less expensive programs available elsewhere.
President Bleich says the current proposal doesn’t require the purchase of insurance ... does this serve the public? Does not requiring the insurance, but nevertheless attacking lawyers' economic interests, indicate a sensitivity by the Board for sole practitioners? I think not. What would serve both the interests of the public and the lawyers is to have affordable insurance available. Until then, there should be no meddling with the current status quo.
Lawyers will be hurt; that is, those estimated 30,000 lawyers (without reference to those in professional corporations) who currently do not have malpractice insurance will be hurt. And if they are hurt, their clients, typically the people who cannot afford the large law firms, will be hurt. Here’s the rub: How does this provide greater access to the legal help the public needs?
