The Point
Corporate legal costs have risen steadily for the last 40 years (including 2020 — and excluding the Great Recession of 2008 to 2009). Meanwhile, the legal system’s demands on business increase relentlessly.
So, CFOs, or other business executives, need to step in and impose spending discipline on the corporate law function. Because lawyers in-house and in firms have not.
THE POINT
Reports about pricing “compromises” between law firms and client companies in the wake of Covid-19 simply reflect attorneys’ intransigence about hourly billing — not a real willingness to remove that business model’s waste and cost uncertainties by agreeing in advance the value they promise to deliver for a predictable dollar amount.
DISCUSSION
An example:
The American Lawyer / Law.com, January 4, 2021 (paywall): “Constrained by Crisis, Law Firms and Clients Are Learning to Compromise on Pricing“:
“The pandemic and its economic fallout have driven legal departments to turn to their law firms for help. With a toolbox of old and new ideas at their disposal, firms are showing that they’re willing to listen ….
“The circumstances are giving rise to conversations about pricing and driving both sides of the law firm-client relationship to seek common ground ….”
But “common ground” between lawyer and client is precisely what the hourly billing model makes impossible. Pricing risk remains Continue reading
In light of the response to my Wall Street Journal op-ed published June 3, “Will Lawyers Act with Honor After Covid? / My profession should support safe-harbor rules, not capitalize on uncertainty”, I will be hosting a free Covid-19 liability prevention web briefing to be held:
Monday, June 29 at 11:00AM Central Time, and
Tuesday, June 30 at 2:00PM Central Time.
This briefing is designed for executives, and describes how you can run your company’s operations to reduce Covid-19 negligence exposure. Although it takes into account court rulings, statutes, and regulations — this is not a law lecture. It’s about how CEOs, CFOs and other P&L executives can manage reopening of their businesses in an unreasonable and dynamic risk environment.
Please let me know of your interest in attending by using the form at the “Contact Us” tab above, or email me directly at joel [at] webberpc.com.
THE POINT
As former general counsel and legal innovator Jeff Carr tweeted the day after the above headline:
“OMG!… Wait, didn’t this story run in 1998, and 2001 and 2008 and 2014 and, well every year there’s a survey? Oh well, might be a slow news day.”
DISCUSSION
This is old news. Really old news. Though I guess it doesn’t hurt to run a survey for current, empirical confirmation.
According to a corporate general counsel group called “In the House” and LegalBillReview.com, 73% of in-house counsel believe their legal department are spending too much on their outside counsel.
Chris Colvin, head of “In the House”, offered some context:
“He noted that the survey was sent to in-house counsel before the pandemic caused by the new coronavirus began. He said he expects the number of in-house counsel who think they are spending too much on outside counsel would increase if the survey were done today.”
THE POINT
This series is about how the legal system’s subjective and arbitrary character constrains your lawyer from answering “yes” or “no”.
Sometimes your lawyer doesn’t want to be pinned down to a definite answer, and you, as the business client, need to nudge him or her for some specificity.
DISCUSSION
In this fourth post I address the ultimate “human factor” in the law: All legal advice and representation comes to business owners and executives through attorneys.
You see, attorneys are people (fill in your own lawyer joke here).
…
On my first visit to Paris I found myself at dinner with Dr. H. — a family friend and Princeton PhD in physics — a senior official with the Paris-based Nuclear Energy Agency of the Organization for Economic Cooperation and Development (OECD). He peppered me — a newly minted lawyer with a New York firm — with questions about my work.
“You see, Dr. H., the legal system is riddled with subjectivity. It’s all about opinions — of judges, of regulators, of legislators, of disputing attorneys, of lay people acting as jurors.
“Unlike your discipline — there’s no empirical test by which to evaluate whether a judgment is valid or bogus. It’s nothing like nuclear physics, where a consistent scientific focus guaranties objectivity.”
[Cut me some slack here. I was 26. I had everything pretty much figured out, and saw everything in black and white. As I aged, I came to know less and less, until I became the dumb guy whom my kids will tell you they met upon their arrival in the world a few years later.]
Dr. H. (patiently) replied:
In light of the response to my Wall Street Journal op-ed published June 3, “Will Lawyers Act with Honor After Covid? / My profession should support safe-harbor rules, not capitalize on uncertainty”, I will be hosting a free Covid-19 liability prevention web briefing to be held:
Monday, June 29 at 11:00AM Central Time, and
Tuesday, June 30 at 2:00PM Central Time.
This briefing is designed for executives, and describes how you can run your company’s operations to reduce Covid-19 negligence exposure. Although it takes into account court rulings, statutes, and regulations — this is not a law lecture. It’s about how CEOs, CFOs and other P&L executives can manage reopening of their businesses in an unreasonable and dynamic risk environment.
Please let me know of your interest in attending by using the form at the “Contact Us” tab above, or email me directly at joel [at] webberpc.com.
THE POINT
This series is about how the legal system’s subjective and arbitrary character constrains your lawyer from answering “yes” or “no”.
This post addresses the situation where a higher court has ruled on a specific point of law, but the judge presiding over your particular case doesn’t like that holding — and finds a way to avoid abiding by it.
DISCUSSION
One of this blog’s goals is to help business owners and executives to make better management decisions through a practical understanding of how the law works.
This post is the second in a four-part series in which I explain how the legal system can prevent lawyers from giving a “yes” or “no” answer to questions about whether or not a particular management decision will create legal problems.
Because the legal system is based on human decision-making — while scientific “laws” are not.
…
Consider the following circumstance:
A higher court overrules a lower court, and the lower court then throws a judicial tantrum and refuses to follow the higher court’s holding offers a principled argument for why the higher court’s ruling does not apply.
THE POINT
This series is about the how the legal system’s subjective and arbitrary character constrains your lawyer from answering “yes” or “no”.
This post addresses the situation where lower courts disagree with each other’s rulings — and a higher court will need to step in to resolve their differing judgments. But meanwhile business executives need to make decisions.
DISCUSSION
One of this blog’s goals is to help business owners and executives make better management decisions through a practical understanding of how the law works.
This four-part series takes up the question: Why can’t my lawyers say “yes” or “no”? Why can’t I get a straight answer?
With all my attorneys’ conditions and caveats — how can I make a business decision?
…
My own answer:
Lawyers give guidance based on what the legal system has decided … so far. That legal system is made up of people. And any person’s judgment contains — to a greater or lesser extent — a subjective or arbitrary element.
Put another way: What lawyers tell you lacks the objectivity we associate with physics or chemistry — due to the human factor.
THE POINT
In February of this year the American Bar Association took action that illustrates how attorneys’ views of their “ethics” rules can have the effect of shutting down innovation in the delivery of legal services, thereby protecting their incomes from unwanted competition.
DISCUSSION
It’s impossible to prove what someone has intended by an act on their part.
But the ABA’s February action had the effect of protecting their lawyer-members from unwelcome competition by shutting down consideration of changes in the “ethics” rules proposed for consideration by the ABA Center for Innovation and four of the ABA’s standing committees.
In February, the American Bar Association, acting through its House of Delegates, considered an ambitious proposal of its ABA Center for Innovation and four standing committees relating to innovation in the delivery of legal services. Here “innovation” meant opening doors to possibly better and cheaper ways to serve clients.
Managing Legal