Category: In The News
By a 6-3 vote, the U.S. Supreme Court validated the health insurance concept and Congressional intent to cover millions of people not previously covered. It’s fascinating, if not tragic, how politics continues to rule court decisions … the details of this individual case, I’m sure, will be played out in great detail in media today and days to come.
Medicine has residency; accounting has two year service requirement to become certified. Now law has incubators … not quite the same thing.
Years ago, seeking to address an RFP (request for proposal) of a large prospective client, I assembled a team of skilled specialists. I was flattered that they all said “yes” to joining me, knowing only me and the prospective client. None of us, individually, could have met the client’s needs. We trusted one another enough to work together and arrange the details of compensation, etc. at a later date. But, I never gave a thought to how our team would be managed for peak performance.
In the current issue of Harvard Business Review, the author suggests that “…many critical tasks are performed by teams created on the fly, but lack of stability can hinder their performance…It’s one thing to make yourself more efficient, quite another to make a team more efficient, and still another when that team’s membership is in constant flux…
To some degree, technology and pricing policies are creating practices of “teams on the fly” as well as “unbundled services.” With short-term teams assembled on the fly becoming increasingly common, the authors set out to investigate how fluid teams can work better.
From 2000 to 2007, over 42,000 legal malpractice lawsuits were reported to liability (malpractice) insurers, according to the American Bar Association Standing Committee on Lawyers Professional Liability. This committee segregated 21 root causes of negligence across all practice areas.
Only one such root cause accounted for over 10% of the total claims. “… This root cause is failure to know or apply the law…” This accounts for 11.3% of the total. As one pundit said, that’s an easy one to correct by “…sticking to your knitting…” Handle only matters you are competent to handle, even if the client’s money is on the table, tempting you.
Malpractice actions otherwise can be categorized as time – based issues, such as failing to calendar dates, failing to follow up on looming deadlines and failing to react appropriately to the calendar. These three together account for 17% of the total.
“Conflicts of interest,” amounts only to 5.3% of the claims in the ABA study. However, Rules of Professional Conduct 3–300 and 3-310 provide a larger trap for the unwary, whether at the beginning of a case or mid-stream.
“Collection policies” is a major speed bump for lawyers. Insurance companies and law schools will urge strongly that a lawyer never sue for unpaid fees because the following day, the same lawyer will be sued for negligence. There are a several ways to address this, including doing good work, regularly reviewing your accounts receivable to be sure the client pays under the terms of his or her signed engagement agreement and conducting a peer review of one’s own work before following through with a collection complaint. Failure to pay is seldom because of absence of funds; it is a symbol of dissatisfaction with the lawyer and the process of communication (or lack thereof) … and this must be addressed promptly.
Failure to act from fear of one’s own imperfections merely gives strength to one’s client and encourages the client to violate the agreement and the reason to be connected with the lawyer.
The practice of law is a business and must be operated under good business principles. Failure to do so creates tension and conflict between the client and lawyer at the time each needs the other the most.
In 2009, the voters of the city of San Francisco approved proposition Q. The net effect of this initiative was to tax the payroll of partnerships, including lawyers, hedge fund managers and doctors. The California Supreme Court recently denied review of a lower court’s decision that this is a legitimate tax voted on by the people of San Francisco.
The protagonists were essentially fighting about a decade’s worth of payroll taxes, a not inconsequential amount of money. The city is in the midst of a transition away from payroll taxes to gross receipts taxes. The counter argument that this is a tax on the privilege of doing business in San Francisco doesn’t seem to carry much weight or be very important. Another argument will be made … No one likes to pay taxes, until they need the public services.
Two changes are about to occur in the lives of “want to be lawyers.”
First, to appease their conscience, the Board of Trustees of the California State Bar considers requiring law students to take on one more obligation before graduating, 50 hours of free or low-cost legal services for the “needy” within a year of passing the bar examination. What is the issue? Is it to address the concern that so many people cannot afford to hire an attorney? Or is it to provide additional and needed training for newly minted lawyers?
If it is the latter, law schools to be accredited by either the state or the American Bar Association should include the client representation process in the curriculum before granting the degree. If it is the former, all lawyers should be required to provide “legal aid” or low-cost services or a percentage of their gross revenue to legal aid organizations.
If either of these alternatives were implemented, two powerful entities would rebel. Law schools with their prestigious alumni would howl; and all lawyers would consider a percentage of their gross revenue to be an additional tax and anathema.
The second change is the reduction of California’s three-day bar examination to two days. Whether the complaint is that three days is more arduous than two days, which it is, or whether the more than $800,000 savings to the Bar is the motivation is not clear. Somehow, it just does not seem that saving money is of major concern to the “powers that be.” It is also clear that educating its members – attorneys – is also not a major concern. Over 70 percent of the annual State Bar budget is directed toward the disciplinary system. Of the matters within that system, over 50 percent relate to management issues. Educating lawyers to be more effective in managing their business and dealing with their clients (unrelated to theft of client trust funds) would result in a significant reduction of expenses to the Bar, and increase more effective service to clients and, oh perhaps even a reduction of annual dues to lawyers.
But then, LawBiz® has been whistling in the wind about this issue for decades.
The number of new lawyers admitted to the bar was lower in 2014 than in 2013; in addition, law school admissions were considerably lower than in previous years. That suggests there will be fewer lawyers ready and able to fill the ranks of the Baby Boomers as they increasingly leave the practice. Prices to consumers of legal services may increase, depending on the increased utilization of technology. But, compensation for lawyers, even entrepreneurial lawyers will be squeezed and likely lead to continued decreased attractiveness for law school admissions.
When the prices of services or goods continue to rise, creativity enters the fray to lower the price, or a parent price. In the sale of food products, for example, the weight or size of the package decreases to keep the price at its previous level. With professional services, technology appears to provide more effective, speedier and higher quality legal services. Hence, the model rule of professional conduct concerning competence gets modified to include technology skills comparable to those of colleagues in the practice area and/or geographic area of delivery.
Just today, in reviewing materials preparatory to moving my office after 25 years at one location, I reviewed the June 6, 1983 issue of Time magazine. Two articles were of particular significance. One was the cover article about “…stress, seeking cures for modern anxieties…” The other was about education, “…have degree, will travel.” “The class of ’83 faces the worst job prospects since World War II…”
Ironic, but these two topics seem to be in the forefront even today, February 2015. There may be nuances between the two years, however I suspect there are not significant differences in the proposed solutions.
Jerry Maguire said “Follow the Money. A former labor union leader said “Follow the bank account, not the budget, to see how much money is really available to offer union members-employees.
Why is it, then, that some politicians are attacking the Affordable Care Act, originally a Republican proposal, and many economists are saying there is hardly an economic ripple? They cannot both be right?
As attorneys, we’re taught to argue both sides of the equation. As citizens, it would seem that we need to focus on the truth and follow the evidence
John Claassen, in a “guest column” in the February 4, 2015 edition of the Los Angeles Daily Journal entitled “PROTECT THE VALUE OF HUMAN ASSETS,” quoted Bill Gates’ opposition to increasing the federal minimum wage as follows: “If you raise the minimum wage, you are encouraging labor substitution, and you’re going to go buy machinery and automate things.”
The tension between machinery and labor is an age old issue. This precedes the development of the cotton gin and other industrial revolution equipment. In a 1983 trip to China, I observed hundreds of laborers sweeping the streets with bamboo brooms; in my community, this work was then being done by street cleaners driving trucks. More territory could be covered, with greater effectiveness and less labor. China understood that, in 1983, if they automated this task, they would have an even higher unemployment rate, risking such dissatisfaction which might cause an overthrow of the then current government.
Owners and employers in a private enterprise economy are always seeking greater efficiency and profits. They make the choice between labor and technology based on many factors, only one of which is return on investment. To say that increased mandated compensation such as a minimum wage would promote automation is no doubt true; however, it was also true in the 1930s, the 1800s, the 1700s and likely will be true in the future. It is true in every industry and profession.
Society in the past has focused on the well-being of its populace, not just the numbers. This includes healthcare, minimum wages, regulations of civility toward one another and other aspects of human endeavor. We value human assets. We value new technology and research and development. New technology and increased efficiency improves our life and increases the well-being of all our citizens. We encourage the growth in each area of endeavor by tax policies and other approaches. If I read Mr. Claassen correctly, he suggests there is a tension between the two, and policymakers should not ignore nor discount the value of “lower wage workers.”
The legal profession understands this process. Thousands of lawyers have been laid off, fired or encouraged to retire since the Great Recession. Many of them were document review lawyers or lawyers with little or no marketing skills. In Mr. Claassen’s terminology, these were the “lower or middle income” lawyers of the profession. Such economic disruption never happened in the profession before. Despite the economic improvement of our economy, and law firm profitability, most of those jobs will not return. Why? Because technological improvements have made many obsolete or more expensive than clients want to pay. Discovery search technology is far more efficient and accurate than hundreds of document review lawyers. These jobs will not return. This is progress. Does it come with some pain to individuals? Yes. Should there be an economic soft landing for those affected? Perhaps. That is a matter for society to determine, but it is not reason to limit wage increases or disfavor research and development.