Category: Personal Thoughts
Going from one generation to another in the 1980s when I was asked to be the law firm’s Chief Operating Officer was difficult enough … and dysfunctional if seen from a 50,000 foot level. But, today, with four generations in the same workspace and literally competing for the same jobs/clients, many conflicts and sparks emerge that wouldn’t otherwise. It’s a wonder that law firms continue to grow in such an environment … of course, such growth does provide “hiding” space to some extent for conflict. See “Bad for the Brand” author, Jonathan Fitzgerald, for a prescient understanding.
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.
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.
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.
Some pundits have declared that the era of the customer is now upon us. In an announcement by Costco Wholesale Corp. and American Express Co., the 15 year relationship of exclusivity will come to an end in 2016. The economics appear to be clear. Costco wants/needs to bolster its sagging profits; AmEx believes it will not be earning “enough” to continue. Hence, the power of the buyer (Costco) to pick up its marbles and find another credit card company. Obviously , the buyer has options. AmEx will lose about eight percent of its gross revenue and its stock price has already suffered.
A similar situation occurred years ago between a large regional supermarket chain and an even larger (by revenue) national cheese supplier. The supplier believed it had a unique customer branded franchise and could force the supermarket to bend to its will. The supermarket gave the processor 48 hours to remove its product from the store cases and it was years before the manufacturer could reenter. The franchise was not so strong as the supplier believed.
In each case, and in most others, there is a breakdown in communication and relationship that far transcends the economics.
Law firms have felt similar pressures in the last several years. To say that law firm clients have reached new heights of power is a mis-characterization. Rather, a super sensitivity on the part of General Counsel to the needs of the corporate employer/client which signs his/her paycheck and a breakdown in the loyalties of organizations to their outside counsel fostered by a “take it for granted” attitude by outside counsel. The goal still is a “partnership” between the lawyer and the client. In the past, some lawyers have taken the client relationship for granted. Perhaps, the client will speak up more assertively today. There is more to loyalty than merely a technical command of the law.
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.
A New York consulting firm recently conducted a survey and found that eight of the top 10 companies that no longer provided extraordinary support for their products and services for technology companies. Companies like Samsung, Apple and others apparently are appealing to a younger audience that is not accustomed to having handholding as an element of value.
Dunkin’ Donuts was one company that was more traditional and not technology based. Apple, while no longer enabling you to make an appointment at their “Genius Bar” online nevertheless still had a service component by opening more stores in more cities with more personnel to help those with operational issues. Apple found that the Genius Bar is better left for hardware and software glitches; other issues can be addressed by the consumer taking a class in either their store or their phone provider. But, Apple did not forsake its consumer who needed technical assistance.
Nothing replaces human contact, even for the youngest generation. A very astute technology company called “www.gethuman.com” build some of the gap for older folks by finding phone numbers of the very same companies who seek to hide their presence from consumers.
Companies, even technology companies, must realize that customer service is a marathon, not a sprint. Consumers, myself included, recently have left Samsung and purchased the new Apple iPhone 6. Why? because Samsung refused to connect with their consumer to solve the consumer’s issues. Apple does. And while Samsung’s commercials suggest that Apple 6+ is nearly a copy, it is a “copy” that works and carries with it a service component.
Within the last few days, a major law firm’s (Lewis Brisbois Bisgaard & Smith LLP) Los Angeles office has been severely impacted.
One of the largest fires seen in the Los Angeles area (Da Vinci Apartment project) also damaged 8 of the adjoining building’s 16 floors that housed the firm’s Los Angeles office with 250 lawyers and staff. The office’s managing partner, Timothy R. Graves, put the best face on the situation by saying their experience in New York (Hurricane Sandy) gives them some advantage in dealing with the Los Angeles experience. Technology further helps alleviate potential damage that might otherwise have been experienced. Remotely working, however, does not remove the consequences of significant water damage to paper files and client unease … When one goes to sleep, one doesn’t expect a 1 a.m. fire to change your life, but it can happen.
A member of the California State Legislature announced that he will ask for “…a financial and operational audit…” of the State Bar. In his press statement, the Assemblyman said he wants the State Auditor “…to investigate, study, analyze, and assess the financial practices and the performance” of the bar. The politician said “… “(m)andatory bar dues should be spent on regulating our profession and improving legal services to the public,”
This utterance is not the only one arising from the recent turmoil resulting from the dismissal of the Bar’s Executive Director. The seriousness of the charges and counter-charges cannot be underestimated. But, the seriousness is heightened by the fact that the State Bar must get permission from the State Legislature to assess and collect annual fees from its lawyers. One might question whether this is a true separation of powers required by the Constitution, but it’s been the standard in California since 1927.
Perhaps the California Bar should be segmented, as is the New York Bar, into a regulatory/licensing function and a member benefit function. California lawyers had their opportunity during Gov. Pete Wilson’s reign and let it pass. Perhaps the issue should be revisited.
Achieving success in business—including, of course, the business of law—is an art. The artist (lawyer) must create a scene on a canvas (atmosphere) that draws in clients, making clients want to immerse themselves in that canvas.
Last night, I was talking with a friend and venting about the paperwork requiring signatures in order for us to complete the process of buying a house. Between the escrow company and lender, it seemed as though there had to have been pounds of paper, quite a few of which required a notarized signature. My friend commented that it took only a few pieces of paper with a simple signature—no notary—to buy and drive off in a Lamborghini or other fancy car. In contrast, a house can’t be moved. One would think that the lender and the seller would be more worried about the car than the house.
How have such signatory processes been formulated? More importantly, is the buyer made to feel like an honored and respected participant or, rather, like someone who is not trustworthy?
Although this metaphor is not totally applicable to the business of law and the lawyer-client relationship, the fact is that the lawyer must make his/her client feel honored and comfortable. The lawyer must make the client feel that the law office and the lawyer’s services are like an art museum surrounding the client with masterpieces that the client will willingly return to again and again.
To do less will put a ceiling on your success.