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August 31, 2007

Lawyers Could See Record Payday

An Iowa court is expected to rule today on whether to approve two attorneys' request for $75 million in fees and costs for a class action lawsuit they brought against Microsoft Corp. According to an Associated Press report, the award, if approved, would be a record for the state. The fee request comes from lawyers Roxanne Conlin of Des Moines and Richard M. Hagstrom of Minneapolis, who settled the case in April for $179.95 million, but not before three trips to the Iowa Supreme Court and some seven years of litigation. In their motion asking to the court to approve the fees, the lawyers say they are warranted by  "the complexity and difficulty of the case and the excellent result obtained."

According to AP, eight Iowans have filed letters with the court opposing the fee request. "How in the name of all that is sacred can you even imagine that to be equitable?" one wrote. Another called the request "an obscene amount of money to pay to Roxanne Conlin for bothering the court with this witch hunt." Conlin points out that the request includes $8 million the attorneys have spent in costs and more than 117,000 hours of work over seven years.

Meanwhile, Conlin and attorneys from Hagstrom's firm Zelle, Hofmann, Voelbel, Mason & Gette have already won approval of $48 million in attorney fees for a similar class action in Minnesota. And Hagstrom is asking for another $24 million in fees in a related lawsuit against Microsoft in Wisconsin.

August 31, 2007 | Permalink | Comments (2)

Honoring Lifetimes of Achievement

For the fourth year running, I have failed to win one of The American Lawyer magazine's lifetime achievement awards. But that's OK: I've still got a few years left in me, and the magazine's editors have managed to find eight high-achieving lawyers who actually deserve the award. As announced yesterday, recipients of Am Law's fourth annual lifetime achievement awards are:

  • James A. Baker III, Baker Botts, Houston. A former secretary of state and White House chief of staff, Baker's years of public service were bookended by stints as a partner at Am Law 100 firms. Despite his client commitments, he hasn't left the public sphere, most recently co-chairing the congressionally appointed Iraq Study Group.
  • Thomas A. Gottschalk, Kirkland & Ellis, Washington, D.C. Gottschalk left K&E 13 years ago to become general counsel at General Motors Corp., where he set the in-house standard for promoting diversity and pro bono. He returned to his former firm after retiring from GM last year.
  • Shirley M. Hufstedler, Morrison & Foerster, Los Angeles. A leader in the pioneer generation of women lawyers, she served as secretary of education under Jimmy Carter and for 11 years as a judge on the 9th U.S. Circuit Court of Appeals. She and her husband, Seth, headed an elite litigation boutique known for its high-quality work and its willingness to take on difficult public interest cases.
  • Nathaniel R. Jones, Blank Rome, Cincinnati. Jones was NAACP general counsel for a decade, beginning in 1969, taking several cases to the Supreme Court. President Carter named him to the 6th Circuit, where he served for 23 years.
  • Ira M. Millstein, Weil, Gotshal & Manges, New York. Even his friends say that Millstein, one of the partners who built a small Manhattan shop into a global powerhouse, didn't invent corporate governance; he just keeps being asked to perfect it. Throughout his career, Millstein has served as one of New York's leading private citizens, coming to the aid of projects as diverse as restoring Central Park and redeveloping lower Manhattan.
  • E. Barrett Prettyman Jr., Hogan & Hartson, Washington, D.C. A clerk to three Supreme Court justices and a leading appellate advocate in his own right, Prettyman also helped mentor a new generation of Supreme Court specialists, most notably John Roberts. Along the way, he was a pro bono stalwart, first president of the D.C. consolidated bar and a public servant, serving in the Kennedy Justice Department and as D.C.'s inspector general.
  • Jerold D. Solovy and Thomas P. Sullivan, Jenner & Block, Chicago. Partners for decades, Solovy and Sullivan are cornerstones of Jenner's formidable litigation department and the firm's extraordinary pro bono record. Both have been at the forefront of a variety of criminal justice issues, ranging from promoting counsel for the indigent to arguing pro bono appeals to the U.S. and Illinois Supreme Courts.

The honorees, said The American Lawyer editor-in-chief Aric Press, "have exemplified the legal profession's twin values of client service and public duty." They will be honored at an Oct. 24 dinner in New York City.

August 31, 2007 | Permalink | Comments (0)

Rowe Today, Gone Tomorrow

Today marks the last day of existence for the Chicago-based law firm Mayer, Brown, Rowe & Maw. Tomorrow it becomes just Mayer Brown. The reason for condensing its name, according to this Aug. 23 announcement: "To build a stronger and more defined brand in a fiercely competitive market."

The firm's current name, as Brenda Sapino Jeffreys reminds us at Tex Parte Blog, came to be in 2002, when the Windy City's Mayer, Brown & Platt merged with London's Rowe & Maw. With this move to a shorter and sweeter name, the firm joins a trend that is increasingly popular among law firms, as Martha Neil observes at the ABA Journal's Law News Now. And with the new name comes, of course, a new logo, in which a diamond, not an ampersand, separates Mayer and Brown. In that, Peter Lattman at the Wall St. Journal's Law Blog see a trend towards firms not only shortening their names but also adding typographical symbols.

Unfortunately for Mayer Brown, the name change will do nothing to change the $2 billion lawsuit it faces for allegedly helping to mislead creditors and investors of commodities and futures broker Refco Inc.

August 31, 2007 | Permalink | Comments (1)

6th Circuit Chides Lawyers on Law

The case before the 6th U.S. Circuit Court of Appeals questioned whether the state of Michigan could bar strippers from dancing bottomless. But in this Detroit Free Press report about the case, one sentence that stood out was this:

"The judges also chided state lawyers for misapplying legal theories, relying on outdated law and inadequately explaining how the ban furthered state interests."

That piqued my curiosity, so I pulled up the case, Hamilton's Bogarts Inc. v. Michigan, decided yesterday. As it turns out, that one paragraph from the Free Press sums up virtually the entire decision, which chastises the state's lawyers for the legal inadequacy of their case on three major points:

  • The state "appears to confuse the doctrines of res judicata and collateral estoppel." Even though the state's brief argued the former, the court "forgave" it and treated it as an argument for the latter, noting, "Latin is a dead language anyway."
  • The state "relies almost entirely" on a 21st Amendment legal argument that, while once considered viable, the Supreme Court expressly disavowed a decade ago. Given this, the state's primary legal argument "is no longer correct."
  • The state fails to address the most critical First Amendment issue, that of whether the regulations on nude dancing are content-based or content neutral. "We are left to guess about the governmental interest at stake ..., not to mention the critical question of which standard governs the case."

The case is not over. The appeal to the 6th Circuit addressed only the lower court's refusal to enjoin enforcement of the nude-dancing ban pending litigation. The circuit court said the injunction should be granted and remanded the case for further proceedings, adding, "Hopefully the case will be litigated differently after remand."

August 31, 2007 | Permalink | Comments (0)

August 30, 2007

It's Not Just Law Firms That Alter Wikipedia Entries -- Dutch Royalty Does It Too

As we posted here, it's not just law firms that are altering their Wikipedia entries. According to this amusing article from The Associated Press (8/30/07), Dutch royals do it too. As the article describes, a Dutch prince and his wife revised their entry to give their version of the somewhat scandalous circumstances surrounding their marriage. As with the law firm edits, the Dutch couple's changes were discovered through Wiki Scanner.

August 30, 2007 | Permalink | Comments (0)

Transcript of Sen. Craig Police Interview Released

Scary, is all I can think after reading (and hearing the audio) of the just-released transcript of Idaho Sen. Larry Craig's police interview. For those who haven't followed the story, Craig was arrested for lewd conduct in a Minneapolis airport bathroom back in June 2007 and, apparently without consulting a lawyer, plead guilty to a lesser charge of disorderly conduct earlier this month. During the police interview, Craig's tone was (in my view) entirely respectful; he didn't try to pull rank, but the officer took umbrage just the same:

I know you're not going to fight me. But that's not the point. I would respect you and I still respect you. I don't disrespect you but I'm disrespected right now and I'm not tying to act like I have all kinds of power or anything, but you're sitting here lying to a police officer.

If a police officer can treat a United States senator in this manner, imagine how many run-of-the-mill, less-educated or -savvy criminals are intimidated into pleading guilty for what they might not have done. That's one aspect of this that's scary. 

Of course,  what's also troubling is that Craig couldn't discern even from the interview how weak the police officer's case was and apparently didn't understand the value of calling a lawyer. Even if Craig did engage in lewd conduct, a skilled lawyer could have helped Craig understand the legal and political implications of a guilty plea. How can we expect our representatives to defend our rights when, apparently, some of them don't understand these rights themselves?

August 30, 2007 | Permalink | Comments (5)

Leona Helmsley's Will: for the Dog

Hotelier Leona Helmsley's pet is one lucky dog: He's the beneficiary of $12 million from his owner's will, according to this New York Times story, Helmsley, Through Will, Is Still Calling the Shots (8/30/07). The article reports that Helmsley left her 8-year-old Maltese, Trouble, $12 million while leaving two grandchildren $10 million (contingent on their visiting their father's grave) and cutting two others out entirely, for “reasons which are known to them.”

But one expert quoted in the Times story opined that some of the will was vulnerable to challenge. Under New York law, a judge can reduce bequests to pets if they're excessive and go beyond an amount that will keep the animal alive. 

Sean Graham at Hull & Hull Estate Law Blog comments here on Helmsley's choices:

Although a standout in so many ways, it seems to me Ms. Helmsley is not so unusual in wanting to see what is reported to have been a beloved pet live in comfort, even opulence, after her departure. It is no secret that people can be extremely close to their pets, in some cases closer even than to other people.  It may seem a waste to spend fortunes taking care of dogs, with so many people and causes that might benefit, but I do note that the residue of Ms. Helmsley's estate is to be given to a Charitable Trust.  It may be that once little Trouble finally follows his owner to that opulent doghouse in the sky, the remaining monies set aside for him will go to the same trust.  If a Will reflects the desire to provide for or thank those closest to you it is really not so surprising when people take extra special care to make absolutely sure their pets are protected. Sometimes those same pets made the testator's last years or months much more bearable than otherwise.

And if you're interested in a rundown of all of the provisions in Helmsley's will, you can find it here at Wills, Trusts and Estates Law Professor Blog.

August 30, 2007 | Permalink | Comments (1)

Online Settlement Systems Saving Money in Tort Litigation -- but Why?

A recent report shows that claims and settlement costs for personal injury and property damage against New York City are generally on the decline (Brooklyn Eagle, 8/30/07) -- from $529.8 million in FY 2006 to $496.4 million in FY 2005. The full report is available here. What's interesting, however, is  at least one of the reasons for the decline: the city's use of

Cybersettle, an online negotiation program for resolving disputes. Apparently, use of Cybersettle results in lower settlement amounts, in a shorter period of time. From the article:

When the online system was used, the average length of time from the filing of the claim to the settlement was 278 days and the average settlement amount was $11,252. In contrast, the average settlement time for claims that were settled by other means was 1,629 days, and the average settlement amount was $38,809.

The article does not discuss the reason why use of Cybersettle leads to smaller settlements. But the difference between Cybersettle and non-Cybersettle claims is substantial: around $27,000. My own thoughts on the reason for the disparity? Perhaps use of Cybersettle has enabled more claimants to negotiate with the city unrepresented-- and they're willing to settle for less either because they don't realize that they might be entitled to more or because they're willing to accept less where a lawyer doesn't take a cut of the recovery. Or perhaps Cybersettle has lowered the cost of litigation for attorneys, thus allowing them to settle cases for less and still achieve fair compensation for claimants and a reasonable fee. 

I couldn't find any more discussion of this issue around the blogosphere, and yet, I'd think that personal injury lawyers, tort reformers and mediators would all be interested in these statistics. So here's my question for the blogosphere and readers: Why does Cybersettle keep settlement awards down? Submit your comments or links to this blog post below.

August 30, 2007 | Permalink | Comments (2)

Another Law Firm Joins for Second Life

Praxis LLP is a different kind of law firm. Praxis takes its name not from the founding partners but from its founding concept: translating ideas into action. And now, Praxis has distinguished itself again by establishing the first virtual office for a Southern California firm on Second Life among other law firms anywhere on Second Life.

I've blogged about lawyers on Second Life before, and I'm intrigued by the business development possibilities. But as a practical matter, how does a law firm run a Second Life practice? Do the lawyers themselves design their own avatars and learn how to operate them -- or does support staff handle that task? What kind of security is involved? I try to be open-minded about business development and trying anything once, but I have to admit that I have second thoughts about the value of Second Life in a lawyer's marketing portfolio.

August 30, 2007 | Permalink | Comments (4)

August 29, 2007

eBay Scheme Earns Reprimand for Lawyer

The Delaware Supreme Court yesterday issued a public reprimand against lawyer Joseph N. Gielata for "an ill conceived plan" to orchestrate eBay purchases in order to recover treble damages from PayPal. Seeking to cash in on a money-back guarantee PayPal offered, Gielata reportedly sold a friend three paintings via eBay for $3,000 then represented the friend in a lawsuit against PayPal seeking to recover the purchase price plus treble damages and attorney fees. Gielata pled guilty to misdemeanor theft before facing the ethics complaint. The Supreme Court affirmed the recommendation of the state Board on Professional Responsibility, which concluded:

"The Panel believes that the evidence presented showed by clear and convincing evidence that there was a scheme, an ill conceived plan to get together with a friend, sell paintings to each other, make claims against Pay Pal and then pursue legal action to recover not only the Money Back Guarantee, but treble damages and attorney's fees."

[Hat tip to Legal Profession Blog.]

August 29, 2007 | Permalink | Comments (0)

Questioning Craig's 'Criminal Intent'

Once an editor always an editor. At the blog LawBeat, Mark Obbie, former executive editor of The American Lawyer, issues an assignment to reporters who cover the law: "Tell us what it takes to prove criminal intent in a case like Sen. Larry Craig's." As Obbie notes, the police report describes Sen. Craig as having "placed his roller bag against the front of the stall door," then tapping his foot and swiping his hand under the stall divider. Apart from the obvious question of where else is there to put a roll-aboard suitcase in a cramped bathroom stall, Obbie sees larger issues for journalists to explore:

"How many such cases are there? How many are contested (I imagine very few, for the same reasons that led Craig to hope this would all disappear without a trace)? Is Minnesota law typical of other states' laws on such things? What's the history of police excesses in hunting down desperate, closeted gay men? These questions obviously matter because an alleged personal indiscretion became a police matter based on someone's interpretation of toe-tapping and hand-waving. Let's learn more about the law, and figure out if it's fair."

In Craig's case, those questions appear to be legally moot, given that he signed a plea of guilty to a charge of disorderly conduct. But Craig's plea raises questions in its own right. Although the plea states, "I now make no claim that I am innocent," any lawyer who has ever handled a criminal matter knows that a guilty plea is often more a concession than an admission. Criminal defendants (and criminal prosecutors) regularly enter into plea deals for reasons that have little to do with guilt or innocence and much more to do with the costs of contesting the case -- in money, time or, as here, reputation. Is the criminal-justice system truly interested in achieving justice? There's a question for an enterprising reporter to pursue.

August 29, 2007 | Permalink | Comments (2)

Short List Emerges to Replace Gonzales

Following up on our post Monday, With Gonzales Gone, Who's Next? the Associated Press is reporting -- with credit to a "senior Bush administration official" -- that five names have come to the top of the list as possible replacements for Attorney General Alberto Gonzales, while the full list of "possible, if highly speculative candidates" could number as many as 24.

Short-list candidates identified by AP are Ted Olson, former solictor general and now a partner with Gibson, Dunn & Crutcher; George J. Terwilliger III, deputy AG under former President George H.W. Bush and now a partner with White & Case; Sen. Orrin Hatch, R-Utah, former chair of the Senate Judiciary Committee; Larry D. Thompson, former deputy attorney general and now GC of PepsiCo; and the acting AG, Solicitor General Paul D. Clement.

August 29, 2007 | Permalink | Comments (0)

Nixon Peabody: VH1's Summer Fave

Just when it seemed the blogosphere had drained every last guffaw out of the Nixon Peabody not-a-theme-song song (here in MP3), along comes one more: Selection of the song as the Favorite Jam of Summer 07 by the VH1 program Best Week Ever.

Unless you've been dog sledding through the Yukon the last two weeks, you know the story of the song, which the firm commissioned in celebration of being named one of Fortune magazine's 100 best companies to work for. You know that Above the Law blogger David Lat posted the song on YouTube, only to have Nixon Peabody demand it be taken down. Although a firm spokesperson asserted, "Fun is not prohibited here," the blogosphere saw it differently. Lat collects many of the links while The New York Times, Blawg Review #123 and my colleague Carolyn Elefant all provide summaries of the ensuing PR debacle.

Which brings us to this latest honor from VH1. Why pick the Nixon Peabody song as favorite summer jam? "Best Week Ever" comic Michelle Collins explains:

"Guess what, law firm? You can’t stop the tubes! And thank god. Why? Because 'Everyone's a Winner at Nixon Peabody' is officially our Favorite Jam of Summer 07! The type of tune that makes you want to get out the Bartles & James, brush n’ braid your long gray hair, tear off your stirrup pants and miniature horse cardigan, and make out with your 77-year-old husband on a nude beach somewhere in Pueto Vallarta. For real, check it out -- it's almost too good to be true, the kind of motivational song usually saved for competitions between unable-bodied peoples, not high-power blood-sucking attorneys."

Yes, everyone's a winner at Nixon Peabody -- except, it appears, the PR staff.

August 29, 2007 | Permalink | Comments (3)

Is the Biglaw Boom About to Bust?

On both sides of the pond, industry observers are asking the question, "Is boom time for large firms about to end?" Or, as Bruce MacEwen asks it at Adam Smith, Esq., "Has the gravy train departed?" MacEwen is prompted to ask the question after reading parallel stories from London's Financial Times, Law Firms Hit by Market Turmoil, and Philadelphia's The Legal Intelligencer, With Dip in Economy, are Associate Layoffs on the Horizon?, both suggesting that dips in the economy, domestically and internationally, may foreshadow corresponding drops in large-firm profitability and hiring.

For firms in the United States, particularly those with significant practices in securities and finance, MacEwen's forecast is partly cloudy with a possibility of rain -- but no real deluge. That is thanks both to diversification of firms' practices and their no-holds-barred battle for talented corporate associates. Management consultant Peter Zeughauser tells MacEwen, "I can't even imagine a firm laying off an M&A lawyer. It's beyond comprehension."

MacEwen likewise sees no reason for U.K. firms to panic. The Financial Times piece opens with this gloomy assertion:

"Leading London-based international law firms are starting to feel a chill from the world market turmoil that may threaten the industry's unprecedented profits boom."

But MacEwen cites Mark Campbell, global head of finance at Clifford Chance, as saying this is more a matter of the froth having disappeared. Firms that have sufficiently diversified will do fine, MacEwen suggests, and the more nimble among them will do even finer.

And let's put all this boom-or-bust talk in perspective. The Financial Times piece and a similar report in The Times of London (Law Firms Riding All-time High - But is the Boom About to End?) are premised upon the latest Global 50 survey published by the U.K. periodical Legal Business. The Times sums up that survey with this lead:

"The UK legal market is more profitable than at any time in history with the leading firms billing over 350 per cent more than they did 15 years ago."

Legal Business describes the survey through a reference to last year's survey, when it said, "There has never been a better time to be a global law firm -- especially if you bill in sterling." That comeback remains in full swing this year, the magazine reports, adding that "some of the best-known US firms have been left looking like they have some catching up to do." While the magazine predicts that the market may have reached its peak, one lawyer tells The Times that billions of pounds worth of deals remain in the pipeline. Observes another: "All markets move in cycles. We will survive this one."

Survive -- and, no doubt, prosper.

August 29, 2007 | Permalink | Comments (1)

August 28, 2007

Yahoo Moves to Dismiss Lawsuit for Aiding and Abetting Torture

Can a U.S. court punish a U.S. company for alleged human rights violations committed abroad? That's one of the major questions at issue in a lawsuit filed against Internet giant Yahoo on behalf of several pro-democracy writers in China, who claim that Yahoo's release of their personal user information to the Chinese government lead to their imprisonment and torture. Not surprisingly, the suit was filed in the United States, not China -- and yesterday, Yahoo moved to dismiss the suit, according to this article in the Washington Post (8/28/07). Yahoo admitted that it released information about the writers, but defended its decision as necessary to comply with China's request, which was lawful. Yahoo's opponents question whether China could lawfully request this information, but argue that even if it could, Yahoo is obligated to follow U.S. and international legal standards when it does business abroad, which would have prohibited release of this information. 

To read more on the Yahoo lawsuit and view some of the filed documents, visit this link at Rebecca McKinnon's RC Conversations Blog.

August 28, 2007 | Permalink | Comments (2)

GC Mike Dillon, Out of Context

About a week ago, we posted here about how more and more lawyers' billing rates are breaking the $1,000/hour barrier. We also referenced a quote from Sun GC

Mike Dillon in the Wall Street Journal article on billing rates as saying that he didn't believe that charing $1,000 an hour for legal services was inherently unreasonable. At least one law blogger took Dillon to task for his comment. As for me, I didn't view Dillon's remarks as outrageous (as I noted, if a lawyer can dispose of a case with a 60-minute, thousand-dollar-an-hour phone call, then he deserves that rate). But the quote struck me as odd for someone who'd authored a classic blog post like The Way of the Mastodon, which makes the point that in the Internet Age, corporate clients can locate more competitive options for legal services and need not remain captive to Biglaw's increasing rates.

Dillon doesn't deny the comment, but he does explain it further in this blog post. He writes:

I did state and I do believe that there may be times when a $1,000/hour fee is warranted. If you are embroiled in a complex, "bet the company" type of litigation, most GCs will happily pay this hourly rate - provided the value received is commensurate with the fee. This means the services of an attorney with very specific and unique skills, plenty of experience, and the ability to quickly drive a high exposure problem to a favorable resolution.  The reality is that most companies will rarely, if ever, require these types of legal services.  Most of my discussion with the reporter focused on the larger issue, which is the economic misalignment between traditional firms and their corporate clients. I also shared with the reporter some of the things we are doing at Sun to reduce the impact of this misalignment.

Dillon goes on to write that he doesn't mind that the reporter didn't write about Sun's measures to contain legal costs because the reporter had a different focus for the story. However, Dillon concludes that "context is everything and having a blog is a great way to provide it."

August 28, 2007 | Permalink | Comments (1)

Are Law Firm Layoffs Coming Soon?

As the economy declines, will we see a repeat of the associate layoffs that we saw in the late 1980s following  Black Monday, the early 1990s following the savings-and-loan scandals and again in the 2002 with the burst of the dot-com bubble? That's the question that Gina Passarella explores in this article, With Dip in Economy, Are Associate Layoffs on the Horizon? (The Legal Intelligencer, 8/28/07). According to the article, some law firm leaders are predicting layoffs in areas like structured finance, real estate and corporate mergers and acquisitions. Others speculate that any downturn will be offset by the growth of practice areas like bankruptcy and litigation. 

And how will the changing market impact associates? Duane Morris Chairman Sheldon Bonovitz is quoted in the article as saying that layoffs are a possibility in some fields. But others are more optimistic, pointing out that corporate attorneys are in high demand, and it is unlikely that any will be laid off should the economy take a turn for the worse.

At the WSJ Law Blog, commenters share their predictions here. Some predict that small and midsize firms, which are less diverse than large firms, will take a bigger hit. And others remarked how talk of doom and gloom has quelled talk of $190,000 salaries for first-years at New York firms.

Greg Bowman at the Law Career Blog discusses the impact on associate salaries here. Bowman notes that law firms won't lower salaries as a result of expected downturn, but instead, will simply stop upping them annually. And he notes that since firms have already been cautious about hiring associates, when the economy does turn around (as it always has historically), those associates who remain employed will be very busy.

  Finally, over here, the Estrin Report theorizes that paralegals will be hit hard as well:

While the Pollyannists who in the last downturn predicted an opportunity for bankruptcy and litigation practices predicted the same opportunity for this upcoming downturn, no one seems to realize that those corporate paralegals trained in M&A are most likely NOT trained in bankruptcy or litigation.

Consequently, Estrin recommends that paralegals should acquire cross training in a recessionproof practice specialty outside of the corporate area -- and should start doing so now, before "the other shoe drops."

August 28, 2007 | Permalink | Comments (0)

Blawg Review #123

Though you might expect a "brief" Blawg Review from an appellate lawyer, that's not the case with Blawg Review #123, hosted by D. Todd Smith of the Texas Appellate Law Blog. Smith's Blawg Review #123 is styled as an appellate decision that sets a great precedent for future Blawg Reviews by covering a wide range of subjects, from the Nixon Peabody theme song debacle to judges who write and cite law blogs. In our opinion, Blawg Review #123 is one opinion worth reading.

August 28, 2007 | Permalink | Comments (0)

August 27, 2007

With Gonzales Gone, Who's Next?

You should know it is time to resign when your title changes from "attorney general" to "embattled attorney general" (as it is today in both The New York Times and The Washington Post). When President Bush first nominated Alberto R. Gonzales to be attorney general, the move was seen by some as a step towards his appointment to the Supreme Court. Instead, his tenure, as the Times describes it today, "has been marred by controversy and accusations of perjury before Congress."

As we eagerly close the door behind him, conjecture turns to his successor. Several reports say his temporary replacement will be Solicitor General Paul D. Clement, a lawyer who was described in a 2004 Legal Times profile as "one of the brightest legal minds in the country" with "a perfectly appointed conservative resume." Clement is on the short list of potential Gonzales successors at the Wall St. Journal's Law Blog.

Other names floated by the Law Blog and by other  sources are Secretary of Homeland Security Michael Chertoff; James B. Comey, former deputy attorney general and now general counsel of Lockheed Martin; D.C. Circuit Court of Appeals Judge Laurence H. Silberman; Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois; Michael B. Mukasey, former chief judge of the Southern District of New York; SEC Chairman Christopher Cox; Larry D. Thompson, former deputy attorney general and now GC of PepsiCo; former solicitor general Ted Olson; and J. Michael Luttig, GC of Boeing and former judge of the 4th U.S. Circuit Court of Appeals.

Whoever succeeds Gonzales, there is one certain credential required. Back in March, Andrew Cohen summed it up well when he said at the Washington Post blog Bench Conference: "Clearly, the next head of the Department of Justice must be many of the things that Gonzales is not."

August 27, 2007 | Permalink | Comments (1)

Dewey LeBoeuf -- And How!

Even before Dewey Ballantine and LeBoeuf Lamb announced their merger late Friday, Bruce MacEwen was dissecting the deal at his blog Adam Smith, Esq. The merger, which awaits votes of the two firms' partners, would create the firm Dewey & LeBoeuf. With 1,300 lawyers and annual revenue of more than $900 million, it would be the 11th largest firm in the United States.

Not only are the firms "astonishingly well-matched," says MacEwen, but their merger is a deal that could make "tremendous sense" for both firms:

"Not to put too fine a point on it, but both firms are in similar boxes. That box, with apologies to my home town, is overwhelming New York-centricity.  As a global capital market center, New York's pre-eminence is threatened as it never has been in the lifetime of those practicing today.  This is a combination of globalization in general (when there are international alternatives, there are international alternatives); the impact of Sarbanes-Oxley, real and perceived; the omnipresent plaintiffs' securities bar in the US; and the overhang of the 'Spitzer Effect.' If a city set out on a conscious program to position itself as friendly to global capital formation, it's safe none of these phenomena would be on its agenda."

While New York's status as a financial hub faces no immediate threat, MacEwen says, both firms need to be developing a plan for the longer term. In the case of this merger, the plan, suggests MacEwen, may be that there is strength in numbers. Indeed, the firms' joint press release suggests as much when it says:

"The combined firm, which will be known as Dewey & LeBoeuf LLP, will be an established powerhouse in New York, Washington, D.C., and London, the most important cities for transaction deal flow. Dewey & LeBoeuf will cover 12 countries, ranking 13th globally and third among U.S. firms in terms of number of countries covered, as per ALM Global 100 2006. It will rank as the fifth largest firm in New York City with approximately 550 lawyers and the fifth largest U.S.-headquartered firm in London with approximately 170 lawyers. Dewey & LeBoeuf also will have a presence in nearly every key international financial and commercial center and will rank as the 14th largest firm by headcount and the 16th largest firm by revenue in the United States."

Read more:

August 27, 2007 | Permalink | Comments (0)

Lawyers, Guns and Tasers

A Minnesota lawyer is being cited for bravery today after he was wounded while helping police nab a fleeing criminal suspect, who they finally subdued using a Taser. Meanwhile, a California lawyer faces possible charges relating to the use of a Taser on his client -- and himself.

In Minnesota, the Star-Tribune reports on Faegre & Benson partner Keith P. Radtke's role in subduing a man who allegedly terrorized neighborhoods in two states. Radtke and his wife had just put their three sons to bed and were headed downstairs to relax when their front door flew open. A ragged-looking man with a rifle forced Radtke and his wife toward the garage. The Star-Tribune describes what happened then:

"When they got into the garage, Radtke saw an opportunity and pounced, knocking the rifle out of the suspect's hands.

"Radtke put the suspect in a bear hug and yelled for his wife to go inside and call 911, Hutton said. She did.

"Radtke didn't realize there also was a .45-caliber gun in the suspect's waistband, and the suspect was able to get a hold of it and shot Radtke in the lower back.

"Radtke continued to struggle with the suspect and knocked the handgun across the garage floor. The suspect bit Radtke several times, and Radtke put him in a wrestling hold.

"Nearby officers arrived at the scene, separated the men and used a Taser to subdue the suspect."

As of Saturday, Radtke was listed in good condition at a hospital in St. Paul. Local authorities thanked the lawyer for his bravery, saying that if he had not stopped the suspect, others might have been injured.

Meanwhile, in California, defense lawyer Peter Schlueter may face charges for having his expert witness demonstrate a Taser's force by shooting it at his client and himself, reports the Orange County Register. In a videotape played in court, a defense expert witness used a Taser on Schlueter's client, George Engman -- and also on Schlueter and his twin brother -- as evidence of their contention that police used excessive force in arresting Engman. "The videotape played in court showed Engman writhing as he was shocked and also the marks left by the device on Engman, Schlueter and Schlueter's brother," the newspaper says. Apparently, the district attorney was also shocked: the DA said the lawyer and his expert might face prosecution for violating the state's Protection of Human Subjects in Medical Experimentation Act.

August 27, 2007 | Permalink | Comments (7)

Call Me an Idiot, But Not a Crook

That is the position of lawyers Burt Odelson and Mark Sterk, as reported today by the Chicago Sun-Times. The partners in the Evergreen Park, Ill., firm Odelson & Sterk have filed a libel lawsuit against the Proviso Insider blog, contending that their reputations were damaged by a July posting saying that the two lawyers would be indicted by Chicago U.S. Attorney Patrick Fitzgerald. It is one thing for someone to call them lousy laywers, the pair told the Sun-Times, but quite another to say that they had broken the law. "You can say I'm an idiot, but you can't say I'm a crook," Sterk is quoted as saying.

August 27, 2007 | Permalink | Comments (2)

August 24, 2007

Everyone May Be a Winner at Nixon Peabody, but Do They Have a Sense of Humor?

When David Lat of Above the Law received a copy of Nixon Peabody's theme song, "Everyone's a Winner," he did what any snarky, clever "legal tabloid" blogger would have done: He posted it. And predictably, rather than keep a sense of humor about the incident, like some bloggers or lawyers, Nixon Peabody reacted the way any humorless, stuffed-shirt stereotype of a Biglaw firm would: It demanded to know who sent the song to Lat, asserted copyright protection and asked Lat to remove the song from his site and from YouTube. As Denise Howell points out here, it's hard to understand why the firm chose this approach instead of simply "celebrating the high camp and silliness." 

August 24, 2007 | Permalink | Comments (2)

Are Reality Shows Subject to Child Labor Laws?

Producers of a new reality show, Kid Nation, due to air on CBS in mid-September, are facing complaints that the show -- in which children ages 8 to 15 try to create a functioning town with minimal adult supervision -- violated child labor laws. See news stories from Variety (8/24/07) and NYT (8/17/07). The Attorney General's Office in New Mexico, the state where the show was filmed, is reviewing the complaints to determine whether further action is warranted. Among other things, children worked for 14 hours a day without pay; they were also unsupervised, so four accidentally drank bleach while another suffered a burn from hot grease while working in the kitchen. Paul Secunda comments here at Workplace Prof Blog that given the level of abuse reported in the news, criminal child neglect charges might be more appropriate. However, CBS denies the allegations, claiming that it consulted with New Mexico officials while filming the show and that a state labor inspector visited the set. 

But is CBS alone to blame? What about the children's parents? Yesterday's Smoking Gun reported here that participants' parents were required to sign agreements with CBS, in which they waived their rights to sue the network even if their child died, was injured or contracted a sexually transmitted discease during the show's taping. (There's a link to the agreement in the post). Perhaps CBS wasn't as careful with the children as it should have been, but parents also took huge risks for their children in signing the agreement, which was fairly explicit in stating that children would be sent to remote locations, that producers could not guarantee the safety of children and that there were risks involved (see page 2 of agreement). Should CBS receive full blame for injuries to children when their own parents were willing to endanger them?

August 24, 2007 | Permalink | Comments (6)

A Cell Phone Saves the Day

In today's high-tech society, most of us can't imagine surviving without a cell phone. And for one criminal defendant, a cell phone -- or at least cell phone records -- spared him a conviction and jail time, as reported in this article, Cellphone Records Help to Clear a Murder Suspect (8/24/07). In July 2006, Eric Wright was arrested and charged with fatally shooting Tyrell Pope in east New York in Brooklyn. Wright told his lawyers that he'd been in New Jersey at the time of the shooting (and, indeed, claimed that he heard the shots being fired while on his cell phone with a friend who was in east New York). Wright's attorney obtained a copy of the cell phone records, which, sure enough, showed that he'd been in Newark, N.J., at the time of the shooting. Initially, the prosecution minimized the significance of the cell phone records, arguing that there was no proof that Wright was using the phone. But when other evidence emerged that called Wright's involvement into question, the prosecution dismissed the case. 

Of course, as with other potentially exculpatory evidence, like DNA, there's also a downside to cell phone records: Just as they may exonerate defendants, cell phone records can just as easily implicate them as well.

August 24, 2007 | Permalink | Comments (4)

If Your Boss Is a Jerk, Should You Be Able to Sue?

If your boss is a jerk, you may soon have other options besides quitting or extracting revenge like this. As this article, Is the boss a real piece of work? (LA Times 8/21/07), reports, at least four state legislatures are considering legislation that would allow workers to sue their superiors for bullying or an abusive work environment. From the article:

The ranks of bullying bosses are growing, some experts contend, as short-staffed companies tap managers with lousy people skills. Others point out that though mean and dimwitted supervisors have been around since work was invented, baby boomers on the cusp of retirement and restless younger employees are more likely to complain or quit than suffer in silence. It's easy to decide against taking the latter tack, thanks to the proliferation of venting websites, among them

According to the article, the proposed legislation currently lacks important details such as what would constitute an abusive work environment. A sampling of complaints submitted in a recent Bad Boss contest sponsored by the AFL-CIO included bosses who kept the office so cold that ink in pens froze up; a boss who took employees to lunch at a discount warehouse and told them to eat the freebies; and a boss who mocked a cancer patient when her hair fell out after chemotherapy. 

At the same time, there's some concern (e.g., as expressed here) that the proposed legislation may lead to a rash of new lawsuits and create a new burden for management, which are already subject to myriad anti-discrimination laws.

Martha Neil of the Statutory Construction Blog argues that that bad behavior doesn't justify new laws. She writes:

Of course, it doesn't take a law for a company to enact a policy requiring bosses not to abuse employees. And workers have other ways, besides litigation, to make known their feelings about unpleasant supervisors. Today, for instance, the AFL-CIO, one of the country's biggest and best-known unions, will name the worst boss in the country, based on the results of an Internet contest. One entry, the Times reports, "is about a lawyer who called the office every morning to give instructions as he brushed his teeth and conducted other business in his bathroom."

Initially, I agreed fully that there ought to be better ways to force bosses to improve their conduct than the threat of litigation. After all, we read so much about how positive employee morale boosts company profits -- and you'd think that these economic incentives would suffice to keep bad bosses in line without the threat of litigation. But perhaps that's not an accurate assumption. As Lisa Fairfax of The Conglomerate posts here, a recent study shows that bad bosses get promoted rather than punished. According to the study, approximately 64 percent of the 240 people surveyed said domineering bosses were actually promoted for their conduct despite its negative impact on the workplace environment. If this survey has any scientific accuracy (unlikely, given the small sampling size) and it's true that nastiness gets you ahead in the workplace, then perhaps there is a need for legislation to give bosses incentive to behave -- because apparently, the workplace provides incentive not to.

August 24, 2007 | Permalink | Comments (1)

August 23, 2007

Crashing the Wexis Gate

Long, long ago, in a land far, far away, access to the SEC's EDGAR database of corporate filings was available only by subscription through proprietary services such as Mead Data Central, the former owner of LexisNexis. Then came the seemingly quixotic Carl Malamud and his nonprofit Internet Multicasting Service, which in 1994 began offering the EDGAR database of corporate filings free via the Internet. A year later, as IMS's funding was about to expire, Malamud urged the SEC to continue where IMS would leave off. At first, the SEC hedged, but in August 1995, then Chairman Arthur Levitt agreed to take on the task of providing free Internet access to EDGAR. It was a turning point that paved the way for the future of government information on the Web (as I first noted a decade ago).

We've come a long way since then in achieving free and easy public access to government information online. But in the publication of federal and state court decisions, two private companies still control access and set the price of admission. And Malamud, once again, is leading the charge against the gate. Through the organization, Malamud has set out to create in the short term "an unencumbered full-text repository of the Federal Reporter, the Federal Supplement and the Federal Appendix" and, eventually, a full-text repository of all state and federal cases and codes. His intent, he wrote in a letter to West, is not to compete with commercial vendors.

"Rather, we wish to make this information available to a population that today does not have access to the decisions of our federal and state courts because they are not commercial subscribers to one of the handful of services such as your award-winning Westlaw tools. Codes and cases are the very operating system of our nation of laws, and this system only works if we can all openly read the primary sources."

Earlier this week, Malamud began to publish the first cases of his repository. It was sufficiently newsworthy to merit coverage from The New York Times and commentary by Tim O'Reilly.

Malamud's letter to West asks it to clarify the extent to which it claims copyright in published decisions. This has been an issue of dispute time and again. In a 1990 New York Times piece, Progress Spawns Question: Who Owns the Law?, Linda Greenhouse reported on the star-pagination lawsuit between West and Lexis that ended with a closely guarded settlement agreement rather than a definitive court decision. A 1990 suit between startup Web publisher and LexisNexis similarly ended in a copyright by contract settlement agreement.

Although Malamud asks West to clarify its copyright, he also invites the company to take the high road and simply release the full text of federal cases. "You have already received rich rewards for the initial publication of these documents," he wrote, "and releasing this data back into the public domain would significantly grow your market and thus be an investment in your future." I doubt Wexis would throw open its gates that easily, but why not? The value of Westlaw and Lexis is less and less in the cases -- especially as courts post their own decisions directly and services such as FindLaw (which is owned by West) and Justia offer easy access -- and more and more in the secondary reference materials unavailable elsewhere online. For either West or Lexis, giving up old cases to the public domain would have the PR benefit of appearing to be a heroic gesture while having little negative impact on the long-term bottom line.

Besides, it is the right thing to do, just as it was when Malamud convinced the SEC to do it a dozen years ago.

August 23, 2007 | Permalink | Comments (0)

The Blogs the Judges Read

At his blog May it Please the Court, J. Craig Williams points to an article that answers the question, Which blogs do judges read? The article, from the spring/summer issue of the National Judicial College magazine Case in Point, looks at the blogs judges write and the ones they read -- and also examines the ethical and practical issues raised by judicial blogging. The article by writer Heather Singer includes a list of blogs mentioned by the people she interviewed for the article. The list offers a taste of the blogs judges favor -- and includes a few judges write:

As for the ethics of judges blogging, NJC President William F. Dressel said it all depends on what they write:

"As long as judges are using blogs to enhance public education and understanding of our justice system and not compromising the integrity of cases, then judicial blogs could serve and promote a greater understanding of the challenges and difficulties judges face in advancing justice."

August 23, 2007 | Permalink | Comments (10)

Biglaw Tight-Lipped on Offshoring

Bill Heinze at I/P Updates points to an article on legal outsourcing by Bloomberg reporters Cynthia Cotts and Liane Kufchock in which they describe how clients are pressuring large law firms to cut costs by sending work to India. It is a trend, they say, that will move some 50,000 U.S. legal jobs overseas by 2015. Robert Profusek, co-head of the M&A practice at Jones Day in New York, tells Bloomberg:

"The objective is to have only the most valuable people in London or New York, and the others in India, China or Columbus, Ohio. Lawyers are service providers. We are not gods."

While Jones Day and Kirkland & Ellis both say they send work overseas, many large firms are less forthcoming about offshoring. Cotts and Kufchock write that seven of the 10 highest-grossing U.S. firms declined to comment on outsourcing. Another, Chicago's Mayer, Brown, Rowe & Maw, said it does not send work offshore.

For the firms, a key issue is disclosure, the writers say:

"U.S. law firms are required under ethics rules to disclose markups on what they pay foreign attorneys who aren't licensed to practice law in the U.S. Such rules don't apply to legal work performed by lawyers admitted to practice in U.S. jurisdictions."

Nondisclosure allows firms more leeway to mark up bills, but New York University legal ethics professor Stephen Gillers tells Bloomberg that clients are savvy to that. "They want to negotiate the markup on these charges." As for those tight lips at large firms, the CEO of one offshoring company says it is not because the firms are ashamed of outsourcing but "because they view it as a competitive advantage."

August 23, 2007 | Permalink | Comments (2)

Decoding Legal Gobbledygook

Lingo_book Adam Freedman (aka The Party of the First Part) is a former litigator who now makes his living decoding policies and procedures into plain English for a major New York City investment bank. He also writes the "Legal Lingo" column for the New York Law Journal Magazine. Now, publisher Henry Holt and Co. is about to release his book, The Party of the First Part: The Curious World of Legalese, in which, according to Publishers Weekly, he "offers a cornucopia of hilarious, offbeat and downright bizarre examples of simple concepts contorted into words that defy understanding."

In an excerpt published on his Web site, Freedman offers a peek at the lunacy of legal language:

"Consider the fact that Congress once passed legislation declaring that 'September 16, 1940 means June 27, 1950.' In New Zealand, the law says that a 'day' means a period of 72 hours while an Australian statute defines 'citrus fruit' to include eggs. To American lawyers, a 20-year old document is 'ancient' while a 17-year old person is an 'infant.' At one time or another, the law has defined 'dead person' to include nuns, 'daughter' to include son, and 'cow' to include horse; it has even declared white to be black."

Perhaps if you buy a copy of the book, you might get Freedman to "execute" it for you. Even without buying the book, you can browse The Legalese Hall of Shame and read Freedman's tips on writing in plain English.

[Hat tip to Overlawyered.]

August 23, 2007 | Permalink | Comments (6)

Law Firm Asks Homeless Man for $1,000 Retainer

The headline above is that which appeared yesterday on a post at the blog Downtown Eastside Enquirer. The post says that the Vancouver, Canada, firm Lawson Lundell responded to the homeless man's request for legal representation in a libel action with an e-mail asking for the retainer and advising that he would be charged $400 an hour for the services of a senior lawyer. Alternatively, the e-mail said, the matter could be assigned to a junior lawyer at an hourly rate of $250 to $325, or the firm could provide a referral to a lower-cost lawyer.

It all sounds like a salacious story of lawyer greed until you realize that the author of the post is describing himself and that the only indication he had given the firm of his homelessness was a link to his Web site, which includes a reference to himself as a "moneyless home-free man" who "escapes impoverishment and opens pathways to emancipation and prosperity, for himself and others." In the end, the author of the post admits: "It is possible that [the firm] had not reviewed the websites and was not aware that he was homeless."

August 23, 2007 | Permalink | Comments (6)

August 22, 2007

Is Life Better for Women at Dorsey?

After reading about the recent ratings of the Top Law Firms for Women, Bruce MacEwen decided to speak with Marianne Short, managing partner of Dorsey & Whitney, which made the top 50 -- and he's posted the extensive interview here. MacEwen explains that he decided to interview Short because "of all the 50 firms [named as best for women], Dorsey is the only one that is both in the AmLaw 100 and which is led by a woman.

According to Short, firms are making considerable progress towards accommodating the desire for work-life balance. Her firm developed a program that allows for flex-time for men, women or anyone without children to attend to family obligations. Short also adds that there's no resistance to this program from her firm and no "face time" requirements that force people into the office on the weekend. 

Short cites statistics to show that the firm is making progress. She says that five years ago, 28 percent of fifth- through seventh-year associates were women, while today the number is 50 percent. MacEwen finds this a powerful number, though I'm a little skeptical -- I think that other factors may explain the retention rate, such as increased law school tuition costs forcing women to stay in the workforce longer to repay loans and more women deferring children until they advance up the corporate ladder. The better metric would have been a comparison of working moms as fifth- and seventh-year associates.

Based on this interview, it seems that Dorsey & Whitney is a great place to work for women, as well as all lawyers who want an outside life. And indeed, Dorsey & Whitney has a female managing partner, which is highly unusual for large firms. At the same time, is Short's portrayal accurate? Does everyone at the firm really support the flex-time program? Or is Short more inclined to focus on the benefits -- either because she's a woman who succeeded at the firm or because she's a managing partner? Take a look at the interview and send us your comments.

August 22, 2007 | Permalink | Comments (3)

Billing Rates Hit the $1,000 Mark

Law firms are generally conservative entities, tepid about breaking barriers when it comes to work-life balance or diversity. But today's Wall Street Journal reports on one barrier that I'm betting every law firm is avid to bust right through: the $1,000-an-hour billing rate.

Nathan Koppel reports that several New York firms, including Simpson Thacher & Bartlett, Cadwalader, Wickersham & Taft and Fried Frank are expected to raise their top rates for some partners to $1,000 an hour. While some attorneys began billing at that rate last year, what's different now, according to Koppel, is that "a critical mass" is developing around $1,000 fees, and as such, more and more firms are comfortable with those rates.

Noted litigator David Boies (formerly partner at Cravath and now principal at his own firm, Boies, Schiller & Flexner) criticized the rates in a quote in the article:

Frankly, it's a little hard to think about anyone who doesn't save lives being worth this much money," says David Boies, one of the nation's best-known trial lawyers, at the Armonk, N.Y., office of Boies, Schiller & Flexner LLP.

  Another lawyer, Steve Sussman (who often handles high-stakes contingency matters), explains that the hourly fee of $1,100 is intended in part to discourage anyone from hiring him on an hourly basis.

However, clients aren't necessarily put off by the increases. Even perennial law firm value-hunter Mike Dillon, Sun Microsystems' GC, opines in the article that: "$1,000 for very seasoned lawyers who can solve complex problems doesn't seem to be inappropriate."   

In a similar vein, Jeff Lipshaw, in a post at the Legal Profession Blog, does not find the $1,000-an-hour rate inherently objectionable:

To me, it's just a number.  As a GC, I was far more interested in total budgets and value-propositions than the hourly rate.  So I could see ponying up an ungodly hourly rate for the certain few (like Kevin or his counterpart at Weil Gotshal, the handsome and debonair Steve Newborn) who could bring value to bear (Brackett Denniston III, the GC of General Electric allows as he has done the same).  I scratch my head more at paying a litigator that much for two reasons:  it piles up quickly, and I can only imagine a very few "bet the company" cases that would warrant fees at that level.  Indeed, one of our strategies within the company was to bid out important but not mission critical work to high quality lawyers at non-financial center firms. 

Lipshaw's blogging colleague Nancy Rappaport has some reservations about the higher fees, however:

The problem, of course, is that the rate doesn't distinguish between "review file" and "develop brand-new legal theory that saves the day."  And then there's the copycat issue, where lawyers who think that they're worth $1,000/hour want to increase their rates just to stay in the game....How many of the law firms increasing their rates to the new four-digit high spend much time calculating their "value added" part of the equation?  I'll bet that, instead, they're just trying to make ends meet, given the still-increasing overhead caused by high associate salaries, and of course there's always the ego problem (he charges $X, therefore I will, too).

I agree with Lipshaw and Rappaport to the extent that they recognize that the issue here is overall cost, not hourly fee. If a partner is charging $1,000 an hour to make a couple of phone calls and resolve a case in a morning (for $4,000), then the hourly fee is a far better value than having an associate billing at $200 an hour to work on the case for a month. Unfortunately, as Rappaport suggests, a problem arises when lawyers raise rates and they don't increase value but just keep billing as usual, only at the higher rate. It's hard to justify paying a lawyer $8,000 a day to sit at a court hearing or review some documents.

On the other hand, the comments from the lawyer who charges $1,000 an hour to discourage clients from signing up by the hour doesn't hearten me much either. After all, the only reason that a firm would want to turn down $1,000 an hour to bring clients over to a flat-fee arrangement is where the latter are resulting in effective rates in excess of $1,000 an hour. And I naively believed that the point of flat fees was to increase value to clients, not generate more money for lawyers.

But what's your view? Would you pay $1,000 an hour to a lawyer, and if so, in what circumstances? When is that fee justified -- if ever?

August 22, 2007 | Permalink | Comments (1)

A Post About Ethics Rules, Offshoring and Mark-Ups on Contract Attorney Fees

Do state ethics codes deter offshoring of legal services to India, therefore enabling U.S. firms to charge higher prices for services? And should firms be limited in the amount that they can mark up outside lawyer fees? Those are some of the questions that came to my mind after reading this fairly detailed article, Jones Day, Kirkland Send Work to India to Cut Costs (Update2) (Bloomberg, 8/21/07), which describes how large firms and corporate clients are using outsourcing (hat tip to Legal Pad).

The Bloomberg article is an interesting read because it provides some interesting data on how the costs of offshoring work to India compare to law firm costs. Consider the case of Socrates Media, described in the opening paragraphs of the story, which hired QuisLex, an India-based research company that performed the requested work -- customization of a residential lease for all 50 U.S. states -- for $45,000. That's roughly one-tenth of the $400,000 estimate that had been quoted by Socrates Media's outside counsel. Bruce Masterson, CEO of Socrates, found that the work was "good quality" and has been using QuisLex ever since.

So if basic legal research tasks cost so much less in India than within the United States, why aren't law firms sending more work, such as document review or basic research, offshore? Some firms argue that the savings are not as significant because the work still needs proper supervision and security. But there may be another, financial motive as well. As a general matter, virtually every state bar allows lawyers to mark up the cost of legal research and writing services, so long as the overall costs are reasonable. However, firms are not required to disclose the cost differential for legal work performed by U.S. lawyers, whereas disclosure of mark-ups are required for foreign lawyers. Thus, firms can hire U.S. lawyers for contract work at $60 an hour, pay them $30 an hour and bill them out at $200 an hour and keep the $100 an hour as profit without ever telling clients about the price differential. Thus, firms have no incentive to go offshore and hire Indian lawyers for $20 an hour, because then they'd have to tell clients about all that profit -- or bill the work to clients at a lower rate.

Of course, law firms will still face some price pressure from more sophisticated corporate clients:

Armed with the knowledge of how little law firms might pay for offshore work, corporations can use the threat of cutting them out and sending legal tasks overseas on their own to force law firms to reduce fees. Law firms can earn more by using labor they can mark up without disclosure,'' said Stephen Gillers, professor of legal ethics at New York University School of Law in Manhattan. ``But clients are knowledgeable about costs, and they want to negotiate the markup on these charges.''

Still, how much leverage do clients have? Though they can, like Socrates Media, outsource more routine tasks, when it comes to massive litigation, companies are still dependent on outside firms, which have no incentive to outsource to India to cut costs when they can readily mark up the costs of contract lawyers without disclosure. 

And if companies don't have substantial leverage to negotiate fees, then how reasonable are the law firm mark-ups? I don't begrudge firms for marking up the cost of contract attorneys if the mark-ups are reasonable. Firms devote overhead to finding, managing and supervising contract lawyers, and of course, they're entitled to make a profit. Having said that, when does a mark-up become unreasonable within the meaning of the Code of Professional Responsibility's requirement that lawyers charge "reasonable fees"? If a firm pays a temp agency $70 an hour for a contract lawyer (with the lawyer receiving $30 after the agency takes its cut) and bills clients $200 an hour for services, is that reasonable? Would a $300-an-hour rate be reasonable? If you find these rates troubling, is it because you believe that the client is getting ripped off -- or because the contract attorney is getting paid so little?

August 22, 2007 | Permalink | Comments (3)

Judge Criticized for Jailing Public Defender Unprepared to Go Forward

An Ohio judge who sent a public defender to jail for five hours because he was not prepared to go forward with a case is now facing widespread criticism for his decision, as reported in this story, Judge Has Unprepared Lawyer Arrested (ABC News, 8/20/07). From the story:

Portage County Judge John Plough had assistant public defender Brian Jones arrested for contempt of court last week after Jones refused to begin a misdemeanor assault trial because he said he was unprepared. Jones was assigned to the case one day earlier.  Jones, who started working as a public defender earlier this year, was found in contempt and held for five hours in the local jail before being released on bail, said Ian Friedman, a lawyer with the Ohio Association of Criminal Defense Lawyers.

Not surprisingly, Plough's ruling outraged the criminal defense bar, prompting the National Association of Criminal Defense Lawyers to release this statement condemning the judge's action and reaffirming defense counsel's ethical obligation to postpone or delay a trial if they are not fully prepared to proceed.

Andrew Perlman at the Legal Ethics Forum has these comments:

It's bad enough that public defenders have too many clients and not enough resources.  Now, in Ohio, they have to fear going to jail if they can't prepare a case for trial within twenty-four hours.  What's particularly remarkable about the judge's decision was that the lawyer was put in a position of either going to jail or providing unethical representation.  I am consistently amazed (though no longer surprised) by the routine denial of a criminal defendant's right to a competent attorney and the courts' unwillingness to recognize the problem.  When a body of law develops that explains how long lawyers can sleep through a trial before they're considered to be ineffective and lawyers can be jailed for failing to try a case within a day of being assigned to it, there is something seriously wrong with the system.

Judge Plough will hold a hearing on the contempt charge on Friday. It will be interesting to see whether Plough changes his view in light of the criticism his ruling has received.

August 22, 2007 | Permalink | Comments (1)

August 21, 2007

NLRA Stagnation Revives Labor Movement

The conventional wisdom is that labor law has reached a dead end and that organized labor is withering. But in what reads like an essay in Hegelian dialectics, Yale labor law professor Benjamin I. Sachs argues that the stagnation of federal labor law and the dysfunction of the National Labor Relations Board is giving rise to a reinvention of labor law and a new dynamism within the labor movement.  His article outlining this argument, "Labor Law Renewal," appears in the current issue of the Harvard Law and Policy Review. In it, he provides three examples of this "new dynamism" and asserts:

"[L]abor law is being reinvented through a process that I call the 'hydraulic demand for collective action.' That is, the NLRA’s failings have left the traditional legal channel for collective action blocked, but this blockage has not dissipated the demand for organization. Unable to find expression through the NLRA, the pressure from this continuing demand for collective action has forced its way out through three new legal channels. No longer a regime defined by a single federal statute administered by a single federal agency, American labor law is increasingly constituted by private processes, by state and local regulation, and by multiple federal statutes enforced by multiple actors."

Commenting on Sachs' article at the American Constitution Society Blog, David Tannenbaum, law clerk for 9th U.S. Circuit Court of Appeals Judge Stephen Reinhardt, says the strategies Sachs identifies "may bedevil liberals and conservatives alike." He explains:

"Liberals may find themselves balking at the idea of devolving labor law-making to the local level, remembering that unions sought a centralized regime because the states once provided so little protection. ... Conservatives will continue to question the economic wisdom of unionization, but it will be harder for them to do so when more of the rules are set by private negotiations."

As for Sachs, he asserts that collective action is alive and well within the workforce and should form the core of labor law reform: "Workers' collective action, in its highly variable incarnations, is labor law's central project and one that merits the work of reinvention proposed herein."

August 21, 2007 | Permalink | Comments (0)

Suit Fails Against Tobacco Makers

A conservative taxpayers' advocacy group lost its bid yesterday to force five major tobacco companies to reimburse the federal Medicare program for money spent to treat smoking-related illnesses. The group, the United Seniors Association, a conservative alternative to the American Association of Retired Persons, sued Philip Morris, R.J. Reynolds and other cigarette makers, claiming standing as a private attorney general under the Medicare Secondary Payer statute, which creates a private cause of action against those primarily responsible for  Medicare-covered medical expenses.

But in a decision issued yesterday, the 1st U.S. Circuit Court of Appeals ruled that United Seniors is without standing to bring suit under the statute because it did not allege that any of its members were Medicare beneficiaries who were treated for smoking-related injuries. In so ruling, the court rejected United Seniors' argument that the Medicare recovery statute created a qui tam cause of action authorizing anyone to bring suit as a private attorney general, even Medicare nonbeneficiaries. Where Congress has intended to create a qui tam action, it has done so expressly, such as in the False Claims Act, the court said, but this was not the case with the Medicare statute:

"No mention is made of any jointly-held cause of action by the government and the private plaintiff, or of the private plaintiff's right to sue solely in behalf of the government."

The full decision dismissing the lawsuit is available here: United Seniors Association v. Philip Morris USA.

August 21, 2007 | Permalink | Comments (0)

Bloggers at ILTA

What better time to visit Orlando, Fla., than late August? Well, pretty much anytime, really, but a bevy of legal bloggers is there this week for the 30th Annual Educational Conference of the International Legal Technology Association. The conference features a remarkable line-up of programs and speakers. It is a line-up that, according to Monica Bay at The Common Scold, brought 2,700 attendees to steamy Florida -- 500 of them first-timers. Bay says the conference keynote from astronaut Jim Lovell was the best she's ever heard (and knowing how many conferences Bay attends, that says a lot).

At the blog KM Space, Doug Cornelius of Boston's Goodwin Procter is posting live from the conference and has provided coverage of programs on developing the right IT and KM governance structure for your firm; how wikis, blogs and discussion forums relate to legal KM; stories from client-facing KM implementers; and the alignment of information management, KM and records management.

Some of the other legal bloggers in attendance at ILTA -- rounded up by Kevin O'Keefe at his LexBlog Blog -- include Dennis Kennedy, Bruce MacEwen, Ron Friedman, George Socha, Nina Platt, Chris Dale, Lawyer KM and Eric Feistel.

August 21, 2007 | Permalink | Comments (6)

Blawging 101

A new department of study launched this week in the College of Law, and every one of its professors is a legal blogger. As outlined in the course catalog, the department's offerings include courses covering bad legal arguments, electronic discovery, ethics and the solo practitioner, billing methods and ethics and trial preparation. Unfortunately, this law school exists only online and is yet to be accredited. But it is worth some moments of matriculation as the creative legal blogger David Gulbransen (aka Preaching to the Perverted) presents Blawg Review #122 in the form of a law school course catalog.

August 21, 2007 | Permalink | Comments (0)

August 20, 2007

Precedent for Aaron Charney?

Could this story be good news for Aaron Charney, the former Sullivan & Cromwell associate suing his firm for sexual orientation discrimination, as we posted here back in February? According to the just-issued news story, a former partner at Clifford Chance's U.K. office who sued the firm for discrimination based on sexual orientation just settled his case for an undisclosed sum. According to one commentator quoted in the article:

This means that not only did the firm have an allegedly discriminatory culture, but specific circumstances happened where the individual felt personally discriminated against."

The report also added that it is rare that sexual orientation claims hit the headlines because of fear that raising these issues amounts to career suicide -- an observation that I also made when I first posted about this.

August 20, 2007 | Permalink | Comments (8)

Law Firms One-Up Each Other Behind the Scenes Through Wiki Edits

Biglaw firms may seem genteel and respectful of each other on the surface. But behind the scenes, they're secretly trying to one-up each other. Concurring Opinions breaks the story in this post, A Slow Day at the Office:  Lawyers Editing on Wikipedia

As Hoffman describes, he discovered a new tool, Wikiskanner, which lists wiki edits from various organizations. Using this new "toy," Hoffman did a little sleuthing and claims he discovered that a bunch of large law firms had used Wikipedia to "burnish their reputations and trash their competitors." (Visit Hoffman's post for direct links to the edits.)

Eric Turkewitz picks up on Hoffman's report in this post at New York Personal Injury Law Blog to question Wachtell Lipton's veracity. According to Turkewitz, back in March, Wachtell Lipton boasted that "it doesn't engage in advertising or marketing." Yet Wachtell Lipton was one of the firms "outed" by Hoffman for editing its Wikipedia profile, which prompted Turkewitz to ask, "Doesn't editing your profile on Wikipedia to improve your image qualify as marketing?"

After reading Hoffman's post, I'm curious about the ethics of law firms editing each other's profiles. On the one hand, Wikipedia, by its very nature, invites and encourages edits; there's nothing unlawful about a firm changing a Wikipedia entry (by contrast, hacking into another law firm's Web site to change the content or redirect traffic to one's own site would violate the law). And law firms always have the ability to change their profiles, so any damage isn't permanent. At the same time, there's something unseemly and underhanded about a law firm secretly editing a competitor's profile to make the firm look bad. I'm sure if solo practitioners engaged in this conduct, the bar would investigate. I wonder whether the bar will have any reaction here. Ethics experts: Do you have any opinion on this one?

Related links:  Above the Law.

August 20, 2007 | Permalink | Comments (7)

Still More on the Facebook Trend

We posted about increasing use of Facebook by lawyers just a few weeks ago, but there's still more news. Kevin O'Keefe of LexBlog shares here that 10 Am Law 100 law firms have Facebook networks (though the ones that I quickly examined did not seem all that robust). Though I understand the potential business advantages of a Facebook profile, I would also think that including embarrassing data or photos in a one's profile could sabotage a career. Question: How much information would you include in a law firm Facebook profile?

August 20, 2007 | Permalink | Comments (1)

Same Old Suspects When It Comes to Corporate Representation

Perhaps large firms aren't going the way of the mastodon just yet, despite various stories on how corporate clients are thinking twice about retaining their Biglaw counsel. This Corporate Counsel story, The Usual Suspects (8/20/07), summarizes the results of the sixth annual Who Represents America's Biggest Companies survey, which found that the same large firms such as Skadden, Kirkland & Ellis and Davis Polk continue to dominate.

The reason? Despite increasing costs, apparently, firms are reluctant to take the risk of making a move. Legal Blog Watch affiliate blogger Rees Morrison is quoted in the article, saying:

"There's no real reason to move elsewhere, and there's risk involved with moving on" to other firms... he adds, [firms] need these relationships, [and] most law departments stick with the partner and the firm they trust."

Perhaps the new associate salaries of $160,000 will result in a bit of a shakeup for next year. But for now, it appears that large firms can rest easy that their risk-averse corporate clients aren't going anywhere.

August 20, 2007 | Permalink | Comments (0)

Should Firms Treat Personal Injury Cases as Pro Bono?

According to this article, Law firms are offering services to victims' families for free, a few Minneapolis firms are offering legal services pro bono to the victims of last month's I-35 W Mississippi River bridge collapse. The article reports that law firms such as Robins, Kaplan, Miller & Ciresi, Soucie and Bolt and Wil Fluegel are among those that have signed up to represent victims without a fee. However, at least one firm, Schwebel, Goetz & Swieben, declined to join the group of firms waiving a fee and, instead, will represent victims or their families through a contingency arrangement. The article notes that just the costs of the suit -- investigative work and discovery -- will run at least $1 million, with the cost of lawyers' time exceeding that.

One expert quoted in the article describes the reasons that a law firm might forgo fees in these kinds of cases:

David Schultz, who teaches legal ethics at the University of Minnesota School of Law, said he can come up with two reasons for a firm to offer free work. One is noble, and the other is smart business. "This plays well," Schultz said. "Then you get to Ciresi's firm as he's running for U.S. Senate. It helps temper any edge that he's just a money-grubbing trial lawyer."  Still, Schultz said, "If it's simply about doing good work -- it's an exceedingly generous offer by law firms in cases that could potentially make lawyers millions of dollars. For anybody who was on that bridge, you have a potential lawsuit."

While it's hard to criticize the firms taking cases at no cost, I do question whether their decision represents an optimal allocation of scarce pro bono resources. Why take on a huge case where there are probably at least a dozen highly qualified personal injury firms to handle the matter? And is it appropriate to characterize this work as pro bono when the clients have numerous other options? 

August 20, 2007 | Permalink | Comments (1)

August 17, 2007

After the First Law Firm IPO

Bruce MacEwen at the Adam Smith, Esq. blog recently interviewed Andrew Grech, managing director of Melbourne-based Slater & Gordon, which in May became the first law firm to be publicly traded.

During the conversation, Grech described the immediate aftermath of his firm going public, what obligations the firm holds to investors versus clients, the reasons for the IPO, whether the IPO process was more difficult than expected, the post-IPO firm culture and the benefits of nonlawyer regulators.

August 17, 2007 | Permalink | Comments (0)

Orrick Raises the IT Bar

Many law firms have strategic-thinking CIOs, acknowledges Ron Friedmann at the Prism Legal Consulting blog, and some also have directors of knowledge management or directors of practice services. But now Orrick, Herrington & Sutcliffe has all three: Patrick Tisdale is Orrick's CIO, Peter Krakaur is the chief knowledge officer, and Clark Cordner recently joined as director of practice and client services -- he will focus on delivering differentiated legal services enabled by IT.

"I suspect that few AmLaw 100 or 200 firms have such experienced people in all three roles," Friedmann posts. "Clients should see value in both efficiency and effectiveness. Orrick lawyers (and recruits) should find attractive a deep support organization that makes their lives easier."

August 17, 2007 | Permalink | Comments (0)

Cybersettle Helps NYC Settle Claims

Geoffrey Gussis posts at InHouseBlog that if you're looking for a new technology-based dispute resolution tool, then you should check out Cybersettle, which has assisted in over $1 billion in settlements. And according to a article, "Cybersettle, which allows for the negotiation of settlements over the Internet, has signed a new three-year contract with New York City."

August 17, 2007 | Permalink | Comments (0)

August 16, 2007

Why Does the ABA Oppose Mandatory Retirement... But Not Other Alternatives for Older Lawyers

With the graying of the bar and an increasing number of law firms implementing mandatory retirement programs (topics that we posted on here and  here several months ago), it's not surprising that the ABA just addressed the issue of mandatory retirement at last week's annual meeting.  As reported by the WSJ Law Blog, the ABA adopted a recommendation that law firms reject mandatory retirement programs.  Right now, 57 percent of firms with more than 100 lawyers have such policies in place, but the ABA is asking these firms to rethink their policy.  According to the WSJ post, those opposed to mandatory retirement argued that it is inconsistent with other industry workplaces, where mandatory retirement is unlawful.  But opponents argued that the ABA should not tell law firms how to run their operations.

Though I have issues with the ABA adopting political positions, I don't find it inappropriate for the ABA to make recommendations to law firms about work-life balance, diversity or mandatory retirement -- since these issues directly impact practicing lawyers.  (I draw the line at ABA recommendations carrying any weight, but see nothing wrong with the ABA offering advice or recommendations as it did here).

At the same time, I find it ironic that while the ABA opposes mandatory retirement programs, it has also issued an ethics opinion holding that law firms can ethically make retirement benefits contingent on a lawyer's agreement to sign a non-compete clause (as a general rule, law firms cannot bind lawyers to non-compete agreements because to do so would violate the client's unfettered right to a lawyer of his or her choosing).   In other words, the ABA is willing to say that mandatory retirement is wrong.  But the ABA won't do anything to provide real relief to lawyers who are the victims of mandatory retirement who would like to retain their rightfully earned retirement benefits and at the same time, open a law firm that may compete with their former firm.  To me, this inconsistency suggests that while the ABA opposes mandatory retirement officially, in the end, it doesn't really care much about the plight of older lawyers.

August 16, 2007 | Permalink | Comments (1)

Padilla Found Guilty

Well, it may have taken over half a decade, but Jose Padilla's long, strange, Kafka-esque journey through the legal system has finally come to some resolution, with today's jury verdict finding Padilla guilty of supporting Islamic terrorism overseas

Though the verdict is only a couple of hours old at this posting, preliminary thoughts on its meaning are already circulating in the press.  In this CNN story, Kendall Coffey, a former US Attorney viewed the verdict as a "critical vindication" for DOJ and at the same time, raises questions about whether military tribunals are necessary.

The New York Times also characterized the Padilla verdict as a "major victory" for the Bush administration in this report,
Jose Padilla Convicted on All Counts in Terror Trial
.  But the <i>Times</i> also quoted Anthony Natale, Padilla's lawyer as stating that:

“In this case, you will see how in the absence of hard evidence, a suspicion can be fueled by fear, nourished by prejudice and directed by politics into a criminal prosecution.”

Not much commentary from the blogosphere, yet...but we expect that by tomorrow, the blogs will be popping with thoughts on the meaning of the verdict and predictions about what comes next.

August 16, 2007 | Permalink | Comments (1)

Did You Violate Copyright Law Today?

All of us have done this at least once, I'm sure:  circulated an electronic article from an e-newsletter or other publication to which we subscribe.  But what you probably didn't know is that re-circulating these articles may violate copyright laws -- and according to this story from CNET, publishers are starting to crack down on offenders.

According to the article, the Software Information & Industry Association (SIIA) entered into a $300,000 settlement with a research company over distribution of the company's "press packages" without a license or permission.  But while widespread circulation of information might violate copyright law, what about fair use?  Generally, fair use allows reprinting for non-commercial purposes, which means that occasionally passing on a story to inform a colleague could fall within fair use exceptions.  However, regular forwarding of a copyrighted electronic publication suggests that the material is being used for business purposes (because of the regularity of transmission) rather than education. 

So the next time you send those articles off to an associate or colleague, give some thought to copyright issues.

August 16, 2007 | Permalink | Comments (0)

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