Victor Borge likened lawyers to clarinets—both have cases, mouthpieces, and need a constant supply of hot air to function. There are just over 1.3 million licensed lawyers in the U.S. according to the American Bar Association 2015 National Lawyer Population Survey. That’s a lot of hot air and mouthpieces. Paradoxically, the legal profession lacks a strong, unified voice desperately needed at this time of profound and accelerated change. That powerful legal voice must address big challenges to the rule of law including preservation of the Bill of Rights, access to justice, equal justice, global migration, human trafficking, and a growing erosion of confidence in democratic institutions.
Yogi Berra said, “Baseball is ninety percent mental and the other half physical.” His numbers are off, but his on-field stats, glove, and immense popularity landed him in Cooperstown, a place that enshrines baseball greats based upon metrics. Ever wonder why law—a trillion dollar global industry purportedly grounded in evidence, proof, and fact—is so remarkably devoid of meaningful metrics for performance and results?
The Guardian recently reported that senior partners at Magic Circle firms now charge 1,100 pounds an hour— that’s $1,500 plus an expensive lunch. U.S. firms average a bit less, but their rates are not for the faint-of-budget, either. The National Law Journal reported that for 2014 the top 14 U.S.-based firms had a $980 average partner billable hour rate. Senior partners charge well above that and top out in the same zip code as their Magic Circle competitors.
Conflicts of interest are anathema to lawyers. The Rules of Professional Conduct-written by lawyers- decree that they are to be avoided. But the Rules do not begin to address the many real-life conflicts that lawyers and law firms confront. Conflicts can arise from a law firm’s size and structure, a lawyer’s moral compass, and competing economic interests with clients to cite but a few examples.
A Vague Standard
Let’s begin with the Restatement of the Law Governing lawyers which states that a conflict of interest exists:
“if there is a substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interests or by the lawyer’s duties to another current client, a former client, or a third person.”
This definition implies that a lawyer’s exercise of independent professional judgment must be preserved lest a conflict situation arise. That seems clear enough. But is it a subjective or objective standard? And how does one gauge whether a risk is “substantial” enough to trigger the potential for conflict? Also, how is the “materially and adversely affected” threshold determined?
I was invited to breakfast the other day by an old friend who is the Managing Director of one of the nation’s most powerful lobbying shops. He has a law degree but never practiced–not in the narrow sense, anyway– opting instead to become a political operative, first at the State level and later at the highest echelons of national politics. He has more juice than a Tropicana plant.
After getting past the family stuff, we talked about business and quickly delved into his method for building “teams” to solve the BIG dollar economic/political/legal challenges of his clients (typically foreign Governments or consortia of multinationals “having issues” with those sovereign entities). I asked how he decides whom to bring in as lawyers and whether he had any “go-to” firms. “I don’t think about law firms when I need lawyers,” he said. “Lawyers are condos; I want a particular unit; I don’t care about the building.” His response was a variation on the old saw, “I engage lawyers, not law firms.” But my powerbroker friend’s comments suggested something more fundamental: even in real “bet the company” engagements, selection of counsel is driven by the lawyer, not the law firm. Put another way, a “trusted adviser” attorney trumps the law firm brand, even—at least for my friend—in “bespoke” situations.
This is not to deny the existence of an elite group of law firms—perhaps 20 or so of the AmLaw 200—who do have a differentiated brand and are often retained because of that brand rather than for a particular lawyer. But even Cravath learned years ago that its brand was trumped when David Boies left to set up his own firm, taking several clients with him. [Read more…]