One of this blog’s goals is to help business owners and managers understand why their lawyers act the way they do.

My question in this two-part series: Why don’t more law firms treat the businesses that pay their bills like customers?

In my post a week ago I quoted Forbes’ legal commentator Mark Cohen:

“There is unambiguous evidence of a significant and persistent disconnect between law firms and their clients. Only 25% of corporate legal buyers said they would recommend their ‘go-to’ law firm.”

A business owner or manager might ask: Why can’t law firms treat my business with the same care and attention with which Southwest Airlines, Starbucks, the Cleveland Clinic — or my local dry cleaners — treats me?

Law firms are rarely managed the way that you run your business. To move toward a relationship with them that better serves your interests, it would help to understand how certain perverse incentives in the law firm world work.

The way law firms handle internal issues — like the two addressed below — creates perverse incentives. And those perverse incentives make law firm leadership more responsive to its partners — its owners — than to the organizations who pay their fees.

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In posing the above question last Monday, lawyer and law firm consultant Bruce MacEwen quoted Peter Drucker:

“There is only one valid definition of a business purpose: to create a customer.”

Having consulted to law firms on their business strategies — MacEwen argued that law firms’ “real clients” too often consist of the lawyers who own those firms — and not the organizations who pay those law firms their fees:

“… The firm exists to serve the preferences of its lawyers.”

… 

In asking if a law firm really focuses on your business as its true customer — as its client — let’s start by looking at a high-sophistication, high-consequence professional services organization that truly focuses on its customers — its clients.

I describe the following with my wife’s permission.

His alert reading of a routine blood test prompted my wife’s internist to identify a specific parathyroid disorder.

He suggested three medical centers for the required surgery: The two most prominent university health systems in Chicago — and Tampa General Hospital.

Frequency of the required surgery:

  • For each of the two university health systems — fewer than 10 per month.
  • For Tampa General Hospital / Norman Parathyroid Center — 170 to 180 per month.  

We bought plane tickets for Tampa.

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My most recent post introduced an explanation for the question posed above:

The legal profession is an industry managed by committee. There are no outside boards of directors to step in with an “outside view” when things aren’t working. 

Law firms are run by — and answerable to — no one other than their own lawyers. The law firm alumni who populate in-house counsel departments have never known any other approach — so they’re usually OK with this.

Of course, a corporation’s senior officers can express displeasure with their attorneys inside and outside of the business. But — with good reason — they are wary of stepping in and second-guessing lawyers steeped in legal rules and institutions of which those senior officers have only a modest understanding.

Free of an “outside view” whose forceful application might bring about necessary changes — business attorneys persist in a status quo of mediocre service delivery — as noted in the most recent post:

“There is unambiguous evidence of a significant and persistent disconnect between law firms and their clients. Only 25% of corporate legal buyers said they would recommend their ‘go-to’ law firm.”

But this “outside view” is what empowers human institutions to make painful-but-necessary changes when their outside environment threatens their effectiveness.

Early this year I posted about Andy Grove of Intel:

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On my drive to the office yesterday, I learned that the Chicago Blackhawks had fired Joel Quenneville, their head coach.

Three Stanley Cups, second winningest among 38 head coaches since its 1926 founding, best playoff record in club history. Replaced by 33-year-old Jeremy Colliton — former NHL and AHL star — current head coach of the Rockford IceHogs.

Lots of chatter over the merits. Great move. Terrible move.

But there’s no question about exactly who it was who’d made that decision: Not “Coach Q” himself.

Someone saw a problem with the team’s status quo — and made a decisive move in response.

Last month GE ousted John Flannery as its CEO due to missed profit and cash targets.

And they replaced him with an executive from outside the company — a move not seen at GE for decades — if ever.

As with the Chicago Blackhawks, Mr. Flannery did not oust himself. GE’s board did that.

Someone saw a problem with the company’s status quo — and made a decisive move in response.

When the men and women at the top of an organization see something wrong with the way that it’s coping with external realities — like customer satisfaction or shareholder support — they tend to make decisive moves like the Blackhawks or GE.

Law firms don’t respond that way.  

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In Part 1 of this two-part series of posts, I described — how “judges’ personal foibles and idiosyncrasies — I mean their distinctive, well-informed, jurisprudentially ingenious perspectives — can drive litigation outcomes more than any objective view of the law or evidence would seem to warrant”. 

From there I compared the relatively new (circa 2006) legal analytics technology to a courtroom grapevine that colleagues and I used in the Manhattan District Attorney’s office in the 1980s to ascertain such personal foibles and idiosyncrasies when our case was assigned to a particular judge for trial.

By this time legal analytics is old news — at least among the largest law firms and for specific categories of major business litigation. But recently this technology has moved beyond just big cities and elite law firms to Main Street and to small law firms.

Witness the example of Gavelytics’ announcement a few weeks ago.

Gavelytics — the legal analytics company — announced a new partnership with a company called “CourtCall”. In my own courtroom experience, CourtCall has functioned as a conference call service — just that this one involves judges and is deemed a formal court appearance for the participants (there’s a video offering feature too apparently).

My first experience with CourtCall came when I had a case in a small city. Until then, my experiences doing conference calls with judges and lawyers — in place of an actual visit to the court — had been confined to the well-equipped federal courts, who have their own, ample facilities for such things.

The fact that Gavelytics has partnered with CourtCall tells me that this legal analytics offering is not confined to big cities and elite law firms. It’s now coming to small cities and small law firms.

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In a recent post I wrote that judges’ personal foibles and idiosyncrasies — I mean their distinctive, well-informed, jurisprudentially ingenious perspectives — can drive litigation outcomes more than any objective view of the law or evidence would seem to warrant:

“My introduction to this came when I was a prosecutor in Manhattan. When my colleagues and I brought a felony case we knew all of the personalities among the judges on the trial court to whom that case might be assigned.

“And our prosecutors’ grapevine functioned well. We had either firsthand experience — or readily available, reliable accounts of a professional colleague — to inform the way we argued law or handled evidence before any particular judge.

“Some judges tended to disbelieve police testimony. Others would never impose a greater sentence than the law absolutely required. Some were meticulous on evidentiary objections. Others were relatively loose on such rulings. Some were temperamental. Others were reasonable.

“Learning the judge’s personal idiosyncrasies was always my first order of business when I was assigned to a particular judge for trial.”

This is the outlook of every lawyer assigned to try a case before a particular judge: Who is this person who’ll be calling the shots on my case, and how have they handled cases like the one I have before them now?

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In this fourth post I address the ultimate “human factor” in the law: All legal advice and representation comes to business owners and executives through attorneys.

You see, attorneys are people (fill in your own lawyer joke here).

On my first visit to Paris I found myself at dinner with Dr. H. — a family friend and Princeton PhD in physics — a senior official with the Paris-based Nuclear Energy Agency of the Organization for Economic Cooperation and Development (OECD). He peppered me — a newly minted lawyer with a New York firm — with questions about my work.

“You see, Dr. H., the legal system is riddled with subjectivity. It’s all about opinions — of judges, of regulators, of legislators, of disputing attorneys, of lay people acting as jurors.

“Unlike your discipline — there’s no empirical test by which to evaluate whether a judgment is valid or bogus. It’s nothing like nuclear physics, where a consistent scientific focus guaranties objectivity.”

[Cut me some slack here. I was 26. I had everything pretty much figured out, and saw everything in black and white. As I aged, I came to know less and less, until I became the dumb guy whom my kids will tell you they met upon their arrival in the world a few years later.]

Dr. H. (patiently) replied:

“Joel, you might be surprised at how little ‘objectivity’ there is in our field.

“My French colleagues will tell you about the need for a robust nuclear energy as the basis for a strong economy. They’ll minimize operational hazards.

“While my German colleagues will emphasize the dangers of nuclear energy — though their country maintains its own nuclear plants. But you’ll wonder if you’re talking about the same industry as the French have described to you.

Despite the nuclear industry’s empirical and scientific roots — what you’ll hear about it depends largely on who it is you’re talking with.”

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In the third of this four-part series, I address another situation in which the legal system’s subjective and arbitrary character constrains your lawyer from answering “yes” or “no” to your questions.

Consider the following circumstance:

A judge’s personal idiosyncrasies distinctive, well-informed judgments may drive the outcome more than an objective view of the law or evidence.

My own introduction to this came when I was a prosecutor in Manhattan. When my colleagues and I brought a felony case we — collectively — knew all of the personalities among the judges on the trial court to whom that case might be assigned.

And our prosecutors’ grapevine functioned well. We each had either firsthand experience — or readily available, reliable accounts of a professional colleague — to inform the way we argued law or handled evidence before any particular judge.

Some judges tended to disbelieve police testimony. Others would never impose a greater sentence than the law absolutely required. Some were meticulous on evidentiary objections. Others were relatively loose on such rulings. Some were temperamental. Others were reasonable.

Learning the judge’s personal idiosyncrasies was always my first order of business when I was assigned to a particular judge for trial.

In the last few years lawyers and code-writers have begun to create — via software — what my prosecutor colleagues and I had by word-of-mouth.

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One of this blog’s goals is to help business owners and executives to make better management decisions through a practical understanding of how the law works.

This post is the second in a four-part series in which I explain how the legal system can prevent lawyers from giving a “yes” or “no” answer to questions about whether or not a particular management decision will create legal problems.

Because the legal system is based on human decision-making — while scientific “laws” are not.

Consider the following circumstance:

A higher court overrules a lower court, and the lower court then throws a judicial tantrum and refuses to follow the higher court’s holding offers an argument for why it need not abide by the higher court’s ruling.

In Kindred Nursing Centers, L.P. v. Clark, decided May 15, 2017, the U.S. Supreme Court — reversed and vacated the judgment of the Kentucky Supreme Court — in which the Kentucky Supreme Court had refused to enforce the parties’ agreement to send any disputes to arbitration — rather than have them handled by a court.

In overturning the Kentucky Supreme Court’s judgment — 7-to-1 — the U.S. Supreme Court had ruled:

“The Federal Arbitration Act … preempts [makes invalid] any state rule discriminating on its face against arbitration … And … also displaces any rule that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.”

Plain English: We’re telling all lower courts to enforce arbitration provisions according to their terms — just as they would any other term in a contract — because the Federal Arbitration Act says they have to do so.

Then the U.S. Supreme Court sent the case back to the Kentucky Supreme Court to do just that.

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Thus began an October 15 article in “Above the Law” — one of the leading news websites directed at lawyers — particularly lawyers employed by law firms as “associates”.

Under the headline “Biglaw Firm Makes It That Much Harder to Get Your Bonus”, here’s the complete text of the first paragraph:

“As we enter the home stretch to make billable hour targets in advance of bonus season, one firm is changing the ground rules on its associates and robbing them of a small but significant chunk of time that they’ve always been able to count toward their 2100 hour minimum.”

Quite appropriately the reporter focuses on what this means for specific interests of the law firm associates who are his readers.

But for a business lawyer concerned with managing a company’s legal affairs, what jumps out is something else. This is a timely reminder of the cockroach-like survival of the billable hour — and of its business model corollary: The pursuit of “associate leverage”.  

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