Thursday, February 19, 2009

Why Law Costs So Much

I have a new case. Week before last, I wrote a letter to the company that my clients are unhappy with. I got a response from a partner in a large, well respected law firm here in Atlanta suggesting that lawyers and clients meet to discuss the issues.

We've Emailed back and forth this week to set up the meeting. All of the Emails from the lawyer copy his partner who bills a tenth of an hour or so to read the Emails.

This isn't earth-shaking law. To my mind, a senior associate with the big firm could handle it. Rather, the firm has "staffed" the case. I'm sure that the partners have assigned a baby associate to do research on the legal issues implicated by the problem. Both partners probably bill in the neighborhood of $350 - 400 an hour. The associate is clicking along at something over $200 an hour.

Both partners will be attending the meeting to be held about 75 miles south of town.

By the time our meeting is over tomorrow, the company we are unhappy with will have spent northward of $5,000.

Then there will be issue analysis memos generated by the firm and a report to the client. They'll probably hire an expert or two to look at some of the technical issues. Say another $10K or so?

At that point the company and the partners will have developed a "strategy" for dealing with the problem, resulting in a mindset that will get in the way of resolving the problem. Suit will be filed and it will wend its way along until it reaches a point that everyone is ready to cut their losses.

They don't teach this part of law in law school.


molly gras said...

Can I print this out and hand it to my 13 y.o. son in the hopes that he can then identify the financial viability of pursuing a potentially lucrative career in law?

My boy, after all, may be most interested in this kind of payout when it comes time to think about long-term career choices (i.e. he likes money!)

FYI - In a few years, the middle offspring of Pos may be calling ...


Dave said...

Somewhere I've gone wrong Molly, the post is a condemnation of my profession. Remind the kid that he starts out as the baby associate working from dawn to past dusk at his computer churning out billable hours to feed the beast of law. Ain't glamorous.

Michael the Fed said...

And you say you couldn't do my job. This is eaxactly why I hated doing outside counsel management.

DaleC said...

If the company is a big enough target, they want big guns on it from day one to help prevent mistakes that can cost big money later. Expensive mistakes have made the billed client immune to the pain of big bills. It's a cost of doing business for them.

Sucks, but in a system full of jackpot juries and plaintiffs looking for an easy buck, I can't say I blame them.

My gut and past experience says to settle the case early before it can metastisize. I'm not a lawyer, bu I have cut a lot of checks to them.

Debo Blue said...

I'm w/Molly G. I'm forwarding this to my nieces in hopes it will send them applying to the nearest law school.

Interesting fact about my life: our church used to teach us that a lawyer was always lying and would never go to heaven.

How many hundred of thousands of us grew up hearing that same message?

The Curmudgeon said...

There can be only one winner in this kind of case... the big Atlanta law firm.

But -- and maybe you can explain this to DaleC -- it sounds like you have a business dispute -- contract related -- no "jackpot juries" there, only businessmen in a rough patch with other businessmen. They need disinterested counsel to step back from the situation and come up with a solution so both sides can move on. But -- no -- the silk stocking firm is more interested in "staffing" than in the interests of its clients.

Good luck.

Dave said...

I wasn't going to do this post; but, I thought that I could make it vague enough and still make the point. I guess I was wrong.

First, Debo, same thing I said to Molly.

Some background for the rest of you about Michael's comment, he spends his life reigning in lawyers whose goal is to squeeze every penny from a case.

My problem is that I don't have a Michael on the other side of this. I think I have a plan to cut them off at the path before they start milking, we'll see.

As to Dale and Curmudgeon, your comments are interesting coming from different viewpoints, a client and a lawyer.

I used to be a partner in a well-respected firm and had a lot of pressure to staff, though we, as law firms go, were fairly low key.

My favorite staffing story was the time that I went to a business that had sued my client to review its documents.

I was put in a big room with a couple of hundred boxes of documents. Sitting across the table from me was a paralegal and a baby associate. They were "monitoring" my review.

Neither smiled when I said that I promised not to steal anything.

An hour or so later I asked them if they needed a bathroom break. Silence. I told them I was going to take one, and asked if it was OK to leave my notebook on the table as I knew they wouldn't look at it; or, we could all leave the room together and promise no one would come back in until we all got back. No smiles.

We resolved to leave and return at the same time.

That same firm, in the same case, had a senior partner, a junior partner and a paralegal attend most depositions. I was handling the case with one of my partners and I kept trying to get him to show up at one of the depositions I was handling to "show the flag." He laughed but refused to play along; and, he wouldn't let me show up when he was doing a deposition.

Back to Dale and Curmudgeon. Dale, it isn't always a good idea to settle early. It is a good idea to hire a lawyer who knows what he or she is doing, does what is necessary and nothing more and bills accordingly, giving you advice that allows you to make the right decision.

Dale and Curmudgeon, if we don't settle, there will be a jury and the possibility (probability from my point of view) of big compensatory and punitive damages. There's still a need for dispassionate advise, even though it won't make Molly's son and Debo's nieces rich.

molly gras said...

Well, that settles that. I guess I'll have to nudge him towards engineering ...

DaleC said...

It isn't always best to settle early and I had a recent slip and fall case where that was proven to be tru. Our liability just keopt getting smaller and smalelr as we learned more and more about the plaintiff.

I hire REALLY good attorneys. That is no place to dick around looking for a bargain, especially in areas like taxation and estate planning. Same goes for hiring acountants and doctors. I don't always hire the most expensive help, but I do try to find the BEST that I can afford.

For what it's worth, my uncle is a member of the GA Bar and my father has his JD. My brother-in-law is an attorney with the SEC (not the sports conference, I have a good story about that one) and father-in-law is a retired Fed judge and JAG. I like and respect attorneys, but completely despise the ambulance chasers and charlatans who eff it up for the respectable ones. It is my opinion that the vast majority of attorneys are ethical and respectable professionals, but damn that minority casues youguys all kinds of pain. Given a small change in events, I would have been one of you.

DaleC said...

Curmudgeon - Ever seen a seemingly small case later blow up in the smart guys faces? I have.

I spent most of my professional life in Alabama and am very sensitive to jury awards, possibly uneccesarily so. A family friend was the attorney with the $ 4.5 Million BMW paint job that went all the way to the SCOTUS. That was a simple dispute over about $ 700 worth of paint work and $ 4000 loss of value. Another family friend is a prominent defense attorney in Alabama. I have worked as an expert witness in vehicle crash cases for the largest firm in the state.

I have seen molehills turn into mountians once they got in front of a jury. I work daily with insurance companies on the total loss automobile side of the game. "Bad faith" makes people quake in their boots and that could be called a contract "dispute".

I am not trying to tell you your business, only that I have seen what I described on an "up close and personal" basis. I was merely offering an explanation from the clients point of view as to why they got all lawyered up (staffed) for no logical reason :-) I agree with Dave that it seems counterproductive and maybe a little goofy, but I understand why.

That said, remember that I like lawyers :-)

DaleC said...

Dave - "if we don't settle, there will be a jury and the possibility (probability from my point of view) of big compensatory and punitive damages."

Two things - First, if I understand you correctly, you're saying that, if it goes to a jury, there is a probability of high awards. That leads me to think that there won't be awards as high if it is settled. As the defendant, my gut would have served me well here, though admittedly not always.

Second - If it has the potential to escalate, I want to be damned sure that everything was handled thoroughly from the beginning so that I can defend myself as effectively as possible from those high awards. That is something a large target is unwilling to risk so they "lawyer up" and get ready for an all out fight. Juicy targets are also usually pretty good at identifying potentially large awards early and acting accordingly.

I don't have the facts of your case, so these are very general and abstract thoughts.

Kvatch said...

I used to have an attorney that was worth every penny of her billing rate. No nonsense; wouldn't 'hold my hand' in delivering her assessments; took on any work I gave her and kept close tabs on the other members of the firm engaged to work on my behalf. Sadly, she left that firm some years ago and exited the profession.

fermicat said...

My first thought upon reading this post was that lawyers have a lot in common with consultants.