Valentine’s Day Edition

There were so many significant events this week worthy of a Risk Tip theme:  The 50th anniversary of the Beatles’ appearance on Ed Sullivan, the US luge medal (not to mention the women’s curling victory), and, of course, Valentine’s Day.  Then I heard that the legendary Sid Caesar died at the age of 91.  A Risk Tip is a perfect way to pay tribute, I thought; certainly, there is no shortage of Sid Caesar video clips.   But what’s the risk management tie-in?  Caesar was not exactly risk averse– just ask Mel Brooks, whom Caesar purportedly dangled out an 18th-floor window in a fit of rage.  Oh well, Valentine’s Day it is.

New relationships are always fraught with complications, particularly when the holidays roll around.  And woe to the couple who start dating right before Valentine’s Day.  Is it too soon for flowers?  Or is it ever too soon for flowers?  Dinner is probably a safe bet, but what about gifts?  If you’ve been going out all of four weeks, is a gift really necessary?  Or does it send the wrong message?  The right answer depends upon the expectations of your significant (or not-so-significant) other.  While I have a pretty good idea about what my wife of 16 years expects on Valentine’s Day, it’s much harder when you are just getting to know someone.  

Starting a relationship with a new client is sort of like starting a relationship with a new boyfriend or girlfriend.  Does the client expect that a team of partners and associates will work on (and bill time to the matter), or does it anticipate that just one or two lawyers will handle the work?  If the client is having a dispute, does it understand the potential consequences and costs involved should litigation arise?    

It is incumbent upon the lawyer to fully appreciate the client’s expectations.  Make sure you know what the client expects at the outset in terms of fees, the scope of work to be performed, and the potential legal consequences of a course of action.  And if those are expectations are unreasonable, it’s not enough to stay quiet; have a conversation before undertaking the matter.  And once the matter starts, be sure to keep the client informed.  Stay in regular contact so the client is aware, in real time, of the work you are doing.  While your new girlfriend may be pleasantly surprised by a bouquet of roses, don’t expect a new client to respond pleasantly when you surprise them with a six-figure bill. 

Keeping these things in mind is the first step to a long and happy relationship.   Just like the couple in the attached clip.  

Now really, did you think I would show some mushy VD clip instead of a Caesar gem?  And if you don’t like it, take it up with this guy. 



Music to Your Ears

What’s the most annoying thing about the practice of law?  You may have a long list, but I bet there’s one thing you on it:  the hold music while you’re waiting for a conference call to start.  I once tried to compose lyrics to go along with our firm’s music, but my efforts looked a lot like those of Jack Nicholson in The Shining.  

Come to think of it, most everything about a conference call is annoying: 

Do you know what else is annoying about conference calls?  Some clients don’t want to pay for them.  Many clients have their own billing guidelines with concerns about intra-firm conferences.  Here is some language from different guidelines that have crossed my desk recently: 

  • Office conferences among one or more attorneys or paralegals in your firm to discuss [Client X] matters should be kept to a minimum.  Generally, numerous office conferences among a partner and one or more associates or paralegals will result in only the partner’s time being credited and the associates’ or paralegals’ time being deleted or adjusted.”
  • [Client Y] will also not pay for internal firm conferences or for associates to attend meetings or hearings for the purpose of “associate development.”  
  • [Client Z] will scrutinize conference calls … and other similar activities in which multiple timekeepers participate. If it is necessary in the considered judgment of the billing partner to have more than one attorney or paralegal participate in an activity, outside counsel should bill for this with discretion and, where the necessity is not compelling or there is any question of the appropriateness of involving multiple timekeepers, obtain the prior approval of [Z] Counsel. [Z] reserves the right to not pay for the time of multiple activity participants when the appropriate discretion is not being applied.

 Then, again, at least some clients prefer them to more expensive alternatives:

  •  Alternatives to travel, such as conference calls, should be used where appropriate. 

So, what to do?  A few suggestions.  As the client relationship lawyer, know what your client expects.  Staff and schedule accordingly.  When you start work on a new matter, ask the relationship lawyer if there are guidelines, and get to know them.  Lastly, if your firm doesn’t have one in place already, develop an internal review process so that someone (other than the relationship lawyer) has a chance to review and raise any concerns whenever a client asks your firm to follow its guidelines.

One Lawyer Deep

Much has and will continue to be written about the redaction error in the Apple-Samsung litigation which resulted in a sanctions order reported in this morning’s news.  For those not following the matter, a law firm associate, “working late one night,” failed to properly redact a document containing sensitive Apple information, which was then circulated to the firm’s client, in violation of a protective order. 

The Court summarized the issues quite nicely:

A junior associate missing one redaction among many in an expert report is not exactly a historical event in the annals of big-ticket patent litigation. Even if regrettable, these things can happen, and almost certainly do happen each and every day. But when such an inadvertent mistake is permitted to go unchecked, unaddressed, and propagated hundreds and hundreds of times by conscious – and indeed strategic – choices by that associate’s firm and client alike, more significant and blameworthy flaws are revealed.

As the sanctions order makes clear, “[f]or the simple error in redaction … the court does not find that sanctions can reasonable be imposed.”  The real concerns were the firm’s process for handling such redactions as well as its conduct after the error was made.

As to the review process, the firm described its mistake as stemming from an approach that was “650 lawyers wide and 1 lawyer deep.”  The court found that, given the efforts by both counsel to prevent disclosures of discovery to the public, “then surely, logically, it would be worth a second, or even a third, round of review before producing it to a competitor corporation, who would know exactly how to exploit it.” 

As to the subsequent actions, the court found that the firm failed to follow the procedures in the protective order to advise opposing counsel immediately once it learned of an inadvertent disclosure.  The court allowed substantial discovery on the issue, with a number of lawyers being deposed.  Based on its review of the record, the court found that at least one lawyer at the firm knew of the issue, and that the firm should have had in place better safeguards for addressing this information.  If no lawyer at the firm “was responsible for knowing what documents had gone out to the client, such that that person would have been aware that the … report had gone out before, that is a flaw for which the firm must be held accountable.”

Luckily for the firm, the court did not impose the most severe sanctions sought, including “an injunction against [their client] … to a ten-year ban [on certain representations],” finding “insufficient evidence that this failure to notify or misuse ultimately implicated any issue in this or any other litigation or negotiation.”  However, the court did award opposing counsel and their counse all costs and fees in pursuing the sanction, as well as other relief.

For now, we don’t know if the order will be appealed or the ultimate cost of this particular sanction.  The firm has reportedly instituted a new redaction policy, requiring a second set of eyes on such things in the future.  But, for now, the case presents an example of how running a case too leanly can pose risks requiring attention.  And, it will create some interesting discussions between lawyers and clients when a client is insisting on efficient staffing at the same time a court is suggesting secondary and tertiary review in a document production.

Merry New Year

As the year comes to a close, we are inundated with articles and news stories about the “Best of 2013”– best videos, best sports moments, best movies, best songs, etc. But asking us to pick the year’s best Risk Tips is a little like asking a parent to pick their favorite child. And at the end of the day (or year) it’s not about which Tip had the best clip, it’s the lessons learned. So, in no particular order, here are some of the takeaways from this year’s Tips:

*Confidentiality: Remember the Harry Potter lawyer who spilled JK Rowling’s alter ego to his wife’s best friend? Rowling’s lawsuit against the firm was settled for an undisclosed amount.
*Dishonesty: Let’s not forget the big firm lawyer who was disciplined for submitting fake expense reports to his firm.
*Scams: No matter how many times we warn people about unsolicited emails from a foreign country, from a legitimate company that checks out, but whose CEO inexplicably uses a gmail account, and having splling mitstakes and not well grmmer, those email scams keep coming.
*Data security: Change passwords often, make them strong, and keep your head (or at least your documents) out of the Clouds.
*Civility: Be nice, even when your adversary calls you a Jerk . . .or when someone maligns the Steve Martin classic.

Ok, who are we kidding; of course it’s about which clip is the best. And while we can’t pick the best Tips of 2013, you, our loyal readers, can. Let us know your top choice.

Lastly, click on the attached for a New Year’s greeting from OGC.

Buyers’ Remorse

In 1981’s Modern Romance, Albert Brooks decides to change his life after his girlfriend leaves him. So he decides to take up running. A slick sales clerk — a brilliant Bob (aka Super Dave Osborne) Einstein — convinces him to buy top dollar gear that he doesn’t really need, so he ends up spending far more than he planned with little to show for it (his running career lasts all of about four seconds).

Focused on trying to win back his girlfriend, Brooks apparently never tried to return his overpriced (and mostly unused) running gear. Unfortunately for lawyers, most clients aren’t preoccupied with girlfriends. Fee disputes between lawyers and clients are on the rise. And even if the time entries are valid and the work justified, disputes can arise where the amount of the bill exceeds, or is out of portion to, the amount involved in the underlying representation.

So here are some tips to help you avoid a billing dispute:

Be clear at the outset of the representation: Many clients, particularly those embarking on a litigation, are eager to for their lawyers to take a no holds-barred approach — that is, until the bills start to show up. It’s best to be clear at the outset what the client should expect in terms of fees and expenses. That said, make clear that any fee estimate is just that — an estimate — not a guaranty or a cap.

Know your client: Is your client a public company or a small family-owned business? Does it have a budget for legal fees or is this its first significant transaction or litigation? Is the amount at stake $1 million or $100 million? All of these factors should be taken into account as you chart a course of action for the representation. While it might be a good idea to travel cross-country to interview a witness in an eight-figure case, it makes little sense to do so when that expense represents a significant percentage of the amount of the dispute.

Communicate: A sure-fire way to invite a billing dispute is to undertake work without your client’s knowledge. Keep your client in the loop and don’t undertake any significant expense without first clearing it.

Look for warning signs: Growing A/R; repeated complaints about bills (and anything else); and unresponsive clients are all signs that a billing dispute is on the horizon.

If you follow these tips, both you and your client will be happier and you just might be able to avoid a billing dispute. After all, as Albert Brooks demonstrated in another movie, conversations about refunds never go well.

Trivia question — What do Albert Brooks and Bob “Super Dave” Einstein have in common? You can find the answer here.

Happy and Peppy

I’m a big fan of The Odd Couple — the play, movie and, of course, the TV show. Many years ago I had the pleasure of seeing Tony Randall and Jack Klugman perform the play live (come by my office and check out the autographed playbill).

In my view, the best moments of the show are not when Oscar and Felix fight, but when they try work together to achieve something. Despite their multiple differences — or perhaps because of them — the result is far better, and funnier, than if either had tried it on his own. Like when Oscar was dating singer (and erstwhile Gong Show judge) Jaye P. Morgan, prompting Felix to try his hand at songwriting. On his own, the results were less than stellar. When he solicited Oscar’s assistance, a hit was born.

Lawyers too are better served getting input from their colleagues rather than trying to go it alone. As smart as we are, our colleagues bring different, and usually helpful, perspectives to an issue. Many firms in fact require consultation with another attorney under certain circumstances, such as before filing a complaint or other claim, rendering a formal opinion, or proceeding to trial.

Certainly, these shouldn’t be the only instances when you consult with your colleagues. So before you file your next motion, or send a memo to a client, ask one of your colleagues to take a look. The final work product will invariably be stronger. And that should make you, and your clients, Happy and Peppy.

The Spanish Prisoner

Law firms remain a target of scams that lack the twists and turns of a David Mamet story, often coming in the guise of a prospective client.  A common con starts with an unsolicited email, often from overseas, seeking assistance in collecting one or more past due accounts.  The prospect may look quite legitimate, including a website and other contact information that appears to check out.  (Some scams, however, are easier to sniff out, leading to the maxim:  “Real CEOs don’t use Gmail.”)  Once the engagement is confirmed, the client then comes forward with the happy news that the debtor will pay, and all the firm has to do is cash the check and pay out the balance (less the attorney’s large fee for doing not a lot of work) to the client.  At that point — surprise, surprise — it turns out the check is either no good or stolen, and the firm is left holding the bag, so to speak.  Lesson:  Be cautious and perform due diligence on all unknown clients and “too good to be true” opportunities.

The Sound and the Fury

At one point in his varied career, William Faulkner landed the job of Postmaster of the University of Mississippi.  He didn’t like it much.  He summed up his feelings in the following letter to his employer:

As long as I live under the capitalistic system, I expect to have my life influenced by the demands of moneyed people. But I will be damned if I propose to be at the beck and call of every itinerant scoundrel who has two cents to invest in a postage stamp.

This, sir, is my resignation.

What does this have to do with risk?  Well, just like frustrated postal clerks, clients can quit us just as easily.  A 2012 Acritas survey of a couple of thousand General Counsel in 45 countries, revealed that some 30% ended a relationship with an outside lawyer in the past year.  Many did so out of frustration:

  • “They were doing a bad job: no results and a lot of invoices.”
  • “Poor service. Lots of delay. When challenged, they were completely up front and just said [they] don’t have enough resources, which is pretty astonishing for an international law firm.”
  • “It has to do with quality and price. We paid thirty or forty thousand euros, more or less for nothing. So, they had to go.”
  • “The main client relationship [partner] left the firm. I find that often when partners leave, those firms neglect to contact clients to say we still want your business and we have signed a new relationship manager. They tend not to correspond with you. Yet the partner who leaves always contacts you from the new firm.”
  • “There was a severe lack of relationship between what the bills were and what the value delivered was.”

As to Faulker, he went on to do big things, including writing the screenplays for two of my favorite movies, “Mildred Pierce” (1945) and “The Big Sleep” (1946), the latter being one of the greatest movies of all time that makes absolutely no sense.  Oh, and we also think he wrote a book or two.  In his writing career, it appears that Faulkner was allowed to observe a dress code less rigorous than that required of a Postmaster: 

William Faulkner

As to the resignation letter, don’t believe me?  It’s on the internet so it must be true.

Fathers and Sons

Wouldn’t it be great if our children always took our advice? We try to steer them in the right direction, but sometimes they insist on doing things their own way. Like my 14-year old son who, despite the obvious superiority of Star Trek in the sci-fi realm, thinks Lord of the Rings ranks. Oh, rebellious youth.

We don’t always see eye-to-eye with clients either. Although we (like parents) can counsel them on strategy, they (like kids of a certain age) often get the last word. Model Rule 1.2 provides that, generally, “a lawyer shall abide by a client’s decisions concerning the objective of representation.” Of course, a lawyer may not follow a client’s instruction (and must withdraw) if it would violate a law or rule of professional conduct. But beyond that, we don’t get to impose our will on clients.

That said, if a client chooses to disregard our advice, it’s a good idea to confirm that in writing. That way, there’s no confusion over whose decision it was if things don’t go as planned. And if the client persists in ignoring our advice, or there is a fundamental disagreement over how the matter should be handled, we may need to consider withdrawal.

Thankfully, we can’t withdraw from our fatherly (or motherly) roles. And while my son and I still don’t agree on Trek v. Rings, we’ve been working to bridge the gap. Imagine my delight when I discovered (courtesy of one of our partners) the perfect intersection of our interests: a music video of Mr. Spock singing the Ballad of Bilbo Baggins. Despite its freakishness (actually, because of it), it was the high point of our day (if not the low point of Leonard Nimoy’s career). Cue the Vulcan harp…