It was the wrong thread

[Penske_Account]

Originally posted by sebastian_dangerfield
How do you get around the argument that banking's not a traditionally piecework business like law, and that, in the same way you wouldn't pay an accountant with an equity slice, why would you do so for a lawyer?

Tell the clients that the alternative is that they can have the bankers or the brokers draft/negotiate the documents and give the opinions and with the banker's/broker's malpractice insurance underlying the risk of error......

[sebastian_dangerfield]

Originally posted by Penske_Account
Tell the clients that the alternative is that they can have the bankers or the brokers draft/negotiate the documents and give the opinions and with the banker's/broker's malpractice insurance underlying the risk of error......

Touche.

But then, they just might. The problem with law is the skillset is so fungible. There are only so many bankers. And lawyers will kill their own industry happily. If one firm did what you suggest, hungrier lower level firms would jump in and offer to do the work at a lower hourly fee. A bidding war to see who'd offer the lowest fee would erupt. But then, that's the natural progression of all law in the next 30 years anyway, isn't it...

[Penske_Account]

Originally posted by sebastian_dangerfield
Touche.

But then, they just might. The problem with law is the skillset is so fungible. There are only so many bankers. And lawyers will kill their own industry happily. If one firm did what you suggest, hungrier lower level firms would jump in and offer to do the work at a lower hourly fee. A bidding war to see who'd offer the lowest fee would erupt. But then, that's the natural progression of all law in the next 30 years anyway, isn't it...

Let the games begin.......

[sebastian_dangerfield]

Originally posted by Penske_Account
Let the games begin.......

"Let" is the wrong word. They are and will. Technology and market forces naturally decrease the value of every skillset (except pro sports). If we can knock doctors' salaries down and television actors' salaries are capped by the cheaper competition of reality teleivision, why not lawyers?

I think that cat from Cisco was was dead on. The services need to be bundled and capped more, or, for the few with vision, made into/coupled with contingency pieces. Hell, even consultants, the King Parasites of all the corporate cuttlefish, are selling bundled packages.

[Mmmm, Burger (C.J.)]

Originally posted by sebastian_dangerfield
Your analogy applies only in the context of litigation in which you represent the defendant. In a plaintiff's case or a deal, Penske's right - the only thing - from the lawyer's side - precluding an equity compensation structure is the lawyer's risk aversion.

You could do it defense side if you could agree on a maximum loss. Problem is most claims are way overstated, so it's not the amount in the complaint. But you could certainly imagine figuring that a company's max exposure is, say $10m, and your compensation is 10% of every dollar below that amount the defendant ultimately pays, whether by settlement or judgment. Of course, there are two big problems--first is teh alignment of incentives, although that's no different than contingency plaintiffs. The second is if it's a straight corporate dispute, and the other side isn't on that billing arrangement--they'll try to bleed the firm even more with discovery requests, etc. Once both sides are paying that way, though, litigation costs should go way down.

[Penske_Account]

Originally posted by sebastian_dangerfield
"Let" is the wrong word. They are and will. Technology and market forces naturally decrease the value of every skillset (except pro sports). If we can knock doctors' salaries down and television actors' salaries are capped by the cheaper competition of reality teleivision, why not lawyers?

I think that cat from Cisco was was dead on. The services need to be bundled and capped more, or, for the few with vision, made into/coupled with contingency pieces. Hell, even consultants, the King Parasites of all the corporate cuttlefish, are selling bundled packages.

Right on!

[sebastian_dangerfield]

Originally posted by Mmmm, Burger (C.J.)
You could do it defense side if you could agree on a maximum loss. Problem is most claims are way overstated, so it's not the amount in the complaint. But you could certainly imagine figuring that a company's max exposure is, say $10m, and your compensation is 10% of every dollar below that amount the defendant ultimately pays, whether by settlement or judgment. Of course, there are two big problems--first is teh alignment of incentives, although that's no different than contingency plaintiffs. The second is if it's a straight corporate dispute, and the other side isn't on that billing arrangement--they'll try to bleed the firm even more with discovery requests, etc. Once both sides are paying that way, though, litigation costs should go way down.

That is doable, but its awfully tricky to implement in the 30-60 days in which a firm has to answer a complaint.

Re this:

"if it's a straight corporate dispute, and the other side isn't on that billing arrangement--they'll try to bleed the firm even more with discovery requests, etc."

Such a system would on its face appear to cut costs, but you have to consider that firms don't view labor as fatiguable. They would continue to wallpaper each other at breathtaking rates with increased pain on associates. I've felt this first hand. A contingency lawyer doesn't give a shit how much work he or she throws onto an associate. It's not even factored into his or her decision making. Affix that mindset to the billable firm's "there's never too much work" and you have a recipe for amazing turnover. Turnover in billable firms is no big deal because the money's guaranteed. Turnover in contingency work screws up the bottom line because it has an immediate detrimental effect on the posture and prosecution of the case. I think trying to turn Old Grey Suits into new age risk takers is possible, but "the process of weeding out" as the model evolves is going to ruin many, many firms.

But then, what's the option? If the model needs to change, pain's a necessity, right?

ETA: Is "the process of weeding out" a Black Flag reference, or did Black Flag steal it from someone else?

[Mmmm, Burger (C.J.)]

Originally posted by sebastian_dangerfield

Such a system would on its face appear to cut costs, but you have to consider that firms don't view labor as fatiguable. They would continue to wallpaper each other at breathtaking rates with increased pain on associates. I've felt this first hand. A contingency lawyer doesn't give a shit how much work he or she throws onto an associate. It's not even factored into his or her decision making.

I'm sure they'd keep spitting out BS paper, but both sides would have an incentive to cut back. If the standard model was known to be a contingency rate, after serving 8 billion discovery requests to each other, the sides woudl get together and figure out what they really need and how to do it at low cost. Sure, in some cases both sides would say fuck you and the costs would be high. But I'm guessing that in a lot of cases, they would work out the disputes a lot more efficiently than they do now.

Re complaint, you're right. But it's always possible to negotiate a fee arrangement after that. You could also pay a fixed fee to answer the complaint, plus another fixed fee for a MTD, and then negotiate after that over the fee arrangement through judgment or settlement.

[Hank Chinaski]

Originally posted by Mmmm, Burger (C.J.)
I'm sure they'd keep spitting out BS paper, but both sides would have an incentive to cut back. If the standard model was known to be a contingency rate, after serving 8 billion discovery requests to each other, the sides woudl get together and figure out what they really need and how to do it at low cost. Sure, in some cases both sides would say fuck you and the costs would be high. But I'm guessing that in a lot of cases, they would work out the disputes a lot more efficiently than they do now.

Re complaint, you're right. But it's always possible to negotiate a fee arrangement after that. You could also pay a fixed fee to answer the complaint, plus another fixed fee for a MTD, and then negotiate after that over the fee arrangement through judgment or settlement.

my old biglaw had 2 agreements in place that I have never heard repeated:

For X million per year it defended all environmental actions.

For Y million per year it handled all business of a major bank. This didn't include P cases or mergers.

The firm looked at it as "the piston effect." you hope that enough of the files are slowing down when others are ramping up.

It required 2 things-

1 Major company with enormous number of files. It doesn't work for defendng the 2 cases some small manufacturer may have.

2 there needs to be absolute trust between firm and client. When the firm says "you should settle the Jones file for the offered $250K" the firm should know the company won't say no because firm has to handle the case for free, and flipside, the company needs to know the firm would not recommend it settle unless it made sense.

It actually worked well on a macro level for the firm. The problem was assigning credit for the factotems pushing the cases. People handling a defense would be rationed by the man an amount of credit they can get from the file, but they still had to handle the file.

"Sebby, here is the Jones bad check defense file. We estimate that you will need $12K for the first quarter on the file!" From everything I heard the man never rationed enough BECAUSE at the end of the year the remaining non-rationed money was something the Man coould claim he brought in all on his own Ala contingency.

[sebastian_dangerfield]

Originally posted by Hank Chinaski
1 Major company with enormous number of files. It doesn't work for defendng the 2 cases some small manufacturer may have.

2 there needs to be absolute trust between firm and client. When the firm says "you should settle the Jones file for the offered $250K" the firm should know the company won't say no because firm has to handle the case for free, and flipside, the company needs to know the firm would not recommend it settle unless it made sense.

It actually worked well on a macro level for the firm. The problem was assigning credit for the factotems pushing the cases. People handling a defense would be rationed by the man an amount of credit they can get from the file, but they still had to handle the file.

I think, as the cat from Cisco noted, #1 is already being utilized by big, truly national firms who have the luxury of a bullpen on Fortune 100 companies. The problem for small comapnies is that they will always get raped by the regionals who can't provide them the bulk discount of the nationals. But that's a two way street. Regionals have to give massive haircuts on their bills for mid-sized and small companies.

Re # 2, you don't get any real "credit" for anything but origination anymore, so I don't see what the issue with that is. Since the work is bulk, assuming reasonable oversight of associates and service partners is implemented, the company would look to the netted aggregate result of all the disparate actions taken together. If the result is an amount under the exposure of the cases in aggregate, then the firm was a good investment. If the firm's a good investment, who cares if on a micro level some cases settled for more than they should have. As to who in the firm gets "soft credit" for working one of those files better than someone else, I guess you could give that person a higher bonus.*

*I have always been baffled by "soft" credit. I brought in a few clients during my career and expected, where we billed them a decent amount, to see a piece of the action. I also serviced clients brought in by other lawyers, including the annoyance of taking them out for drinks, etc... In the former, I expected real cash; in the latter, I kind of hinted at my worth, but didn;t expect much because, well, they weren't my clients, and I really didn't feel like I had much basis to ask for anything (even where I realized substantial settlements running those clients' cases). I don't view "soft credit" as a continuing relevant measure in the future of the legal business. I'd like to be proven wrong.

But then, I don't really give a shit anymore (other than as this sort of academic exercise)...

[Hank Chinaski]

Originally posted by sebastian_dangerfield
I think, as the cat from Cisco noted, #1 is already being utilized by big, truly national firms who have the luxury of a bullpen on Fortune 100 companies. The problem for small comapnies is that they will always get raped by the regionals who can't provide them the bulk discount of the nationals. But that's a two way street. Regionals have to give massive haircuts on their bills for mid-sized and small companies.

Re # 2, you don't get any real "credit" for anything but origination anymore, so I don't see what the issue with that is. Since the work is bulk, assuming reasonable oversight of associates and service partners is implemented, the company would look to the netted aggregate result of all the disparate actions taken together. If the result is an amount under the exposure of the cases in aggregate, then the firm was a good investment. If the firm's a good investment, who cares if on a micro level some cases settled for more than they should have. As to who in the firm gets "soft credit" for working one of those files better than someone else, I guess you could give that person a higher bonus.*

*I have always been baffled by "soft" credit. I brought in a few clients during my career and expected, where we billed them a decent amount, to see a piece of the action. I also serviced clients brought in by other lawyers, including the annoyance of taking them out for drinks, etc... In the former, I expected real cash; in the latter, I kind of hinted at my worth, but didn;t expect much because, well, they weren't my clients, and I really didn't feel like I had much basis to ask for anything (even where I realized substantial settlements running those clients' cases). I don't view "soft credit" as a continuing relevant measure in the future of the legal business. I'd like to be proven wrong.

But then, I don't really give a shit anymore (other than as this sort of academic exercise)...

I don't think Nationals are giving discounts.

As to "point 2" the "credit" the associates were getting fuck on is how much they billed. Billable hourly minimums- remember?- and they were getting well fuck with this model.

[sebastian_dangerfield]

Originally posted by Hank Chinaski
I don't think Nationals are giving discounts.

As to "point 2" the "credit" the associates were getting fuck on is how much they billed. Billable hourly minimums- remember?- and they were getting well fuck with this model.

Sounds to me like they are. Anytime you bulk the service, you lose what you could have stolen with billable hours.

Re associates getting fucked, we could debate how it can be cured all day. It won't be because there's no incentive for the people at the top to fix it when they can just throw cash at it every once in a while, which acts as a short term salve and creates a market of eager law students to keep the system going.

[ltl/fb]

Originally posted by Hank Chinaski
I don't think Nationals are giving discounts.

As to "point 2" the "credit" the associates were getting fuck on is how much they billed. Billable hourly minimums- remember?- and they were getting well fuck with this model.

Discounts on what? Billing rates? Hell yeah they are, if you're a big enough client. If the discount was about something else, I apologize for stating the obvious.

[Hank Chinaski]

Originally posted by ltl/fb
Discounts on what? Billing rates? Hell yeah they are, if you're a big enough client. If the discount was about something else, I apologize for stating the obvious.

cite please. firm name and describe "discount. "80% of our normal rate?" If I read the article would i be able to answer these questions?

[Hank Chinaski]

Originally posted by Replaced_Texan
The Rule Against Perpetuities in action!

"Established in 1900, the Campbell Estate is a for-profit trust set up by Scottish carpenter James Campbell to benefit his heirs. Its holdings were valued at $3 million when it was founded."

my father was a part-Scottish carpenter but he never had $3,000,000. what is up with that?