(thanks to New Yorker)
Showing posts with label lawyers. Show all posts
Showing posts with label lawyers. Show all posts
Monday, 10 September 2012
Wednesday, 29 August 2012
ReInvent(ing) Law
I've been struck by two contrary views on legal education recently. The first is by Matt Leichter on the inflexibility of the law degree. The second is an announcement by Michigan State University College of Law had received a $150,000 grant to support its new ReInvent Law Laboratory from the Kauffman Foundation.
Leichter, as creator of The Law School Tuition Bubble, is as you would imagine more dystopian in his view of legal education. (I agree with much of what he says in Bubble.) The gist of his American Lawyer piece is that the versatility of the JD degree is a misnomer for law graduates not being able to find jobs. Because the ABA convinced states to accept its monopoly over accrediting law schools the purpose of law school was to train lawyers for law jobs. Moving into other careers, ancillary or otherwise, was accidental.
It has been recognized from Max Weber onwards that law has been one of the most, if not the most, transferable and portable of educations and skills around. More so than engineering (but compare China) or administration (compare France). Political scientists have demonstrated the clear predominance of lawyers in legislatures at both state and federal levels. And 25 of the 43 presidents of the United States were lawyers.
For Leichter the luxury of latitude is now too expensive and so law degrees must be of single purpose. I think he is doing law and himself an injustice.
While legal education is in crisis, there are bright areas where teachers and scholars are trying to reinvent law and legal education in ways that don't detract from its purpose (read Karl Llewellyn on "law jobs"), but augment and expand its remit.
ReInvent Law is one of these explorations. It takes the idea of collaboration seriously and that lawyers can learn from other disciplines and practice. ReInvent Law also wants to eradicate the essential conservatism of law by introducing ideas of entrepreneurialism. The founders, Renee Knake and Dan Katz, have of course spent time in the UK and are acquainted with the new entrepreneurialism of legal services here. The expansion of Alternative Business Structures and online provision of legal services, to mention two, inform their course on Entrepreneurial Lawyering.
It was the success of LawTechCamp London 2012 that underpinned ReInvent Law. (And by the way three students received job offers at that LawTechCamp, all in diverse legal ventures.)
ReInvent Law is the indicator of the way things are going or ought to go in legal education, especially if it is to drag itself out of the morass it's in. It builds on the success of Miami's Law Without Walls and Temple's LawMeets.
There are high barriers to overcome, the conservatism of law and lawyers, the move to interdisciplinarity, and the readiness of the market to accept these new ideas. In some ways programs like ReInvent Law are pushing at opening doors. We know that law firms aren't looking for just highly-trained technical lawyers: they want people who can think about business, clients as well as law. These programs drive to the core of this thinking. Neither LawMeets nor ReInvent Law would have received the grants they attracted if this weren't so.
Yet they are still on the edge of law and we need to drag them to the centre.
Tuesday, 17 July 2012
Lawyers' Ethics in Action....
Back to the real world after the International Legal Ethics Conference V in Banff.
Sunday, 1 July 2012
LawTechCamp London 2012
Last Friday, 29 June 2012, in central London we held the first LawTechCamp in London. And it was a great success--we're already thinking about next year's camp.
Robert Richards has put together a great resource on the LawTechCamp London at Legal Informatics Blog which includes presentations, archived tweets, and links to other posts on LawTechCamp. My friend Legal Aware has some good posts with photos here and here.
If you want to get a real flavour of the event, watch Michael Bossone's video poem, Push, in pecha kucha style.
Terrific, isn't it.....
Tuesday, 6 March 2012
Becoming a Cosmopolitan Lawyer
Peter Lederer and I have revised our paper, "Becoming a Cosmopolitan Lawyer". It's available at SSRN here.
The paper is based on extensive interviews that Peter and I have done over a few years. It is presented as an oral history--rather different to anything I've done before.
Comments most welcome.
Wednesday, 29 February 2012
What Is Fitness for Purpose?
These are becoming heady days for the legal profession, or rather, I should say "authorized legal services providers" as we may well see lawyers as we've known them become a minority group. The last two months have seen all kinds of new ventures starting under the new ABS regime--BT Claims, Riverview Law, Co-operative Legal Services, Legal365.com, Rocket Lawyer, Slater & Gordon (taking over Russell Jones & Walker)--to name a few.
Today the Legal Services Board and the Legal Services Institute held the first in a series of seminars on "Education and Training: Getting Fit for 2012 Session 1: The Removal of Barriers". Stephen Mayson introduced the seminar by telling the audience how rapidly the legal services market was changing and his list of the last two months' changes was far more extensive than mine. As he put it, "We are seeing the most profound change in the separation of the legal profession from the legal services market. The two are no longer coterminous." The result is that legal education and training (leaving aside the joke that is continuing professional development) are no longer fully fit for purpose.
The speakers, in addition to Stephen, included David Edmonds (chairman of the LSB), Stephen Denyer (global markets partner at Allen & Overy), and Rosemary Evans (legal education consultant). Rather than describe what each speaker said, I prefer to draw out two of the themes: globalization and regulatory standards. Let me say that after this group had said their pieces, the discussion was intense and extensive. We could have easily gone beyond the allotted two hours.
Globalization: There was clear recognition that English law and lawyers are firmly situated in a global legal market. Stephen Denyer pointed out how within A&O only 40% of the lawyers were UK-qualified. Furthermore, he now works "with hundreds of lawyers who are dually-qualified, and scores who are triply-qualified."
It's clear the English legal qualification now suffers in comparison with the New York Bar qualification. It is the de facto global legal qualification. As Nigel Savage and I have argued before, the structure of English legal qualifications--degree, vocational learning, training contract--impedes the route to qualification rather than open it up. I've tried to put this in as stark terms as I can (based on a report I did for the LSB on the global context of legal education).
It is not that UK legal education is bad per se but rather we need to redesign it for a multiplex world and legal marketplace.
Regulatory Standards: If legal education and training are to be redesigned what would they look like and who would be the recipients? Given the range of potential providers of legal services, we can't necessarily rely on a single entry route. We belong in the polycentric camp--many paths.
John Randall, one of the authors of the Legal Services Institute paper, "Reforming Legal Education", remarked that the qualification is important because that's where regulation starts. Rosemary Evans emphasized this by arguing for legal education to encompass more work-based experience and be expansive.
This next point is going to be hard for conventional lawyers to grasp. It's that we have moved to outcomes-focussed measures in our regulatory schemas. So if we accept that there are many paths into the legal services market, they must have the same outcomes measures and there must be mutual recognition. Much of the legal profession and also legal education has relied on status measures (often implicit) rather than objective measurable criteria. Changing this way requires much soul-searching for parts of the legal profession because, to go back to the start, they are no longer the only constituents of the legal services market.
My final two thoughts on this are that the European Commission is presently researching the operation of the Establishment Directive with a view to moving away from vertical differentiation between professions to a horizontal measure that will group all professions (eg, lawyers, hairdressers, engineers) together as cognate groups. Lawyers will no longer be a special group.
The US model of legal education, flawed as it is, is enjoying a remarkable export market to civil law countries and those that used to follow the English model.
Now one reason for this seminar series is to inform the Legal Education and Training Review and to them I extend my deepest sympathies as they plunge into this quagmire.
Friday, 6 January 2012
PI(I)GS Might Fly!
The Troika is upsetting big bar associations because it is demanding the liberalization of professions in countries it is bailing out. Key complainers are the American Bar Association and the CCBE. (Thanks to Peter Lederer for the H/T).
The Wall Street Journal Law Blog reported that the ABA and CCBE have written a letter to Christine Lagarde, head of the International Monetary Fund and former head of the world's largest law firm, Baker & McKenzie, asking her to pass on their concerns at the end of independence of the bar to the heads of the European Union and the European Central Bank.
The WSJ Law Blog says:
The American Bar Association and the Council of Bars and Law Societies of Europe say measures in Ireland, Greece and Portugal threaten “one of the core principles of the legal profession: regulation independent from the executive branch of the state.”Although only three countries are listed we know it won't be long before Italy is included once it receives its subvention from the Troika.
I've analyzed some of this before and it's clear that the Troika isn't signalling the death of the legal profession. Far from it, it is demanding proper regulation and accountability which lawyers have avoided. Colin Scott, dean of UCD Law School, cogently argues:
It is not unprecedented for government to appoint independent regulators to oversee the legal profession...it is normal for independent regulators within our system of democratic governance to be subject to a variety of mechanisms of accountability to ministers, not least to provide reassurance that the regulator will not be captured by those it is set up to regulate. Few are wholly independent in a modern state better characterised as exhibiting characteristics of interdependence. As an example, the legal profession is dependent on the state for fees across much of the criminal justice system and in respect of many civil matters too. No one argues that the taking of instructions and fees from government compromises the professional independence of lawyers.There are two strands to the Troika's thinking on the legal profession and professions more generally. The first is proper regulation as Colin Scott refers to above. (And, in the case of Ireland, for example, the Justice minister is being responsive to concerns.) The second is that in many countries the professions are closed off from many who would like to participate. Not because they are incapable but because they don't possess the social capital that enables them to enter and practice. (Ample cites on professional closure here.)
The Troika's moves are an attempt to open up the labour market so it is accessible to all not just a few. One only has to look at how many law firms in continental Europe are dynastic family organizations.
Unfortunately, when the ABA and CCBE says
Bars and Law Societies around the world have always been open to reform: they follow very closely societal, economic and any other changes within their own countries and worldwide, evaluate the impact of these changes on the profession and take the necessary steps to adapt.it is very hard to believe them. I don't think the IMF will budge and nor should it.
Tuesday, 3 January 2012
The ABS Race is On!...Almost...
(thanks to Rocking Horse Works)
Today's the day the Solicitors Regulation Authority (SRA) belatedly began accepting applications from those who want to become Alternative Business Structures. It was meant to be last October 6, but the SRA hadn't quite got to the cantering stage then. Now it's trotting along.
According to Legal Week there have been 15 licence applications including Irwin Mitchell, which wants to take external investment, and Cooperative Legal Services which wants to integrate its legal practice under the Coop umbrella.
About 10 applicants are serious and although the process can take 6 months some applications will be processed earlier. The SRA says it will be rigorous
"For example, we'll be asking for the employment history of everyone going back five years - we need to have detailed information relating to those who want to be regulated by us."Others for ABS conversion may be Claims Direct, a claims management firm on a no win-no fee basis, which is owned by Russell Jones & Walker. And Solicitors Journal says
Other likely contenders include LEGAL365, the legal business set up by Freeserve founder Ajaz Ahmed with law firm Last Cawthra Feather, and In-Deed, the conveyancing service set up by Rightmove founder Harry Hill, who revealed last month that he would be buying up law firms.Both LEGAL365 and In-Deed are online legal services providers and this form makes perfect sense. It will be interesting to see if other online providers, eg, Legal Zoom or Epoq Legal, move this way.
Well, it has been a slow start. Unlike the Big Bang of 1980s financial services, no equivalent explosion has occurred in legal services. In fact it has been rather a damp squib which has the potential to become a sparkler that might graduate to a firework bang in the future. 2012 should give us the picture.
What won't be clear is the effect on the delivery of legal services. Most analysis, for example that by Susskind, focuses on what lawyers will do or won't do. It doesn't say much about access to justice and whether we can look for an increase in legal services. One of the questions here is the carving out of the market with the potential that many might not get access to legal services, for example, those on benefits or unemployed.
I have not yet seen anything about say the pro bono commitments of ABS. Now there is a difference between corporate social responsibility and pro bono, although many lawyers confuse the two. But there is no reason why good CSR policies can't include commitments to pro bono. I hope so.
This is terrifically hard to do as the Kutak Commission on legal ethics in the US in the 1980s found when it proposed a mandatory 40 hour per year pro bono commitment. Outrage and uproar. It never happened.
Perhaps what we need is a pro bono index like a stock market index so we can track pro bono and share prices. Who knows, there could even be a healthy correlation, dare I even say causal link... OK, that's pushing it too far.
Friday, 30 December 2011
Some Nightmares Just Won't Go Away...
Hot off the press, this one. Rick Kordowski, creator of Solicitors from Hell website, is appealing the judgment against him.
So far the Law Society's actions have failed to close the website, which has resurfaced as Solicitorsfromhell.net (see below), and now Kordowski is back to challenge Mr Justice Tugendhat's decision.
Kordowski said, "[he] was tempted to leave it alone and let it go down in history as one of the most ‘archaic’ judgments of all time."
However, Kordowski further said, "the individuals who accompanied the Law Society on the claim against him failed to follow the Pre-Action protocol code. [He] is also perplexed to why these individuals had not (and still haven’t) contacted [him] to ask who the authors of the words complained about were."
One other interesting aspect of this is that the Law Society complained to the Information Commissioner (IC) about Solicitors from Hell, but received a less than helpful reply. The IC said although he found some of the comments offensive, other accounts of clients' experiences were credible.
Moreover, the IC can't be expected, nor is it his role, to police websites. And, he says quite definitely, that it isn't his role to "rule on what is acceptable for one individual to say about another, be that a solicitor or other individual. That is not what my Office is established to do." That's where libel comes in if you want to take action.
But accepting that we now live in a socially networked world, the Information Commissioner suggests that the best route is for solicitors to approach Solicitors from Hell directly to negotiate changes where there are factual inaccuracies.
In a final recognition of the new world order that professionals and others have to live within, the IC effectively tells the Law Society "live with it". There are plenty of websites that rate people and products and if you kill one, then it will pop up elsewhere....just as Solicitors from Hell has done.
It is an unwinnable battle.
Given that Hugh Tomlinson QC of Matrix Chambers who is acting for the Law Society can't be cheap, I hope the Law Society has the support of its members for the costs of this litigation. They clearly aren't going to get any money from Kordowski.
I still have my doubts about shooting the messenger. It can make the Law Society look like a bully if it's not careful, no matter how justified it may think it is.
Sunday, 27 November 2011
Tesco (Ireland) Law?
Ireland is about to head towards Tesco Law. Turns out that Tesco is in Ireland also, so that helps. Last Friday (25 November) I spoke at a conference at University College Dublin on Regulating the Legal Profession.
Ireland has introduced its own Legal Services Regulation Bill (PDF of Bill here) which is based on a report by the Irish Competition Authority published in 2006. The first sentences of the executive summary are trenchant
The Competition Authority has concluded that the legal profession is in need of substantial reform. The profession is permeated with unnecessary and disproportionate restrictions on competition which should be removed so that consumers can benefit from greater competition in legal services.That these changes are occurring is testament to the intensity of the financial crisis in Ireland. Among the many changes required by the IMF, the ECB, and the EU (the Troika) in exchange for a rescue package was
To increase growth in the domestic services sector
Government will introduce legislative changes to remove restrictions to trade and competition in sheltered sectors including:
- the legal profession, establishing an independent regulator for the profession and implementing the recommendations of the Legal Costs Working Group and outstanding Competition Authority recommendations to reduce legal costs.One journalist at the conference joked that "You should never waste a good crisis if you want to get something changed." The Irish government was given slightly less than a year to introduce these changes. The Irish legal profession had been successful before at fighting off change until now.
The conference, organized by Colin Scott, Dean of UCD Law School, attempted to bridge the divide between regulators and practitioners and academics so that a useful conversation might flow. Something flowed at least.
For Julian Webb (who spoke on the Legal Education and Training Review) and myself it was like looking back through a time tunnel to five years ago in the UK when the legal profession was so defensive about the changes being introduced by the Legal Services Act 2007.
The Irish bill essentially proposes the same things that the British have done--separate and external regulator, separating representative and regulatory elements of professional legal bodies, reformed legal training, more open and unrestricted access to lawyers' services either through firms or ABS, and external complaints procedures.
The practitioner speakers at the conference saw these proposals as threats to the integrity and independence of the legal profession. They desire to kill the bill. That isn't going to happen. If they want to pick a fight that they have some chance of coming out of alive then it will be in the negotiations over the details of regulation after the legislation is passed. They know this but still feel as if they must go through the motions. It's a waste of political capital.
I feel we've started a dialogue of sorts. This was helped by trying to put the Irish experience in a less parochial context. Lynn Mather of Buffalo gave a keynote speech on lawyers, the market and the state which theorized some the issues that legal professions face. I placed the regulatory push into its global context. And Colin Scott distinguished meta-regulation from mega-regulation which you can get an idea of from his inaugural lecture, Regulating Everything.
From both economics and sociological perspectives there is no doubt that these changes will occur. More conferences and workshops will be needed to develop the conversations.
Monday, 21 November 2011
What Should We Be Teaching in Law School?
There is one thing wrong with the question in the title and that is whether in fact we should have or need to have law schools. The more I think about what the UK Legal Education and Training Review has to do, the more I feel for them. Probably since the days of 1870 at Harvard Law School has there been such an air of turmoil around legal education.
It's clear we don't know what we are doing or why. David Segal's article in Sunday's New York Times, "What They Don't Teach Law Students: Lawyering" speaks to an American dilemma but one that shortly will become an English one too.
The gist of his article is that law firms have to take on the task of training their associates to be "real" lawyers, not just pretend ones out of law school who don't know anything. Moreover, law faculty have no incentive to change this because their reward patterns aren't directly tied to their students getting jobs but to the articles they publish. Teaching also takes a junior role to scholarship.
In part this is because law schools appeared to be trade schools without any serious role in the academy except to bring in money. Now this has become institutionalized because the entire economic infrastructure of law schools is built on a state-guaranteed loan system. Some might say redolent of Fannie Mae and Freddie Mac. For Brian Tamanaha they're a drug.
Law firms are finding that clients refuse to pay the costs of training associates straight out of law school:
Last year, a survey by American Lawyer found that 47 percent of law firms had a client say, in effect, “We don’t want to see the names of first- or second-year associates on our bills.” Other clients are demanding that law firms charge flat fees.Law jobs as a result are harder to get. Recently in New York a lawyer, who is an adjunct professor at one of the elite law schools there, told me how all adjunct faculty at the elite schools in the north east of the US are being asked to try and place their students. It seems not all are getting jobs.
Whether law schools should become trade schools again isn't the reason I'm writing. There is something wrong with law schools and legal education and they need fixing. Their curriculum follows a path that seems to lead nowhere. And this is true in the US and the UK.
Students are bored, overworked and frustrated. We ought to be able to design a curriculum that excites them and commits them intellectually and emotionally to law. Unfortunately I don't think the legal profession is good at doing that.
Law Without Walls--which is entering its second year--has begun the redesign process and has generated more excitement than any other legal educational venture that I can think of.
So, do we need law schools? While we ponder this I'm sure new educational ventures will come along and stealthily extract the law school consumer base and it could be too late for law schools to repair the damage. Is the law school the best medium in which to learn law?
UK law schools are about to commit seppuku soon. They are to charge tuition fees considerably higher than hitherto but with no concomitant increase in quality or innovation in the curriculum. Indeed, most likely students will be paying more for less as universities freeze hiring or make staff redundant. It won't make the "student experience" anymore satisfying. Indeed, I think it will lead to law schools closing down or shrinking so much that they become adjunct departments to business schools or such. They might as well become paralegal training centres.
All law students--here and in the US--should read David Graeber's Debt: The First 5,000 Years. It's a tremendous read showing how the phenomenon of debt is at the root of our social and economic structure. Law students, and others, need to understand the phenomenology of debt and how it rules their lives. If they do, law schools will have no option but to reform. But how?
Saturday, 29 October 2011
Friday, 19 August 2011
...And Complaints Can Be Bad for You
In my previous post, I vainly hoped lawyers could learn from the complaints process they now have to follow. Unfortunately (h/t to Legal Futures) they haven't quite absorbed the lessons. This is definitely a case of being placed on the naughty step.
Two law firms refused to follow the Legal Ombudsman's orders to compensate clients. The result was the LeO went to court to get enforcement orders with the consequence that in addition to paying the compensation the firms had to pay the LeO's court costs.
Stupid? I think so. Law firms aren't going to get anywhere by being adversarial. As the LeO says:
“The cases are a reminder that ombudsman decisions, once accepted by complainants, are binding. Lawyers need to remember that our decisions are enforceable through the courts and that failure to comply promptly can mean an unnecessary expense.I'm sure the legal profession must be thinking the world is conspiring against it. All we need is the next step to name the law firms. They should have warning stickers.
“Those who don’t comply are likely to have to pay costs ordered by the courts, and risk being referred by us on conduct grounds to their regulatory body.”
Tuesday, 16 August 2011
Complaints Can Be Good for You...
The SRA's starting point is clear
A perception of poor complaints handling by the legal profession was one of the drivers for the Legal Services Act 2007 (LSA). In response, a fundamental requirement of the LSA is that approved regulators must ensure legal service providers have effective procedures in place for the resolution of complaints. Section 112(1) of the Act also requires an approved regulator to make provision for the enforcement of those requirements.This is the result of the Legal Services Board's YouGov research on complaints handling, which ought to be compulsory reading for all lawyers. So the SRA will now require law firms to collect data on first-tier complaints in a new way.
The SRA, following the Financial Ombudsman Service approach, will use the data to construct waves and trends of complaints to allow it to see if there are systemic issues in complaints. The data will also inform the SRA that it has a problem with law firms that aren't handling their complaints properly. (You can see how the Financial Ombudsman Service analyzes its data here.)
This is all part of the risk-based approach to regulation now in train. My guess is that lawyers may well be in for a shock when they start seeing the results of the analyses.
My ever-eager curiosity also wonders how much--if any--of these data will be made public. Some redaction might be needed, but it should be there in the public domain, so at least we could see if things are improving.
Thursday, 4 August 2011
Mea COLPa and the Lawyer's Gone Bust...
Two separate items in Legal Futures raise concerns about lawyers and their relationships within their own firms and with their clients. They tell different sides of the same story, from inside and outside the law firm.
The first is that many firms haven't begun to train their staff in risk and compliance for when outcomes focussed regulation begins October. Yes, three months.
The second is that there has been a steep rise in compensation claims against solicitors. The figure is now over £200 million.
New figures from the Solicitors Regulation Authority (SRA) said the value of the 1,952 open claims against the Solicitors Compensation Fund at the end of June was £205m, £76m more than at the same time in 2010, even though there were almost 1,000 more claims open then.I wrote before that law firms are confused and perplexed by who should be their compliance officer for legal practice and what that officer ought to be doing. By October 2012 the COLP has to submit a report on the preceding year. That means having all the reporting and accounting systems in place now, or by October at the latest.
If law firms can't get their compliance act together then how are they going to respond to client complaints? How will they catch dishonest lawyers? Note that law firms have also to appoint a COFA (compliance officer for finance and administration) too. If these processes are fully functioning will clients have confidence?
Perhaps, instead of trying to kill off Rick Kordowski's Solicitors from Hell, the Law Society and Bar Council should be prompting their members to start thinking and acting to ensure clients are satisfied, well-served, and confident in the legal profession.
Adam Sampson, the Legal Ombudsman, wrote recently that customer service will be the key criterion
What is important here is the introduction of the concept of customer service as a basic standard against which barristerial actions are to be judged. I know from my own experience that the vast majority of barristers take their responsibility to their client as their central, driving motivation. However, there remain a small number of the profession who see customer service as something which is wholly the responsibility of the solicitor and therefore not a matter with which they need to concern themselves. It is this small group who may struggle to adjust to the new reality.Barristers, it seems, have not yet adjusted to a non-adversarial complaints system where they can "prove" their innocence. That will be only one part of the process.
Lawyers must realize that the new world of legal services won't wait for them to catch up from the 19th century to the 21st. We know other suppliers will jump in and begin to mop up. It might be Coop or it might be Quality Solicitors, but it won't be the lawyers who stand there with question marks over their heads. Whoever works out that consistently good service across all fronts to all clients improves business will win.
Tuesday, 2 August 2011
Lawyers, the Comorra, and Dutch Auctions
(thanks to movieaddicts)
There's a scene in Gomorrah (about the Neopolitan Comorra) where dress-makers compete to win an haute couture contract for a major clothing designer. They are asked to bid for the work in money and time--the lowest amount for each. Pasquale pleads with his boss not to go below a certain number of days which of course he does to win the contract. It's a reverse auction. These are also known as Dutch auctions, in contrast to "normal" English auctions where the price ascends not declines (see Smith 1990: 120). Later in the film Pasquale sees Scarlett Johansson on TV wearing one of his dresses.
Dutch auctions are very desirable for buyers of services although not so good for the sellers. Lawyers are now finding out what it is like to be on the receiving end of a Dutch auction. With a hat tip to my friend, Peter Lederer, the Wall St Journal has run a fascinating article on the machinations of corporate counsel to impel lawyers and law firms to embrace reverse auctions. (Here's an alternative location if it's hiding behind Murdoch's paywall.)
Here's the opening:
Spurred on by budget pressures, companies' use of a controversial auction process to negotiate contracts with law firms has surged in recent years, a trend that could eventually reduce the revenue attorneys can expect to reap from clients.
Several big companies—including GlaxoSmithKline PLC, eBay Inc., Toyota Motor Corp. and Sun Microsystems—have used the tactic, known as reverse auctions or competitive bidding, to pressure law firms to lower prices, especially on high-volume work such as tax filings and intellectual-property transactions. Many lawyers now worry these auction-based pricing strategies are spreading to more complex projects.
"Is it making all of us uncomfortable? Yes. Especially when you start to move away from the more routine sort of work," says Toby Brown, the director of pricing at Vinson & Elkins LLP.
What is interesting is that this isn't being done through beauty parades and pitches but instead through websites where law firms bid against each other and against the clock. Sounds like a chess game, no?
Despite the tender feelings of law firms and lawyer that this might all be a bit infra dig--"not very professional is it, old chap?"--it's gathering pace and market share.
Ariba Inc., the maker of one of the main reverse-auction software tools, claims that around 40% of today's market for legal work—a threefold increase from just a few years ago—is contracted through electronic, online means, most of which involve a reverse auction, according to Sundar Kamakshisundaram, a marketing manager for the company.
And David Baumann, general counsel for TechNexxus LLC, which helps companies cut down on legal, technology and business-services costs, says more than a third of the work they do involves reverse auctions, about four times more than in 2008.
Lawyers will plead that their work is complex and varied and can't be priced like other products. It doesn't really wash when one sees investment banks pricing complicated deals every day. How many other suppliers are able to say, "I won't tell you the price now. Wait until I think I've done enough, then I'll let you know."
As one general counsel so aptly put it:
"Every lawyer will tell you that every piece of work they do is incredibly important and risky and has to be custom-made, and that's just nonsense," says Jeff Carr, FMC Technologies' general counsel. "No matter how legally brilliant you are, there is always an alternative."What's the difference between a loaf of bread and a lawyer? You eat one and the other eats you.
*****************
Smith, Charles W. 1990, Auctions: The Social Construction of Value. California.
Friday, 22 July 2011
Is Solicitors from Hell a Conspiracy Against the Legal Profession?
(thanks to Byfield)
As I came out of the BBC yesterday with Des Hudson*, the chief executive of the Law Society, he said Rick Kordowski was a criminal. I reminded Des that the police didn't think so. He wasn't happy.
We'd both been invited to discuss Solicitors from Hell on Radio 4's You and Yours consumer affairs programme. For those of you who might not know Solicitors from Hell allows disaffected clients to write their stories about their dissatisfaction with their lawyers. At times the voices are plaintive, frustrated, and upset. A number of lawyers have sued Kordowski for defamation, except he's got no money. And recently a judge suggested the Law Society and the Bar Council take action against Kordowski and his website.
The BBC has put the story and the difference between Des and myself on their news website. You can listen to our discussion here: we are Chapter Three.
My view is quite simple. Whatever one thinks of Kordowski or his website, it serves a need. It demonstrates clearly that people need an outlet to express their feelings and concerns about how they are treated. Instead of attacking Solictors from Hell the Law Society should be doing something about those complaints. It should be preventing the need for a website like Solicitors from Hell. If there's no felt need, then no SfH.
Lawyers are improving their game--don't get me wrong--but far too slowly. In the first six months of setting up the new Legal Ombudsman received nearly 40,000 calls which turned into close to 4,000 complaints. And there is a backlog as well. But that's far too many complaints for a profession to have landing on its doorstep. It's still not an easy process to complain about bad legal services. It could involve the Ombudsman or it might the task of the Solicitors Regulation Authority. Certainly the Law Society website doesn't make clear about how to go about complaining except to give a link to the Legal Ombudsman. Take a look at its website home page and see how easy it is to locate the complaints section. It's not.
This is one of the reasons why government decided the professional bargain was no longer working and passed the Legal Services Act in 2007 and established an entirely new regime of regulators for the legal profession and legal services market. Professions have to be accountable to the public.
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*Here's Des in a better mood and you can read previous posts on Solicitors from Hell from March, April, and June.
Saturday, 18 June 2011
Proof It's Time to Teach Legal Ethics in the UK...
The latest beneficiary is Freshfields, which isn't on the panel, and partner Barry O'Brien of Marks & Spencer conflicts of interest notoriety.
However, what really intrigues me are the comments following the article. They represent the polar extremes of formalism and professional responsibility. My take is that lawyers are superb at avoiding accountability but then their forensic training ensures they make these distinctions. For example, the way the SRA Code of Conduct is used to justify positions is rather like the way evangelical preachers on TV use quotations from the Bible. In a country where legal ethics is not properly taught, now is the time.
I've added the comments below:
A few facts
Megatron
Clearly facts aren't your strong point, but the panel was created by your friends in the last government. Do you remember? The ones who set up the system of financial services regulation and who advocated "light-touch" regulation. The ones who virtually bankrupted the country. Do try to retain some grasp on reality.Rant over -16 Jun 2011 | 14:59
Cleansing the Augean Stables
Megatron,
Let's get it all out in the open. Where were the lawyers when the Japanese earthquake struck, eh? Didn't they warn Tepco about the risks of water-cooled reactors?What about Southern Cross? Shouldn't they have predicted the squeeze on local authority spending and refused to act for Blackstone on the freehold sales?
When Cardigan ordered the charge of the Light Brigade, shouldn't the lawyers have known what would happen and injuncted the Russian guns?
I'd be interested to hear your thoughts.
Scattergun -16 Jun 2011 | 15:34
@Megatron
I can only assume that you are not a lawyer. If you are a lawyer then you clearly weren't listening in your conduct classes. Rule 1.04 "You must act in the best interests of each client." Not in the interests of the country. Nor of the government. Nor of Mrs Miggins.
Your duty as a solicitor is to help your client achieve its aims within the law. It is not and never has been a professional duty of a solicitor to second guess his client's commercial decisions and aspirations or to place his own value judgments about a transaction's social utility above the interests of his client. Those are the responsibility of financial regulators, not solicitors in private practice.
Your position is just a commercial law version of the old canard put to criminal lawyers: "How on earth can you defend rapists/paedophiles/armed robbers etc?" And the response is just the same: they are entitled to legal representation and their lawyers are bound to act to the best of their abilities in the client's interests (and not society's at large). It's a fundamental premise of the rule of law.
I can only assume that you are not a lawyer. If you are a lawyer then you clearly weren't listening in your conduct classes. Rule 1.04 "You must act in the best interests of each client." Not in the interests of the country. Nor of the government. Nor of Mrs Miggins.
Your duty as a solicitor is to help your client achieve its aims within the law. It is not and never has been a professional duty of a solicitor to second guess his client's commercial decisions and aspirations or to place his own value judgments about a transaction's social utility above the interests of his client. Those are the responsibility of financial regulators, not solicitors in private practice.
Your position is just a commercial law version of the old canard put to criminal lawyers: "How on earth can you defend rapists/paedophiles/armed robbers etc?" And the response is just the same: they are entitled to legal representation and their lawyers are bound to act to the best of their abilities in the client's interests (and not society's at large). It's a fundamental premise of the rule of law.
Vercingetorix -16 Jun 2011 | 18:17
Maths
@ Vercingetorix
I don’t think you are a lawyer either to be honest based on what I just read. Lawyers are not allowed to represent rapists and paedophiles if they are guilty and then try to claim they are innocent. I think you are missing the point. FSMA said that financial institutions had to act in the interests of market confidence, protection of the consumer, as well as protecting the system as a whole. Therefore, law firms had to assess whether the deals breached those rules and if they did (which clearly they did) they should have refused to act for the client and reported to the FSA and Treasury that financial institutions were conducting deals and activities with huge systemic risk implications. So, these deals were not "within the law" (as you claim) otherwise there would not have been a financial crisis would there?As for quoting the code of conduct by the SRA to justify City firms' oversights in regard to those deals. Please! The SRA is protectionist toward large City firms – They wouldn't dare invent a Code that might in any way, shape or form offend a City firm.
Also @ Vercingetorix - I think it was stated that the law was "not designed" in the interests of City firms and partners. I don’t think people like Plato really put much though into creating a legal system designed to help partners get a good PEP every year!
The incompetence of the lawyers point is interesting too. How could these lawyers spot systemic risk dangers? Many of the clients (i.e. employees of these banks) have very technical and high level economics and mathematics degrees. There is no way the majority of lawyers working on those deals have anywhere near those intelligence levels. There is an argument that the lawyers were not trained properly to work on those deals (from an economics perspective) and that their knowledge was limited to working with precedents and writing board minutes. This should fall at both the door of the advising partners and the SRA / Law Society for allowing lawyers to act on deals that they don’t have the technical expertise to understand.
Maths -17 Jun 2011 | 10:13
@Maths
Where in my post did I say lawyers could assert innocence on behalf of clients they know to be guilty? I didn't.
But even if they do know of a client's guilt, they still defend their client. It is quite possible to test the prosecution's evidence and find it wanting such that a client is acquitted without ever asserting a client's innocence. It happens every day in criminal courts up and down the country.
You really were asleep in your ethics classes weren't you?
As to the rest, you seem to be completely confused as to the difference between a City solicitor and a financial regulator. One is not the other.
Where in my post did I say lawyers could assert innocence on behalf of clients they know to be guilty? I didn't.
But even if they do know of a client's guilt, they still defend their client. It is quite possible to test the prosecution's evidence and find it wanting such that a client is acquitted without ever asserting a client's innocence. It happens every day in criminal courts up and down the country.
You really were asleep in your ethics classes weren't you?
As to the rest, you seem to be completely confused as to the difference between a City solicitor and a financial regulator. One is not the other.
Vercingetorix -17 Jun 2011 | 12:39
Maths
Time to re-read FSMA, Maths. The FSA has those obligations ("objectives" in fact), but financial institutions do not.
Sarpedon -17 Jun 2011 | 12:46
reality check
Reality check: the regulators should have regulated. Or worst case the banks should have seen what was coming. Legal advisers advise on, shock horror, legal issues. Financial institutions advise on, shock horror, financial issues. Admittedly there is some crossover, but to assert that lawyers shouldn't be working on deals that they don't 100% understand from an economic perspective is frankly absurd and highlights a 'bash the banker/lawyer' attitude promulgated by a government that fundamentally failed to protect the economy.
People are out for themselves. It is the responsibility of the government to check this, unless something is actually unlawful (which everything referred to above was not, it was merely inadvisable). If it were unlawful, only the government could have made it so.reality -17 Jun 2011 | 14:56
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A friend sent me another picture of a lawyer at work which I thought I'd include here. Indeed, it's quite accurate....
Thursday, 2 June 2011
Accountants Really, Really Want Privilege...
(Thanks to Colin and Accountancy Age)
The accountants are desperate to have some form of accountant-client privilege and the Institute of Chartered Accountants of England and Wales have applied to be intervenors in the Prudential case before the Supreme Court. The Law Society has already been given permission to intervene.
Laissez les bons temps rouler!
Saturday, 21 May 2011
Time to Take Your Law Firm to Market?
(thanks to greentech media)
Is it worth floating a law firm on the stock market? Peel Hunt, a broking house, thinks it can work. In a briefing note, it lays out the attractions and possible drawbacks.
Some of the key points are a continuing need for legal services with a growing regulatory state--ie. more red tape, more need for lawyers and other professionals. Good steady income streams (if partners bill properly, I assume). One of the most important reason given is
Flotation simplifies many of the problems associated with partner transition – equity is transparently valued and incoming partners need not provide capital. This can ease the recruitment of young partners, who rarely have built up their own personal wealth to be able to afford to buy in from their own cash resources. Equally, rewards above normal remuneration and after loan interest and loan capital repayments are, in some cases, only achieved by partners in their late forties. The best young partners, particularly those with a marketing mindset, are likely to want a visible reward and, in particular, the possibility of capital reward in their thirties.On the downside is a crucial factor. I've written about managing cultural risk in firms and Peel Hunt identify "the risk of culture change" as a clear risk of flotation
The biggest risk, but the most difficult to analyse objectively, is the extent to whichThis is one area where I would say the vast majority of professional service firms, frankly, don't have a clue. If they mess it up then this is where they will do it. Without cultural mediators they are lost. The example Peel Hunt cites is Slater & Gordon in Australia which seems to be a financial and cultural success.
a public flotation may cause partners to change their behaviour in a way that damages their “trusted advisor” status. The intrinsic pressure of meeting market expectations may change the behaviour of partner/directors. If this causes them to market more aggressively the firm’s specialist services then this may be positive. If however it leads to a more “churn and burn” mentality then, even though this may take years to feed through, this would severely undermine goodwill.
Lawyers would do well to read pages 13 to 15 of the briefing which detail how salaries and dividends would need to be handled. Some middle-range partners might not be entirely pleased with what's on offer: the senior partners will be laughing, however.
The biggest question is how do you value a law firm? I'm not going into detail here but most lawyers will have to learn something called financial reality. It's rather different from Wonderland. (See page 18 for more.)
Using Allen & Overy as a case study, the value of the equity comes out "at £1.48bn, equal to £4.0m each per full equity partner...Those closest to retirement are the most likely immediate beneficiaries of a listing."
Standby for internecine warfare...?
PS. I should mention a fascinating post by Mark Brandon at Motive Legal on "Would you buy shares in a law firm?" which delves into some of the dangers of law firm flotations.
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In respect of the complex financial products and mechanisms that were created during boom times e.g. securitisation etc and the complex deals that took place, it was the responsibility of lawyers to advise their clients that these could end up in a financial crisis scenario. The lawyers should have been alert to the fact that, although operating in a soft law type environment, these deals were harmful to principles such as market confidence, protection of the consumer, as well as protecting the system as a whole. It was the lawyers' duty to deter the clients from conducting these deals and they should have reported their concerns to the Government, FSA and international bodies and refused to act for the client. A client may well think these deals are smart, but it is for the lawyer to consider the legalities – that does not just mean loyally making it happen for the client so they can bill and buy an Aston Martin, but also looking at the bigger picture.
So City lawyers are reaping what they have sown here. And if lawyers wish to argue that they could not anticipate the financial crisis then that is more reason to say they are responsible and should be brought to book because it would be negligent for any lawyer advising on finance deals to not have a firm grasp and understanding of economics related to the deal and how the deal fits into the economic system as a whole within that economic climate (e.g. a boom period).
And £20m is sick – why on earth don’t the government deal with this in-house, probably at 1/10 of the cost? And why are these firms on any kind of a panel in which they initially advised on the deals and the institutions that went belly up? This is another example of the David Cameron 'jobs for the boys' mentality that the current Government promote (i.e. work for the Eton and Westminster School alumni, stuff the rest). It is a total disgrace.