Big Firms, Small CasesAuthor(s): James E. DanielsSource: Litigation, Vol. 10, No. 3, THE SMALL CASE (Spring 1984), pp. 29-30, 56-57Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/29758881 .

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Big Firms, Small Cases

by James ?? Daniels Many large law firms need the small corporate case. Once shunned as not profitable, that litigation is now actively sought. The 1970s saw an explosion in firm size, in salaries for rookie associates, and in the trappings of plush offices. But the boom times are over. The intractable overhead

remains, but big-firm revenues have declined or, at best, stabilized.

Why? The enormous bread-and-butter cases are no longer there in the number they used to be. Although this trend may not be enduring, of far greater significance to firm revenues is the change of corporate attitudes about litigation.

Corporations appear more anxious than ever to avoid massive lawsuits. Indeed, alternative means to resolve con? troversies that put a higher priority on the cost and speed of resolution than on the underlying principles and issues that led to the conflict have become fashionable. Mini-trials, "rent-a-judge" proceedings, and informal arguments to

corporate officers are gaining increased attention as the bet? ter way to resolve disputes. With litigation that is unavoidable, businessmen are

increasingly sensitive to costs ?both with respect to the absolute amounts that must be invested in the prosecution or defense of claims, and in the wisdom with which those investments are made. Rather than simply abdicating to the

lawyers, corporate management is beginning to insist that business standards and procedures be applied. Clients are

learning to measure the performance of their lawyers by the same standards they apply to their traditional profit (and loss) centers.

I spent ten years as a partner in a large firm in New York

City, a firm of 175 lawyers. My present firm has 40 lawyers. This experience has led me to several suggestions that will allow big firms to compete more effectively for the smaller lawsuits.

Inefficiencies may be tolerable in the mammoth case. In the small case, however, the lawyer's bill becomes a key ingredient in any reasoned analysis of litigation strategies.

The large institutional law firms are widely criticized for

charging clients too dearly for litigation. Although the quality

The author is a partner in the firm of Warshaw, Burstein, Cohen,

Schlesinger & Kuh in New York City.

of the work is rarely challenged, the business community and in-house counsel generally believe that big firms pay inor? dinate attention to the pursuit of excellence for the sake of excellence alone, and pay scant attention to whether the return to the clients justifies the investment. Also, it is widely held that such firms are woefully inefficient in their use of people.

While hourly rates are considered high, the number of hours

by which that rate is multiplied is of far greater concern and the real cause of inflated billings.

Big firms can attract a significant volume of small cases

only if they adopt procedures that will lead to a better use of their economies of scale. Although the implementation of the suggestions that follow might initially reduce the bottom line, the ability to compete more effectively for the small corporate case could increase business and improve profitability.

Hallmarks of big firm practice are broad expertise and diverse skills. Partners and associates have confronted an incredible variety of litigation problems. With issues

recurring, sometimes in the same form, the firm's lawyers frequently encounter problems with which their colleagues have dealt. Rarely, however, is that great advantage and

opportunity exploited. This can change. You must inform every litigator about

what his colleagues are doing and have done recently. Insist that each lawyer take full advantage of that knowledge. Thus:

1. Whenever a new litigation matter comes into the office, brief all partners on the issues that it may produce. Anyone who has handled anything reasonably similar should share his experience.

2. Hold informal gatherings of all litigators to discuss work in progress.

3. Circulate written post-mortems of litigation. Describe the motions made and defended and the issues researched. Record that specific lawyers delved into a given subject.

4. Circulate litigation-calendar reports on decisions of interest. You should note defects, rarely mentioned.

5. Develop experts within the firm, such as experts on

experts, on damages, on merger guidelines, on Rule 37 sanc?

tions, and on computer support. Rather than have this ex?

pertise develop at random, designate lawyers with special

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interests to keep abreast. Absorb as overhead the time spent in developing this capacity.

6. Computer systems can retrieve briefs, internal

memoranda, and other firm work on a subject. Design these

systems either to house all work in full text (expensive) or

merely to contain indexes of selected work (economical). Any system should include an identification of the lawyer respon? sible for the work product. Once a lawyer knows whom to

consult, obtaining that person's work becomes simple. Big law firms are guilty of generating ample quantities of

needless work ? and then billing the client. Big firms are not alone.

Litigators view pretrial proceedings as a time for

maneuvering. The firm makes summary judgment motions, which invariably are denied, "to educate the judge." The firm utilizes its big guns in a discovery motion to demonstrate that the client is serious. The firm takes depositions of the adver?

sary's executives to bully them and have them experience the burden of litigation. Using pretrial as a time for psyching out the adversary may be effective on occasion. But in all cases, it is costly.

A solution lies in cost-benefit analysis. Were the client to understand that the deposition of the chief executive officer, who has no important knowledge on the merits, would cost

$20,000 to prepare and take, he might conclude that the effort is not worth the price. Learn to include the price in making or recommending decisions. The result will be a much lower bill. Whatever the outcome, the client will probably remember that bill when it next retains counsel.

Big-firm associates also spend much of their time writing, rewriting, editing, proofreading, and rewriting again. Although it may be necessary to communicate to the court, the adversary, or the client, the practice of internal memoran? da is considerably overdone. Inevitably, the associate uses the most expensive and elaborate vehicle for reporting to a

Big firms stress perfection in written work, but try to justify the cost of unsplitting infinitives.

senior lawyer. Rarely is it in the client's interest to increase the cost of legal research because the law firm prefers written to oral reports and wishes to augment its library.

Big firms typically stress perfection in written work whether

they circulate it outside the office or not. No one disputes the need to Shepherdize (or Lexisize) the authorities, or to

report factual assertions with impeccable accuracy. But try to justify the incremental cost of unsplitting infinitives and

locating typos. You might even challenge the accuracy of the conventional wisdom that sloppiness breeds distrust of the

underlying substance. Firms must re-examine their use of internal memoranda.

While useful in some circumstances, written work becomes

superfluous for internal use. Have partners ask for oral

reports whenever feasible. De-emphasize memoranda

writing ability in evaluating associates. When preparing memoranda, make brevity the cardinal rule. Do not consider

pen-corrected typos a cardinal sin. Employ capable proof? readers, whose time is far less precious than that of any lawyer. Finally, include a legal writing course in the associate

training program. At least improvements will be at the law firm's expense rather than the client's.

A common big-firm luxury is the bag-carrier. Associates and junior partners frequently accompany their seniors, yet serve no other function than companionship and muscle. In court, on visits to the client, on the deposition trail, these

bag-carriers sit silently. This represents the height of

extravagance to the cost-conscious client. Double-teaming may be useful in the heat of battle when

consultation is necessary. But the two principal reasons for the practice

? associate morale and associate training ? do

not justify the expense. Large disbursements typify big-firm litigation work. There

are several reasons: habits are formed on big cases, where expenses seem like a drop in the large bucket (although, in

reality, clients are more prone to criticize specific disbursements than the amorphous time charges, since disbursements are easier to compare). Junior lawyers are far away from the client and its concerns, and they dwell more on their own comfort than on the bill. Status, reflected in

perquisites, means a great deal in the competitive world of the big firm.

You must control expenses on the small case, a self-evident

proposition. Unlike the typical small firm, where close super? vision of expenses is a necessity, big firms must intercede with their lawyers to set standards and to provide a model to follow.

Establish firm-wide ground rules to cover travel, use of

overtime, food, cab fares, and the like. Do not change the rules because of the client on the case or for lawyers at different levels of status. Any open-endedness or favoritism will cause the best-intentioned system to disintegrate, since

competition for perquisites leads lawyers to discontent and

eventually to the abandonment of cost-saving practices. Train

lawyers, especially partners, how to spend money carefully. Look for a consultant from the business world, perhaps recommended by a major client, to provide that instruction.

One disbursement that requires special mention is photo? copying. That the photocopying room is often a profit center at the big firms reflects poor, not good, management. While

steep charges may produce tempting short-run profits, the firm runs the risk of losing good business in the long run.

Consider the extravagant uses to which lawyers put copiers. Big-firm lawyers and paralegals copy too much too often.

They copy cases before they are read, they maintain personal sets of documents, they make multiple master sets of deposi? tions, and so on. You may reconcile the big-case client to that expense, but the practice is intolerable in the small case.

Sharply decrease the numbers of pages copied. Use a buck

slip to forward papers rather than make copies. Borrow the book rather than copy it. Use the client's equipment for big jobs whenever feasible. Discourage people from maintaining their own sets of papers. Remind people of the file room.

Inefficient firms that want to attract small cases have two choices: become efficient or absorb their inefficiency as

(Please turn to page 56)

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contest has become academic, and the lawsuit is no longer a fit subject for the exercise of judicial power.

Most often it is clear when the real conflict in a case has lost sufficient steam to require dismissal as moot. But the mootness doctrine can be abused. It can be used by a litigant as a strategem to avoid an adverse legal ruling if he is willing to take steps that appear to ter? minate the controversy. The classic in? stance of such manipulation is the ef? fect by a defendant to take a case from the courts by declaring that it has volun?

tarily stopped doing what the plaintiff is complaining about. Recognizing that such maneuver in mid-litigation leaves a defendant free to return to his old ways, courts have found means to detect and abort that shenanigan. They hold that "voluntary cessation" of allegedly illegal conduct, without more, is insufficient to moot a case.

Courts also recognize, however, that there are times when voluntary cessa? tion is genuine and litigation should not continue as if it were sham. The usual test is an evidentiary hearing that deter?

mines the meaning of the defendant's change of course.

In Iron Arrow Honor Society v.

Margaret H. Heckler, Sec'y ofH&HS, 104 S. Ct. 373 (1983),-U.S.-the Supreme Court of the United States confronted a variation on this theme. Iron Arrow was an all-male honor society at the University of Miami of an? cient lineage. In 1976, the Secretary of Health, Education & Welfare notified Miami's president that the university, a

recipient of federal funds, was violating federal law by providing significant assistance to an organization that discriminates on the basis of sex. The university responded by asking for time to negotiate with Iron Arrow, but agreed to ban the society's selection ceremony in the interim.

Iron Arrow sued the Secretary of Health, Education & Welfare, seeking both a judicial declaration that the society was not covered by the federal law and an injunction against the pro? posed ban on its campus activities. But the district court and the Fifth Circuit Court of Appeals both upheld the Secretary's contrary view that federal law extended to the activities of Iron

Arrow.

On a first trip to the Supreme Court, Iron Arrow won a remand to the court of appeals for reconsideration in light

of recent case law. But before the court of appeals could rule, Miami's president wrote a letter to the head of the society. He declared that it had now become firm university policy that Iron Arrow, even if it won in court, would be barred from returning to campus until it discontinued sex discrimination. In short, Miami had now adopted its own anti-discrimination policy.

The government took the president's letter both to the court of appeals and to the Supreme Court chanting "moot? ness." The Supreme Court took up the chant. The Court reasoned that this was not a case of a defendant who had sud? denly and suspiciously agreed to halt its conduct. Indeed, this was the very opposite

? a declaration by a third party that, for lawful private reasons, it would continue to engage in the conduct the plaintiff challenged. From the Court's point of view, this declaration meant that no matter how the lawsuit was decided, the plaintiff would not be relieved. Accordingly, the Court con?

cluded, the case is "classically moot."

That is the one thing it was not. Moot? Perhaps. Classically moot? Not so. Unlike the typical case in which a

ruling on the law would have no prac? tical impact on the parties, the Court could well have decided this case in a manner that would have helped Iron Arrow. For example, a judicial ruling might well affect the longevity of the

university's newly minted policy by making clear that the law did not require it. That would remove the Secretary's threat from any future university deliberations on that subject. To be sure, the university had advised the Court that its new policy had been

adopted without regard to the threat? ened federal action. But it can hardly be doubted that the university's decision had been reached in at least the shadow of the federal threat. If Miami's alumni were relieved of that threat, who can say what they might have decided about an old and otherwise revered campus in? stitution. By analogy to the voluntary cessation cases, was Iron Arrow not en? titled to an evidentiary hearing on the actual impact of the Secretary's threat?

But the Supreme Court declined to let the case proceed any further.

Perhaps its willingness to interpret mootness broadly in these cir? cumstances is a further example of judicial eagerness to curb "unnecessary" litigation/wherever it appears.

Big Firms,

Small Cases

(Continued from page 30) overhead. Since it may take time to become efficient, the big firm that wants to attract smaller litigation mat? ters may want to change some pro? cedures and billing rules. Some specific

measures are:

1. Do not evaluate partner and associate performance on hours billed. That condones and even encourages in?

efficiency. However accurately hours might measure performance on massive cases, to record an inordinate number of hours does not prove a lawyer's ef? fectiveness in the small case. It may demonstrate quite the opposite. In?

dustry and hard work are positive qualities. But a lawyer's hours are too crude a measure of productivity. Hours lead to diary padding.

2. Do not convert overhead into profit centers. A firm's stenographic pool, the summer associate recruiting program, and the copying equipment are all part of the big firm's support. Although not the responsibility of specific clients, many firms bill these operations as if they were. For example, many firms charge for work at a rate that greatly exceeds out-of-pocket or even fully allocated costs. Although the firm and client may prefer you to bill for support separately, pass on the cost of services.

3. Do not be a slave to the computer printout. The trend is to avoid writing off diaried time. Yet computers are pro? grammed to make life miserable for the billing partner who believes a client should not get tagged for time poorly spent. The firm's management commit? tee, obsessed with short-term income, increases that misery by demanding af? fidavit evidence before allowing write? offs of time. That results in an unfair bill, and eventually, a client lost.

4. Control time with internal case

budgeting. Carefully prepare a forecast of work. Use that to monitor work. Ex? amine overruns to determine if they were the product of emergencies or of poor use of time.

5. Paralegals can reduce bills. Less expensive and fully-capable legal

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assistants can digest depositions and in? dex documents. But paralegals at big firms do work once the province of less

expensive staff. In particular, they take over document management and filing.

What used to be an overhead carried by the firm is now charged at handsome

hourly rates. While big cases may generate document control problems so enormous that a college degree cum laude is necessary, the small case rarely does. It is unfair for the client to pay the price of over-qualified staff. Reassess the use of paralegals. Create different time charges for different kinds of work. Absorb filing work as overhead.

6. Do not saddle the client with the

heavy learning costs associated with a

big firm's up-and-out system (now sometimes referred to as "the gradua? tion program"). When Jones replaces Smith on a small case, the firm must ab? sorb the necessary retooling time.

Big firms are unable to compete for small corporate litigation because they are perceived as inefficient. The prob? lem is not simply in the perception, but in the reality. The perception is usually correct. Big firms must acknowledge their inefficiencies, eliminate them, or absorb the cost. Otherwise, corpora? tions will send their small case litigation elsewhere.

Drunk

Driver

(Continued from page 28) saying he didn't do everything perfectly, isn't that correct?

Q. In other words, he didn't make an A + ?

Whether your client should testify will depend on the defense you choose, the state's evidence, and, of course, what your client has told you. As in

every criminal case, your client can be

your greatest asset or your worst liabili?

ty. What he says and how he says it may make all the difference to a jury. Weigh the options with him, give him the benefit of your knowledge and judg? ment, but remember, it is his decision.

The case is tried and lost, or your client has admitted guilt. Now for

sentencing.

If this is either your client's first DWI conviction or he has not attended a DWI school as a result of a previous conviction, he may avoid losing his license by attending a school. DWI school may be a one-day course or a course consisting of four to six one hour sessions. Successful completion of the course (attending each session and

passing a written test similar to a driv?

ing test) should result in dismissal of the

charges and retention of his driver's license.

Although DWI school is a good op? tion in a bad case, it should never

preclude a thorough investigation and

aggressive defense. Someday your client may be charged with another DWI. If

you can obtain an acquittal, that is your duty. All too frequently, lawyers un? familiar with the criminal process see

nothing wrong with a quick plea to a first DWI because the consequences ap? pear slight: six weeks of school and a month of probation.

That is shortsighted. The conse?

quences of a first DWI cannot be overlooked. Your client may be charged with another DWI and face a man?

datory jail sentence. If your client fails to attend the DWI school, he may be held in contempt, be back before the

judge, and receive jail time or a substan? tial fine in addition to losing his license.

If your client has enrolled in an alcohol treatment program or is willing to do so now, the judge might consider

sentencing him to that program or

deferring sentencing while he attends the program. (In some instances, the

judge might agree to defer the entire case pending successful treatment. Six months down the road your client may appear to the judge as a reformed

alcoholic, rather than a crazy drunken

driver.) Your client should, of course, plead

not guilty or nolo contendere if an ac? cident occurred. Never plead guilty to an accident. If your client does not wish to go through a full trial to avoid col? lateral use of a guilty plea, consider sub?

mitting the case to the judge on

stipulated testimony. This will avoid an admission in any future civil lawsuit.

If, despite your best efforts, your client is going to jail, you can still re?

quest that he be placed in a work-release

program or that he serve his sentence on weekends.

Finally, assuming your client is work

ing and carries liability insurance, you can help him obtain a permit to drive to and from work. That is a civil pro? cedure and the district court clerk can

explain the local rules. As the outcry against drunken driv?

ing mounts in volume, so will the number of those arrested. The lawyer who accepts a DWI case must be familiar with the law, the procedure, and the policies of the local police and the courts. Remember that your client

may indeed be blameless.

Non-Jury

Case

(Continued from page 10) him to say to himself that he will work on the case on the hypothesis that you are right, you have not done all you should have done. Except for very com?

plicated cases, it ought not to be necessary for a lawyer to wind up his case with a request that he be allowed two weeks for a brief.

Seven, I suppose most lawyers, but

especially New York lawyers, are

parochial. They assume that the law of New York is the law of the universe. Not in one case in ten do lawyers so much as suggest which law governs the case.

I suppose that in the state courts, con? flict of law questions are not as abun? dant as in the federal courts. Let me make a confession that in a number of cases, after finding nothing but New York law cited on a problem manifest?

ly governed by the law of a sister state, I have had counsel stipulate that the

New York law is the same as the ap? plicable law. I found that my indepen? dent adventures to discover the law of Massachusetts or Nebraska were too

great a drain on my time. I was con? fronted by that problem at least six times during the last few months of my service.

Eight, a minor detail ? but one that should be mastered from the very begin? ning of a trial career

? that is, to learn to handle your papers and other props. The lawyer who cannot find his plead? ings, his exhibits, his depositions, who is always fumbling around, whose courtroom table looks like a rummage

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