You don’t know who you hired but you sure as hell know who you fired……………
Hiring Lawyers by Default and Inevitable Litigation Train Wrecks
By Jonathan Pollard – Employment Law. Non-Compete Defense. Trade Secrets. Partnership Breakups.
For the past 11+ years, I have owned a law firm that specializes in defending high-stakes non-compete and trade secret cases. During that time, we have taken over countless cases or disputes where the client had a different law firm before our law firm became involved.
In many of these situations, we take over a case or a dispute that has become an absolute train wreck.
In many of these situations, the client reaches out to us for a second opinion on litigation or arbitration strategy. The typical refrain: “I’m not sure we hired the right lawyer.”
I’m not talking about the average Joe employee. I’m talking about executives, entrepreneurs, successful privately held companies. I’m talking about cases where there is $20+ million on the line. I’m talking about clients who have resources and options when it comes to hiring suitable counsel.
And yet: Many of these folks have a lazy / default approach to hiring lawyers for these types of cases. I will now address the specific default approaches that I see.
- Random BIGLAW firm. Anybody who is really in the game knows that some BIGLAW firms do good work. Some lawyers in BIGLAW do good work. But lots of BIGLAW firms and attorneys just bill hours and trade on a reputation earned 100 years ago by named partners who are long dead. Folks with experience in law and litigation know that. Lots of clients don’t. They assume BIGLAW = high quality representation. Procaps, anyone? Procaps was a South American company who needed representation in a Florida business dispute. They ended up with Carlton Fields. Of course they did. Someone recommended Carlton Fields — a preeminent, politically-connected Florida law firm. Carlton Fields mishandled a big antitrust / unfair competition case and got Procaps whacked for more than $15 million in attorneys fees and costs. I see this movie all the time. I especially see this in secondary or tertiary markets where a couple BIGLAW firms have a local presence. Years ago, I used to go to this Italian steakhouse on Las Olas Boulevard called Timpano. This was before they closed and renovated. The new spot has none of the old school mafioso charm. I was sitting at the bar one evening. And this fat, drunk guy started ranting about how he could destroy all of his enemies in business — because his lawyers were Proskauer Rose in Boca. He said that anytime he needed to mess with someone, he could just give his lawyers a $100,000 retainer and tell them to bury the other side. His drinking companion sees me shaking my head and takes interest. He asks me what I do. I tell him I’m a lawyer. He asks me if I know anything about Proskauer Rose in Boca Raton. And I start laughing. You see, I had already encountered an adversary who played that same exact card, same exact office, same exact BIGLAW firm. And we beat them soundly. The upshot: Random BIGLAW firm whose name people know. BIGLAW name that people know because they have a presence in X secondary or tertiary market. That is a default approach to hiring specialized litigation counsel. That is not an actual strategy.
- “My transactional lawyer.” Are people and companies who engage in multi-million dollar transactions really this dumb / gullible? Yes, apparently so. I have seen this one countless times. Client X hires Lawyer Y to handle a transaction. After the transaction, shit hits the fan. There is a dispute. Possibly there is litigation. Client X engages Lawyer Y for the dispute / litigation. Lawyer Y is the transactional lawyer. Lawyer Y is dabbling. At best, Lawyer Y says, “Don’t worry, one of my colleagues can help with the litigation.” But the firm has no real expertise in the type of litigation at issue.
- Cross sold within a BIGLAW firm. Client uses X mid-sized or large law firm for certain business / legal matters. Client assumes: This is a pretty big firm. They must have good lawyers who can help with any problem that arises. I’m sure they have someone who can handle this trade secret / tortious interference / computer fraud case. I might as well just stick with them rather than go elsewhere for this one matter. That makes sense of the firm legitimately has a team with expertise in X type of litigation. And if that expertise is available at a reasonable price. Look: I’m familiar with BIGLAW billing models. In many cases like this, larger firms work the case around the clock. And at many of these firms, first and second year associates are billing at $600+ an hour. This is why lots of clients jumping ship and taking specialized litigation to small speciality shops that provide a better product/service and better pricing. But – invariably – I see train wreck cases that emerge out of that default approach to hiring counsel: The client got cross sold within a BIGLAW firm.
- “It was an emergency. We hired the first lawyer who would talk with us.” Not to be a bald-headed jerk-faced meanie, but let’s consider the merits of that strategy. Law is a profession but it is also a business. There are certain market realities. I left Boies, Schiller & Flexner when I was a 3rd year associate. I started my own shop. For the past decade, I have run a law firm with anywhere from 3 to 6 lawyers at a time. We have litigated give or take 200 cases in this area of law. When I first started my own shop, the phone rang sporadically. And I would jump on any new possible business. Because that’s what you do when you don’t have tons of business. Back then, I would take the emergency call or email from a potential client on a Friday evening. Do I take that call now? No. Because I have tons of business. I have existing cases and clients to focus on. I am not taking any random calls, especially not on Friday evening. Who is going to take that call? A rookie who is hungry for a shot to prove himself. You can take a chance on that lawyer. It might work out. Years ago, some folks took chances on me and I delivered. Otherwise, it’s some 15th year lawyer who is available for a random prospect at the drop of a hat on a Friday evening at 7pm. Call me crazy, but that doesn’t bode well. That’s like me calling the best general contractor in a market and expecting them to start renovating a building for me next week. Not going to happen. The good ones are always busy. The good ones set their own terms. The good ones aren’t chasing business. The good ones aren’t dropping everything to talk with a random prospect on Friday evening. It doesn’t work like that. Could I get someone to start renovating that building for me next week? Yep. Would they probably suck? Pretty much. Upshot: The situation my be urgent. But you have to understand the utility of a couple extra days. Is it urgent wherein you need to hire a lawyer this very minute? Or, is it urgent wherein you need to secure competent counsel within the next few days. That’s a big difference. The lawyers who will jump in at a moment’s notice generally are not the same as the lawyers who may be available within a couple days or a week. Lots of folks make that mistake. They hire whoever is immediately available. And, often, that does not work out very well. The more you know.JP
Published by Jonathan Pollard
Employment Law. Non-Compete Defense. Trade Secrets. Partnership Breakups.