Wednesday, January 28, 2004
Bankruptcy Judge Finds ACandS' Asbestos Reorg Unfair
Undue Influence by Plaintiff Attorneys
by Douglas McLeod
Business Insurance - Corporate Risk and Employee Benefit Management news
Posted on Jan. 27, 2004 3:38 PM CST
WILMINGTON, Del.—A federal bankruptcy judge has refused to confirm the Chapter 11 reorganization plan of asbestos defendant ACandS Inc. after finding that the plan was unduly influenced by asbestos plaintiffs’ lawyers and would treat some asbestos claimants unfairly.
U.S. Bankruptcy Judge Randall J. Newsome threw out ACandS’s prepackaged Chapter 11 plan Monday after hearing objections from units of Travelers Property Casualty Corp., which is the longtime liability insurer of the former Armstrong World Industries insulation contracting unit.
Judge Newsome found that a committee dominated by asbestos plaintiffs’ lawyers largely dictated the terms of a trust fund for claimants, chose its trustee and created several categories of secured claimants, many of whom were represented by lawyers on the committee.
Monday, January 26, 2004
Morgenstein & Jubelirer Snags $15 Million Verdict
Morgenstein & Jubelirer partner John Worden secured a $15 million jury verdict in Kansas City Federal Court on January 20 for NewCap Insurance Company, a Cayman Island-based captive insurer of Ascension Health, the nation’s largest hospital chain. The defendant, represented by Shook, Hardy & Bacon, was reinsurer Employers Reinsurance Corporation (“ERC”).
The dispute stemmed from an underlying verdict in Evansville, Indiana in 2001. In that case, plaintiff Gregory Loomis, a neurosurgeon at Ascension Hospital St. Mary’s Medical Center slipped on some water in one of the hospital’s kitchens. He developed reflex sympathetic dystrophy (RSD) in his elbow and claimed that he was no longer able to work. The lost wages claim was $16 million. That case proceeded to trial and the jury returned a $16,950,000 in his favor, 16 times as large as the largest prior verdict in Evansville history. After an unsuccessful appeal, the underlying action was settled for $16 million.
NewCap/Ascension turned to ERC for reimbursement of $15 million in excess of a $1 million deductible. However, NewCap/Ascension failed to give ERC notice of the claim until after the jury verdict, and on that basis ERC refused coverage.
Under Kansas law, late notice excuses an insurer’s or reinsurer’s duty to provide coverage only in cases of substantial prejudice. The unanimous 8-person jury returned a verdict in 90 minutes, awarding NewCap $15 million.
Can Pittsburgh Become the Back Office for America's Law Firms?
Patty Tascarella
Industries & Communities - bizjournals.com
From the January 23, 2004 print edition of the Pittsburgh Business Times
Can Pittsburgh position itself as corporate America's backroom in terms of legal work?
Over the past few years, more local firms are benefiting from corporations outsourcing projects and even whole functions of their own legal departments.
Last fall, Alcoa Inc. reviewed a field of 30 law firms before tapping Eckert Seamans Cherin & Mellott LLC to handle its intellectual property legal needs. As part of the three-year contract, Eckert set up an office at the Alcoa Technology Center. Alcoa said it expects the arrangement to cut its costs by 25 percent in the IP area.
Now The Legal Network, a downtown-based legal staffing firm, is launching an effort to entice corporations to move legal projects to Pittsburgh. "
Paperless Trials Growing
Industries & Communities - bizjournals.com
From the January 23, 2004 print edition of the Boston Business Journal
Legal Notebook
Sheri Qualters
Journal Staff
The paperless-office ideal of a few years ago may be nothing but pie in the sky, but lawyers are embracing the concept of a paperless trial, and startup companies are plugging into the market.
Saturday, January 24, 2004
Legal Market Indicators
Law Office Management & Administration Report
January 13, 2004 3:39pm
Spending on outside counsel is on the rise and in-house counsel expect to spend more this year on securities, corporate, regulatory, litigation, and intellectual property matters, according to the Strategic Review and Outlook for the Legal Services Industry study conducted by The BTI Consulting Group, Inc. (Boston; 617-439-0333).
The bad news: The same report contends that although Fortune 1000 clients are now each using 10 core law firms-up from nine last year-they are planning to cut the total roster by 41% over the next three years. One possible reason, the survey says, is a drop in client satisfaction noted by respondents.
BTI reports that 15% more clients are shopping for new law firms, less work is being bid out, and informal networks play a much larger role in the law firm hiring process.
More of the same. The 2003 ACCA/Serengeti Managing Outside Counsel Survey Report offers a similarly disquieting picture of relationships between in-house and outside counsel. According to this third annual survey of members of the American Corporate Counsel Association (which recently changed its name to the Association of Corporate Counsel, or ACC), legal spending continues to increase, both in absolute terms and relative to company revenues, despite a slowing economy.
But when the surveyors asked in-house counsel to identify their most pressing concerns, reducing spending on outside counsel dominated the agenda again, for the third year in a row, with an even higher percentage of responses (81.5%) than last year.
The reason? The in-house counsel who completed the survey say their second highest concern this year (up from third place last year) is "too much work for too little resources/legal budget issues." And there's a sense that outside law firms are doing nothing to cut their own costs. Eighty-six percent of respondents say they want their outside law firms to be more concerned with costs.
One perceived problem is that "the vast majority of work done by outside counsel is still billed at either standard or discounted hourly rates, both of which have increased during the past year," the report claims. "Resistance by outside counsel to alternative fee structures remains strong, and few law firms propose alternative fees to their corporate clients," the surveyors assert, adding that "when companies attempt to obtain competitive proposals from law firms, they receive on average less than two law firm responses for each request issued."
The kicker: "Law firms may not even be aware of the importance of this issue because few initiate evaluation discussions with their clients," survey respondents claim.
To address the cost issue, law departments are increasingly taking actions that strike at the heart of law firm profitability goals. In addition to the new controls on the conduct of outside counsel, law departments are sending less work to law firms. In addition, the surveyors found, financial controls are on the rise to the extent that there has been constant growth in the use of budgets across all types of matters and also in the number of in-house counsel who are tracking the performance of their outside counsel against budgets.
Financial controls in use include budgets for all types of matters, with 83% of in-house counsel requiring budgets for some of their matters, especially litigation. Other common methods for controlling outside legal spending include discounted or alternative fees (36.3%), billing guidelines and spending rules (32.2%), evaluations of outside counsel (22.6%), and in-house fee/bill managers (21.1%).
Non-financial controls over outside law firms are also growing. More corporate counsel, for example, now require their law firms to use in-house services and expect law firm assessments at the conclusion of each matter. Outside law firms are also facing new requests to share their work product for future use by the law department as well as with other law firms representing the same client.
Consider, too, that an increasing number of in-house counsel now expect law firm associates to have a minimum level of experience-which has increased steadily each year, to 4.24 years in 2002. Corporate clients are making this one of many conditions for retaining law firms.
There's less work to go around, the surveyors note, as in-house departments funnel more work to their own lawyers, place greater controls on outside counsel, and send less work to outside law firms. Only 23.3% of in-house counsel issued a request for proposal in 2002. "One reason this practice is not gaining momentum may be the lack of law firm responses to the RFPs," the surveyors note.
Where do corporate clients find their in-house counsel? Like the BTI survey, the ACCA survey also found that corporate clients are more likely to use informal networks to secure outside counsel. When they had to retain additional firms:
* 82% of respondents sought information from their current firm.
* 52% asked in-house counsel at another company.
* 47% got a referral from their in-house resources.
* 40% used a company-approved list.
* 26% asked employees at their own companies for recommendations.
And after two years in which median outside legal spending was double that spent on law departments, that gap was reduced to 1.6% during 2002, reflecting a higher percentage of work being kept in-house.
In-house counsel are projecting an increase of 5% in their companies' spending on their law departments next year, while spending on outside counsel is projected to remain flat. As a result, the data reveal that law firms have slowed the annual increase in their hourly rates, from 9.27% in 2000 to 6.28% in 2001 to 5.44% in 2002. And if this year's predictions turn out to be accurate-i.e., no change in outside legal spending next year and an increase of 3.6% in hourly rates-there will be even less work for outside counsel during the coming year.
Although only a minority of in-house counsel uses electronic billing, the practice is increasing dramatically and is at the top of the list of desirable new technologies. Indeed, the survey finds a widening acceptance of Internet-based systems to increase the efficiency of working with outside counsel. Electronic bill review is experiencing the greatest upswing with the realization of the savings possible from processing bills electronically, managing to budgets, and producing management reports from such systems.
The bottom line: Even if your firm seems to be corporate clients' outside counsel of choice, it never hurts to evaluate and improve the relationships. For suggestions on doing this that you can put to immediate use, see the sidebar "Four Easy Ways to Establish and Maintain Strong Client Relationships."
For more information: The 2003 ACCA/Serengeti Managing Outside Counsel Survey Report offers information on how in-house counsel analyze trends in the methods they are using to find, manage, evaluate, and compensate their law firms.
A copy of the 200+-page survey, including a summary report, tables, and analyses, is available on CD. Order it either through ACCA at www.acca. com/Surveys/partner03/ or from Serengeti at www. SerengetiLaw.com.
(Source: Law Practice Management magazine, published by the ABA Law Practice Management Section)
Copyright © 2004 Federal Information & News Dispatch, Inc.
Copyright © 2003 The Dialog Corporation
Law Firms Spending 1.5% to 3% of Revenue on Marketing
Partner's Report for Law Firm Owners
January 22, 2004 3:05pm
Owners of large firms continue to embrace chief marketing officers. It's no secret that in the 25 years since the Bates decision allowed law firms to advertise their services, law firm marketing has changed from being "undignified and inappropriate" to become an essential part of the business dynamic at firms of all sizes. Here's proof: A recent analysis of Am Law 100 firms reveals that experienced industry heavy-hitters who assume the title of chief marketing officer (CMO) now earn around $400,000.
The marketing director's role can be murky, however, because few firms have agreed-upon levels of responsibility for the position. And some firms have failed to answer certain important questions: How much control should a marketing director have over his or her budget? To whom does the head of marketing report? Should the title be CMO, marketing director, or global head of communications? "Some firms throw around these terms, but they really don't embrace the whole function," Sally Schmidt of Schmidt Marketing, Inc., who runs CMO searches for big firms, told The American Lawyer magazine. "There are some who look to hire [top legal professionals], but don't give them full utility."
In addition, "estimates of law firm marketing budgets vary, as do the means of reckoning what falls within that budget," the Am Law report notes. "The average is 1.5% to 3% of a firm's annual revenue." In contrast, "Big Four accounting firms can expect overall marketing budgets that total several hundred million dollars-roughly 3.5%-a slightly bigger slice of a much larger pie." Source: The American Lawyer magazine (New York City; 800-888-8300).
Copyright © 2004 Federal Information & News Dispatch, Inc.
Copyright © 2003 The Dialog Corporation
Monday, January 19, 2004
Outsourcing Law Firm Services to India
A small collection of recent articles on topic. See also.
Wednesday, January 14, 2004
More Data to Add to Your Review of Billing Rates
Law Office Management & Administration Report
January 13, 2004 3:39pm
LOMAR was inundated last month with calls from law firm leaders needing additional data to evaluate their firms' hourly rates. To assist, LOMAR located a range of data culled from a new survey of rates in 18 metropolitan areas, 2003 Attorney Billing Rate Survey, conducted by Helder Associates, Inc. (Milton, Del.; 302-644-0445; bonhel@aol.com).
According to the executive summary of the survey, nearly 70% of responding partners bill their time out at between $200 and $400 per hour; 4.2%, at less than $175 per hour; and 16%, at more than $500 per hour. As expected, several cities (Dallas, Los Angeles, New York, and Washington) reported a much higher percentage of partners billing in excess of $500 per hour.
Nationally, the average billing rate for first-year associates was $168 per hour, although associates in major metropolitan areas (New York, Los Angeles, San Francisco, and Washington) are billed out at much higher rates. Hourly rates in these cities range from $202 to $243 per hour for first-years to a high of $256 to $358 per hour for the class of 1996.
(Tables omitted. Please call 212-244-0360 and identify yourself with code FDN337 to have the tables faxed to you.)
Copyright © 2004 Federal Information & News Dispatch, Inc.
Copyright © 2003 The Dialog Corporation
Analysis and Graphs by Ellis Mirsky:
1,800 hours billed per year appears to be the de facto standard for law firm partners U.S. nationwide. It's about all that partners, on average, appear to want to work -- they've "maxed" out at 1,800.
Large Eastern firms dominate in the hourly rate categories but Eastern mid-size firms trail their Central and Western region counterparts slightly. Why? In the East, large firms dominate. Elsewhere, mid-size and smaller firms have a better shot at getting high-end work.
The Eastern Region‘s partner billing rate frequency distribution shows clusters of high billing rate partners driving up the region's average. (It also enables lower billing rate individuals to push their hourly rates upward.)
Central Region mid-size firm partners are billing 109 more hours annually and commanding a $31 hourly premium over their large law firm counterparts. What's up with that? And, Central Region partners are billing less time. Why? Insufficient work to keep them busy? Perhaps, because their hourly rates too are depressed and that suggests that they simply don't have enough work to keep busy full-time. Mid-size firms must be getting that work and their hourly rates reflect it. Are we witnessing the emergence of a new crop of large Central Region firms, now only mid-size? What message should that send to existing large Central Region firms? Too many partners in large Central Region firms? Middies coming!
Large Western Region firms are living, well, "large" -- high hourly rates and 40 hours over national average billings. The higher Eastern Region partner rates suggest that there's room for large Western Region firms to increase hourly rates (to make up the $51 difference in average partner rates). Let's see what happens in 2004. Higher rates and more leverage (spelled a-s-s-o-c-i-a-t-e-s) can increase margins in Western Region firms.
US Partners
Eastern Region Partners
Central Region Partners
Western Region Partners
U.S. Associates
Eastern Region Associates
Central Region Associates
Western Region Associates
Billable Hours
Hourly Rates
Billing Per Partner
How to Teach Your Associates to Make Rain Like the Pros
Compensation and Benefits for Law Offices
January 13, 2004 3:39pm
Are rainmakers born or made? For law firm managers responsible for offering professional development training in this crucial skill, there's good news. James Durham, president of The Law Firm Development Group, Inc. (Dedham, Mass.; 781-320-1535; www.lfdg.com), insists that within every lawyer there's a rainmaker struggling to get out.
Moreover, Durham's research, which is based on interviews with 152 law firm clients and 15 law firm rainmakers, each of whom controls several million dollars worth of business, indicates that the "little things" matter a lot to clients. Successful rainmakers know this and as a result focus their attentions on conveying clearly to clients how much they are valued.
It's not just how smart your lawyers are, unless they're dealing with "bet-the-company" work, where winning is all that matters. In fact, Durham told attendees at a 2003 industry meeting in San Diego, "Lawyers can have the highest price and the lowest level of expertise and still win new business." How? Teach your junior lawyers to give their clients a level of attention and service that convinces them that working with your firm is infinitely better than working with other lawyers. Rainmakers know the importance of this, Durham contends, and all lawyers (even associates who've only recently set their sights on mistmaking) can learn their secrets to success.
Here is a simple course on Rainmaking 101:
1. Clients want to be able to find you when they need you. Most won't be counting the minutes before you return a phone call as long as they can reach you when they feel they must. The point: When you train your junior lawyers in client service, stress the importance of accessibility. According to Durham, few clients will go overboard with calls-especially if your junior lawyers have laid the groundwork for a successful relationship from the outset. Adopt an attitude that conveys to clients that you're available and that when you're not, someone else from your firm will be.
2. To get clients and stay on their A-lists, rainmakers act-they don't just wait for clients to initiate contact. A week or even a day after a matter wraps up, the good rainmakers call to "debrief" clients, seeking insight into what they did well and what they could have done differently, offering articles and other resources of interest, and so on. While it may be unrealistic to expect this of new associates who weren't the client's primary contact, Durham recommends teaching them how to start a rainmaking effort by initiating contact with their last five or 10 clients-not waiting for the phone to ring.
3. Entertaining clients is overrated. Personalized attention is preferred-and powerful. Send clients articles periodically, remember dates that are important to them, and ask about their families. The point: The best lawyers/rainmakers personalize every client relationship to some degree by stepping outside of the lawyer role. The idea is to make clients feel appreciated, not to hang out with them after work or on the weekend, Durham says.
4. No lawyer is an island. Clients view their lawyers as part of a team, and you must see clients in the same manner. Suggest that associates make two lists, one with the names of everyone they work with at client organizations and the other with the members of the firm's team. Then cross-reference the two lists, matching people who know or should know one another well, and foster those relationships.
"This is called zippering," Durham explains. "The most successful firms are the ones so tangled up at so many levels that [someone on your team] can leave and the client stays." The point: It's not just about one lawyer. Rainmaking depends on having members of your team build relationships with people at all levels of the client organization.
5. Keep to stated deadlines. The best lawyers/rainmakers know the importance of doing what they said they'd do when they said they'd do it. Missing deadlines inconveniences clients and devalues their time. Yet law firm systems inadvertently fuel deadline inefficiencies, Durham believes. Few firms allow the associates who are responsible for delivering services to hand off or turn down work from partners to accommodate clients' needs.
"Rank-and-file lawyers say, 'Of course rainmakers never miss a deadline-they do it on our backs,'" Durham told attendees. "That's why some of the best rainmakers are the least liked internally." The point: Anticipate problems with deadlines and take the steps needed to mitigate client concerns at every turn.
6. Doing what you've always done gets you what you've always got. To build a practice, you must expand your range of work, Durham says. "Great rainmakers realize that business comes from anywhere, everywhere, all the time, and anytime," he told attendees. "Cross-selling should mean bringing in work you don't do" regularly, taking note of clients' needs, and being prepared to "sell what you don't do." The point: Again, it's not about one lawyer; it's about your clients and the entire firm. Rainmakers know that if they can't sell themselves, they should at least sell the lawyer down the hall.
7. You only get one chance to make a first impression. Clients expect confidence and presence from their lawyers. The point: Invest in presentation-skills training to make the desired impression, Durham advises. But remember, confidence is not arrogance. "Any training aimed at improving confidence levels is critical."
8. You can't fake sincerity. Clients expect their lawyers to be loyal and willing to do what it takes to move their cause forward, Durham says. "Clients want lawyers who will take care of them and keep them safe... It's impossible to fake [loyalty] and fool clients." Consider: Are you the type of person who would stop to help someone in need, even if it required some personal sacrifice? Clients value lawyers who can honestly answer "yes."
9. It takes non-billable time to build a practice. Few lawyers want to invest in non-billable activities, but Durham believes the fear factor should motivate even those who are most ambivalent about this. "If you just moved 40% off your entertainment time and 40% off your firm management time, instantly you have 100 hours available without working one minute harder," he asserts. The point: Face-to-face meetings with clients and prospects off the clock yield the highest marketing return, so schedule time to discuss their business.
10. Research is your friend. Rainmakers know that before they meet with a potential client, they must do their homework. Sometimes it's as simple as conducting a Google search or having marketing staff gather the information needed for an RFP. Whatever the approach, the preparation will put lawyers in good stead.
For more insights on how to grow rainmakers with proper in-house training programs, see the sidebar "Basic Components of a Client Development Training Program." Basic Components of a Client Development Training Program
Marketing training creates better lawyers, James Durham, president of the Law Firm Development Group (Dedham, Mass.), contends. He suggests using the format outlined below or creating some version of your own to put together a training program for junior partners and associates that includes a section on client development:
1. Set specific goals:
* Make associates more valuable to clients as early as possible in their careers.
* Make associates more profitable to the firm and more valuable to the partners and the client teams with which they work.
* Provide professional experience and development opportunities that will encourage associates to stay with the firm.
2. Set general goals:
* Expose associates to the broad spectrum of skills they'll need for effective lawyering, client service, and practice management.
* Introduce associates to the firm's substantive law areas and teach them technical proficiency in selected areas (e.g., opinion letters for business lawyers, deposition skills for litigators).
* Establish regular, meaningful feedback procedures that give associates a better opportunity to improve their lawyering skills. Evaluate associates on multiple criteria, including client satisfaction, independence, marketing potential, and judgment.
3. Use ancillary, related programs to maxi-mize the value of your training program. These are aimed at helping your firm's partners learn how to:
* Involve junior lawyers appropriately and cost-effectively in client relationships. Develop procedures to encourage such client contact.
* Develop firm protocols and procedures for case assignment and workflow management.
* Offer close supervision, case management, and feedback techniques that will encourage and support associates' skill-development.
* Establish their own targets for marketing, training, and practice-management efforts.
* Create service-team structures to ensure consistent, predictable, and appropriate staffing for key clients.
4. Propose titles and topics for specific, tiered associate training programs. Consider the following examples relating to the topic "learning the business of law," which would include classes on:
* The firm's associate development and learning program.
* The workflow process: the anatomy of client work from request through completion.
* Client services from the client's point of view.
* Partners and their roles as managers.
* The ethical considerations of being a lawyer.
* The life of a client relationship from initial engage-ment through completion of the matter.
Another training resource: In addition to conducting associate-training programs, The Law Firm Development Group has created an interactive CD-ROM training program called "Just Think. About Clients." This tool can be used to teach your associates, individually and at their own speed, the importance of client service and how to deliver that service to their clients. For more infor-mation: Contact James Durham at The Law Firm Development Group, 902 High St., Dedham, MA 02026; 781-320-1535; Web site: www.lfdg.com
Copyright © 2004 Federal Information & News Dispatch, Inc.
Copyright © 2003 The Dialog Corporation
