Jimmie Gates with the Clarion Ledger penned an excellent article on attorney advertising over the holidays.

The article prominently features Richard Schwartz, the godfather of lawyer advertising in Mississippi. Besides the article, I recommend watching the accompanying video interview of Schwartz on the digital version linked above.

Schwartz spends “well over $1 million a year on ads.” In the video, he notes that lawyer advertising has gone from being frowned upon in some circles to expected.

It clearly works. Schwartz’s website lists 21 attorneys practicing at the firm. Morgan & Morgan, the other advertising behemoth in the Jackson market, lists 15 attorneys in their Jackson office. Both firms are masters at building a brand.

Other personal injury attorneys in Jackson are doing what they can to keep up. There are billboards for many different law firms around Jackson and daytime TV is filled with their commercials.

I would love to know from the big advertisers how they handle the huge volume of calls the ads generate and the percentage of callers converted into clients. There is no telling how many calls they get from people who are simply angry consumers or have a non-recoverable legal problem. Call screening has to be a big under-the-hood issue that grows larger with every dollar spent on advertising.

Seems like all the good attorney ad brands are taken. Maybe I’ll run an ad campaign as Mr. Sunshine:

Want an attorney who isn’t going to blow smoke and will keep it real? Call me, Mr. Sunshine. I’ll break it down why your case sucks and you should take the peanuts the insurance company is offering and run.

Zero Hedge ran this post last week about most Americans not being able to afford lawyers. It’s not an unusual take.

Stories like these suggest the problem is attorneys have priced themselves out of the market. I disagree. The problem is the civil justice system is not equipped to solve most people’s legal problems.

Consider this quote:

Most civil cases are usually about debt collection, landlord tenant disputes and home foreclosures. Lawyers will build their cases around litigants inexperience and inability to hire competent counsel.

Terry Lawson, a legal aid attorney in Missouri said: “These guys know they’re going to win. Their hope of hopes is that nobody will go get lawyers.”

The first paragraph is true. The second is true, but not the whole story.

As a reminder, lawyers aren’t magicians. Occasionally, an attorney can seemingly pull a rabbit out of a hat. That doesn’t make her a magician. In all likelihood, she will not repeat it in the next case.

The person looking for the lawyer in the debt collection usually owes the debt. Same for the tenant in the landlord-tenant dispute. Same for the homeowner subject to foreclosure. They are going to lose–with or without a competent attorney. So the creditor or landlord doesn’t really care whether the defendant gets a lawyer.

It’s also no surprise the consumer defendant can’t pay an attorney–no matter how much the attorney charges. If they could afford an attorney, they could pay their debt.

Lawyers want to help their clients. We crave job satisfaction and abhor feeling like we aren’t making a difference. These feelings don’t jibe with charging a client who is going to lose.

Who wants to charge a couple of thousand dollars to represent a client in a debt collection the client is going to lose anyway? How will that help the client?

In many of those disputes, the client is also on the hook for the other side’s attorney fees. Active litigation with an attorney will make those fees higher. Usually, they are better off not fighting the dispute in court.

I feel bad for people in those situations. It’s sad. But many times, a lawyer will just make a bad situation worse.

I get calls from people in these situations all the time. It’s soul sucking to hear their stories. It is the worst thing about my job. But I can’t help them regardless of whether they can pay my fee.

Want to help these people? Come up with a better system for handling these types of disputes.

The post continues:

And it’s not always about winning or losing in civil cases. Silvana Naguib, an attorney at Public Counsel, a California pro bono legal firm commented: “Lawyers can help negotiate better settlements. There’s a stark difference between the agreements signed by self-representing litigants versus what [I get] for clients.”

Ok. Want to help the problem? Fund more pro bono attorneys to advise consumer defendants. But that’s an issue for the legislative branch, not the judicial.

Lawyers didn’t create the system and are not magicians. We take way too much heat for something that’s not our fault.

As widely reported on Jackson Jambalaya and elsewhere, multiple metro area homeowners associations are accusing Ridgway Lane of embezzlement. Most of these homeowners associations have filed suit against Ridgway Lane. I wish them luck.

There is a good rule of thumb when it comes to lawsuits involving embezzlement. The rule is: you can’t recover from the thief.

Think about it. If the thief had money, he wouldn’t be stealing. The thief starts broke. That’s why he’s stealing. He steals some money and spends it. Wash, rinse and repeat.

The challenge for victims and their lawyers is to find someone other than the thief to blame. Someone who has money.

Consider the ongoing receiver lawsuits in the Madison Timber ponzi scheme. The receiver is not suing Lamar Adams. He forfeited his assets and went to jail. Instead, the receiver is suing various other parties who, allegedly, share in the blame for the scheme. Getting a judgment against these defendants will be much harder than against Adams. But unlike with Adams, recovery is possible.

This rule doesn’t only apply to embezzlers. It applies to all variations of crooks and incompetents. For most of us, it’s a lesson learned the hard way.

Rarely, victims can recover from someone other than the thief or person who ripped you off. Usually, you’re just screwed. You can’t get blood out of a turnip. Attorneys have to find a viable defendant for recovery–not just liability.

So getting back to the homeowners association lawsuits, sure they will ‘win’ the case, but how are they going to recover? Are they just litigating for bragging rights?

As with any rule of thumb, there will be exceptions. But not many.

There are other rules of thumbs for lawyers. One of my favorites is: you never want to be the client’s third (or more) lawyer on a case. It’s never worth it. And I’m not aware of this rule ever having an exception.

I recently wrote about the change in law firm structures here.

Several readers emailed me and pointed out I did not discuss the effect of corporate mergers or the impact of companies adopting ‘the Dupont legal model’.

Here is some background for current and future lawyers under age 40. When I graduated from law school in 1993, there were healthy defense-centric practices all over Mississippi. There were well-known great insurance defense firms in towns like Columbus, Laurel and Pascagoula. While there may not have been a ton of defense work in these towns, they had little competition. Insurance companies hired the local defense attorneys.

In a big case with a corporate defendant, a company might hire a Jackson firm. But the Jackson firm turned around and associated the local defense firm as ‘local counsel.’ This meant the small town defense lawyers had two ways of getting hired: (1) directly by the defendant; and (2) indirectly by other lawyers as local counsel. So not only were these firms not at a disadvantage to the big Jackson firms, in some ways they had advantages.

You may ask why the companies didn’t just hire a firm with multiple offices all over the state? Because there weren’t any. I can’t think of one firm with offices in multiple regions of the state. For sure, none of the ‘Big 5’ Jackson firms did.

This changed in the mid-90’s with the Dupont legal model. Here is an explanation from a 2004 ABA article:

In just over 11 years, the DuPont legal model has become enshrined as the way to get value for money in legal services. More than 160 corporations and government agencies have been in touch with E.I. DuPont de Nemours Co. to take a close look at the mod­el, and there are a lot of variations at work around the country.

Devotees use fewer law firms and other legal-related service providers, develop a close relationship and a detailed playbook with them, then measure results to determine best practices. (See www.dupontlegalmodel.com.) DuPont was working with more than 350 law firms before it created the model. Now it uses just 41.

The first to get squeezed out by the Dupont model were the small town defense firms. If companies were going to hire a firm to cover a whole state, they wanted a statewide firm. Two things started happening almost simultaneously.

First, Jackson firms quickly opened outposts all over the state. Sometimes they hired established local attorneys to open the office, sometimes they dispatched talented young attorneys to the new offices. Second, regional firms opened offices in Mississippi. Suddenly the small town defense firms had competition from firms who could offer the Dupont model.

While all this was going on, the number of U.S. companies hiring attorneys was shrinking. From 1996 to 2016, the number of publicly traded companies shrank from 7,322 to 3,671. Locally, many companies that hired local attorneys were taken over by national companies that stopped hiring local attorneys.

Attorneys as old as me don’t need the stats. We just know there are a lot fewer corporate/insurance clients than 30 years ago. In Mississippi, I don’t believe there are half the corporate/ insurance clients there were in 1995.

For many of us–myself included–our best clients were bought by other companies where other people made hiring decisions and hired other lawyers. There was nothing worse than having a great relationship with an in-house attorney, only to have the caseload taken over by someone you didn’t like and who had stupid ideas for defending cases.

Everyone who did any defense work from 1990 – 2005 knows what I’m talking about.

In the 2000’s, we have fewer clients hiring fewer attorneys.

For litigation, that’s where there is litigation. Because while all that consolidation was happening, there was also consolidation of litigation itself. There are a lot fewer cases being litigated in fewer places.

These trends magnified the pressure on rainmaking. Thirty years ago, rainmaking wasn’t as important because there was a lot more rain. With so many clients hiring so many attorneys, it wasn’t as hard to have a book of business.

Compared to how it used to be, the legal industry is in a drought. In a drought, rainmakers are king.

Defense firms aren’t the only attorneys who have felt the pain. In a follow up post, I may discuss why attorneys with practices like mine are dinosaurs destined for extinction.

In my last post I discussed a Wall Street Journal article covering the difficulties of partnership at big law firms. Now I will discuss why making partner in a big firm does not mean what it did 40-50 years ago. This is a brief overview. A book could be written on this subject.

The article touches on the answer:

Being named a partner once meant joining a band of lawyers who jointly tended to longtime clients and took home comfortable, and roughly equal, paychecks….

Many firms have expanded rapidly to mirror the growth of their corporate clients….

Today, making partner can take more than a decade and still requires scraping for new business….

In the 1980s, the most elite law firms were small and leaned on close ties to a few marquee clients passed down from one generation of partners to the next….

Mr. Greenwald realized the firm needed to operate less like a law firm partnership and more like the investment bank he’d just left, if it wanted to survive….

A handful of law firms still operate under a lockstep compensation system, which pays partners in a relatively tight band based on seniority, rather than how much revenue they bring in….

“Many law firms have become so focused on the next client, the next matter, the next dollar, that they have failed to notice the gradual, but inexorable, disintegration of their cultural glue,”…

My Take:

Law firms changed because the world changed around them. Change was more about survival than paying some partners more than others. That was a byproduct, not the cause.

Before law firms changed, their institutional clients changed. The Greatest Generation were ‘company men.’ They joined a company and worked at it for their whole lives.

Law firms serving companies mirrored their clients. New lawyers joined firms with plans to stay their entire careers.

Things began changing around the time the Baby Boomers started joining the workforce. Many stodgy institutional companies began to be passed, go out of business or merged into competitors. For a variety of reasons, executives in particular moved to other companies with regularity. For a brief overview of this phenomena, see chapter one of the book Barbarians at the Gate.

That had a profound impact on law firms dedicated to a few institutional clients. The company men knew one law firm–their law firm. A new executive from outside the company probably doesn’t care that the institution has always used a particular firm. The executive could just as easily want to use a firm he knows and that is loyal to him.

Suddenly, the law firm was at risk of losing the institutional client. And even if it didn’t happen, it could happen. Law firms realized that. It meant they could not safely rely on a few clients to support an entire firm.

Any by the way, the executive leaving and a new one coming in was not a one time event. It often repeated itself every few years. This meant that the institutional firms had to worry about retaining the institutional client every few years.

Institutional clients also started bringing lawyers in-house to save money. Joining the institution’s expanding legal department was an option for some lawyers who worked at the institutional-serving firms. Many did. But for most, that move traded income for job security. For lawyers living paycheck to paycheck, it wasn’t an option financially.

By the 1990’s, most power companies, phone companies, car manufacturers, insurance companies and other traditional institutional clients were expanding their legal departments and using outside firms less.

On this last point, I’m speaking from personal experience. I had an insurance company client that was a reliable source of defense work that was a great backstop to my contingency fee cases. But in the late 2000’s, the company decided to hire an in-house lawyer to work on their Mississippi cases. The projection was that it would save the company around $500,000 a year in Mississippi alone (I was not the only Mississippi attorney affected). I was asked to apply for the job, but passed.

Today, institutional clients have virtually no loyalty to law firms. It’s even accelerating as millennials move into leadership positions in businesses. More than one of the dying breed of company men have complained to me about how different things are with millennials beginning to call shots. Experience is valued less because of, in a word, Google. Steve Millennial feels like he doesn’t need Sarah, who has worked at the company for 30 years, when he thinks Google is a match for Sarah’s 30 years of experience (it’s not, by the way).

Lawyers can relate. There isn’t a lawyer alive who hasn’t had to deal with a client who considers himself an expert by Google. Appellate judges who can still live in a world of a record and precedent don’t know how good they have it. Maybe next time in an appellate oral argument a judge asks me a question I can’t answer, I should respond: “can’t you just Google it”?

Law firms are hyper-focused on the next client because finding that next client only means firm survival. On a related point, plaintiff attorneys who serve one-off clients are often too critical of defense lawyering. They need to understand that many of the tactics they don’t like are client driven. It’s dangerous to tell an institutional client “no.” For high and mighty plaintiff lawyers who claim they are above such chicanery, it’s a bit like telling me what you would do in a foxhole. You really can’t say unless you have been there.

In short, the business world changed around law firms. Most firms simply couldn’t survive using the lock-step partner model. I realize a few have and continue to thrive. But for every one that has, someone could point to 10 that had to change to survive.

The highest paid lawyers at most big firms might be some of the best attorneys at the firm, but that isn’t why they are the highest paid. It’s about rainmaking.

Rainmaking is job security and power. The rainmaker can leave today and start her own firm or make a lateral move. She knows it, the firm knows it and other firms know it. There is an entire industry devoted to recruiting lawyers to switch firms.

Whatever a law firm is doing is almost always a lagging indicator of what is going on around the firm. If the world hadn’t changed, law firms wouldn’t have changed. If firms could still rely on longtime institutional clients, the firm itself would be the rainmaker. Pay would be tied to seniority.

In summary, big law firms changed because the business world they served changed. Lawyers are conservative by nature and slow to change. You know when law firms started putting computers in everyone’s office? When the clients started asking for their email addresses.

Don’t blame law firms for their top heavy compensation systems and cultural changes. Firms had to change in response to a changing world.

I could write more on this topic, but I better go see if I can make it rain.

Sara Randazzo’s Wall Street Journal article about pay and structure differences at big law firms has been getting a lot of attention. The article is a masterpiece and is a must read for people interested in how big firms operate.

This is the first of multiple posts about the issues the article raises.

It opens:

Four hundred of Kirkland & Ellis LLP’s top lawyers gathered in May at an oceanfront resort in Southern California to toast another banner year.

Kirkland was the highest-grossing law firm in the world for the second year running, earning $3.76 billion in revenue. When a slide flashed on the screen, showing the value of the firm’s shares, the partners in the room quickly did the math. They would be taking home $1.75 million to $15 million.

Not invited were another 560 partners, who were back at the firm’s 15 offices around the world, working. Though outwardly carrying the same title as those lounging poolside in California, they hold no equity in the firm and generally can expect to make $800,000 at most. While a comfortable living, the salary and its implied second-class status is not the reward many expected after striving to join the venerated partnership.

This is life at the modern law firm, where not all partners are created equal, and data and money rule.

Regular readers of this blog will notice that the layout has changed. The reason for the new layout is so the blog is mobile friendly and can be easily read on smart phones.

Truthfully, updating to a mobile friendly blog layout was not a priority for me. Lexblog, which hosts my blog, updated the site so it would no longer look like it was out of the dark ages when viewed on mobile devices.

The new design looks great on my I-phone. So I should have done the update years ago.

Every day. That’s how often I am targeted in some sort of scam attempt.

The majority of the scam attempts are emails that go into my junk folder that I never see. But plenty make it into my inbox. Like this email received this morning:

We are electronics components manufacturer and distributor located at Saitama-shi, Japan and We would like to retain your firm for litigation matter in your jurisdiction.

Please what is your hourly fee and standard retainer fee? Kindly advise to enable us forward you the adverse party information for your conflict check.

Please if you are not accepting new case at the moment we will appreciate it if you can refer us or forward our message to a business attorney that can handle this transaction for us.

We look forward to your prompt response.

Yours Sincerely,

Kunio Hijikata (President & CEO)

Nissoku Engineering Co., Ltd.

620-1, Asahigaoka,

Hidaka, Saitama-shi, 350-1203 Japan

Tel: 042-985-2411

Fax: 042-984-4151

Including what goes to my junk folder, I receive some form of this scam attempt several times a week.

I also receive plenty of garden-variety non-lawyer scam emails like:

Dear Friend,

Can you please stand as an Investor to receive funds for investment in your country?

If Interested, Please Reply To My Personal Email:

and:

Dear Card Member,

A Recent Charge on your Could not be Completed.

Kindly Verify this Immediately. [with a link].

or:

New voicemail from WIRELESS CALLER 14703165505 to Reception Computer.

Received at 24/04/2019 02:01:52 PM (39 seconds). [with an attachment].

It’s no mystery why I (and you) receive so many scam emails. They work. People fall for them. Even attorneys. All the time.

Another big business is what John Morgan refers to as the lawyer trophy industry. Several times a week, I receive an email congratulating me that I’ve been selected to pay a high 3 to low 4 figure fee to join a prestigious list of lawyers.

I’m not talking the American College of Trial Lawyers or Mississippi Bar Fellows. No, the names are a bit flashier, like Top 100 Whoop-ass Trial Lawyers. You make think that is a big exaggeration, but it’s actually quite small.

Going through my junk filter, I’ve received emails selling awards from 7 different organizations this week.

I also receive multiple emails per week offering me the chance to pay internet marketers to send me case leads in my area, re-design my website or perform SEO witchcraft that will result in a huge influx of new cases. The way this one works is that you pay them, you don’t get any cases, eventually you stop paying them and they move on to the next target.

Being a solo is harder than being in a firm. And one of the biggest sucks about it is that solos are viewed as ‘marks’ by so many scam artists and sales people.

Perhaps the greatest thing about Baker Donelson that I didn’t know at the time was I never had to deal with any of this crap. No one ever tried to sell me anything office or business related. I wasn’t a mark because the sharps knew it was a waste of time to target a big firm associate. It was great. And I didn’t even know it.

There has got to be a lot of money in the business of scamming and selling trophies to lawyers. Because a lot of people are doing it.

This recent news about the comptroller of a New Orleans law firm stealing $2 million from the firm reminded me how common employee embezzlement is in the legal industry.

I have several friends over the years who were victims of employee embezzlement. Invariably, it was the last employee they would have suspected who was doing the stealing. I mean that literally. The embezzling employees seemed exceptionally trustworthy. Maybe that’s what gave them the confidence to steal.

Years ago, I read an article about how to eliminate the possibility of employee embezzlement. In a nutshell, the owners have to do everything themselves. It seemed like too much work to implement. But like many other areas, technology has made it more feasible.

Mobile bank deposits, credit card bill payments and cloud based accounting systems mean it takes much less time to do the firm’s bookkeeping. I now do my bookkeeping. It takes little time.

And even if you decide not to permanently do the job, you should at least know how to so you can look over someone else’s shoulder.