Courtesy of Bigger Pie Forum via Jackson Jambalaya, it seems Mississippi’s PERS system is getting reamed in management and investment fees. Here’s a list of how much area states paid in 2018 in PERS management fees:

  • $103 million- Mississippi
  • $5 million- Alabama
  • $27 million- Arkansas

My Take:

Sounds about right.

Read a book or two (Liar’s Poker, books on the 2008 financial crisis, etc.) on how Wall Street investment banks screw their ‘fish’ customers like public pensions. Looking at the list of outside investment managers at the front of the PERS annual financial report, I assumed Mississippi PERS is a ‘mark’ in the pension investment world.

No doubt there is a steady stream of calls and visitors to the PERS investment office selling some ‘great’ investments. The commenters on Jackson Jamabalaya have it right. The investments could be cheaply managed in passive ETFS in-house.

Many broadly diversified ETF’s are so cheap from an expense ratio perspective they are nearly free. And maintaining target allocations is getting easier with companies like Betterment. It’s forcing the Schwab and Vanguards of the world into the poorly named ‘robo-advisory’ business.

I also bet these institutions who we pay an arm and a leg to have sold us some dog-crap investments that they wanted off their books. It’s the Wall Street way.

PERS needs a complete overhaul. Not surprisingly, it’s not a topic on the campaign trail for those running for statewide office.

If you’re looking for an easy way to gain insight into the investing, follow Meb Faber on Twitter and listen to his podcast the Meb Faber Show.

On September 6, 2019, a Harrison County jury in Gulfport returned a plaintiff verdict totaling $2,107,351 in Foote v. Burwell.

Dr. Dudley Burwell replaced plaintiff’s hip at Memorial Hospital in Gulfport. Plaintiff suffered an injury to his left illiac vein during the operation. Plaintiff alleged Burwell used a screw that was too long.

Burwell consulted a vascular surgeon (Dr. Graham) during the surgery. They decided to complete the surgery. Plaintiff’s condition worsened and Dr. Graham performed a repair surgery the same day.

Plaintiff endured a lengthy recovery that included renal failure.

Plaintiff’s theory was Dr. Burwell was liable for the surgical error and Dr. Graham was responsible for not performing a repair before Burwell closed.

Dr. Burwell argued it was a surgical complication. Dr. Graham contended he acted reasonably. The jury found for the plaintiff and apportioned 75% fault to Burwell and 25% to Graham. Here is the jury’s verdict.

The jury assessed the following damages:

  • $994,000 – pain and suffering (subject to $500,000 cap).
  • $880,074- past medicals
  • $107,508 – lost wages
  • $125,769- future disability or impairment.

Dr. Graham worked for the hospital, so the claim against him fell under the Tort Claims Act and was advisory only. On September 18 the Court entered judgment against Dr. Burwell for $1,210,013. Here is the Judgment. 

Joe Sam Owen of Owen, Galloway and Meyers in Gulfport represented the plaintiff. William Whitfield and Kaara Lind of Copeland Cook in Gulfport represented Dr. Burwell. Roland Samson represented Dr. Graham.

Circuit Judge Lawrence Bourgeois presided.

Thanks to the Mississippi Jury Verdict Reporter for telling me about this verdict.

My Take:

I can’t imagine what it was like to wake up from hip replacement surgery and not only were things not better, they were worse. This makes me feel better about my decision to have my hip replacement at the Mayo Clinic in Minnesota.

Not only was my doctor top-notch, but the hospital care exceeded what I’ve seen in Mississippi. When I rang the call button, a real nurse walked in my room immediately. In a Mississippi hospital, it would have sounded like I had been connected via speaker to the drive-thru at Wendy’s and I might not see someone for 15 minutes.

A $500,000 pain and suffering cap on an injury with $880,000 in past medicals seems unfair. It’s been 17 years since the caps were enacted, but there has been no adjustment for inflation. So basically, the caps get lower every year. I expect the legislature to address this issue at around a quarter to never.

The Mississippi Business Journal reports that a $28.7 million 55,000 square foot federal courthouse will open in Greenville in 2022. From the article:

The $28.7 million, 55,000-square-foot project will be built on Washington Avenue in downtown, with construction to start in the spring and completion expected for the fall of 2022, said Jackson architect Roy Decker, whose firm, Duvall and Decker, submitted the winning bid.

It will replace one built in 1960 that has become outdated and inefficient.

My Take:

Great news for Greenville and the Delta.

Here is a preview of the September 2019 issue of the Miss. Jury Verdict Reporter:

  • $3.5 million verdict- Harrison County truck negligence case covered here (8/20/19);
  • $625,000 verdict- Yazoo County truck negligence case (7/16/19);
  • $186,400 verdict- Neshoba County workplace negligence case (7/3/19);
  • $2,500, $2,500 verdicts- Pike County car wreck case (7/24/19);
  • defense verdict- Hattiesburg federal court employment retaliation case (8/21/19); and
  • defense verdict- DeSoto County car wreck case (8/6/19).

My Take:

Based on the info. in the reporter, I give the plaintiffs an overall record of 2-2-2 in these six trials. The wins were the Yazoo and Neshoba verdicts. You can figure out the rest.

Above the Law is reporting that national firm Morgan Lewis & Bockius is offering voluntary buyout packages to all legal secretaries. The reason: “technology innovation” and “the practice needs of our lawyers.”

My Take:

I know where they are coming from.

Forcing attorneys to become tech proficient and slashing the ranks of support staff is a big thing on the horizon in the industry. My experience with support staff is illustrative.

When I opened my own practice in 2002, I had an assistant hired and ready to start day one. It was every bit as necessary as phones and computers. I could not practice without someone to answer the phone, type, handle bookkeeping and manage the paper flow.

The paper flow was ridiculous. Every couple of months, we filled another filing cabinet. Soon, we had to store files off site. Not to mention all the paper we were shipping to clerks, judges, attorneys and clients. I can still hear the sound of our copier churning out paper.

I didn’t type anything except emails. Dictation didn’t work for me. For whatever reason, the quality wasn’t there. I wrote everything out longhand and had my assistant type it. I revised by hand and she typed those. We exchanged drafts all day.

Answering the phone was more important than it is today. I primarily wrote in the morning, went to lunch and spent the afternoon on the phone. I had to be in the office because there was a lot of phone tag until you connected. Most communications done by email today was done by phone. Email is quicker and more efficient.

All of this made my assistant very busy. It was common for us both to work on Saturday.

Flash forward to 2019. I don’t have staff. I can’t keep someone busy. Why? Tech.

Somewhere along the way, all the emails taught me to type. Electronic filing allowed for a virtually paperless practice. I went from keeping someone busy over 40 hours a week to keeping them busy a couple of hours a day. It was hard to justify the expense of having staff, but I still had an assistant.

Then one day, something happened that required her termination. I decided to wait to fill the position. I signed up for a virtual receptionist to answer the phone and learned how to do the bookkeeping on Quickbooks. I quickly realized that I no longer needed or wanted an assistant.

There is no doubt that if I was still at a big firm, I would not know how to electronic file or that it only takes a couple of minutes. I would depend on others to do many things that I could do myself in virtually no time. I would not have learned to do all I have with tech because I wouldn’t have been forced to.

The Morgan Lewis buyouts suggest big firms are figuring this out. One way or another, attorneys are becoming tech proficient, reducing the need for secretaries. It’s a copycat industry. It’s probably a trend setting move.

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 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.

On August 16, 2019 a Harrison County jury in Gulfport rendered a $3.5 million verdict in Gonzales v. Coastal Industrial Contractors Inc.

Here is a Sun Herald article on the verdict. It states:

A Gulfport jury recently awarded $3.5 million to 41-year-old Leighann Gonzalez of Biloxi, who suffered life-altering injuries when a truck driver ran a stop sign in June 2017 and slammed an 18-wheeler into her car.

Coastal Industrial Contractors Inc. of Biloxi owned the truck and assumed liability, leaving the jury to determine the amount of damages.

Plaintiffs asked for $5.7 million at trial. I have an unconfirmed report the verdict was in the same ballpark as the last settlement offer, but a bit lower.

Former Supreme Court Justice Chuck McRae of Jackson and Michele Biegel of Long Beach represented the plaintiff. It was Biegel’s first just trial.

Mathew Williams of Galloway Johnson represented the Defendant. Circuit Judge Christopher Schmidt presided.

My Take:

Sounds like it was close to a tie, which is common in car wreck trials– except here, there were two more zeroes than in most trials.

I remember winning my first jury trial. Confidence wise, it was the high water mark of my career. I naturally assumed I would never lose. Now, 23 years later, I wonder how I ever won a trial and whether I’ll ever win again.

Experience is valuable in the legal profession. But it’s hell on a cocky young lawyer’s confidence.

Here is a preview of the August 2019 issue of the Miss. Jury Verdict Reporter:

  • $1,379,898 verdict- Madison County roofing negligence case (7/17/19);
  • $450,899 verdict- Harrison County car wreck case (7/31/19);
  • $100,000 bench verdict- Hinds County premises liability case (8/2/19);
  • $2,652 and $2,020 verdicts- DeSoto County car wreck case (8/5/19);
  • $5,000, $3,000 and $1,700 verdicts with 5% fault to Defendant- Hattiesburg federal court truck negligence case (7/31/19);
  • defense verdict- Rankin County premises liability case (7/17/19); and
  • defense verdict- Jackson County medical malpractice case (5/24/19).

My Take:

The first three look like plaintiff wins.

For all Mississippi’s many problems, the state’s congressional leadership has a long record of getting presidents to make good choices for federal judge positions. Miss. Court of Appeals Judge Cory Wilson’s nomination for a Southern District U.S. District Court judgeship is the latest example.

This one is unsurprising for a couple of reasons. First, it’s been a rumor for a while. Second, legal gossips have been throwing Wilson’s name around as an obvious candidate for potential federal judge openings for at least a decade. He checks all the boxes:

  • stellar academic credentials;
  • diverse experience in private practice;
  • diverse public service experience that both credentialed him for a position like this and raised his profile in political circles; and
  • he’s nice and people like him.

The only hole I see in his resume is never attending LSU.

Don’t underestimate the importance of being nice and liked. You know who does not get federal court nominations in Mississippi? Jerks who no one likes to deal with.

I can’t speak to sitting judges nominated before I started practicing, but the biggest common denominator of federal court nominees since 1993 is popularity within the Bar. It doesn’t matter if the person came from private practice, a trial court bench, an appellate court bench, a magistrate position, wherever. People who get federal court nominations are professional, nice, friendly and popular. I can’t think of a single exception.

I have heard nothing but positive reaction to Wilson’s nomination and the speculation before that. I’m not surprised. It’s a solid choice. He will breeze through confirmation.

Before anyone asks, the answer is no, I don’t know which courthouse he is going to. Hattiesburg or Gulfport are the obvious leading contenders.

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.