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PLP Pulse: News from the Frontiers of the Legal Profession
July 2011
 

Attorney Regulation & Ethics

Representing Controversial Clients When Partners Disagree with Law Firm
The American Lawyer

How should big law firms decide whether to approve a partner’s wishes to represent a controversial client? The question raises divisive political, policy, and moral issues. According to Ben W. Heineman and David B. Wilkins, distinguished senior research fellow and faculty director, respectively, of the Program on the Legal Profession at Harvard Law School, “this is the significant question raised by the dustup between King & Spalding and former solicitor general Paul Clement over Clement's contract to represent the House of Representatives in defending the Defense of Marriage Act (DOMA places the federal government firmly against recognition of same-sex marriage.)” Rule 1.2(b) of The Model Rules of Professional Conduct states that a “lawyer’s [firm’s] representation of a client…does not constitute an endorsement of the client’s political, economic, social, or moral views or activities.” Heineman and Wilkins offer a balanced framework that entail three considerations that include “deference to the pluralist views of partners; ‘principles’ screening by firm management based on firm values; and ‘reputational’ screening by firm management on business considerations.” The authors write, “...we believe that there should be a strong presumption for partner pluralism in general service law firms based on the moral agency of individual lawyers and the need for internal diversity of views and civilized internal debate. However, we also maintain that the same concerns for pluralism and individual moral choice require that lawyers in the firm may, as a matter of good-faith personal conscience and without harm to their career, choose not to work on a particular controversial matter that the firm does take.”

As Cloud Computing Rises, So Do Ethical Concerns
The Recorder

Following a growing trend over the past few years, which has been supercharged by the Obama Administration’s endorsement of it, cloud computing is changing the way many companies and lawyers are doing business. Cloud-based storage refers to internet-accessed storage where data is not located on one’s hard drive or in a server room. Citing extensive cost savings, reduced administration, increased accessibility, and better “disaster recovery” options, many attorneys and firms are outsourcing their document storage to shared-hosting companies such as Amazon, Microsoft, and services such as SugarSync and Box.net. Ethical concerns surrounding the security and confidentiality of such data are growing. While no online data is ever one hundred percent secure, as long as attorneys follow reasonable steps to ensure data remains confidential (such as encryption, password protection, and U.S. based hosting) many state bar associations agree that online data storage is ethical, according to The Recorder.

Law Firm Malpractice Claims on the Rise
The Am Law Daily

According to broker Ames & Gough, there were significantly more malpractice claims in the first six months of 2011 than all of 2010. Surveyed collectively, insurers provided malpractice coverage to 75% of large and midsize U.S. firms. Real estate practices were the most likely to be at risk for malpractice suits, with “conflict of interest” and “failure to file timely” as the most common claims. Although several Am Law 200 firms have been the subject of malpractice suits filed this year, Vice President of Ames & Gough Eileen Garczynski states that, “with the real estate market beginning to rebound, the rate of real estate-related malpractice claims against lawyers should level off as the year continues.”

Pakistan Aims to Enhance Legal Ethics by Overhauling Legal Education
Pakistan Observer

Heads of local Pakistani law colleges met with the Chief Justice of Lahore High Court in an effort to strengthen the standards of Pakistan’s legal system. Chief Justice Ijaz Ahmed Chaudhry noted that education regarding ethical principles in law has fallen apart in recent years, and he has urged a return to higher standards. The Chief Justice sought proposals from the law colleges for a complete overhaul of legal education standards in the country that he would submit to the Chief Justice of Pakistan.


Corporate Counsel

Responsible Corporate Officer Doctrine and Constitutional Due Process
Corporate Counsel

A general counsel’s presumably career-ending 12-year exclusion from participation in federal healthcare programs has been upheld by a federal appeals court under the “responsible corporate officer” doctrine, according to the Corporate Counsel, which adds that under the doctrine “an executive can be convicted of a criminal misdemeanor even if he personally did nothing wrong, but failed to detect and stop those who did.” As “responsible corporate officers,” a general counsel and two senior executives were convicted in 2007 for failing to prevent the felonious actions of Purdue Pharma personnel who supplied misleading information to regulators about the addictive properties of the prescription drug Oxycontin, thereby misbranding it. The Washington Legal Foundation had filed an amicus brief with the U.S. Court of Appeals in Washington, D.C. arguing that the legal doctrine “raises serious constitutional due process concerns about the government’s interpretation.” The Foundation argues that exclusion from participation in federal programs is too severe a penalty for a strict liability misdemeanor, and that how the government is interpreting the statute dealing with strict liability conflicts with the Constitutional requirement to follow due process.


Diversity

Diversity Scorecard Reports Increase of Minority Lawyers
American Lawyer

According to the latest Diversity Scorecard of 2010, a survey was sent to firms of the Am Law 200 and NLJ 250 and the percentage of minority attorneys increased slightly by 0.2%, up to 13.9%. It remains too early to determine whether the drop in diversity in 2009 during the recession was an anomaly. “The addition of those new minority lawyers is an extremely positive indicator of the effort by The Am Law 200 to recognize the importance of diversity in building their organization,” says Robert Grey Jr., Executive Director of the Leadership Council on Legal Diversity. One area with a decrease in diversity scores, however, was in the percentage of African American lawyers, dropping from 3.3% in 2009 to 3.2% in 2010. “We’ve stopped the hemorrhaging” explains diversity consultant Arin Reeves of Nextions LLC, “but now we have to figure out what caused the bleeding.”

Stark Diversity Numbers Plague the Toronto Legal Profession
The Globe and Mail

The Diversity Institute at Ryerson University’s 2011 DiverseCity Report reveals a large disparity between whites and minorities at the upper levels of the legal profession. The Report, which for the first time included members of the legal profession, found that only 6.6% of partners of law firms in the larger Greater Toronto Area were visible minorities, and that judges of the Superior and Appeal court level made up 4% of minority groups. The Law Society of Upper Canada, the regulatory body governing the legal profession in Ontario, has attempted to address the problem by changing mentorship programs and hiring practices and has reported an increase in recent years. Top advocates for diversity and change argue, however, that more can be done.


Globalization

Brazilian Federal Bar Reviews Alliances with Foreign Lawyers
The Economist

The federal bar association in Brasília is looking into formal alliances between foreign-trained and local lawyers following the decision of the São Paulo chapter of the national bar association (OAB-SP) that such alliances contravene its rules. According to The Economist, should the federal bar association concur with the OAB-SP, “all formal local-foreign legal alliances may have to be dissolved.” Foreign firms with formal local-foreign legal alliances suspect that the OAB-SP decision is a result of the threat that they pose to local “oligopoly” profits and the “old guard.” Opinions are divided on Brazil’s ban on multi-jurisdictional law firms. Rob Ellison, managing partner of Shearman & Sterling’s São Paulo office, affirms that the firm best serves its clients by remaining independent and working with the most fitting local firm for each particular matter. However, other firms say that at least some clients want seamless multi-jurisdictional legal advice beyond what formal alliances offer. By attempting to prevent access to formally allied firms or even a “global one-stop shop,” Brazil is going against the trend of globalization in legal practice.

Following in Their Clients’ Footsteps, Magic Circle Law Firms are Expanding into New Markets
Financial Times

Magic Circle and other large law firms are following their clients into new markets in pursuit of new sources of profit and adjusting their business models to manage growth, according to the Financial Times. In particular, China’s increased trade inflows (and outflows) and ever-expanding share of the global economy is significantly changing the landscape of the global legal services industry. Apart from opening offices and expanding in China, law firms are also following clients into Australia, South Africa, and Canada, all of which are destinations of Chinese investment, to meet clients’ legal needs. In recent years, Allen & Overy and Clifford Chance have completed mergers with Australian firms while Norton Rose has expanded into Australia, South Africa, and Canada. At the same time, law firms are ensuring that traditional markets in major financial centers are not neglected.

New York State Bar Association Recommends the Establishment of a Permanent Center for International Arbitration in New York
Business Wire/Reuters

The New York State Bar Association has released The Report of the Task Force on New York Law in International Matters, recommending that New York establish a permanent center for international arbitration to preserve its status as a “major world center for international legal matters.” The Report warns that New York must respond to increased foreign competition from multiple countries or risk losing its position as a major world center for international dispute resolution. Other Task Force recommendations include the establishment of “a council of New York international law firms to promote and advance New York law.”

Large Canadian Law Firms Weather Recession
The Lawyers Weekly

The Lawyers Weekly reports that while large Canadian law firms were not left unscathed by the recession, they have weathered the storm far better than their American counterparts. Canadian firms are not as specialized as U.S. firms are, and despite the collapse of the mortgage-backed securities market in 2008 have not been forced to lay off as many lawyers although they have reduced hiring and their rate of growth has slowed. In addition, growth of Canadian firms is spurred by increasing global interest in Canadian natural resources. Scott Jolliffe, chief executive officer of Gowlings, affirms that Canada’s future looks promising in part because of increased demand for resources, goods and services in Asia, South America, and Africa, as well as globalization of the legal profession.


Public Interest Lawyering

Law Firms Give Back, Contribute 4.45 Million Hours of Pro Bono in 2010
Business Insider

Despite the economic slowdown, attorneys from 138 firms completed nearly 4.5 million hours of pro bono service in 2010, according to the latest Pro Bono Institute’s (PBI) Report. The Report analyzes pro bono work of firms who signed the Law Firm Pro Bono Challenge, and those 4.5 million hours represent the third highest total on record. Firms joining the Challenge commit to contribute 3-5% of their annual billable hours to pro bono work and report those hours to the PBI each year. There was concern that given the tough economic conditions over the past few years pro bono work would suffer. While firms are facing challenges with fewer new hires and increasing workloads, many remain committed to pro bono work and as Steven H. Davis, Chairman of Dewey & LeBeouf stated, “times are even tougher for our pro bono clients”. The near record number of pro bono hours from Challenge firms in 2010 reflects that commitment and firms still see pro bono work both as a valuable means of professional development for their attorneys and as a means of giving back.

Am Law Pro Bono Report Shows Dramatic Decline Last Year
The American Lawyer

The average number of hours dedicated to pro bono work among lawyers in the Am Law 200 was down 8% in 2010, according to the American Lawyer’s Pro Bono Report, thus “reversing a decade of steady growth.” Also down by 5.2% is the average percentage of lawyers who spent more than 20 hours on pro bono work. Only 174 of the Am Law 200 firms responded to the survey, which was down from last year’s 191 firms. One law firm leader attributed his firm’s significant drop in pro bono services to extremely high levels of fee-paying work.

Rising Prestige of the Public Interest Career
Daily Business Review

In 1990, only 2.1% of new law school graduates accepted jobs in the public interest sector, yet it rose to 6.7% by 2010. David Stern, Executive Director of Equal Justice Works, a program dedicated to improving support on and off campus for public interest lawyers, states that the change has arisen due to several factors, perhaps the most notable being prestige of the profession.


Innovation & New Models

Can Third-Party Litigation Funding Prosper in America?
The Asian Lawyer

Insolvency Management Fund LTD. (IMF), one of the pioneers of the litigation-funding business in Australia, has funded cases over the past ten years with awards and settlements totaling close to $900 million. Now, IMF has decided that its Australian base is too small and is looking to move abroad into the U.S. market. One of the major questions, however, is whether countries such as the U.S. have a legal system that will be favorable to third-party litigation-funding. Differences between U.S. and Australian courts, along with how lawyers are generally accustomed to funding their cases, makes it difficult to predict whether IMF will be successful if they look toward international expansion.

Office Productivity and Collaboration Improve Through Social Networking
Montreal Gazette

In an effort to relieve lawyers of email overload and provide efficient access to information, Toronto law firm Hicks Morley began an internal social network in 2008, mimicking Facebook, Twitter, and Wikipedia. Since then, the firewalled community established by the firm has markedly increased employee collaboration and productivity, shining light onto a growing trend of internal corporate social networks. Using Microsoft’s Sharepoint software, many firms are ramping up the usage of company intranet to create social networks containing blogs, legal practice group wikis, message boards, and archiving stations. By utilizing social networks, firms can be less concerned about geographical barriers when creating research teams, which according to Alistair Rennie, general manager of Lotus software and WebSphere Portal for IBM Corporation “allow experts in the same discipline to better work together no matter where they are.” Additionally, as younger generations of lawyers who have grown up with social networking sites such as Facebook enter the workforce, harnessing the power of social networking has become second nature.

Big Firms Sheltered from the Blogs
The National Law Journal

Am Law 100 firms have more than doubled their use of blogs since 2010, and they continue to gain popularity with a single firm moving from one blog to more than half a dozen. Yet, the biggest law firms continue to resist joining the ranks of firms and lawyers who blog, potentially to their detriment. According to the National Law Journal, “The biggest firms have decided to take a more aggressive approach when it comes to ‘controlling the message’ rather than risk individuals saying whatever they want. They have built a fence around their firm.” Law firm and lawyer online presence appears to be becoming a necessity for success in this digital world, but the real question remains whether blogging will bring in greater revenue.

Your Law Firm’s Newest Associate…Mr. Robot?
Globe and Mail

Law firms looking to cut costs, combined with the increased data involved in managing legal disputes has led to the latest technological advancement in the legal profession—“quantitative legal prediction.” Daniel Katz, a law professor at Michigan State University, explains that programs have now been created that can cut through more raw data than any associate and can produce predictions of case success. Katz explains, “The real weakness of human reasoners is aggregation or scale.” While these programs are a great aid to law firms by cutting back on outsourcing large data aggregation to external firms, Susan Nickle, a partner at Wortzman Nickle, notes that these programs will not come close to replacing a good lawyer for “all of the software is only as good as the lawyers who tell it what to look for.”

Monthly Subscription Plan Promises Near Instant Access to Emergency Legal Services
New York Times

Residents of Massachusetts, Connecticut, and Rhode Island in need of a lawyer will now be able to subscribe to LawyerUp, a service that promises to get an attorney working on a case within fifteen minutes. The company charges $4.95 per month or a $100 flat rate for the first call. After being arrested, clients can access the service by making a toll-free phone call or by using a smart phone application. A dispatcher then verifies contact information and assigns an attorney to the case. According to company co-founder Chris Miles, lawyers are vetted and do not pay to be listed in the service. According to the Times, Connecticut Bar Association president Ralph J. Monaco expressed concern that the new model could allow unscrupulous lawyers to take advantage of new clients.

Apple iPad Increasing Lawyer Productivity
Texas Lawyer

As the new technological wave of tablet computing begins to take hold, many lawyers have adopted the use of the iPad to increase their productivity and provide better service to clients. The iPad offers attorneys an easy to use “information consumption and storage device” through law-specific applications that can vastly enhance productivity and the efficiency of legal services, according to the Texas Lawyer. By using the iPad to store, organize, and quickly access documents and information, lawyers must no longer carry heavy briefcases full of legal documents and can have their legal research accessible at the click of an app. Some of the applications include Goodreader (for document organization, storage, editing and conversion) Fastcase (a searchable database of federal and state cases and statutes), Litigator (all-in-one reference tool for legal rules and procedures), and Read It Later (allows web page storage for offline viewing).


Law Firms & Practice Management

Client Feedback Programs within Law Firms
AME Info

A survey addressing client feedback among 415 senior personnel at law firms, conducted by a consulting group on behalf of LexisNexis Martindale-Hubbell, reveals that 83% “agreed” or “strongly agreed” that clients value the opportunity to provide feedback to their lawyers and law firms. According to Derek Benton, Director of International Operations at LexisNexis, however, “38% of respondent firms reported insufficient staff or resources as the main reason for not doing so. Yet, among those firms that do seek feedback, 64% invest less than 5% of their firm’s marketing budget to obtain it.” Client feedback is often shared informally rather than through detailed reports, with only 51% of firms agreeing that feedback is shared broadly and openly. Benton adds that “overall, our research suggests that, in the future, a majority of law firms will have feedback [programs] in place.”

With Few Exceptions, A Lawyer Surplus in Every State
New York Times

According to a statistical analysis completed by consulting firm Economic Modeling Specialists Inc., every U.S. state other than Nebraska (and perhaps Wisconsin and Washington, D.C.) is producing a surplus of lawyers. The consulting firm compared the number of job openings from the Bureau of Labor Statistics and the Census Bureau for each state with the number of people who passed the bar exam as well as the number of law school graduates each year. New York has the largest surplus (7,687), followed by California (2,951) and New Jersey (2,193). The analysis shows, however, that Wisconsin has a shortfall of 14 lawyers, which may be because graduates of University of Wisconsin Law School and Marquette University Law School are not required to take the bar exam before entering into practice. Washington, D.C. also shows a deficit of 345 lawyers, yet allows lawyers from other states to practice in the district.

New Guidelines to End Bullying at Law Firms
The Herald Scotland

The Law Society of Scotland has issued new guidelines to end bullying and harassment in the workplace. A survey administered in 2007 to more than 3000 lawyers found that one-quarter of all respondents faced some form of discrimination in the workplace at some point during their career. Among those who reported being treated badly by their colleagues, more than two-thirds of women lawyers and trainee solicitors stated that they were bullied. Farah Adams, convener of the Society’s equality and diversity committee says, “although it appears that bullying within the legal profession in Scotland is no higher than that reported elsewhere, it is important that we continue to regard this as a serious issue.” The guidelines urge raising awareness of bullying and harassment in order to tackle the problem in the legal profession.

U.S. Law Firms Moving to One-Stop Model for Litigation Management
MarketWatch

A survey of 513 U.S. lawyers (263 law firm attorneys and 250 corporate counsel), conducted by Harris Interactive Service Bureau on behalf of LexisNexis, reveals that law firms may be making significant investments in people and innovative technologies to manage the litigation process. Results from the survey reveal that 20% of U.S. law firms and 28% of corporate legal department are employing e-discovery professionals as full-time staff; 70% of lawyers want to retrieve legal information from a mobile device; and 76% of law firms have some type of alternative fee arrangement with their clients. The overwhelming majority of lawyers believe that legal technology is vital to the case analysis process. According to Matt Gillis, Vice President of Litigation Tools and Professional Services at LexisNexis, “these findings suggest that law firms have continued their movement to a ‘one-stop’ model for litigation management with more of them managing the different aspects of discovery through integrated technology and on-staff experts.” Balancing large amounts of data with budget constraints and excessive cost to the company was the most cited concern for managing data.


Legal Education

Are Law School Business Models Responsive to the Right Factors?
New York Times

The more that law schools charge for tuition and spend to educate their students the better they do in the US News rankings. Law schools affiliated with broader universities are also typically required to pay central administration what is known as “the tax” to subsidize other areas across the university that may be less profitable, which can be as much as 30% of their revenue. Law schools have raised their tuition fees and expanded the number of matriculating students who receive a legal diploma, even as hiring in the legal profession has imploded according to the Times. “From 1989 to 2009, when college tuition rose by 71 percent, law school tuition shot up 317 percent.” New York Law School (NYLS) increased its class size in the fall of 2009 by 30%, and according to Randolph Jonakait, Professor of law at NYLS, “adding more than 100 students to an incoming class harms their employment prospects.”

‘Scam Bloggers’ are Complaining—and Inspiring Change
National Law Journal

From at least 2009, a vocal group of underemployed law school graduates known as “scam bloggers” has used the internet as a platform to voice their opinions about what they see as the unethical marketing practices of law schools. These blogs have been covered repeatedly in the U.S. national news media, and a recent Minnesota Journal of Law, Science & Technology article by John Marshall School of Law professor Lucille Jewel entitled “You’re Doing It Wrong: How the Anti-Law School Scam Blogging Movement Can Shape the Legal Profession.” Scam bloggers argue that law schools publish misleading job statistics in order to increase enrollment, but unemployment and expensive loans often await new lawyers upon graduation. According to Jewel, the scam bloggers are now helping to inspire changes in the legal profession and in how the American Bar Association collects and reports employment statistics.

Law Graduates in Australia Choosing Non-Legal Business Careers over Private Practice
The Australian

In Australia, there appears to be a trend where law graduates are moving away from private practice and shifting to business careers. According to figures from Graduate Careers Australia, the proportion of law graduates who start work in law firms dropped from 49.1% in 2005 to 43.7% in 2010. “That change, and it’s quite a notable change over a five-year period, probably does reflect a move away from employment in law practice to employment in other areas,” states research manager of Graduate Careers Australia Bruce Guthrie. Additionally, there was a drop in law graduates who start working for state governments, from 26.4% in 2005 to 24.5% last year.

Fewer First-Year Students at Some Law Schools
Wall Street Journal Law Blog

The number of LSAT takers is in decline and the number of law school applicants is down by about 11%, according to the Wall Street Journal’s Law Blog. In reaction to this trend and the lawyer surplus, three U.S. law schools—Creighton University School of Law, Touro Law Center, and Albany Law School—will be admitting fewer 1Ls in upcoming years. Although some have expressed ethical concerns about sending debt-ridden students into an uncertain job market, Professor of Law John Yoo, of the University of California at Berkeley, has attributed the move as not a moral issue, but an economic one—a matter of supply and demand.


Professional Development

Law Firms Divided on the Upward Trend of Non-Partner Career Path
Crain’s Detroit Business

Flexibility in work is something many employees are looking for and willing to sacrifice compensation in order to obtain. According to Crain’s Detroit Business, many law firms are seeing a rise in the number of attorneys following a more flexible non-partner track. As one attorney states, “There is less stress and less responsibility, but maybe a bit less prestige too. You sacrifice a lot and it was the choice I had to make.” Non-partner attorneys work less hours, do not travel as often, and are not expected to generate new clients for the firm, but are paid 20-25% less than their partner track counterparts are. Others contend that such differences among those who choose a non-partner career path fosters resentment, prevents loyalty to the firm, and is a means of exploiting a tight labor market by senior partners. Mark Davis, CEO of Howard & Howard Attorneys PLLC states that he is looking for “not just owners, but drivers of the firm. Having skin in the game makes you care more about the firm.”

Personality Testing of Lawyers in Large Law Firms as a Predictor of Success
American Lawyer

What is the relationship between personality of lawyers and career progression and success? In one study, the Hogan Personality Inventory (HPI) was administered to nearly 1,500 lawyers across four large international law firms to identify basic personality traits and gender effects. The study found that lawyers differ from the general population, other professionals, and each other on the HPI. Traits measured by the HPI include adjustment, ambition, sociability, interpersonal sensitivity, prudence, inquisitive, and learning approach. When compared to the general population, for example, results show that lawyers scored lower on every trait except “learning approach,” which measures an interest in education, ideas, and analysis. The results also indicate that equity partners scored higher on “ambition” and “adjustment” than associates. According to Larry Richard and Lisa Rohrer, “studying personality at different levels in firms provides insight into who decides to stay in law and succeeds in large law firms. Our data show that personality plays a role in career progression, although it is surely one of many indicators of success.”

Salary Woes Cause Judges to Stray
New York Times

For many legal professionals, a judgeship signifies the pinnacle of one’s career. However, as the legal industry continues to evolve, judges find themselves being left behind in an important area: salary, often making ten times less than the lawyers who plead before them in court. In New York, according to the Times, some judges who have not received a raise in 12 years are returning to the practice of law for better compensation.



Program Notes

New PLP White Paper—Corporate Purchasing Project: How S&P 500 Companies Evaluate Outside Counsel

This report marks the culmination of our Corporate Purchasing Project—more than four years of scholarly research dedicated to examination of the ways in which S&P 500 legal departments hire and manage outside counsel, drawing from six academic papers in various stages of publication. How are relationships between clients and service providers in the corporate legal market evolving, and why? Our novel empirical data is drawn from surveys and interviews of 166 chief legal officers (“CLOs”) of S&P 500 companies—one-third of all such large publicly traded companies.

Specifically, we sought to explore four topics of substantial importance about which there is little systematic information:

  • How do these companies evaluate the quality of legal service providers when making hiring and legal management decisions?
  • Under what circumstances do these companies discipline or terminate their relationship with their law firms?
  • How do these companies evaluate whether to follow “star” lawyers when they change law firms?
  • In what ways do these companies manage the intersection between law and public relations?

Purchase the report.

Executive Education: Leadership in Corporate Counsel

Harvard Law School Executive Education recently hosted the third cohort of Leadership in Corporate Counsel. Twenty-six general counsels and chief legal officers from the world’s top corporations attended the three-day event, which gave participants a holistic understanding of the challenges facing, and the skills and perspectives required of, effective corporate counsel leaders. The next Leadership in Corporate Counsel program will be held June 20-23, 2012. For more information, visit our website.



Editor: Daniel L. Ambrosini
Managing Editor: Nicola Seaholm
Contributing Editors: Amanda Barry, Nathan Cleveland, Hakim Lakhdar, Mihaela Papa, Erik Ramanathan


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