Valentinecard

Geoffrey Chaucer — he of the prurient Miller’s Tale and indeed all of The Canterbury Tales in fourteenth century England — invented many of the legends to which we owe what we now celebrate on February 14 as Valentine’s Day.  Blawgletter wishes you a most happy and, er, productive one.

On this joyous occasion we wish also to announce that, in the next few weeks, we expect to unveil a sleeker, cleaner, and even usefuler Blawgletter design.

The innovation in layout and features coincides with a repurposing that careful readers will have already noticed the beginnings of.  Blawgletter started life with a tagline that said "business trial law with a sense of humor".  We’ve now drawn a tighter focus such that most of our posts — though by now means all — will center on "contingent business law" (still, we hope, with a sense of humor).  By which we mean to look at business and commercial litigation from the perspective of a trial lawyer who handles most such cases on a contingent or other risk-sharing arrangement.

We think you’ll like the result.

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The majority of a Fifth Circuit panel held today that a Texas ban on sale of "sexual devices" violates the fourteenth amendment.  All three circuit judges agreed as to the unconstitutionality of the Texas statute to the extent it prohibited advertisements for sexual devices.  The third panel member dissented as to the ban on sale of sexual devices.  Reliable Consultants, Inc. v. Earle, No. 06-51067 (5th Cir. Feb. 12, 2008).

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Supervising lawyers, whether in-house or outside, can profit from giving clear instructions to their charges.  The same goes for general counsel types who oversee the work of law firm types regardless of seniority.

Blawgletter learned that from clerking for a Fifth Circuit judge — The Honorable Jerre S. Williams — going on a quarter century ago.  His Honor favored me and my fellow clerks with a memo that laid out what he expected of us — including hard work, reliability, and integrity.  The instructions gave us confidence and made us want to do our best for him.

Some lawyers in our firm also put together "Tips on Working for Me" memos for those they supervise.  Ideally, the thing should evolve with new insights, technologies, and changes in your practice and preferences. 

Our "Tips" memo did that — evolve — just today.  We offer the latest version for your consideration and improvement.

Tips on Working with Me
Barry Barnett
2/11/08

            1.         Always remember why we have fun and rewarding work to do – because the client needs our help.  We must make top-notch lawyering and service to the client our first priority.  Everything we do follows from that.

            2.         I want you to develop into the best lawyer you have the capacity to become.  You wouldn’t work here if we didn’t believe you have the qualities necessary to succeed.  Everyone – the client, the firm, you, and me – benefits from your progress as a lawyer.  Keep that in mind any time you feel you shouldn’t pester me about something.  You should bother me if it will help the client or help you get better.

            3.         You should feel the same way towards the lawyers who come after you.  Remember that your future success, far more than mine, depends on theirs. 

            4.         I expect you to take the initiative in moving cases forward.  Use your judgment.  Decide what to do and do it.  Challenge yourself.  Get help (from me or others) if you need it, but don’t let worry about making mistakes paralyze you.  You will make mistakes; everybody does.  Honest errors very seldom make a difference in a case, and you won’t lose standing if you own up to your misstep and take care not to repeat it.  Plus you’ll learn faster and accomplish more for the client.

            5.         When preparing any kind of document (memo, letter, pleading, brief) for me, get it in final shape before sending it to me.  You should consider it ready to go out – complete, comprehensive, and with all the polish it could ever need.  I don’t expect perfection, but I do insist on your best work.  Sloppiness drives me nuts – including in things like incorrect citation form, improper punctuation, bad grammar, and misspellings – because I suspect that it reflects inattention, fuzzy thinking, or worse. 

            6.         Send drafts to me as Word attachments to emails.  Make sure to include a date/time stamp and the iManage footer on each draft so I can quickly locate it on the system.  Don’t use an iManage link, which I can’t access from outside the office. 

            7.         I will usually finish off drafts of short items that you send me and get them out myself.  Unless time pressures intervene, I will do my best to make suggestions on improving the draft by putting them in a redline version of the document and sending the draft with redlining back to you via email for further work.  I may add other thoughts in the email.  You should then turn out a new draft and return it to me – in redline so I can see what you’ve changed from your last draft — as soon as you can so I don’t lose track of the project.  You may also bring the draft to me so we can discuss my suggestions and your thoughts about the best ways to improve our work product.  Do it soon, though, because I clear my mind of projects that I’ve finished, and new projects will crowd out my memory of the details of your work product.

            8.         I always have 10-20 cases as well as several case acceptance matters going at once.  When visiting me about a matter, take a few seconds to refresh my memory about it.  A lot of times that reorients my thinking so that I can respond more quickly.

            9.         I want you to consult me any time you want or need my attention, but please make efficient use of my time.

            10.       If you ask me, I will set a time each week when you and I can meet or talk on the telephone.  The session doesn’t have to relate to specific cases.  It could deal with things like an issue you’ve run across in a matter that doesn’t involve me, preparing for a meeting or hearing, business development, or your progress as a lawyer.

            11.       If you don’t understand something I’ve told you or done, ask me to clarify or elaborate.  I may assume you get what I’ve said or done even though I didn’t tell you enough or told you or did something wrong or confusing.  I don’t mind gentle correction.  In fact, I depend on you to help me avoid mistakes.  Do this part of your job especially well!

            12.       I generally prefer to draft case acceptance memos myself.  Sometimes, though, I will ask you to assist.  Usually I will want you to research and add factual details or to insert legal analysis.  I will take care of writing the fee proposal.

            13.       I hold strong views about my own writing.  These include:

                        a.         Dislikes:  passive voice, split infinitives, misspellings, verbs that don’t agree with subjects, legalese, leaving out an open or close parenthesis or a quotation mark, starting a quotation with an ellipsis, block quotes, non-Blue Book citation form, reciting the other side’s argument without – in the same sentence – trashing it, calling parties “plaintiffs” and “defendants” instead of by their names, unimportant facts, failure to check citations, verbosity, unnecessarily repetitive use of a word, burying important arguments or authorities in footnotes, the word “clearly”, phrases like “in the end” or “after all”, personal attacks on opposing counsel, using uninformative headings, and failure to show how the cases that you cite support our position.

                        b.         Likes:  respect for the reader, realizing that the reader doesn’t have much reason to trust you (yet), appreciating that you should therefore aim everything you write at earning the reader’s trust and enhancing your credibility, active voice, conciseness, vibrant verbs, strong nouns, few adjectives and fewer adverbs, synonyms, quoting an especially important or helpful authority rather than paraphrasing it, smooth transitions and strong connections from one paragraph to the next, headings (in briefs) that highlight good facts instead of conclusions, elegant analogies, taking the other side’s arguments early-on and head-on (and not in footnotes, for Pete’s sake!), citing cases whose holdings supports our position, never citing a case just for a good quote, starting with a punchy explanation of why our position should prevail, including (in briefs and memos) a short statement of the case to explain its procedural posture, and a non-argumentative fact section that – despite its apparent neutrality – leaves the reader with the conviction that our side should win.

            14.       By the way, I don’t expect you to write precisely as I do.  You shouldn’t.  You have your own voice.  Most lawyers never find theirs, and many of those who do discover it through hard work and trial and error.  Parker Folse writes beautiful prose but in a style very different from mine.  Pick up from me (and others) anything you find useful and discard the rest.

            15.       You can contact me any time.  Email usually works best, but feel free to call me in the office, on my cell phone, or at home if you need to.

            16.       Err on the side of over-informing trial team members, especially clients, of developments in their cases.  Assume, unless they or I say otherwise, that clients should get a copy of everything that comes into or goes out of our offices, including letters, briefs, pleadings, and memos.  You shouldn’t write anything that you wouldn’t want the client to see.

            17.       If you make a mistake, fess up pronto.  Trying to hide errors can make them more dangerous, increase your stress, and hurt your effectiveness; it also turns you into a liar.  Getting the truth out quickly, on the other hand, nips the problem in the bud and enhances your trustworthiness.

            18.       Keep emails to me short.  If something requires that much explanation, call me or see me about it in person.  Don’t assume that I’ve read long emails.

            19.       Clients want me to stay on top of their cases.  I need your help in doing that.  If you think a document or issue needs my close attention, note that in a message to me, either in an email or a voicemail or on the routing slip, or pay an in-person visit to alert me to the situation. 

            20.       I will generally route emails and other documents that come to me first to the entire trial team, often without comment.  If I think of something that I want a trial team member to do in response, I will put it in an email or ask him or her to see me to discuss the assignment.

            21.       After a deposition, email to me and the other trial team members, including the client (unless a protective order provides otherwise), the highlights of what happened.

            22.       Notify me as soon as possible if you think you can’t meet a deadline or have a conflicting assignment.  I will understand if you alert me in time to make alternative arrangements.  I might not if you don’t. 

            23.       I love for you to seize the initiative in moving cases forward and to make tactical decisions on your own.  Charge!  In the rare instance of a problem that you can’t resolve yourself, take a few minutes to think through possible solutions and recommend a course of action.  That will help me focus on the alternatives and will help you learn how to deal with similar problems in the future.

            24.       Avoid fights with the other side.  That goes double for discovery disputes.  If a dust-up looks likely, let me know promptly.  The problem may result from dealing with lawyers who don’t have enough experience or authority to work things out reasonably.  My intervention with a more senior lawyer on the other side may resolve the issue.

            25.       I expect you to keep track of the deadlines in each case we work on together, to familiarize yourself with the terms of all case management and protective orders, and to possess near-encyclopedic knowledge of the applicable rules of civil procedure and of the forum’s local rules.  Many times associates ask me a question that they could have answered themselves if they had consulted one of these basic sources.  If I ask you what the applicable rule says about a legal issue that you’ve contacted me about, let’s hope you don’t have to say you don’t know!

            26.       Never treat anyone with disrespect, no matter how disrespectfully he or she has treated you.  Pigs like mud fights and especially enjoy getting you dirty too.

            27.       Always, always, always tell the truth.  Always.

            28.       We work in a profession whose best practitioners excel in divining creative solutions to problems.  A lot of the process goes on inside our heads.  If you want to learn more about the creative aspects of lawyering, ask a senior lawyer to talk through the act of creation, which you may think of it as strategizing.

            29.       If you want or expect me to attend or participate in a conference call, meeting, hearing, or other event, send me an Outlook invitation that includes the necessary details.  That way, I can put it directly on my Outlook calendar by “accepting” the invitation.

            30.       Suggest ways to improve this memo.

            31.       Have fun.

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The German Federal Cartel Office searched the premises of seven chocolate-makers on February 7, according to Bloomberg and Reuters today.  The searchees included Mars, Nestle, Kraft, and Ritter.

Possible price-fixing among dominant chocolate-makers surfaced last November with disclosure of search warrants in Canada and then the firing up of a U.S. probe by the Antitrust Division within the Department of Justice. 

Dozens of civil class actions followed in venues across the country.  The U.S. Judicial Panel on Multidistrict Litigation has set a February 19 deadline for responses to motions to centralize all the cases before a single district judge in Texas, Michigan, New Jersey, Virginia, or Pennsylvania.

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A popular gaming device.

A study that Blawgletter mentioned earlier this week concluded that clients prefer contingent fee arrangements even if the deals require them to pay their lawyers more than double their hourly rates.  What prompts such seemingly irrational behavior?  The researchers give a simple answer:  "mixed gambling".

For those who don’t regularly play five card stud and its like, what could mixed gambling mean in the context of a lawsuit?  The study tells us.  It signifies the reality that litigation involves risk and that different fee deals allocate the risk, well, differently.

An hourly fee, for instance, puts almost all the upside and downside on the client.  The lawyer earns money regardless of how the case comes out, while the client pays pretty much no matter what.  The lawyer has a reputational incentive to perform well, but with well north of 90 percent of cases settling before trial the likelihood of an empirically poor outcome approaches zero.  Relationships, in such situations, likely matter more than how effectively or efficiently the hourly lawyer does his work.

The contingent fee, by contrast, shares the risk of a bad result between client and lawyer.  The litigant may or may not pay litigation expenses but never comes out of pocket for fees.  Any payment to the lawyer for her effort depends solely on the case outcome, whether by judgment or settlement.  Client and lawyer thus both desire to maximize the benefits of prosecuting the client’s claims and will suffer or profit according to how well the litigation fares.

So, again:  why do clients choose contingent fees over hourly ones?  Simply because — in general and aside from considerations of inability to pay hourly fees — people dislike the prospect of losing more than they like the chance of winning.  The hourly fee compounds the risk that clients will lose with the certainty that they’ll pay for representation regardless, offsetting the gain from a positive recovery.  A contingent fee arrangement at least assures them that losing the case won’t also make their investment in lawyering services worthless.  Clients thus prefer the "pure positive gamble" of a contingent fee to the "mixed gamble" of paying hourly.

The study doesn’t say so, but we infer that contingent fee plaintiffs internalize the possibility of paying a premium fee as a reasonable price for guarding against a doubly negative outcome.  Agreeing to an arrangement that the lawyer expects will yield a premium on her time thus represents the premium for buying insurance against the loss of hourly fees.

The analysis, according to the study, does not apply to defendants.  Next time, therefore, we’ll look at why we see few negative contigent fee contracts.

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Frank Easterbrook, Chief Judge of the Seventh Circuit, revels in writing stream-of-consciousness opinions.  This chronic self-indulgence comes across nicely in his rejection today of a tax shelter scheme that led to the demise of the Jenkens & Gilchrist law firm (whose name he misspells as "Jenkins & Gilchrist").  The opinion makes its readers wait until page 4, for example, to learn the district court’s disposition.  The rest suggests disdain for helping readers understand, quickly, the significance of the decision. Cemco Investors, LLC v. United States, No. 07-2220 (7th Cir. Feb. 7, 2008).

Blawgletter wonders, at times, about the wisdom of insulating federal judges from the rough-and-tumble of real law practice, indeed of real life.  The Honorable Easterbrook provokes that wonderment more often than not.

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Class actions get a bad rap from people who compare big fees that lawyers earn with small payments that class members receive.  Blawgletter hasn’t much patience with the argument.  It makes the wrong comparison.  The fees should bear a reasonable proportion to the benefits the lawyers secured for the class, not with what a single class member receives.

But the process by which the class lawyers collect their compensation matters every bit as much as the size of the fee.  The more transparency, in our view, the better.

The rules for negotiating fees allow class counsel to proceed generally in either of two ways.  They may leave their award entirely to the discretion of the court, or they may negotiate with the settling defendant to provide varying degrees of support for a specific fee or percentage.

The first alternative presents few concerns.  The lawyers for the class negotiate the best settlement they could get and now must persuade the presiding judge that they deserve compensation.  They may propose a total dollar amount or a percentage of the "common fund".  They may suggest a range.  But, at this point, everyone knows that the lawyers and class members have adverse interests.  The judge acts as the class’s fiduciary and does her best to set the fee at the right level.  If she does her job properly, everyone should have a high degree of confidence in the outcome.

The other principal way of doing it — asking defendants to vouch for the fee — raises more issues.  In the first place, discussion about fees should not begin until after agreement on the total benefits for the class.  Doing otherwise puts lawyers and the class at odds over how much of the common fund each will receive, and the lawyers have a big advantage over absent class members.  Second, the kinds of defense support may range from neutrality (they agree not to weigh in on the fee application) to advocacy (where they promise to argue in favor of a particular award).  Hearty support may raise concern about the arm’s-length nature of the negotiations.  Third, settling with the class first and then separately negotiating the fee may warrant closer scrutiny than if the fee comes solely from a common fund.  The worry is again that the lawyers might not have fought hard enough for the class because they knew the settling defendant would pay only so much in total and wanted to save more for themselves.

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Force of nature.

Apparently you can.  For that very sobriquet appears in the February 2008 issue of ABA Journal.  The article — about Blawgletter’s senior partner, Steve Susman — has Steve saying it to a new associate.

Imagine our shock.

The youthful lawyer, by the way, is now a partner in the New York office.

See Terry Carter’s rollicking article — "G-Man:  A week in the life of a $1,000-per-hour lawyer" — here.

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Point of Law kindly pointed last Friday to a new academic paper on Blawgletter’s favorite subject — contingent fees.  We haven’t digested the study yet.  But in the next day or two we expect to give our take on the researchers’ findings, including their rejection of traditional "rational choice theory" in favor of "prospect theory" as the better explainer of real-world choices between contingent fee arrangements and hourly ones.

Meanwhile, enjoy the paper itself.  And prepare for questions — as well as answers!

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Contingent business law includes class actions involving commercial disputes.  Such as the one over Shell gasoline that, because it left the refinery with too much sulfur, damaged consumers’ automobile fuel guages.

Today the Fifth Circuit considered the contingent aspect of the lawyers’ handling of the ensuing class litigation — the fee part.  The district court adopted the recommendation of a Fee Committee on how to divide $6.875 million among all class counsel.  The court spent about 20 minutes quizzing the committee members, ex parte, before ruling.  Its approval order reflected sparse justification for the allocations to individual firms and didn’t benefit from records showing each firm’s lodestar (hours times rates).  Plus the court sealed the distribution numbers so that the firms couldn’t compare their respective awards. 

The Fifth Circuit held that the, um, methodology didn’t comply with legal requirements.  In re High Sulfur Content Gasoline Products Liability Litig., No. 07-30384 (5th Cir. Feb. 4, 2008).

Blawgletter has a hard time disagreeing with the holding.  Class counsel can and should propose fee allocations, but the district court still has a duty to check their work in a transparent process that encourages confidence in the result.  Chief Judge Jones got this one right.

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