Law Firm Management under the New Rules

SINCE August 1991, when the extensive revisions of the Federal Rules of Civil Procedure were first aired for public consideration, the bench and bar have focused on their effects on the judicial process and the rights and obligations of litigants and counsel. Little, if any, consideration seems to have been given to the practical implications of the new rules for defense law firms, their clients and the public. But the substantial modifications in the way the courts will mandate or permit defense trial lawyers to perform their craft have a direct bearing on law firm size, structure, income and culture. It is vitally important to keep in mind the fundamental reason for many of the new rules. Civil litigation is too expensive, slow, contentious and uncivil for the public to support any longer. The sad truth is that many lawyers and law firms did not respond in a timely fashion to the changes in circumstances brought on by the economic downturn of the late 1980s. If they recognize the purposes and objectives behind the new rules and their likely practical implications, defense trial lawyers can adjust their practices and conventions so as to avoid the disasters experienced by commercial and corporate law practitioners. Defense counsel could do well to look to the plaintiffs' bar for guidance. Contingency fee lawyers, unlike defense counsel, accept the fiscal wisdom of minimizing the number of equity partners and associates in their firms, of maintaining modest law offices, of keeping overhead low and of working on a fee basis that is reasonably defined in amount for the client to understand, appreciate and pay. While defense counsel do not have a ready equivalent to the contingency fee, the new rules dictate that we learn from other practitioners and profit from their methods, goals and past successes and failures. After all, Rule I of the Civil Rules instructs all lawyers to conduct their clients' business with the same goal - "just, speedy and inexpensive determination of every action." Law firms that are structurally burdened will have to change in order to meet this mandate. LOOKING AT CURRENT PRACTICE A. Is the Past Prologue? It is dangerous to stereotype the trial practices of thousands of idiomatic, skilled defense trial lawyers and their firms practicing in hundreds of jurisdictions. But it is essential to start from some baseline, however inexact it may be. Defense trial firms, as well as litigation firms or litigation departments of multifaceted firms, that engage in repetitive or generic litigation for institutional clients operate on a philosophy that seems to have four basic supporting tenets: 1. The vast number of lawsuits settle at or near the commencement of the trial. 2. Partner time should be expended on cases undergoing intensive preparation for imminent trial and at trial because that (a) is the best utilization of the partner's skills and (b) is the occasion that affords the best opportunity to cement the bond between the firm and the client, leading to repeat business. 3. The inventory of pending cases should be handled by junior partners or associates because that (a) frees the senior partner to work on cases at or near trial, (b) permits the firm to build and maintain an inventory or backlog of pending cases that assures future work and (c) allows the finn and the originating partner to earn extra profits through "leveraging" the work effort of other professionals. 4. The relatively low transactional costs of handling large numbers of inventory cases by leveraged professionals offsets and marginalizes the steep transactional costs of those few cases resolved only after a full trial by high-priced partners. The firm is able to maintain an image of providing services at low cost. The model that unfolds from this philosophy calls for the lowest cost, lowest skilled lawyers who are yet capable of performing the assignments to handle the great bulk of the day-today work. …