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Laurence Simons newsletter June 2014

Posted by: Laurence Simons 24/06/14


Lawyer under fire

Raymundo Pacello, the San Diego attorney and self-described 'legal baller' (that's what he calls his legal partnership, apparently) is no stranger to controversy.

Above The Law brought him to our attention when he placed a Craigslist advertisement looking for "young, attractive, hip young females" to work as his assistants, which sounds like an offer no self-respecting legal graduate could possibly turn down.

He's back in the spotlight following news of disciplinary proceedings being taken against him following his representation of a client called Esther Edwards.

In short, the complaint alleges that after securing a big payment for Ms Edwards with his mad legal skillz, Mr Pacello did not use the funds to pay down liens, did not distribute the funds to his client, kept some of them for personal spending and then forged his name on a cheque.

Which, arguably, is blurring the line between being a straight-talking maverick and being a straight-up bad lawyer. However, the 'legal baller' has responded to the complaints in an admittedly lucid - if overwrought - statement that describes the case in a different light.

According to the lawyer, the complaint was brought about in an attempt to gain an advantage in another ongoing criminal proceeding.

"It was legally impossible for me to perform the accused tasks due to the tortious, and dare I say, criminal conduct of Mr Parziale (the complainant). And, on that, I conclude this section of response," he told the disciplinary committee.

Ridiculous Roman oratory-style verbiage aside, it seems that Mr Parcello may have a point, especially as the complainant has since had his licence suspended.

What's more, we shouldn't be too critical, because he has been made bankrupt following the case, citing the complainant's "economic duress, disciplinary threats, and criminal extortion to cripple me personally and professionally" as a major factor in his current financial situation.

The legal career might not be working out, but it seems to me that a career in reality TV could be beckoning. We'll follow it with interest.

Birmingham legal market on the up

The UK's second city might be associated in the popular imagination with Spaghetti Junction, failed brutalist experiments in architecture and under-performing football clubs, but Birmingham is making strides socially and economically, particularly with the optimism created by the potential HS2 rail project.

Lawyers across the city recently expressed this attitude to the Law Gazette, arguing that the city's renaissance has coincided with ambitious expansion plans within its legal services market.

Manchester's law sector enjoyed major levels of growth in the 80s and 90s as funding was pumped into the city and it attracted international business investors - presumably, Birmingham is hoping for a similar dynamic.

Caroline Coates, executive partner for Birmingham at DWF, told the news provider her employer is keen to get involved with the city's legal sector and drive further expansion.

"Our recent investment in new offices at the prestigious One Snowhill development is a key indication of our commitment to growth within the Midlands region," declared Ms Coates.

Although public finances are still extremely squeezed across the city, which has suffered disproportionately from cuts made by the Conservative-led coalition, the private sector is still able to thrive as long as it is managed carefully.

Gateley’s senior partner, Mike Ward, observed: "It’s difficult to judge what it will mean for top-line growth, but we are seeing a bit more confidence in the market. There was a change just after Christmas. Clients are feeling more confident about making plans, so there’s a feeling that there is more in the pipeline."

It is unlikely that Birmingham will be able to rival London, where legal services firms have the kind of access to international partners that makes the capital one of the leading places for lawyers on an international basis.

However, the size and maturity of the Midlands market is not to be sniffed at.

Some 70 per cent of mid-sized Birmingham firms expect to grow in 2014, while investment by the likes of Deutsche Bank will create corporate jobs and possible opportunities for in-house lawyers.

As long as efforts are made to leverage growth across the Midlands, the future looks bright for legal services businesses with bases in the region.

US legal market undergoing changes

Change, whether gradual or sudden, is always a shock. It's fair to say that the shifts taking place in the American legal market are going to occur relatively slowly - although there have been rumours that some biglaw partners are taking hairdressing lessons so they can offer clients a quick shave and trim while they wait.

But before all US-based lawyers start practising auxiliary skills, it could be important to examine a recent report from management consultancy Altman Weil assessing how the sector is likely to develop over the coming years.

There's no mention of barbers in the research, but presumably they're saving that up for an infographic later in the month.

Altman Weil principal and survey co-author Tom Clay suggested that smaller firms (those with less than 250 employees) recognise that the market is in flux but are proving incapable of making the necessary investments to keep pace with it.

In general, the trend across Europe and the US has been towards mergers and link-ups between organisations keen to develop as strong an infrastructure as possible - boutique companies are no longer in vogue.

This research appears to uphold this trend, with even mid-sized firms struggling to cope with the new normal.

Greater price competition, practice efficiency, commoditisation of legal work, competition from non-traditional service providers, and non-hourly billing are all permanent changes in the legal landscape unlikely to be reversed, according to the study.

For the most part, this has been driven by new providers in the market, who are using technology and different approaches to shake up the old verities of legal service provision.

A similar process is underway in the UK, where major retailers and organisations like EY are all keen to muscle into the legal sector following moves to liberalise the way in which licences are distributed.

"Regardless of the reasons, once one segment of the market starts moving toward a new more client-focused model and resetting market expectations, other firms will need to fall in step or they will inevitably fall behind," concluded Mr Clay.

Simply put, lawyers are going to need to add to the value of their proposition if they are to compete - whether or not free haircuts will help is another matter.

NALP: Lateral hires show performance problems

Deciding on who to bring in to fill an important position within a law firm can be a major challenge. While lateral hires tend to have the right skills and experience to hit the ground running, a new study from the National Association of Licensed Paralegals (NALP) has highlighted the problems around this kind of recruitment.

The organisation found that associates brought in from other companies tend to be 50 per cent more likely to leave for performance reasons than their home-grown colleagues.

While developing a strong talent pipeline and ensuring that many promotions take place from within is obviously a cost-effective and appealing way to develop law firms, the reality is that this isn't always a viable option.

Certain roles may need a level of expertise that no-one else within a company has, or simply require freshening up by an injection of new talent and a different perspective.

Entry-level associates only left for performance reasons in 34 per cent of cases, showing that they are more likely to perform well and stay loyal to their firm.

The research, which covered 115 law firms over the course of 2012 in both the US and Canada, will make interesting reading for anyone considering changing their staffing base.

After all, finding talented associates remains relatively difficult despite the host of underemployed legal graduates emerging from the American education system.

With 17 per cent of lawyers leaving in total over the course of the year overall, it is clear that nobody is ever going to be a perfect hire for the long term.

Architects create 'law firm of the future'

A group of architects based in Washington DC have produced a new pop-up legal office described as the 'law firm of the future', exhibited at the Association of Legal Administrators annual conference and expo in Toronto.

It will showcase features that are becoming familiar to many law firms that have recently moved to new office space or revamped their existing offices, reports the Washington Post.

This means a more open floor plan than is seen in traditional buildings, standard-size offices (meaning that moving into the big corner office will no longer be seen as a marker of merit or good performance) and more communal space.

The latter is referred to, upsettingly, as a series of 'touchdown areas' where visiting lawyers or potential clients can set up for a few days if temporarily based in the office.

While this might not sound especially futuristic - there's no mention of robot secretaries, hover-desks or even lifts that ask you how your day has been - it does highlight some of the attitudinal changes taking place within the legal industry both in the US and abroad.

Steve Martin, a principal at Gensler in the district, emphasised that there is no "one-size-fits-all" solution for law firms.

"It’s taking these components and assembling them in a way that reflects who they are as a firm and provides flexibility so they can adapt and change over time," he added.

The project is the first of its kind for the design and architecture firm, and is a culmination of two years of work done by about 40 Gensler employees - the organisation is keen to do more within the legal sector.

It has already collaborated with the likes of Clifford Chance in producing new office buildings.



International law firms 'worried about Russian market'

The ongoing deterioration of the relationship between the UK and Russia was capped off nearly recently by Prince Charles sticking his organic leather shoes in, in a move that seemed symptomatic of how frosty conditions have become in the wake of events in Ukraine.

Naturally, many businesses with a stake in the Russian market are following these arguments closely, with the legal market no exception.

Domestic and foreign practices have been enjoying a period of growth in the sector, especially in urban centres such as Moscow, but according to the Lawyer this position has been affected by the ongoing debate over Ukraine, as well as the US and EU sanctions President Putin's aggression has attracted.

Paul Melling, who founded Baker & McKenzie’s Moscow office, said that six months ago he would have described Russia as the only high-growth market available in Europe for legal services providers.

Naturally, his attitude has now shifted in the wake of the restrictions placed on Russian business and trade.

"For all the right reasons, it was the most exciting time to be a lawyer in Russia in all the 25 years I’ve been here. We’ve seen tremendous strides forwards in terms of compliance and business ethics in Russia. Local companies are trying to build their own compliance structures. But I would also have said, in Russia you never know," he added.

Mr Melling's prescience has proven accurate, with the country's near-inevitable volatility once again affecting the market.

Interestingly, domestic firms could actually begin out-performing their international rivals as a result of the sanctions.

A partner of a domestic service provider told the magazine: "Russian law firms don’t have the impression that they will have less work because of the Ukraine crisis. To the contrary - there will be more work for Russian law firms because of these events."

General counsel 'can drive profits'

Recent studies have highlighted the importance being given to general counsel (GC) functions around the globe, with high salaries becoming more likely and the likes of Google and Microsoft offering their in-house lawyers impressive remuneration levels.

A new report from BarkerGilmore, NYSE Governance Services and Corporate Board Member found 86 per cent of directors now consider their GCs to be a core part of the executive management team.

Only 56 per cent of respondents were of this opinion a decade ago, highlighting just how swiftly this change has taken place as regulatory environments become more complex and businesses seek out a guiding hand.

"Gone is the day when the GC was simply managing the legal and regulatory issues,” BarkerGilmore partner John Gilmore said.

Instead, someone in this position is "expected to be that business-savvy leader who is going to contribute to driving the business - an executive who happens to be a lawyer," he added.

While this does have the effect of making the role more complex, it also means GCs are in a strong bargaining position when it comes to negotiating their salary.

It also makes the job considerably more prestigious than it has been in the past, when it was often seen as a secondary berth after failing to gain a top private practice position.

Some 91 per cent of respondents described GCs as 'trusted advisors', with 85 per cent suggesting they have a great deal of sway with their company's chief executive.

In terms of formulating strategy, 71 per cent of people felt in-house lawyers now play a key role in doing so.