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Laurence Simons Newsletter November 2013

Posted by: Laurence Simons 29/11/13

Lawyer under fire

Although many people enter the legal profession hoping for glamour and excitement, having watched a few too many of those glossy TV programmes that show lawyers getting involved in exciting espionage, a few months of hardcore document reviewing usually strips them of these illusions.

What's more, when practising law does become unexpectedly dramatic, it's generally for a bad, bad reason.

This is illustrated in the demise of the California firm of Lackie, Dammeier, McGill & Ethir, which recently announced plans to wind down its operations following a host of embarrassing scandals, reports Above The Law.

What could possibly have gone wrong? They certainly sound like a law firm, with four names and everything. However, it appears the collected legal wisdom of these four partners was insufficient to prevent the firm from getting involved in some dodgy dealings.

Not only has it been accused of over billing clients, instructing people to harass and intimidate government officials and using private investigators to trail drivers and accuse them of traffic violations, it has also allegedly been bugging people's cars with GPS trackers.

Presumably having been inspired to enter the profession by Sean Penn's character in the classic De Palma flick Carlito's Way, the partners are facing serious problems after this criticism emerged.

"Watergate, that's when I last heard about something like this happening," said Vince Finaldi, the Irvine attorney who filed the suit and amended complaint.

Mr Finaldi apparently had a tracking device affixed to his car during the entire 2012 election season, only finding out when the local district attorney brought it to his attention.

Well, although this is certainly quite embarrassing, hopefully when it all blows over the legal experts involved should be able to find some work at the equally privacy-conscious NSA.

Top lawyers call for carbon regulations

A group containing many of the world's largest law firms, the Legal Sector Alliance, has demanded a new set of regulations that would help cut carbon emissions across the globe at the recent UN Climate Summit in Warsaw.

Innovative legislative behaviour in this area would create the "opportunity for new jobs, economic growth and improved global living standards", the group claimed.

Firms in the Legal Sector Alliance include Linklaters, Taylor Wessing, Simmons & Simmons and Norton Rose Fulbright, reports Business Green.

The case for climate legislation has become increasingly corporate and business-focused in recent years, with none of the proponents of this latest measure likely to be found chained to the railings outside nuclear plants or wearing hemp underwear.

Lawyers may not seem like the most natural of bedfellows for climate change action, but a slew of recent reports have made it clear that many businesses could benefit from well-worked legislation in this area.

After all, even the most prestigious legal operations will struggle to turn a profit if three-quarters of their client base is underwater and the remaining proportion are involved in internecine post-apocalyptic warfare.

That's not quite how the alliance of firms put their case, but we’re reading between the lines here, with the grouping of lawyers calling for investment in cleaner technologies and the delivery of rapid reductions in carbon emissions.

"The nature of the threat posed by climate change means that there is an urgent need for mitigation and adaptation programmes to be incorporated as a matter of course into national law," the group declared.

Desmond Hudson, chief executive of the Law Society, argued that the legal world's position as one of the UK's most profitable sectors means it is ideally placed to argue for the adoption of more effective regulatory measures in the green sector.

Although the Conservative government came to power claiming to be the most environmentally-friendly iteration of the party yet, a report from the Wildlife and Countryside Link recently found it has failed to deliver on a third of its pre-election promises.

On the bright side those statements have all been deleted from the party's website, so we would all do well to just forget any of them ever happened.

Law firms 'must improve flexible working'

Legal organisations in the UK need to improve on their flexible working practices if they are not to see their best talent move to the in-house sector or elsewhere in the corporate world, a new report has suggested.

To our lasting disappointment, flexible working does not involve either compulsory workplace yoga or making lawyers type with their feet for three hours a day, although personally, we feel both of those suggestions would have a positive impact on the sector.

Instead, reports the HR director, it involves allowing staff to choose their hours with more autonomy rather than being tethered to a typical 9-5 working day.

Jude Fletcher, senior partner of Fletcher Day, said: "Flexible working is a request that, in too many cases, is made with hesitation and agreed to with reluctance. As one lawyer puts it later on in this paper, too often a flexible working request is seen as 'career suicide.'"

This can cause a number of problems - as well as leading to burn-out and resentment among workers who feel they need to be in the office as much as possible, it can drive down diversity by making women with families less likely to rise to the top.

By a ratio of more than three to one, respondents to Fletcher Day's survey said flexible working arrangements could lead to them changing their career path in the future.

While the macho environment of law firms has often encouraged staff to work for as long as possible, ordering in pizzas and enduring late-night document tweaks, the atmosphere is changing as modern workers refuse to subsume their life to their daily grind.

Recent pronouncements from the finance sector have suggested it is planning to change its ways, and if the legal industry is to keep attracting the best graduates it is likely it will need to look at its working processes.

However, with 86 per cent of lawyers not feeling that adequate provision is currently being made for flexibility, it clearly has a long way to go.

In-house lawyers 'suffering pay freezes'

Many in-house lawyers across Europe are seeing their salaries frozen or being offered below-inflation rises, according to new research published by Income Data Services (IDS).

Almost a quarter of respondents had experienced pay freezes over the last 12 months, an increase of ten per cent compared to last year, reports the Law Gazette.

Nasreen Rahman, assistant editor at IDS, said the in-house sector is an employers' market.

"With a couple of exceptions, companies tell us that recruiting suitably qualified in-house lawyers is not a major headache at the moment," she explained.

Average deputy general counsels' salaries rose by 2.2 per cent, while senior legal advisers also saw increases of around 2.2 per cent.

This may be a frustration for people within the industry, but at least they get the cachet of telling friends they work as legal experts, which is only about two steps down from being an international spy or a commercial airline pilot who sometimes helps out the Flying Doctors.

And they better get used to enjoying that buzz without worrying too much about their pay-packet - according to the IDS research, this is the third year in a row without an above-inflation salary jump for general counsel.

While the improving economic condition across the continent might prove helpful in this regard, it is still uncertain whether in-house salaries have now hit a peak following a period of precipitous increases.

South-east Asia 'remaining buoyant'

Asia's status as a major emerging market for ambitious law firms lost a little of its lustre over the last six months as the number of deals taking place across the continent fell and big players such as China and Japan endured a slight economic slump.

However, south-east Asia - incorporating Singapore, Indonesia, Vietnam, Malaysia, Thailand, and the Philippines - has remained relatively buoyant, reports Law magazine.

Clifford Chance Asia managing partner Peter Charlton said this area continues to offer strong returns on investment, particularly compared to its counterparts in the rest of the continent.

"Given that trend, depending on the footprint of your firm, you probably would have experienced growth in south-east Asia in the last 18 months," he declared.

Singapore in particular has been a magnet for Western investment, with Biglaw and magic circle firms both keen to get involved in the city-state's corporate affairs as many international firms have a base there.

Furthermore, it offers a 'hedge' to those companies that have made major moves in China - while the Asian giant may loom over the rest of the continent, it is important to have fingers in as many pies as possible if firms wish to avoid being overly affected by any economic blips.

Herbert Smith Freehills has tripled the size of its Singapore office in the past three to four years, noted partner Nicola Yeomans.

"We have formed the view that there are incredible opportunities in the region, and we have gotten a very strong mandate [from senior management] to grow that business," she added.

The ongoing move towards Asia despite China's slump in growth indicates that international legal firms will continue to try to find value in emerging markets, keeping their options open as they attempt to gain a foothold with businesses across the globe.

High-maintenance rainmakers 'losing their cachet'

Rainmakers - the top partners at law firms in the US, named for their ability to bring in lucrative business and their complex tribal dances - have traditionally enjoyed a strong position within their businesses, for obvious reasons.

However, the economic crunch has seen a shift in this attitude, with some legal services providers becoming unwilling to cope with high-maintenance partners constantly pushing for more cash.

Marcie Borgal Shunk, a senior consultant with LawVision Group, recently told Legal Intelligence that many companies are now unwilling to throw money at rainmakers following their failure to prevent the issues seen over the recession.

Companies are now adopting a more forward-thinking approach, attempting to look towards their revenue streams within three to five years rather than simply concentrating on potential short term gains.

This means putting culture over cash and letting disgruntled rainmakers move on, concluded Ms Shunk.

Los Angeles-based Edwin Reeser, an attorney to law firms and lawyers and former head of Sonnenschein Nath & Rosenthal's office in the city, said top partners are still crucial to many business models.

However, overpaying rainmakers is "poison" to the attitude within an organisation, he warned.

Companies warned on information governance gap

For those lawyers who feel their eyelids beginning to droop when talk turns to data security, look away now. Recommind, the unstructured data management and analysis expert, has warned that not enough organisations have an information governance policy in place.

While 75 per cent of British companies claim to have a holistic approach to data in place, this figure drops to 58 per cent in the US, with 64 per cent of respondents feeling their practices are only 'somewhat effective'.

In both countries, organisations remain over-reliant on the government when it comes to keeping information secure, Recommind claimed.

Dean Gonsowski, global head of information governance, said: "While it's positive that organisations recognise the need for information governance, many are still not taking the requisite steps to truly govern their information in a proactive manner. In fact, many are still in the dark."

For in-house lawyers keen to avoid falling foul of regulations in this area, working with IT managers and other executives to sort out a governance plan is crucial.

With only 24 per cent of UK firms aware of how much data their organisation holds, it is obvious more needs to be done to bring this issue to the forefront of legal minds.

In-house lawyers 'unconvinced by outsourcing'

Although private practice law firms have begun to embrace the possibilities offered by low-cost legal centres (these possibilities are largely encapsulated by the first two words of the service), their in-house counterparts have been slower to take action.

That's according to Legal Week Intelligence's annual Client Satisfaction Report, which polled more than 1,400 in-house lawyers.

General counsel gave an average rating of just 4.4 out of 10 when asked to grade the importance of low-cost centres, although satisfaction levels among those who used these hubs were higher, at 5.7 on average.

The availability of legal outsourcing was considered the least important factor when selecting a law firm, behind 'colour of office furniture', 'willingness to bond over karaoke' and 'opinion on Russell Brand's reinvention as a political rabble-rouser'. (One of those is made up).

Bakers TMT partner Steve Holmes, who works closely with the firm's Manila base, said the ability to use legal process outsourcing (LPO) shows a company is willing to be as efficient as possible.

However, Libby Jackson, director of Herbert Smith Freehill's low-cost Belfast base, identified some reasons why outsourcing is given short shrift by general counsel.

"There is concern about communication and a fear that costs will be hidden, and possible project management issues arise," she declared.

Her base deals with these problems by ensuring they are fully responsible for all issues, cutting down on any chain of command concerns that could come up.

"In-house lawyers also have concerns about security of data, which may be highly sensitive, being reviewed out of the jurisdiction," she added.

However, LPOs are likely to become more popular as firms attempt to cut costs and the model becomes more sophisticated. Breaking legal tasks down into components and outsourcing some of them could be helpful for many general counsel in the future, according to Legal Week.

However, bringing in the right kind of people remains crucial to attracting in-house business, the study concluded.