Law Firms and Layoffs

Law firms, like most businesses in these dire days, are laying off a lot of people.  In doing so, like any business, they have to consider the threat of lawsuits by individuals who have been laid off.  Catherine Padalino, the worldwide employment practices liability manager for the Chubb Group of Insurance Cos., has some wise advice for businesses of all sorts, including law firms, on how to minimize these threats:

– First (of course, given the source) have insurance against the risk.

– Evaluate the overall anticipated impact of the layoff, including the potential for litigation as well as public scrutiny.

– Use quantitative criteria such as tenure and performance, rather than “soft” criteria such as social situations and financial hardship, to determine which employees to let go. Be consistent in applying the criteria, which should be communicated to all employees.

– Review the demographics of the staff that will be laid off to eliminate any appearance of discrimination. Consider the status of each employee, including whether he or she recently requested a leave under the Family Medical Leave Act or filed a workers’ compensation claim.

– Use outside counsel to evaluate employment practices and severance policies. Law firms should refrain from self-diagnosis.

“Most important,” said Padalino, “remember to treat all employees-those who will be laid off and those who will stay-with dignity. Laying off employees is unpleasant, but firms that try to do the right thing can help mitigate the potential for an even more unpleasant EPL lawsuit.”

The law firm of the future?

The Toronto Globe and Mail reports on Richard Susskind’s predictions regarding the future of lawyers and law firms.  Susskind is no one to be ignored; in 1996, when he predicted that lawyers would soon send legal advice and most legal documents via e-mail, he was derided and even considered dangerous.  I can testify first hand to the resistance law firms had to the internet.  Even earlier, in 1994, I lobbied my firm for an extra telephone line so I could attach my personal laptop’s modem to the dialup connection for my Manhattan-based ISP (the innovative and much-missed “Pipeline“).  My firm hemmed-and-hawed and finally refused my request, worried somehow that the connection threatened their own internal computer network.  Try as I could to explain that the phone line and the network had no connection to one another and that, therefore, the access through the phone line could in no way provide access to even the most sophisticated of post-Soviet criminal hackers, I was unable to get permission.

It’s hard to believe that was only fifteen years ago.

Now, Mr. Susskind predicts for the near future:

Small law firms that dispense customized legal advice will be pushed out of business by technology-savvy and more nimble firms that dispense run-of-the-mill advice and legal documents through websites. Larger law firms will evolve into commercial enterprises with vast stables of legal, accounting and other experts geared to preventing and managing clients’ legal risks. These big firms will outsource basic legal services to cheaper quasi-legal experts and they will build retail kiosks or websites that allow clients to download regulatory expertise and draft legal documents any hour of the day.

And, of course, it is already happening.  Linklaters LLP, a London-based law firm, has long had a “Web-based service called Blue Flag that allowed clients to research regulation and compliance standards around the globe.”  Other firms use “online document drafting services to download within minutes financial term sheets, employment contracts and other standard documents.”  In addition, “a pair of retired U.K. judges recently launched an Internet startup that allows lawyers to quickly generate judicially approved directives and motions for the courts.”  Just last November, Toronto lawyer Michael Carabash launched an online legal service called Dynamic Lawyers that charges lawyers a modest annual fee of $30 to connect with individuals who privately post legal questions on the website.”

On another point, already addressed on this blog, Mr. Susskind predicts a ‘radical shakeup’ of law firm billing practices that charge clients according to hours of service provided. The days of billable hours are numbered, he said, because it ‘rewards inefficiency’ by handing the largest pay for the most time spent on an assignment.

What will the next great innovation be in online legal representation?  Stay tuned.

The most innovative lawyers in the U.K.

From London’s Financial Times comes this year’s list of the ten most innovative U.K. lawyers. “[T]he submissions showed that it is possible to overturn conventional notions of the role of the lawyer. The bold individuals who dreamt up a new scheme, persuaded colleagues of its importance, set it in motion and made a success of it can take ample credit in their achievement.”

Nevertheless, the judges who made the choices “were dismayed to find no women lawyers or members of ethnic minorities. This follows a report last month from The Lawyer magazine that women account for just 14 per cent of partners at the UK’s four leading or ‘magic circle’ firms. One judge commented that law firms claiming the mantle of innovation must surely show a greater commitment to diversity.”

Perhaps that’s why Marc Harding, General Counsel of Barclays, was selected for

leading the charge for the profession to step up to the challenge of diversity, helping the Law Society complete its first draft of a diversity charter. Mr Harding first demanded that his legal suppliers give Barclays diversity statistics in 2006. Not only must the seven key advisers to the bank deliver these statistics, he also demands them from the bank’s 10 specialist legal panels. The legal press have commented that his work in moving diversity up the agenda will have a lasting impact on the client-lawyer relationship.

Another interesting choice was David Gray, Chief Executive of Eversheds:

To demonstrate the importance of openness and accountability, Mr Gray created a mechanism to receive feedback from the firm’s partners. In a courageous move, he kicked off the process at a conference in 2006, where he stood in front of Eversheds partners and invited them to score him on his performance during his live presentation. The partners anonymously scored Mr Gray from 1 to 5 on specific questions via electronic keypads, with the results screened instantly for all to see. Mr Gray says it was “pretty terrifying”, but “I did it because I wanted to bring home to them that accountability had to start at the top”.

Mr Gray invites feedback via an intranet page, asking partners to rate him on communication, strategic decision making, motivational skills and general leadership.