5
Jun

Michael Ross

Michael Ross, is a former partner of Latham & Watkins (Los Angeles), ex-Senior Vice President and General Counsel for Safeway, Inc., and currently is an adjunct professor at the University of Virginia School of Law and University of California Berkeley School of Law as well as the author of the book Ethics & Integrity in Law & Business – Avoiding ‘Club Fed’.

Given the changes in the US legal market over the last few years, combined with a market saturated with young lawyers, what in your opinion are the distinguishing skills of a successful lawyer?

Law firms continue to reward handsomely lawyers who produce and proliferate client business.  In order to be successful in these efforts, lawyers must usually demonstrate sincere interest in the client and its business.  Too often lawyers emphasize their own achievements and the law firm’s pedigree and reputation, which is of much less interest to many clients and prospective clients.  The lawyer should develop a reputation for not only contributing to the client’s successes but also for giving the client’s General Counsel and senior executives credit for successes.  Lawyers and law firms should also not shirk responsibility for mistakes.

Law firm lawyers with less business production potential should devote significant efforts (without charge to the client) to understanding the client’s business so that the lawyer addresses legal issues in that context, taking into account quasi-legal and non-legal consequences of alternative courses of action and results.  These lawyers may also distinguish themselves by proficient and creative use of networking platforms in order advertise their expertise and efficiencies.

Have these market changes created any new ethical problems/challenges for lawyers which were rarely seen or contemplated before?

The continuing increase in competition for high-paying legal work will challenge law firms to make more than incremental changes to their fee structures in order to provide substantially more value to their clients.  They will need optimize staffing, including greater use of part-time and contract lawyers and outsourcing of legal and support services.  Firms will have to explore and implement new technological measures to increase efficiency.  They should initiate alternative fee structures, rather than merely responding to clients requests and demands for them.

As competition increases, law firms will be susceptible to temptations to take on more matters that involve legal or business conflicts, or serious potential conflicts of interest.  Increasing financial pressures may cause some firms to emphasize billings, collections and realized rates at the expense of professional responsibility and ethics.  These pressures will increase the need for effective ethics training throughout the firm.    

How do you think the decision making process of firms will be affected by these changes (both market and ethical)?

Prudent law firms will become more deliberate in making significant business decisions, such as about, opening new offices, embarking on new practice areas and hiring lateral partners, especially teams of lawyers.  Firms that have learned lessons from the demise of previously successful firms will probably also become more collaborative and transparent in their decision-making.  Many more firms will rely increasingly upon non-lawyer business executives for both strategic decisions and execution of strategies.  Although focus on the current year’s “bottom line” will continue, firms should persuade partners that the firm must be run for the long-term, even if it means less income in the short-term.  Compensation systems may become more complicated and include more incentives for partners to remain with the firm through less profitable times.

How do you see fee structures and pay schemes, in general, for lawyers being affected in the US?

The increased competition and continuing movement of work in-house will increase the use of alternative fee arrangements, including fixed fees, caps, bonuses and discounts, for outside counsel.  This is likely to be most prevalent in smaller, less critical matters.

How do you envision the legal market in the US in ten years?

The law firm market will continue to fragment.  At all levels, firms will compete for “rain-makers.”  Consolidations and bankruptcies will have reduced the number of large and mid-sized firms, but the number and success of “boutique” firms, that is specialists which deliver high quality and value, will have increased.

Large, generally multi-national, firms will be competing even more vigorously for high-value work, such as, M&A, project and corporate finance, bankruptcies and reorganizations, and major securities, antitrust and patent litigation.

Small firms will be competing even harder for routine, lower stakes matters, such as, employment and contract litigation, IP licensing, routine leasing and other real estate transactions.

Mid-level firms will be under substantial pressure to retain long-term client relationships and escape being squeezed out of existence by larger and smaller firms.

In-house legal departments will continue to grow and take on more work that was historically done by outside counsel, such as, routine litigation and regulatory filings.  In-house lawyers will be working closely with compliance departments to reduce legal risks throughout the company.  They will be under constant cost-reduction pressure and become more business-like in hiring and evaluating outside counsel performance.

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