Managing Legal
The Point
1. Legal media, and conversations with my personal contacts, are replete with stories of attorneys in law firms and in-house counsel who are being brutally overworked by hourly billing quotas, and by strained law department budgets with significantly increased workloads (e.g., here and here).
2. This to an extent that substantially jeopardizes those attorneys’ wellbeing. (“Mental health initiatives aren’t curbing lawyer stress and anxiety, new study shows,” May 2023, American Bar Association Journal.)
3. Thereby placing at significant risk the business clients of those lawyers.
This Matters to Your Business
By now, all but the most cynical corporate managements have at least begun to address their employees’ mental health. (“It’s a New Era for Mental Health at Work”, Harvard Business Review, October 4, 2021.)
Yet the legal profession remains notoriously inhumane to its own. With 2200 hours-per-year billing quotas in outside firms. And piling up of workloads in-house while freezing both head count and outside counsel expense (e.g. here).
But how exactly do unreasonable demands upon lawyers, however ruthless, endanger the corporate clients involved?
Simple: Stressed-out, exhausted people tend to make mistakes. And mistakes in transactional drafting, litigation, or simple one-on-one advice from attorney to business executive readily take on consequential proportions.
Consider an attorney malpractice case taken up by a Massachusetts trial court last week. Until conclusion of a future trial, there is no way to know for certain what happened in this case. But the plaintiff alleges two of the most common legal mistakes in deal work where stressed-out attorneys work in haste:
First legal claim: lawyers cutting-and-pasting terms from an unrelated contract end up harming the client in the deal at hand. The principal of a hedge fund sold the fund to a third party. He now complains that his prestigious law firm negligently included, in the relevant sales contract, a provision that allowed the purchaser to redeem all of the principal’s interests in the fund, and to receive all of its profits, for performing some contract terms that were essentially worthless to the principal / seller.
Principal’s claimed loss from the contract provision he alleges was drafted badly: $636 million.
Negligence alleged: Cutting-and-pasting into the relevant sale contract text from another, unrelated, agreement used as a model.
Second legal claim: plaintiff’s lawyers failed to warn him of the potential harm posed by the badly drafted text. Thereby allegedly causing the $636 million loss.
Regardless of eventual determination at trial as to whether or not anyone was at fault, virtually every deal lawyer has faced situations where unthinking adoption of contract language borrowed from another deal’s papers would sabotage their client’s interests, albeit unintentionally. The same holds true for failure to alert one’s client to the operative, harmful impact of such language. Again, unintentionally.
Because …
Of course, anyone can make a mistake. Including a well-rested, clear-headed, emotionally-centered law firm senior partner in her corner office. At 9AM on a weekday morning. Or a general counsel under similar happy conditions. But humane considerations and quality concerns force one’s attention to the proverbial worker-bees of corporate Legal.
These are the law firm associates, two to seven years past graduation, working late and stress-filled hours to make this year’s billing quota. Before parting company with their employer just a few years later on, in a severe up-or-out competition for partnerships awarded to a mere single-digit percentage of those who start such work right out of law school. Similar considerations also affect in-house counsel’s mental health and work quality.
Morally, the legal profession’s treatment of its young members is disturbing. And, from a commercial standpoint, there’s a former hedge fund principal in Massachusetts who might argue that it cost him $636 million.