Lean and Mean Litigation Blog

IF IT IS TOO GOOD TO BE TRUE - LESSONS FROM MADOFF AND MR. PONZI

Over my over thirty years as a complex litigator I have, unfortunately, had the opportunity to represent individuals and classes of investors who have been the victims of Ponzi schemes.  In the early days of my practice, a large Ponzi scheme involved the loss of, say, a $100 million.  Today's schemes, like the Madoff debacle, make those look like drops in the ocean.  Yet, the impact is still the same just on a larger scale, with many if not most investors' lives destroyed.  Having seen the impact of the first Ponzi scheme that I was hired to proscecute on the civil side, it does not take long to conclude that Ponzi operators can cause more death and suffering that a group of serial killers.

The modus operandi also is eerily similar - the perpetrator creates a special aura about himself and his investment scheme [this is not intended to be sexist but from my experience most Ponzi operators have been men] and then finds the right marks to prey upon.  The bigger the scheme the more elaborate is the marketing aperatus - with the perpetrator enlisting the aid of various third parties, be they broker-dealers, financial advisors or other intermediaries [who are always well compensated].  The basic theme is also the same - the perpetrator has some special insight that allows him to create better than market returns.  Why?  Because, in the absence of better than market returns, there is no reason to invest.

As a result, these investments always have another common denominator - they are too good to be true.  Regardless of whether the investors knew that they were investing with Madoff or whether they were totally ignorant of who he was because they had invested through an intermediary, there was one common theme that ran throughout their investments - they were making better than market returns both in up and down markets.

This runs head on into the one simple rule that I have gleaned over the years of representing investors injured by Ponzi schemes and the one rule that would have stood a good chance of their avoiding being defrauded in the first place - if an investment is too good to be true it ain't true.

I was once being hired by a large institutional client who had been defrauded in a large securities offering.  They had done their due diligence and were still the victim of the fraud.  Nothing they could do in that situation other than hire me to pursue the defrauders.  Our meeting occurred around the time that Enron had hit the fan.  So I asked why they weren't hiring me for Enron.  They smiled and said that, unlike most other institutional investors, they had not invested a single cent in Enron.  Why?  Because, even though the stock was a darling of Wall Street, and everyone else was juicing up their portfolios with it, they never understood how Enron made its money, and thus they took a pass on investing in its securities.

A simple rule that all investors should follow - if you don't understand how the investment works don't invest.

Easy to say in hindsight but it is the one lesson that must be taught.  I know.  About four years ago, an acquaintance of mine asked me if I wanted to invest a six figure amount with a Connecticut brokerage who had a deal that would quintuple my money in five years.  The lure was strong.  But I disciplined myself and followed my rule.  My acquaintance didn't.  I have not had the temerity to ask whether he has quintupled his money or was the victim of Madoff or some other scheme.  But the odds are that he was.

I am not an investment advisor.  I am one of those who comes in to try to recoup loses after the frauds have been committed.  But I have learned, over these thirty years, that the same thing that makes a good complex litigator makes a good investment.  Simplicity and clarity.  You must not fall prey to your greed and you must not let others prey upon it.  There are no easy ways to make money. 

Lean and Mean Litigation Blog's Author Joins New Firm

I am pleased to announce that on February 1, 2009, I became Of Counsel to Futterman Howard Watkins Wylie & Ashley, Chtd. a Chicago based litigation boutique.  They are a great group of lawyers and I look forward to practicing with them.  I have been pretty busy since then and was pretty busy leading up to my joining the firm, so my posting has unfortunately lagged.  I hope that as I settle in, I can begin posting again.

Deciding Who To Depose [Part II]

In Part I of "Deciding Who to Depose" I discussed why a blunderbuss approach to creating a deposition program is inadvisable - both because of litigation costs and litigation strategy.  Today's post is about the basic decisional approaches that one needs to take in order to develop a meaningful deposition program designed to get your case properly prepared for summary judgment and trial.

In my prior post, I ended by discussing the six main categories into which witnesses can be placed.  I will now address each category.  But before addressing the categories here is an approach that should be used for every potential witness.   One of my good friends [and one of the finest trial lawyers in the country that I know] relayed to me a very interesting approach that he takes - he operates under the presumption that no depositions should be taken and that the person asserting that a deposition should be taken must do so by clear and convincing evidence.

A high burden to say the least but its spirit is dead on. Depositions should only be taken when absolutely needed.  In any event, regardless of what burden you adopt in deciding whether to depose someone, here are some threshold questions that must be asked about every potential witness: 

(1) how will the witness' testimony further the ball in our preparation for summary judgment and trial?

(2) are there other means of establishing what this witness is going to say - e.g. via the written documents, a declaration/affidavit?

(3) what are the key questions we intend to ask and what do we believe will be the witness' answers?

(4) will asking these questions and receiving the anticipated answers help in our preparation for summary judgment or trial or are we better off waiting until trial to ask these questions?

Now to the discussion of the various witness categories I previously noted in my prior post:

(1) witnesses controlled by the other side that you believe are going to be key witnesses for the presentation of your case in chief;

What are the key characteristics of this witness? First off, someone controlled by the other side means that they either are a current employee or they are a former employee who has indicated that they are going to be represented by counsel for the other side. They are key to your case because either (1) they were a witness to some event or occurrence that is important to your case and there is something that boxes them into having to provide testimony favorable to your side [e.g. documentation - either a signed statement or other document authored by them] or (2) they have authored documents that contain key admissions helpful to your case.

With this sort of witness, you should start with the presumption that you want to first meet this witness when you walk up to cross-examine them on the witness stand at trial.  This is particularly so if you can obtain a stipulation from the opposing side that the documents you are interested in were authored by this witness, are authentic and are business records.  Such stipulations are routinely agreed to.

Having said that, there are counter arguments, however, for taking this witness' deposition.   One of the paramount ones is that you might want to find out, prior to trial, what this witness intends to say about a particular document or documents.  In other words, rather than rip them to shreds with your best cross examination during their deposition, you might conduct an examination calculated to draw out what they intend to say about the document.  In this way, you can better prepare your trial cross exam.  But again it must be emphasized that the purpose of the deposition is only so you can develop a better cross exam at trial - not to use up your best cross exam during the deposition.

If there are no boxing documents but you know that the witness has material knowledge about the events involved in your case and you believe, for whatever reason, that they may recount the event in some fashion that is favorable to your case, then it is probably best that you do depose them to find out what they are going to say. Again, I would not use the deposition to conduct a cross-examination but approach the deposition with the attitude that you just want to find out what they are going to say. If during the course of conducting the deposition you are presented with an opportunity to nail their testimony into a corner that is favorable to you, then you can choose to pounce on it. But I would not approach such depositions with this expectation.

(2) witnesses who you believe are going to be key witnesses for the other side and which the other side will be able to bring to trial;

I would only consider deposing those witnesses under this category whom you believe are going to be doing the heavy lifting for the other side's case. But once you determine who these are I believe that you should depose them only because you need to find out what the other side's case is going to be about. Again, with these witnesses your only objective should be to find out what it is that they are going to say and stretching them to their furthest limits in terms of what and how they are willing to say it.

(3) witnesses currently controlled by you who provide needed testimony and who for whatever reason may not be available at trial;

Quite obviously, witnesses under this category must be deposed by you. I would prepare them for their deposition just as you would a witness at trial. I would also recommend that it be video taped. Video tape is the only way to go these days in presenting deposition testimony at trial. Since this deposition is presumably going to be shown to the jury, you should prepare an examination outline in an expository fashion in the same manner as you would if you were conducting their direct examination at trial. Prepare the witness for their cross examination too just as if you were going to defend their deposition.

(4) third party witnesses who are within the subpoena jurisdiction of the court and who may testify either favorably or unfavorably for your case;

For third party witnesses who are within the subpoena jurisdiction of the court and who may provide favorable testimony for your side, it would be preferable to obtain a sworn statement rather than deposing them. If they have counsel, sometimes their counsel can get in the way of obtaining an acceptable statement that is close to what they would say under oath. In such situations you may have to depose them in order to lock in their testimony before trial. Whether you take their deposition or take your chances at trial are judgment calls that are fact specific to the witness and what they may have to say. For third party witnesses that may provide unfavorable testimony and who are within the subpoena jurisdiction of the court, you should treat their deposition like a witness under category no. 2 above. You want to find out what they have to say so that you can prepare for cross examination at trial.

(5) third party witnesses who are not within the subpoena jurisdiction of the court or otherwise not available at trial and who may testify either favorably or unfavorably for your case;

For those third party witnesses outside the subpoena jurisdiction who may provide favorable testimony, you need to depose them in a similar fashion to those in category no. 3 above. For third party witnesses outside the subpoena jurisdiction who may provide unfavorable testimony and who will not be available for trial this is a dicey proposition. If you are pretty sure that they will not voluntarily come to trial then don't depose them - unless of course your opponent notices up their deposition. If there is a reasonable chance that they will be willing to come to trial, then you need to treat them like a witness under category no. 2.

(6) witnesses currently controlled by you who provide needed testimony and who will be available at trial. No need to depose them at all- unless there are health issues in which case they then come under category no. 3 favorable witnesses.

Believes this covers most witness situations. Happy hunting.

Out of Control Profession - Or What Have You Done For Me Lately?

In an article discussing the ousting of the chairman of Cadwalader [click here] - one of the new mega NYC based firms - detailing how their "profits per partner" were down to $2.7 million and even then had only reached that level because the firm had attracted some rainmaking lateral hires, it concluded with the following:

"Both White and Link [the now ousted chairman] were among the young partners who led a drastic restructuring of Cadwalader in the 1990s. Concerned that the firm was falling far behind other New York firms, they initiated Project Rightsize, which led to the ouster of unproductive partners and practices.
The firm has continued to take a notably aggressive stance on productivity, paying top performers far more than other firms but encouraging laggards to leave."

This article and its conclusion evidence a cancer that has infected the legal profession.  It is something that should cause both those inside the profession and the clients who hire them to sit up and pay attention.  The profession has lost its way and as a result its customers are paying dearly for it - both in out of pocket costs and in the quality of what they pay for. 

For the most part, as the article about Cadwalder evidences, this whole phenomenon has been driven over the last decade or so by the New York large firm legal community.  The NYC large firms cough and everyone coughs too.

And it is a prototypic  NYC phenomenon that caused this out of control sea change in legal costs over the last few decades.  NYC large firm lawyers see the money that their clients make, rightly or wrongly believed that they are just as smart as their clients and thus believed that they were entitled to keep up -  think "Bonfire of the Vanities" on steroids.

Here is the plain truth, if you want to make the big bucks you should choose another line of work other than being an hourly rate lawyer.  Become entrepreneurial - take risks like your business counterparts.  Become contingent lawyers or get out of the practice and become a true entrepreneur - go into business.

But if you work by the hourly rate you shouldn't expect and don't deserve big bucks. Hourly lawyers are service professionals.  They get the pleasure of earning a decent living and working a craft that has non-monetary pleasures that are - or least used to be - equally important.  Hourly lawyers are entitled to make a nice living but that is it.  They are are not taking any risk.

Our profession is losing its professional compass when the be all and end all is profits per partner.  Where the kingpins of firms are the rainmakers and not necessarily the most skilled.  This includes lawyers that once may have been superstars but because of the enormous profit pressures placed on them are now so pyramided and distanced from what real lawyers can and should do, that the skills and talents that made them great now actually lay dormant [of course they would never admit that to a client that they are marketing].

Large firms can pyramid all that they want with all of their highly paid heavily recruited young associates [most of whom, in the faustian deal they have struck, don't stay with a firm long enough to learn anything worthwhile] but here is another plain truth - the practice of law - in it highest and best form - is an intimate and highly personal process. It requires the senior most lawyer on the matter rolling up his or her sleeves and becoming intimately familiar with all of the details.  Not just being filled in by subordinates at key moments.

Think of it this way - who would you want handling your death penalty trial? A lawyer who knew everything there was about your case or someone who had been filled in by a cast of thousands?  The same is true in civil matters and, by the way, it is even cheaper.

Hopefully someday the marketplace [e.g. the clients who pay] will realize that they are paying a lot of money for a figurehead or name when they could pay less and get more by engaging highly skilled lawyers who practice the old fashioned way -  providing intimate personal service to their clients.  It may result in lawyers earning less, but the profession as a whole will be the better for it.  Associates will not be required to bill ungodly hours and clients won't have to pay for the ridiculous bills.  Senior lawyers will actually work closely with young associates and thus the traditions of great lawyering will be passed on.

The Holy Grail?  Maybe.  But the marketplace may ultimately dictate it.  Here is hoping that it does.

Postscript:  I initially drafted this article several months ago when it originally came out and sat on it because I wanted to see whether this was just a blip as Cadwalder had said or was the beginning of a trend.  Since then, Cadwalder has been rocked by historic layoffs of lawyers (96 in one week) purportedly due to downturns in its financial services practice group and Cadwalder isn't the only firm dumping partners and associates by the dozens in these tight economic times. [click here for link to more recent article]. In days past, a firm would collectively tighten its belt and share the blows of such a downturn, knowing that due to the cyclical nature of business, one day's practice group superstar is tommorrow's dog and so on.  Not so today.

We probably won't ever be able to return to those good old days, but my guess is that those firms who can best re-create that model and, most important, follow it, will over time gain a competitive advantage in attracting legal talent and clients.

To Cadwalder and other firms who have fostered  or acquiesced in this firm culture that has now imploded - you reap what you sow.  Perhaps lawyers with sensible views of who they are and what our profession is about will ultimately take the helms.  Don't count on it - humility is not something that NYC cherishes.

Query:  If these large law firms feel comfortable treating their lawyers as fungible commodities when will and why don't their clients do the same?  The subject of a future post - I promise - how companies and their in-house counsel can create fungibility in their outside law firm hiring.

P.S.S. For those of you who regularly read my posts and may have wondered why I haven't posted for a while there are two reasons: (1) my game plan is to aspire to posting quality posts that discuss important issues confronting our profession - both as a culture and as practitioners of an important craft; and (2) over the last month and half I have been recuperating from my second hip replacement surgery [the by-product of too many years as a jock].  I am now back.  Posts my not come weekly but they will come more regularly - as topics present themselves.

To All Aspiring Litigators - Get Thee To A Courtroom

Today it is tougher than ever for young aspiring litigators to get hands on in court experience.  More and more young litigators are becoming litigation partners having never tried a case let alone first chair it. 

Litigator used to mean trial lawyer, now it means litigator.  The Catch-22 of today's litigation environment - cases are so big the clients and the situations demand that senior lawyers handle the critical in court aspects of big cases, few cases are tried and little cases are even less likely to be tried.

It even afflicted my generation.  While my firm - a mid-size firm - took on smaller matters just so that we could get trial experience and I volunteered for any case that was likely to go to trial ( I tried a defective wood deck case,  a defective kitchen linoleum case etc.), most private  litigation associates - particularly those  in large firms  - got no trial experience.  Most of them didn't even get to take depositions until they were senior associates "let alone try cases.  As a result, many became "litigation" partners without ever trying a case.

It is even worse today.  Why?  Because now it is accepted in most firms that "litigation" partners may never try a case.  But this is a real deficit for anyone who is serious about being a litigator.  If you don't know how it is to actually try a case, you are at a distinct disadvantage as a litigator.

The best litigators prepare every case - even if they think that they are going to get it dismissed - with the assumption that it is going to be tried.  This approach causes one to shed the unnecessary and focus on the necessary.

But if you haven't tried cases then you don't have a clue about how to prepare a case for trial.  The two go hand in hand.

Those who have trial experience are going to be a rare breed and under the law of supply and demand, those of you who want to have a leg up on your competition should get thee to a courtroom.

If your current firm won't provide you with this experience, start looking for some place that will.  Those who do - who take the risk of forging their own career path - will achieve personal and professional autonomy while at the same time will have the confidence of knowing that they know the score when it comes to this thing called litigation.

 

THE DANGERS OF RELYING ON E-DISCOVERY SOFTWARE EXPOSED AND WHY A CLAWBACK PROVISION IS THE WAY TO GO

Not sure why but I received a client alert bulletin from one of the ALM top 10 firms [I am not a client and have been adverse to this firm many times].  The bulletin advised me about how a district court had recently slammed a defendant and its counsel over a privilege waiver battle.  Apparently defendant's counsel had inadvertently produced 165 electronically stored privileged documents.

As described, the saga involved defendant's counsel first negotiating a clawback provision [this is something that should be SOP for everyone involved in large document productions - it is a money saver and a tremendous protective shield] but then deciding that they could review the documents and produce them without one [why they didn't do both is beyond me].  They purportedly did key word searches and somehow their searches failed to alert them to the 165 documents that were inadvertently produced.

The district court, quite rightly, held that this was not excusable inadvertence and held that they had waived their privilege.

Maybe defendant's counsel could have presented a fuller record as to how they were diligent, but the short of this is that - you can go out and pay big bucks to e-discovery software companies or pay for an additional layer of supposed e-discovery lawyers [every large firm seems to be creating one] in addition to your litigation counsel or you can do some simple things - like always demanding a clawback agreement.

Such an agreement provides that regardless of the question of inadvertence and whether it was excusable or not,  production of privilege material will not be waived if it comes to the attention of producing counsel that a privileged document has been produced and they timely request its return.  How simple can that be?  You are protected from your opponent ever introducing privileged materials that for whatever reason you fail to intercept in your initial production.

Finally, if you want to nip production of privileged documents in the bud actual review of the documents is a must - key word searches and expensive discovery software systems just don't cut it.  The case is Victor Stanley, Inc. v. Creative Pipe, Inc., et al., Case No. MJG-06-2662 (D. Md.) by the way.

ARE WE LAWYERS OR MBAs?

Click here to read an article that to me reflects much about the problems that confront our profession and the clients we serve. It discusses how a mega rainmaking litigation partner - purportedly bringing in $60 million in billings per year and the highest paid partner earning $5.75 million last year - was leaving  DLA  Piper to go in-house at Pfizer.  Those numbers were pretty impressive, so I decided to look at her bio.

My expectation was that she was an uber trial lawyer that attracted clients because of her stellar in court skills.  That may be the case, but if you read her bio you wouldn't know it. 

The bio is extensive.  It details all of the cases that she has "coordinated" and all the litigation teams that she has lead.   In its own right, it is quite impressive.  But not one mention of ever having been involved in the trial of a case let alone successfully trying a case.  The impression one gets is that she is a skilled case coordinator, legal strategist and leader of litigation teams. Click here if you want to read it.

Now I understand that defense lawyer's objectives are, quite rightly, to avoid trial at all costs and that as a result in some ways it is a badge of dishonor if you have to try a lot cases as a defense lawyer.  Perhaps Ms. Schulman has tried her fair share of cases and just didn't want to tout this in her bio.  But I doubt it.  Anyone who has tried and won cases before juries or judges would insist on this being included in their bio.  They are career benchmarks for true litigators/trial lawyers.

She is not the only one who I have seen with such a bio.  The managing litigation partner from a major firm who headed up the defense of a substantial antitrust matter that I recently litigated had a similar bio - touting all the cases he had successfully managed but not one mention of having ever tried a case.

Whether they have or have not tried cases is almost irrelevant, because the real question is where is the profession going when the people who lead litigation litigation matters tout their ability to "coordinate" large litigation teams rather than their abilities as in court lawyers?

My guess is that more and more litigation partners in large firms are no longer getting any trial experience because less and less cases get tried these days and, of course, throughout their developmental years success is measured in getting cases dismissed before trial.  So as they rise to the top of these firms, litigators' bios have morphed to touting "case management" skills.

Moreover,  this professed expertise in supposedly managing  large litigation teams is a canard. As I have repeatedly stated in this blog and in my published articles - large litigation team means a bloated inefficient and costly litigation team.  You want someone to efficiently manage a litigation matter? Get people who have litigated in the trenches and tried cases.  All the rest is expensive feel good fluff.

Those who know how to try cases are still the best at developing and implementing the best strategies for cases big and small.  The fact that the highest paid lawyer in the largest firm in the country either doesn't have this experience or consciously chooses to not tout her trial experience says more about where things have gone these days - at least in the big firms.

In-house counsel wail about litigation costs and the unreliability of our civil justice system.  Yet they only have themselves to blame when they swallow this "case management"  PR.  Sure the complex litigators clients hire should have the skills to manage big cases.  But the only way to really do this is to work in the trenches and actually try some big cases.  Without such experience one has no idea what is actually involved. Thus, clients would do better to hire lawyers who can and do tout their in-court prowess and not those who tout their case management skills.  The former is the best path to the latter.

CORRECTION - ON GET THEE TO A COURTROOM

For those of you who may have automatically received a post from this blog entitled "For Aspiring Litigators - Get Thee to  A Courtroom", as you may have surmised, this was not supposed to have been posted yet.  It was merely a very incomplete draft and was inadvertently posted due to my being bed ridden with this spring's head cold.  At some point I will complete my thoughts on this and then perhaps you will understand what my rather cryptic notes actually mean.  My apologies.

The Faustian Deal and Why We Litigators Must Change The Way We Practice

Perhaps because I have a son who is about to enter the profession and perhaps because he is a coveted recruit, I write this post as a small and quiet call for a new paradigm in the treatment of litigation associates and, in turn, a new paradigm for how law is practiced.

I am, of course, speaking in generalities, but these observations are nevertheless generally true.  The legal profession and, in particular, the large to mid-size firms, are doing an abysmal job in training their litigation associates to become trial lawyers.

Firms are now completely driven by the bottom line.  It controls all that is done.  Lure top associates with ever increasing starting salaries in order to lay claim that "our firm attracts the best talent."  Work those associates to death on make work tasks to pay for those salaries and to produce the profits necessary to keep up with the Jones to maintain or raise "profits per partner" in order to keep and lure supposed rainmakers.

The result - few if any private sector associates are gaining any concept of the big picture in the cases they work on.  They are given zounds of projects to work on as part of a larger group of pyramided lawyers in various matters. But how many are actually an integral part of any case's litigation team?

It is the rare [very rare] exception where a firm staffs its cases with small teams; where the associates work closely with a senior partner on all aspects of the case. As those who have read my other posts or who have read my articles know [go to my web site for the articles], even the largest cases are more effectively run with small litigation teams.  It is the best way to win and it costs less for the client.  It is also the best way for young lawyers to develop the skills they will need to be case leaders.

Top law graduates - intelligent as they are - accept the current Faustian deal only because the money seems to be too good to pass up.  But as everyone knows, most associates will be gone within 4-5 years, and most of these young litigators leave with little if any marketable skills.  Few have even taken a deposition let alone participated in any meaningful way in a trial or some other form of contested hearing.  Those that stay have limited skills for their years and this experience lag continues - with some "litigation" partners at large firms never having tried a case either as a first or second chair!

How could so many smart people act so stupidly for a few extra short term dollars?

There is only one end point for this trend - eventually the only people capable of trying cases in large firms are going to be former USDAs or State's Attorneys.   But there are not enough USDA or State's Attorney jobs available to provide the training for the private sector's needs.

Moreover, let me tell you a little known secret - there is actually an art - unfortunately a dying one - to handling large complex civil litigation matters that one only learns from doing them in the private sector.  So even government trained attorneys - while having a leg up on their private sector counterparts in terms of courtroom experience - are at a disadvantage when they come up against seasoned private sector civil litigators who know what they are doing.  For example, it is one thing when you have the FBI gathering your evidence for you and another when you have to do it yourself.

Those firms currently drunk on the short term revenues from this inefficient pyramid are going to be in for a rude awakening based upon simple economics of supply and demand.

On the supply side, law school graduates aspiring to be litigators are going to get smart and realize that  they are better off tightening their belts in their early years and gain in the trenches trial experience at a smaller firm [say a litigation boutique] where, to borrow a phrase, rather than giving them a fish the firms teach them how to fish.  There are already supply side organizations cropping up such as "Law Students Building a Better Legal Profession" [click here] that are starting to confront the issue of the quality of associate life and training.

Yet, it still amazes me how the herd mentality takes over for most the top law school grads.  How else can one explain seemingly intelligent people who, for a few extra short term dollars, knowingly squander all that they have worked for to be worked to death for 4-5 years and walk away with few meaningful marketable skills.  It is a losing proposition.  If it were a case it would be dismissed out of court.

Here is absolute rule no. 1 for soon to be law school grads who aspire to be litigators - if you want to have personal autonomy [e.g. control your career arc] make sure that where ever you land you are going to be given the opportunity to (1) take and defend depositions and argue before courts within your first 2-3 years and (2) try cases as second and first chair within the first 5 years of your practice.  Ask the associates who interview you how many depositions they have taken and defended.  Ask them how many trials they have worked on and what they did. 

They may not like these questions, but if you intend to make a career out of asking the right questions, it makes sense to do so when you are making an important career choice. You are entitled to know these things.  If someone is going to hold it against you for asking these questions then you should think twice about why you want to work at such a place.

For those litigation associates who now realize that their high paying jobs are on a track to nowhere in terms of skill development, get out. Get over the prestige issue and get over the money thing.  Nine years out, no one will care where you spent your first years of practice if don't have needed skills, and whatever money you made upfront in your early years will be quickly lost in diminished earning capacity later on.

On the demand side, as large and mid-size general practice firms' development of litigation talent continues on its diminished trend, more and more top flight litigation boutiques are going to become the norm - not only because smart law school grads who want to become real trial lawyers are going to flock to them but also because clients big and small are going to prefer to hire these firms.

In short, unless this trend reverses and large firms pay attention to something other than short term profitability, the marketplace will dictate a division -  where the best/most talented litigation firms and departments will be litigation only firms. 

The trend has already begun - pioneered by firms like Susman Godfrey and followed by firms like Barlit Beck.  Yes, these firms are uber versions of litigation only firms that currently have the luxury of selecting only the cream of the crop law school grads.  But one should not write them off as one hit wonders - firms that only arose because of the unique abilities of their founders.

There is a valid business model behind these firms, why they are so successful and, most important, why they are more sought after than large firm litigation departments time and again.  The model is quite simple - they get the talent, they develop the talent, and,as a result, they provide a better product.

The model is being successfully followed.  Numerous complex litigation boutiques are sprouting up in every major metropolitan area.

Will the litigation boutique overtake large firm litigation departments in my lifetime?  Probably not.  But having litigated my fair share of antitrust matters, I am a firm believer in the marketplace. You don't have to be a Nobel Laureate economist to understand that both the supply side and demand side may very well seek an alternative when law the large firms fail to provide what both sides want.

WHAT IS ALL THE HUBUB ABOUT E-DISCOVERY?

We have all seen them - various consulting firms advertising their new software programs for e-discovery consulting services.  Some of them even provide testimonials from various major firms - about how this or that consulting firm or this or that software is the way to go. [click here for one such example].  Better yet, click here to read an exemplar of an advertisement from one such e-discovery  firm. Perhaps someone can explain in the comments section below this post what it is that they are talking about that distinguishes what they are offering from what the IT people in a company can provide.  Better yet perhaps someone can explain in the English language what they talking about at all.

As an adjunct to e-discovery consultancy, law firms in turn are creating new practice groups specializing solely in e-discovery issues.

To all of this I say, "What the heck is going on here?"

Maybe I am just a "Caveman Lawyer" like the popular SNL character but I will tell you what I think is going on here - money.  With the advent of the new federal rules governing e-discovery, consulting firms and law firms found a new way to make money.  Some serendipity for them fueled this false demand.  Several high profile cases where companies were sanctioned for failing to produce documents - most notably the Qualcom debacle - scared the wits out general counsel.

But the Qualcom matter had nothing to do with a mere failure to find and produce.  It involved conscious or at least reckless disregard by both outside and in-house counsel in not producing highly damaging documents that completely undercut the core of their case.  The documents were readily available in an important player's email files if anyone had asked. [Click here for article summarizing the Qualcom episode]. Yet, this example along with other scare tactic marketing has thrown many large companies and their in-house counsel into a frenzy over making sure that they are not the next Qualcom.

Let's set something straight first - the new e-discovery rules are not anything really new.  The obligations articulated in these new words are merely more detailed descriptions of the obligations that any litigant had under the old version.  When you sue or get sued, you had better make sure that you put a hold on the destruction of any and all documents that might be discoverable or relevant to the lawsuit - hard copy and electronic. This has been the rule before the new e-discovery rules were adopted and it is the rule after their adoption.  And when you produce documents you better make sure that you produce responsive documents.

Yet, after the adoption of these rules consultants and law firms have begun drumming up business under the guise that somehow there has been a sea change in the playing field that must be addressed.  Whatever change occurred had nothing to do with the rules change.  Instead, it has had to do with the way business has been generating documents over the last decade or so.  Business is done electronically.

So the real question is not what should you do under the new rules, but rather what should you do with all of these electronic documents that are now generated.  It turns out that it is really not much different than what we used to do when we only had hard copy documents to deal with.

In the "old days" before electronic documents, we would go to the all the people who might have touched the issues in the case and have them provide their files to us.  A copy would be made and preserved.  We would go to the document custodian and have them pull any stored documents that might pertain to the case (e.g. stored files of the persons with knowledge or general files that might pertain to various issues in the case).

Relying on outside consultants to pare down the documents produced based upon word search protocols [something that they seem to marketing as a cost saver] is going to be the next Qualcom.  Word searches are nice for purposes of your own culling to determine what documents are of interest.  But this is a dangerous gambit when it comes to determining what should be produced.  The better safer and more cost effective approach is to be over-inclusive in what you produce and make sure that you enter into a standard protective order that provides for the return of privileged materials.

Do you need to hire a consultant who specializes in e-discovery, buy their software or pay for another partner within your outside counsel's firm who is supposedly expert in e-discovery?  I don't think so.  But it is your money.

It just involves getting the head of IT involved as soon as you are aware you are going to be or are involved in litigation.  Your IT people are the new document custodians of the electronic age.  You still have to obtain all hard copy but you now also have to obtain all currently maintained electronic material from the persons involved in the subject matter [on their computers and anywhere else that it might be stored] and anything that is maintained within the company's computer files that might relate to the issues in the lawsuit.

What can a consultant give you that is better than the IT people in your company?  Presumably the IT people will know off the top of their heads where all the nooks and crannies are that need to be searched in your database(s) and to the extent that they don't some basic questioning by litigation counsel should do the trick.  This along with making sure that your IT person keeps a clear record of what has been done should provide you with the assurance that you comply with your discovery obligations.

If you require that the documents be precisely culled down so that only responsive documents are produced [a bad/dangerous practice in my view] then there is only one way to do that and this is through actual human eyes looking at the documents.  Anything else - like relying on a computer based search protocol and you are exposing your company to risk of Qualcom sanctions or worse.  Using a consultant who performs supposedly industry standard searches will not alleviate you from your burden to produce responsive documents and the failure to do so - without eyeballing the production with human eyes - could have Qualcom like consequences.  That is why being over-inclusive in your production is a better and more cost effective practice.

If you can't understand what it is that your e-discovery consultant is talking about, that should give you pause for concern. So take a breath and realize that even though this is the electronic age it still is not rocket science when you are confronted with e-discovery.  Common sense and practical approaches are still the best way to ensure that you comply with discovery demands.   At least until courts definitively rule that following the guidances of outside e-discovery consultants is a protective shield, to do anything other than this could expose you to the sanctions that you so earnestly are trying to avoid.