By Alex De Grand, Legal Writer, State Bar of Wisconsin

Gone are the days when a lawyer, fresh from law school, joined a firm and remained there until retirement.

March 18, 2009 – That static law career has been upended by the entrepreneurial norms typical of other businesses. Lawyers regularly change jobs and firms dissolve or merge, as outlined in the Hildebrandt International five-year study “Anatomy of Law Firm Failures.” Hildebrandt identified such seemingly trivial events as expiration of an office lease as sufficient cause for a firm meltdown. Other flashpoints can be a defection of a significant partner, a failed effort to merge with another firm, or poor planning of a firm’s growth, according to the report.

This poses special challenges to firms that are only more pronounced with a downturn in the economy, according to Terry Peppard, a former law firm managing partner-turned-arbitrator-and-mediator. If handled poorly, he said, a shakeup can spill into public view, jeopardizing the fortunes of the lawyers involved, their firm, their clients and the image of the profession.

But a firm cannot wait until trouble hits before it figures out what to do, Peppard warns. “When a law firm fails, the time span between the triggering event and the dissolution might be measured in days,” Peppard said.

State Bar offers Lawyer Dispute Resolution services

Reacting to a series of messy high-profile law firm dissolutions, the State Bar formed its Lawyer Dispute Resolution Program (“LDRP”) a decade ago to help Wisconsin attorneys and their firms resolve quickly and efficiently a wide-range of disputes. According to LDRP oversight committee staff liaison Kris Wenzel, at least 15 lawyer-to-lawyer disputes have been successfully mediated or arbitrated since the program’s inception.

According to Peppard, a member of the program’s oversight committee, “the State Bar’s proven program is uniquely suited to dealing with the kinds of disputes that will inevitably arise from the current upheaval in the national economy and its effects on the legal profession here in Wisconsin.”

Peppard said a firm should plan ahead to manage its shakeups, and that ought to begin with an agreement to disagree – constructively, that is. This means that, before a dispute arises, members of a firm need to resolve that their differences over issues such as fees or possession of client files will be submitted to arbitration or mediation rather than hashed out in a courtroom, he said.

“It is hard to get people to agree to anything once the trouble starts, so it’s important to get them to agree to dispute resolution at the outset,” Peppard said. “Knowing this, law firms are writing the Bar’s LDR program into their partnership and service corporation agreements and attorney employment contracts.” Language for doing so, he says, can be as simple as this:

Any controversy or claim arising out of or relating to this agreement shall be settled by arbitration or mediation under the then current rules of the State Bar of Wisconsin’s Lawyer Dispute Resolution Program, and judgment upon the award of an arbitrator may be entered in any court having jurisdiction thereof.

Peppard said that parties might start with the adversarial process of arbitration. But, after discovery and other preparation for an arbitration hearing, he said, they may want to switch to the more collaborative problem-solving technique of mediation without the need to seek approval from a court or other outsider. If parties have been working through the State Bar’s Lawyer Dispute Resolution program, Peppard said, this change does not even incur a second case filing fee.

Peppard also noted that a great strength of the LDRP is that arbitrators and mediators serving in the program are specifically excluded from the otherwise existing obligation under Supreme Court Rule 20:8.3 to report apparent ethical offenses revealed to them in the course of their service as LDRP neutrals.