Vol. 70, No. 5, May
1997
Book Reviews
Billing Innovations: New Win-Win Ways to End Hourly Billing
By Richard C. Reed (Chicago, IL: ABA Law Practice Management Section,
1996). 276 pgs. $144.95. To order, call (800) 285-2221.
Reviewed by Robb E. Arent
The legal profession has grudgingly, yet rapidly, changed with technology;
however, the practice of hourly billing has remained a monument to the past.
Richard C. Reed drives this point home in Billing Innovations: New
Win-Win Ways to End Hourly Billing. The book is the third installment
of a trilogy that began with Beyond the Billable Hour: An Anthology of
Alternative Billing Methods (1989) and was followed by Win-Win Billing
Methods: Alternatives That Satisfy Your Clients and You (1992).
In Billing Innovations, Reed first chronicles the legal profession's
progression and use of alternative billing methods since the ABA's Task
Force on Alternative Billing Methods was formed in the late 1980s. Unfortunately
for Reed, charting this progress is slow going.
Reed makes salient arguments to change a historical practice in favor
of alternative billing methods. He notes that straight hourly billing discourages
attorneys from being efficient, from reaching early conclusions and from
providing cost-effective services (client value). He then takes the extreme
position that hourly billing will vanish from the legal landscape in the
future.
Reed's arguments are based almost entirely on common sense. This leaves
one to wonder why he required 250 pages to update these previously discussed
arguments other than to justify a $144.95 price tag.
Granted, the arguments and methods employed are highlighted with actual
examples, but many of these apply to only very specific situations. Other
examples were the result of firms adapting billing methods to meet a client's
specific needs. To these points the book seems overkill.
The book presents a brief synopsis of the 14 most common billing methods
including contingency, fixed fee, blended hourly and percentage discounts,
and gives examples of various-sized firms and the progressive alternative
billing methods they employ. The examples include interviews with attorneys
and the text of the firm's fee agreements. It is disappointing that a book
designed to promote these alternative billing methods does not make these
sample documents available on computer disk.
Part One concludes with a chapter that emphasizes alternatives that have
worked for litigators and how other litigators can employ these billing
methods in their practice.
The second half of the book deals with the task of implementing a chosen
billing alternative. Reed emphasizes the need to generate client trust before
any alternative billing method will be successful.
An important aspect of the client-attorney relationship is communication.
There must be an understanding between clients and attorneys to know what
each is expected to contribute, to understand the economic pressures each
faces, and finally how to price the legal services so clients believe they
are getting value for the billings.
The book concludes with chapters on the future of alternative billings
and its relationship to pricing including strategic planning, adapting attorney
compensation to match alternative billing methods, marketing the billing
plans and the role technology should play in efficiency.
Billing Innovations provides a broader palette of alternatives
than do most articles on alternative billing methods. Beyond being a basic
reference, the book falls short because Reed provides mostly a common sense
look at understanding your clients and fulfilling their economic needs.
Robb Arent, Marquette 1996, is a Milwaukee sole practitioner
working with individuals and small businesses in estate planning and taxation.
Competition Regulation in the Pacific Rim
Edited by Carl J. Green and Douglas E. Rosenthal (New York, NY: Oceana
Publications Inc., 1996). 652 pgs. Hardcover. $95.
Reviewed by Prof. Ramon A. Klitzke
Competition is very high on the international agenda of most countries.
The World Trade Organization has a working group on competition and pushes
for stronger competition laws and enforcement mechanisms in bilateral negotiations
with various countries. Reasoned regulation of competition will determine
the future of economic health in the new century.
On Nov. 25, 1996, the foreign ministers of 18 Pacific Rim governments
endorsed sweeping tariff reductions by the year 2000 in the $1 trillion
"information technology" industry. The ministers, meeting at the
fourth summit of the Asia-Pacific Economic Cooperation forum (APEC), also
agreed to voluntarily liberalize many other trade and investment opportunities.
Duties on computers and telecommunications equipment will be completely
eliminated and economic and technical cooperation will be deepened. These
were the first concrete steps toward a Pacific free trade and investment
area by 2020.
APEC members account for 50 percent of the global economy, more than
40 percent of international trade and 80 percent of the global trade in
information technology.
Global trade will continue to expand rapidly but healthy competition
will advance only if domestic laws do not unduly impair the ability of local
firms to compete in international markets and, conversely, foreign firms
have full opportunity to compete in domestic markets. APEC takes a new and
more consensual approach to the contentious trade disputes that have obstructed
healthy competition. Laws and policies on investment, capital markets, intellectual
property and regulation of the environment and labor are all subject to
intense APEC scrutiny and subsequent agreement.
Competition Regulation in the Pacific Rim is an excellent collection
of 14 papers presented by distinguished scholars and public figures from
government, academia and the private sector in 14 APEC countries. The papers
were presented at a meeting hosted by the Program in Asian Law and Policy
Studies (ALPS) of the Georgetown University Law Center in May 1995. This
is the second volume in the ALPS project on "Harmonization of Law in
the Asia Pacific Region."
These papers on antitrust and economic developments in Asia and North
America are exceptionally timely and important. Each author addresses the
relation, in that author's country, between competition law and policy on
the one hand, and investment policy, economic development ("industrial")
policy, trade policy, government regulation and exemption
of particular economic sectors, and intellectual property law and policy.
Of particular interest is the extent to which each country's competition
officials consult meaningfully on the competition aspects of regulation
of each of these five economic areas. Most countries are concerned about
enterprises having significant local power, how to achieve fair deregulation
and how to stop anticompet-itive market practices. They need clear and predictable
standards for local business communities, many of which are inexperienced
in the norms of open markets.
The depth of the 14 papers testifies to the considerable effort the authors
devoted to explaining their national competition regimes. The papers fill
large gaps in information available about competition law and policy in
developing Pacific Rim countries. They describe many recent dramatic changes.
The countries represented in the 14 papers are Australia, Canada, China,
Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Philippines,
Singapore, Taiwan, Thailand and the United States. Each paper is replete
with references to sources of law and descriptions of economic conditions
affecting competition policy. Much of the information is not readily available
in other books.
This book will be of great value to businesses competing in the Pacific
Rim, the attorney advising those businesses and scholars studying the strengths
and weaknesses of the different approaches to competition policy in APEC
countries.
Ramon A. Klitzke is Professor Emeritus, Marquette
University Law School. He taught antitrust law, intellectual property and
administrative law.
Diversification, Refocusing
and Economic Performance
By Constantinos C. Markides (Cambridge, MA: The MIT Press, 1996).
$37.50. To order, call (800) 356-0343.
Reviewed by James J. Casey Jr.
The common political and cultural wisdom in 1996 about the U.S. business
climate in the 1980s is generally characterized by greed, corporate takeovers
and the increasing concentration of wealth with the rich. Constantinos C.
Markide's Diversification, Refocusing and Economic Performance convincingly
challenges current wisdom about that decade.
He argues that while the 1980s had its share of high-profile takeovers,
the evidence shows that a significant portion (250) of the U.S. Fortune
500 firms engaged in "refocusing" or de-diversifying their operations,
and in most cases sold unrelated business operations to concentrate on their
core traditional operations. Drawing upon a data set of these 250 firms,
Markides, an associate professor of strategic and international management
at the London Business School, measures the extent of refocusing among these
firms, proposes reasons for its current popularity, delineates the characteristics
of firms that are refocusing, and discusses the effects of refocusing upon
company market value, profitability and organizational structure.
Using data independently collected and in the body of existing literature,
the author uses a series of regression equations to test the extent of refocusing
among the sample firms and to test the propositions posited at the book's
beginning. The statistical results are, for the most part, statistically
significant, meaning that the statistics tend to support his propositions
to varying degrees. As with all statistical findings, however, the main
question that arises is whether the findings can be extrapolated to the
entire U.S. economy. Given the sample size, comprising most large U.S. corporations,
he raises this issue near the end in discussing the potential limitations
of his findings.
The findings of his research indicate that: 1) more firms refocused in
the 1980s than in the 1960s; 2) although many firms refocused, many firms
continued to diversify; 3) firms refocused primarily by divesting unrelated
businesses and acquiring related ones; 4) firms that refocused were characterized
by high diversification and poor performance relative to their industry
counterparts, while firms that diversified were characterized by low diversification
and solid performance relative to their industry counterparts; 5) refocusing
announcements created positive abnormal returns, that is, an immediate increase
in market value in the capital markets; 6) refocusing resulted in profitability
improvements within the following three to five years; 7) every firm has
a limit to how much it can diversify (the "optimal limit") before
diseconomies of scale and reduced profits set in; and 8) refocusing is not
a panacea for poor corporate performance, but must be linked to an appropriate
organizational structure if refocusing's full benefits are to be realized.
The book insufficiently covers the reasons why corporations refocused
in the 1980s after the diversification binges of the 1960s and 1970s. The
author covers the accepted reasons in the current academic literature. The
premise of the author's argument and research is the corporation's
refocus to shed unprofitable divisions, and while that may be true, other
reasons also are collectively applicable. In short, the phenomenon of refocusing
is far more complex than the work contained in this book. The reviewer joins
the author in arguing that further academic research is needed into the
reasons for refocusing.
The author raises a point in the summary that is far more important than
the space given to it; namely, that the corporate takeovers of the 1980s
would not have occurred at such a rate if firms were not then so overdiversified.
Based upon the proposition that corporate takeovers occur because the individual
parts of a conglomerate are worth more than the whole, the author should
have dedicated more space to this important linkage between diversification
and corporate takeovers, and the profound impact the latter has had upon
American society and how we currently perceive the "excesses"
of the 1980s.
The book succeeds in presenting its limited research agenda, and is necessary
reading to obtain a more complete idea of American corporate behavior in
the 1980s.
James J. Casey Jr., Dayton 1988, works in the Office
of Research and Sponsored Programs, Office of the Vice President for Research
and Graduate Studies, at Northwestern University.
Legal Ethics for Management and Their Counsel
By Len Biernat and R. Hunter Manson (Charlottesville, VA: Michie,
A Division of Reed Elsevier Inc., 1996). To order, call (804) 972-7600.
Reviewed by Jeffrey N. Gingold
The subject of ethics has been a hot topic for attorneys in the 1990s.
In Legal Ethics for Management and Their Counsel , the authors analyze
the ethical rules germane to management and its corporate counsel. Accordingly,
this book is more of a resource for management to understand what it can
expect from its counsel, rather than an educational tool for attorneys.
Since the ABA Model Rules are used for the analysis, the discussion must
be examined in light of each state's ethical rules. This can become especially
complex for counsel who practice in multiple jurisdictions. Here, the book
offers little advice, except to read and understand each state's rules.
The bottom line warning is that an attorney's ethical restrictions can
outweigh management directives; thus, counsel cannot necessarily be viewed
as a "team player." Counsel's reporting obligations alone foster
a unique independence and responsibility which may adversely affect the
company.
The book provides significant analysis regarding the level of diligence
required from counsel in defining the scope of representation. From the
beginning, the attorney must continue to identify whether the client is
management or the company. The discussion outlines the key issues and possible
solutions that counsel may be required to follow.
One of the more troublesome concepts for management to appreciate is
that its counsel's confidentiality is not absolute. While the usual exceptions
to confidentiality still apply, issues of joint representation and intercorporate
disputes may compel counsel to act for the company even if doing so is against
management's wishes. Here, the authors provide useful illustrations for attorneys faced with such questions
of representation, complicated by the need to protect confidentiality.
If this balancing act does not unbalance corporate counsel, other conflict
of interest issues certainly add to the tension. When corporate counsel
is asked to represent the company's client or employees or becomes a member
of the board of directors, counsel must not only be aware of the numerous
prohibitions against such representation but also must properly tread the
steps to terminate representation without prejudicing either the company
or client.
In one of the book's more interesting sections, the authors give direction
to management for avoiding a "noisy withdrawal" if counsel is
terminated or resigns. While the attorney must continue to maintain confidentiality
obligations, embarrassing "noise" can occur where the attorney
notifies third parties that the departure from the company is due to "ethical
reasons."
This book is a useful ethics guide for management and counsel, and reminds
both that an attorney's practice requirements may be beneficial or detrimental
to their relationship.
Jeffrey N. Gingold, Marquette 1988, is a shareholder
in the Brookfield law firm of Blumenfeld, Rose & DeJong S.C. and is
a member of the State Bar Professional Ethics Committee.
The Run of His Life:
The People v. O.J. Simpson
By Jeffrey Toobin (New York, NY: Random House, 1996). $25. To order,
call (212) 572-2141.
Reviewed by Timothy R. Karaskiewicz
Events following the verdict in the criminal prosecution of O.J. Simpson
seem only to have deepened the public's fascination with the murders of
his ex-wife, Nicole Brown Simpson, and her friend Ronald Goldman. Unless
you followed the criminal trial, some of the case's details and subtleties
may have eluded you. You also may have been surprised at the jury's verdict
and curious how the prosecution could lose what seemed to be (from the media
reports of the physical evidence) a certain conviction. As Jeffrey Toobin,
the legal writer for The New Yorker, explains in this book, the verdict
was not surprising.
The prosecution, it seems, was its own worst enemy. From the beginning
Marcia Clark displayed astonishing arrogance. After recognizing that the
Simpson case was unlike any she had ever tried, she refused the services
of a premier jury consultant. Polls had demonstrated that black female jurors
were most sympathetic to Simpson and most antagonistic to Clark's persona.
Still, she favored her instinct that black female jurors were particularly
susceptible to her style of advocacy. The eight black female jurors did
not influence Clark's presentation.
The prosecution also seemed oblivious to the image they projected to
the jury: Clark infuriated the sequestered jurors by consistently showing
up late for court while Christopher Darden often was unprepared and unable
to control his temper in response to Johnnie Cochran's taunts. Most importantly,
despite their knowledge of the significant role that race would play in
the trial, the prosecution put Mark Fuhrman on the stand. That decision
is even more perplexing given the wealth of physical evidence tying Simpson
to the murders and because Clark was aware of Fuhrman's racist history.
The defense did not so much win the case as refrain from losing it. Toobin
credits Cochran with sufficient charisma and authority to turn a domestic
homicide into a referendum on race relations with the LAPD - which the author
persuasively characterizes as one of the worst big city police departments
in the country. Still, Toobin lists the many missteps the defense smoothed
over on the way to victory. In his opening statement, for example, Cochran
promised a defense and yet delivered none. And, after Cochran took control
of the trial team, Toobin describes how Robert Shapiro and F. Lee Bailey
tried to sabotage Cochran and maintain their places in the spotlight, almost
damaging their client.
Another disturbing theme that develops throughout The Run of His Life
is the transcendence of celebrity: no matter what the circumstances,
Simpson's fading celebrity consistently engendered fawning adulation and
cooperation. On the several occasions that the LAPD was summoned to the
Simpson home on domestic violence calls, Toobin describes how officers still
remained deferential to O.J. So absorbed with Simpson's celebrity was the
LAPD that during his interview following Nicole Simpson's death the investigators
accepted Simpson's vague generalities and interviewed their leading suspect
only half an hour.
Others in the case come under the spell of their own celebrity: Judge Ito was so
enthralled by media attention that he interrupted the trial and granted
an hour-long audience to Larry King and his daughter (during which Ito divulged
the contents of an evidentiary ruling he had yet to share with the parties).
Another judge, to whom the case was transferred for a hearing on the Fuhrman
tapes' admissibility, was so enchanted by Simpson's appearance in his courtroom
that he engaged him in a chummy conversation about O.J.'s career at UCLA.
As a former prosecutor, Toobin gives insights into the legal maneuvering,
trial tactics and ethical lapses that occurred throughout the trial. There
also are scoops - Simpson knew the verdict the night before and the dream
team's fees are revealed. The Run of His Life is essential reading
for anyone trying to understand the implications - legal, racial and institutional
- we are still experiencing from the prosecution of O.J. Simpson.
Timothy R. Karaskiewicz, John Marshall 1984, is a
principal assistant corporation counsel at the Office of the Milwaukee County
Corporation Counsel.
Was That a Tax Lawyer Who Just Flew Over?
By Arnold B. Kanter (North Haven, CT: Catbird Press, 1996). 224 pgs.
$13.95. To order, call (203) 230-2391.
Reviewed by Robb E. Arent
At a dinner party I was seated next to the host's grandmother. She eventually
asked my profession and I proudly responded "attorney." Her face
soured, "But you seemed like such a nice young man!"
Such perceptions of attorneys are the subject of Arnold Kanter's fourth
book of legal humor, Was That a Tax Lawyer Who Just Flew Over?
As in previous books, the stories revolve around the fictitious but prestigious
Chicago law firm of Fairweather, Winters & Sommers and its founder Stanley
J. Fairweather.
The vignettes begin with a senior partner-ish memo announcing that in
anticipation of the firm's fiftieth anniversary a book was being written
highlighting the impressions of those who regularly come in contact with
the firm's lawyers.
What follows is a perceptive and satirical look at the noble legal profession.
The witty, often dark, humor may at first spark defensive contempt from
attorneys. In retrospect, however, we can all find the grain of truth once
we realize we are mostly legal legends in our own minds.
A funny insight comes from the mother of a young associate at the Fairweather
firm. The mother is dumbfounded as to why her daughter, who could not possibly
know anything right out of law school, makes $70,000 per year.
Attempting to help her daughter, she hands out her daughter's business
cards everywhere she goes, after placing an offer to reduce the daughter's
billing rate by $10 per hour on the reverse. Stanley Fairweather soon adopts
the idea.
The book's title comes from the story of a commercial real estate agent
who has given up bird watching to focus instead on the attorneys she can
spot in neighboring high-rise office buildings. She has learned to recognize
a lawyer's specialty by his dress and mannerisms. Her notes conclude that
the rumpled brown suit and wing-tips indicates a tax attorney, while the
crisp blue suit must be a litigator.
Other views of the Fairweather firm come from clients, accountants, judges,
shoeshiners, the deli guys on the first floor, psychiatrists and the homeless.
Fairweather's clients form a social club to discuss the firm. While patient with firm
tactics such as inviting the client to golf and then billing the client
for the time, the clients often grumble about extraordinarily long and meaningless
meetings.
The final client masterpiece is an attorney-English dictionary, including
such terms and phrases as: Can I get back to you on that means the
attorney does not have the foggiest idea what to say next, but may be able
to come up with a response in a week or two.
The book is a wonderful addition to the library of any attorney who has
an inflated self-image. It is also a great read for us modest, level-headed,
legal experts - or anyone with a sense of humor about the profession.
Robb Arent, Marquette 1996, is a Milwaukee sole practitioner
in estate planning and taxation. |