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.

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.

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.

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.

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.

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.

Wisconsin Lawyer