Luke Johnson's indecent cowboys – great lawyer-bashing (some of it even accurate)

"Johnson recounts the story of a deal he was involved in for which a law firm quoted £35,000, only to announce two days before completion that the bill would actually be £110,000..."

While not great fee management on the part of the firm, perhaps the other side of the coin is that there was a quote with assumptions and those assumptions were breached. It's a contract after all...

Anon -08 Apr 2010 | 09:41

I agree with the LW writer on some of the points and there is no excuse for such bill management, but articles like that (the FT one) make my blood boil. What a bloated hypocritical piece of rubbish. And the guy (in private equity of course - those well-known 'creators of wealth') despairs of those law school students who will go on to destroy value for our communities of their value?! WTF? And this from someone who wasted a place studying medicine at Oxford only then to join a bank.

A total rambling diatribe because he got stuck with a large bill on a deal he probably pocketed millions on.

JB -08 Apr 2010 | 11:18

LJ is probably right

Unfortunately, I agree with Luke Johnson. Lawyers do tend to have an inflated sense of self-importance and add very little in economic value to any transaction or the economy. It is easy to band about figures stating that the legal industry accounts for £20bn of GDP, but would this not be better spent by companies investing their legal spend (or a large proportion of it) in their own products and services?

If this was not the case, would Rio Tinto and Microsoft (and many other companies) not have outsourced a large part of their legal spend to lower cost countries.

Even with the introduction of ABS, which right-minded investor would invest in a law firm knowing that the partners take a disproportionate amount of the profits home?

As for law firms paying more tax than other companies because of the partnership structure, I doubt this is correct, given the self-employed NICs rates and the "perks" of the job, or the tax planning that takes place at most large law firms – but I am open to persuasion given proper evidence to support this view.

The worst part of this whole article is, that, it is the lawyers and the hypocrites, if only because they maintain a (self-deluding) illusion that the profession somehow has more integrity than others, and even look down on other professions, but we will all have heard the phrase “take a view” – now that makes my blood boil – we should uphold the letter and the spirit of the law – not find sneaky ways around it.

That said, there are plenty of fine individuals in the industry, more than worth their weight in gold, but they are becoming the minority, the industry has gone from a collegiate one to a more “corporate” one, to its detriment, and it should now be treated as such and fully exposed to competition.

Anon -08 Apr 2010 | 18:21

You mistake what a lawyer's job is

Let's get one thing straight - legal counsel's job is not to create value or wealth - that's for commercial.

The role of legal counsel is to LIMIT YOUR RISK.

Commercial guys are focused on dollar signs - invariably they are optimistic and assume the deal will make millions. So they want to get the deal closed as quickly as possible, with as little documentation as possible.

However, our job as lawyers is to assume the downside, to identify weaknesses in the transaction and to protect you from loss (or at least to try).

I can't count the number of times in 2007 and 2008 (pre-Lehman) that I told clients their deals were poorly structured and carried too much risk - only to be overridden. Fast-forward to 2009 and 2010: most of those deals have gone bad, are being restructured, and/or having enforcement proceedings taken.

Moral of the story: it's better to spend an extra $50k up front, get the deal done right and maybe make a little money, rather than get it done cheap and fast, have it lose money and fall apart, and then spend $200k trying to recover....

Lawyer -09 Apr 2010 | 08:56

The comment from Lawyer above is right.

It's amazing how many times non-lawyers are critical of lawyers when they have no idea what their role is.

When I was in-house the commercial guys wanted to secure contracts without any vetting or due diligence. They were frustrated when we in the legal team insisted on certain terms to protect the company.

When the s**t hits the fan, the commercial guys run for cover with a "don't-look-at-me-guv" look on their faces and it's up to the legal team to sort out the mess.

Going back to the article, yes fee management is an issue. But it's a two-way thing. The client needs to supply the lawyer with all the information and be clear about his needs.

Fees of partners is here nor there. A partner has knowledge and experience. The market decides what that is worth just as the market decides what a footballer is worth.

Metallica -09 Apr 2010 | 11:40

Not so black and white

1. The writer's generalisation that lawyers are more greedy due to [right-wing shift in Western political thinking] is laughable. As if people were and are not greedy under socialism or communism. The difference is that under the left-wing systems, greed was seen as so evil that it caused lack of incentive to work and other inefficencies. By the way, have you heard of the expression 'Champagne Socialists'?

2. Yes, commercial should be more proactive in involving counsel earlier on. However, counsel still draft in an archaic manner, sound like geeks with their incomprehensible jargon and appear to be self-serving in their advice.

3. Metallica: 'The client needs to supply the lawyer with all the information and be clear about his needs'. Uh huh. And the lawyer needs to develop the skills of communicating with the client to ensure that the client understands what information is needed. Two-way street.

Anonymous -21 Apr 2010 | 13:50

To Anonymous above, I don't follow your point. Society, business in general and lawyers have clearly become more individualistic than they were 25 years ago and that has been both reflected by and partially driven by shifts in political thinking in Western economies. (I also didn’t say that lawyers had become more greedy directly due to a change in political thinking, I said the broader shift “has had its impact”. This culture is more accepting of wider disparities in income, the pursuit of wealth and, for the want of a better word, greed. It’s ridiculous to claim otherwise. What I didn’t in any sense was assert that this was evil or wrong. As it happens I consider myself to be capitalist and pro-market in outlook.

Alex Novarese -21 Apr 2010 | 13:51

The issue here is law firms versus lawyers. The lawyers don't earn a fraction in their pay packets of the billed fees. It's much easier to rage against the machine than take personal responsibility for it. Look at me; I'm commenting on Legal Week in work hours...

Anti-capitalist -21 Apr 2010 | 13:51

Alex, thank you for your response to my comment - and for clarifying what you meant by 'has had its impact'. There was a misunderstanding on my part.

I suppose we can agree that the right-wing/free market shift, although liberating economically and otherwise, has also brought greed to the fore and fostered a culture of greed becoming more acceptable. I personally believe that this is a more honest state of affairs than the denial of this human characteristic under the other economic systems on the left.

Anonymous -21 Apr 2010 | 13:52

Lawyers and fees

If LJ finds lawyers so objectionable, he has an alternative, don't instruct them.

There's nothing compelling him to do so.

Voila. No bill at all...

John Jorrocks -21 Apr 2010 | 13:52