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The legal
profession is big business. Nationwide it is a multi billion-dollar
operation. Richard Matasar noted at one of the meetings of the Florida
Supreme Court's Commission on Professionalism that the ideal lawyer of
this day and age is not evaluated on the basis that he stands for the
highest principles, but "currently, lawyers are evaluated for
recognition on whether they are rainmakers, how many billable hours they
produce and how much profit they bring a firm."
The legal profession the same as any other business champions
causes for profit. "It is becoming harder these days to distinguish
legal America from corporate America." says attorney Nathan Koppel in an
article published by the National Law Journal on February 1, 2001.
He noted that law firms are hiring marketing directors. That in many top
firms in 2001 the associate-salary arms race, pushed starting pay to $125,000
with an additional year end bonus of $40,000. Mr. Koppel stated that
this has made it harder to turn a profit on associates so firms are
instituting stricter billable hour requirements "to try to get more bang
for their associate bucks". This is referred to as "merit based
associate pay" and is said to be a "national trend".
Law firms are getting bigger and are bottom line oriented.
The National Law Journal reports the annual profits of the top law firms
nationwide. The firms are ranked according to the annual revenue they
rake in. Attorney Robert Sheehan of Skadden, Arps, Slate, Meagher & Flom
proudly declared that his firm of 1332 lawyers was the first to gross
more than one billion dollars a year. The 292 partners of the firm
earned a stunning profit of an average of $1.6 million for the year.
Compared to 1978 the firm had 160 lawyers and grossed $30 million.
It was further reported by the National Law Journal that,
over the past ten years, the average gross revenue of the most
successful law firms nationwide increased by 56 percent, to $265.5
million. Furthermore, that during the same time period, average annual
profits per partner rose by 34 percent to $755,000. However pro bono
services decreased to an average eight minutes a day. Even if some firms
do take on pro bono cases that, is a training ground, an internship for
the lawyers fresh out of law school. The National Law Journal
reports for 2002 that business for lawyers was down for the year
because of the economic slowdown. Nevertheless, the number of
lawyers hired by law firms grew, but only at half the pace at 3.7%.
But, lawyers find this good news because their "industry" grew as
compared to many others that flattened. What, is effected is the entry
level associate positions which are harder to get. The Journal
notes a general trend of mergers in the "industry". Despite
the downturn in the economy in 2003 the income of many law firms
increased and 2004 was also a good year to read it
Click here and the outlook for the future is bullish
click here.
Some firms pride themselves for their ability to command
premium fees. They squeeze out the maximum fees through their lawyers.
In many cases especially in large firms attorneys resort to creative
billing. It is a "team" of attorneys who swarm over a case. These teams
often attend conferences with the client or other matters each charging
a fee. Lawyers charge fees for consulting with their fellow lawyers in
the same law firm. Although they can charge only one fee, but, one of
these lawyers may consult with another lawyer and then one of these two
lawyers may consult with a partner and so forth. The lawyers then may
conference with the attorneys on the other side and so forth, in the
process compounding the billable hours.
To increase income some firms stated that they take equity
stakes in what they deemed was a promising business at the time. This was most
particularly applied in the technology industry. "It is about the
survival of the profession," explained attorney Snow of Brobeck in the
National Law Journal. "Law firms will lose the best talent to more
lucrative fields if they can't keep within striking range of equity-rich
dot coms and investment banks. The law is in danger of being a
profession of second choice." warned Mr. Snow. Well, this is one bubble
that seems to have burst for lawyers as well, but nevertheless they
extricate themselves from liability for the losses to the public.
The National Law Journal also reports on law firms by state.
In the dot com boom in South Florida the hottest specialty was said to
be intellectual property, deal making, commercial litigation followed by
real estate, health care, insurance defense bankruptcy trust and estate
planning. The law firms were scrambling to carve out markets in these
fields. South Florida was said to be "Internet capitol of the Americas.
"Litigation has always been strong and is recession proof" says attorney
Jay B. Shapiro. "And then there is the increase in municipal suits in
federal and state courts".
It was reported in the June 18, 2003 issue
of the Miami Daily Business Review "Embarrassment of Riches" that South
Florida law firms have experienced good financial performance in 2002
and many say 2003 is looking even better. Some law firm leaders said the
outlook is so good that they feel guilty about prospering while many
Americans are suffering through the continued economic recession.
Miami-based Greenberg Traurig once again topped the Review 15, the Daily
Business Review’s annual ranking of the top-grossing firms in South
Florida. Its 235 lawyers in South Florida generated $132.2 million in
gross revenues. Akerman Senterfitt came in second, with its 207 lawyers
pulling in $90 million.
Yet another lucrative source of fees are the bankruptcies of major
corporations to read further
click here. Florida Bar survey finds lawyers' earnings are up across
the board and the hourly rates keep on rising click here. Salaries of associates
increased in 2004 and 2005
click here and earnings are up in 2006 and
continues to increase
click here and the
future looks great click
here.
In some firms associates are billed $240 an hour, which explains the
high starting salaries, that many times trickles down to the public.
Bankruptcy is very lucrative for some firms from $295 to $695 an hour
click here. Interestingly,
the fees in bankruptcy are required to be approved by the bankruptcy
judge. To make the judicial system the most powerful of which the
lawyers are an integral part, the judges who are lawyers themselves
happily oblige. In most cases to contest the fees is an exercise
in futility.
Another side effect of the escalating fees
for lawyers, is that it becomes a ground for the discontent of judges
with their "lowly" salaries.
Many judges especially federal judges complain that they do not make as
much as first year law associates do in some law firms. So, it would
appear that the unreasonable fees awarded by judges to lawyers has yet
another benefit, to support the cycle of demands for increases in
judicial salaries. See,
ABA President A. P.
Carlton Remarks on the Federal Judicial Pay Report May 28, 2003 who
complains that federal judges' salaries are woefully inadequate as
compared to what lawyers make and urges an increase in salaries (at
taxpayers' expense), which complaint persists to this date. To read
Click here. Yet another
federal court judge quits to make more money in private practice.
The annual salary of $157.700 with other benefits is not enough.
Judges claims it is less than what second year associates make.
Click here Federal Judges one of
the highest paid judges claim they are leaving the bench for private
sector, because of higher earnings there. Click here
However, these salaries do not include the many other ways judges
including the US Supreme Court judges earn substantial additional
income. Click here.
There is not a word mentioned in the extensive report of the
National Law Journal of any attorney engaging in the practice of law,
"the noble profession" to
seek justice for law pay. To the contrary, what has been reported is
that attorneys are leaving public service for employment in private law
firms, because of better economic opportunities. The February 12, 2001
Business Section of the Miami Herald noted that senior government
lawyers make close to what starting associates earn in the nation's top
law firms. In switching to the private sector attorneys say that, it
makes no difference to them whether they prosecute lawsuits against
accused criminals in the U.S. Department of Justice or defend them in
the private sector because, the salaries in the private sector are
substantially higher. The Miami Herald named a number of such attorneys
in Florida who for economic reasons changed to the private sector.
The Miami Herald reported in the January 15, 2001 Business
Section that many firms require 2,000 to 2,200 billable hours annually
from associates and some associates said they put in 500 more hours
above these requirements a total of 2700 billable hours. In that year in
addition to salaries for associates starting at $105,000 they received
bonuses ranging from $2,500 to $85,000 based on their billable hours.
Considering that in a year there are at least two weeks for vacation,
plus holidays, weekends, Bar requirements for continuing legal
education, sick leave, lunch and supper time, a good portion of those billable
hours would appear to be duplicates for the same hour.
In 2002 the Commission on Billable
Hours of the American Bar Association issued a Report addressing the
flaws in the current practice of "billable hours". The Report also
notes that an attorney has to bill a minimum of 2100 hours a year.
The Report reviews the history of "billable hours" saying that the
practice started in the 1960's, when the attorneys became aware that
this was more profitable. Prior to 1960's, time was only one
of the elements of the fees, included were other criteria such as the
difficulty of the case, the labor and skill required, the amount
involved and the results obtained, the experience and the reputation of
the lawyer. Starting in the 1960's the attorneys based their
budget on the anticipated billable hours. Firms set billable
hours goals for their partners and associates. As competition
increased between lawyers they could not very well increase their hourly
rates so they increased the hours.
The system of billable hours is criticized
in the Report as
a system of quantity over quality which does not provide an accurate
measure of value to the client. The Report acknowledges that
it puts the client's interests in conflict with the lawyer whose
objective is to keep the billable hours going and not the quick
resolution of the issues. It is noted that this leads to padding of the
bills even making up those hours and includes charges for incompetence
and for functions other than legal work. Additionally, that
it increases the
number of lawyers and other assistants on the case and duplicates work
to increase the billable hours. The objective is to cover the
expenses and the ever escalating compensation for the lawyers.
The lawyer simply sends monthly bills to the
client, with no predictability as to the total cost. In many cases
the fees out space the value of what it at issue. The Report notes
that the system of
hourly billing minimizes responsibility for efficiency and maximizes
ability to earn money.
The Report suggest that there
should be some predictability on the fees, some form of
pre-determination as to how much the resolution of the legal issue
should cost and a method for handling unexpected changes. The
Report further suggests that it is not hours that a lawyer has to sell
but, his expertise and there should be an emphasis on efficient delivery
of legal services. Is is also mentioned that some corporations set
out bids for legal services on flat fee arrangement based on past
experience as to what those legal services should cost. However, the Report recognizes that the "billable hours is still the prevailing
method for charging clients for legal services.
To read the report
go to:
http://www.abanet.org/careercounsel/billable.html
With the economy down, the pressure on billable hours mounts.
In many firms young associates are being evaluated not on their
performance but based on their billable hours. When that is
not met they are simply let go. To read more about this
click here.
It is not simply billing for hours of work, but these hours are
often padded for the captive client
click here. The true confession of a Florida attorney the objective of making
money over professionalism.
click here. The
multi million dollar fees in class action suits are often calculated by
the hourly fee of the highest paid attorney. This was the case in
a suit against the Rite Aid Corporation where the lawyers secured a $126
million settlement and the court awarded $31 million in fees to
the lawyers, which was at the billing rate of $605 an hour, although
lawyers with lesser fees were noted as putting those hours in as well
click here.
Bankruptcy is another profitable source
click here
What has
totally commercialized the legal profession is their advertising
campaigns permitted since 1977. You see their advertisements in
telephone directories on television, the same as any other business and
more so, than any other profession. Pursuant to an article in the
National Law Journal "Little Ad that Changed Everything" in the
September 25, 2002 issue, advertising was the "revolution that changed
the legal profession to a service-oriented business requiring the same
marketing, investment, cost control and production systems as any other
profession". Attorney O'Steen is quoted saying "I would have never
predicted the extent of advertising among the large corporate firms. It
seems almost everybody is advertising now, in one way or another". It is
accepted by the profession, that advertising is now employed by the
attorneys to bring in clients and to increase business. Before
advertising was allowed " the legal profession had as its hallmark
community service, helping people," says Benjamin H. Hill III, a partner
in Hill, Ward & Henderson of Tampa, Fla. "It's now about dollars and
cents. We started down that slippery slope with advertising."
According that
National Law Journal article advertising undermines the reputation of
lawyers. Cited is a survey by Columbia University Law School on attitudes
toward lawyers, released in April 2002, which found that 60 percent of the
respondents said lawyers were overpaid, 39 percent thought they were
dishonest and 41 percent felt they did not perform a beneficial role. "As
public confidence erodes, fewer people may rely on the rule of law to
resolve disputes" said attorney Hill. "More lawsuits today are prompted by
missives sent out by lawyers than come from people with complaints,"
remarked Victor Schwartz, general counsel for the American Tort Reform
Association in Washington, D.C. "Advertising gets away from the merits of
the claim and goes more to the results possible. It creates a lottery
mentality."
Arnie Malham,
president of CJ Advertising LLC in Nashville, Tenn., which produces
advertising campaigns for 26 personal injury lawyers in 60 markets around
the country, noted that "The 'good ole boys' became known as the
'litigators' and the 'ambulance chasers' became known as the 'marketers'
or 'contract fulfillers'. Now, in a new era, many of them have teamed
together to go after every pharmaceutical with a side effect and every
product that ever hurt a hair on your head. I suspect this trend will
continue. Litigation firms will continue to court advertising firms in
order to generate referrals." Attorneys such as David Singer, who operates
in Miami-Dade and Broward counties, in Florida would explain that his
advertising is helpful to his clientele afraid of the legal system and who
are seeking someone to help guide them through the bewildering maze.
In Florida you
see those ads with an attorney looking straight at you, sprouting his
message with law books in the background. Well, that is because pursuant
to the Florida rules the attorney himself must be in the commercial. No
actors or spokesmen are allowed. The background must be single color or be
comprised of law books, and can include no music with lyrics. Some lawyers
are worried about hurting the image of the profession when what you see
are the ugly mugs of lawyers on TV, since concededly not all lawyers are
good looking. Bar's leadership and the Florida Supreme Court recently
approved two long-sought changes to the rules. The changes eliminate the
prohibition against depictions that aren't specifically related to the
matter of hiring a lawyer. And for the first times, television or radio
advertising can feature voices other than a lawyer's.
The profession also resorts to "electronic
ambulance chasing" click
here. The 2003 president of The Florida
Bar, Tod Aronovitz noted in the January 2003 issue of the Florida Bar
Journal that "Litigated matters as well as legally assisted business
transactions sometimes result in: 1) public shouting matches; 2) name
calling, orally or by written communication; 3) failing to extend a common
courtesy in order to gain an advantage; 4) use of a deposition or correspondence to embarrass or humiliate another; and/or 5) using rules
of procedure to bludgeon an adversary knowing that one is advocating a
marginal legal position".
Mr. Aronovitz refers to a
commencement address, by Supreme Court Justice Sandra Day O'Connor saying
that, "Clients increasingly view lawyers as mere vendors of services, and
law firms perceive themselves as businesses in a competitive marketplace.
As the number of lawyers in this country approaches one million, the legal
profession has narrowed its focus to the bottom line, to winning cases at
all costs, and to making larger amounts of money. Almost every complaint
about the decline of ethics and civility 'sounds the dirge of the
profession turning into a trade'."
Lawyers are resorting to
electronic court records for all sorts of business information, to market
themselves. Lawyers view these records to gain business, by viewing
a company's litigation history, what firms represent the company, and even
what individual lawyers work on specific cases and have argued in front of
particular judges click here.
The firms are also engaging in market research as any other commercial
business. Lawyers are competing for business against other lawyers
and so they resort to market research on clients and client industries as
well as competitive intelligence about law firms. Some hire
independent firms others do their own market research. A firm may
run the risk of learning its reputation is not as strong as it thought --
or worse, that it has no reputation at all among would-be clients
click here.
In terms of the real world, where the attorneys, the same as
any other businessman, strive for the maximum profit, no explanation has
been offered by The Florida Bar nor can they offer any as to why the
attorneys should not be regulated the same as any other profession. Nor
can they justify why The Florida Bar a private organization of profit
oriented businessmen should be aligned with the judicial branch of
government. It has become obvious that, the function of the Florida Bar,
is to safeguard the law business.
USA Leads the World in Lawyers "America has 281 lawyers for every 100,000
people, compared to Britain with 94, 33 in France and a mere 7 in Japan.
Americans have a proper contempt for the vast mass of lawyers." The
Economist, page 35, December 16, 2000".
Runaway lawsuits are costing
Americans jobs. For a report
on the Lawsuit Industry in America in 2003 detailing its size,
scope, and inner workings published
by the Manhattan-Institute go to:
httpp://www.manhattan-institute.org/triallawyersinc.pdf For prospects
for the law industry in the year of 2005
click here. The 16 top-grossing
plaintiffs firms who make most of their opportunities, whether from
asbestos, securities or mass tort malfeasance, or spectacular airplane and
personal injury disasters click here.
To keep up with the times law students are taught new technology and
advocacy skills to appeal to the changing face of the contemporary jury.
The appeal is no longer by rambling presentation but, resort is to
electronic visuals - all of which add to the cost of trials
click here. Prestigious law
firm buys into Supreme Court practice by hiring a number of Supreme Court
clerks fresh out of their year at the Court and law firms are hiring their
own corporate counsel as any big business
click here Yet another area
that lawyers are looking for business is helping corporations in
outsourcing click here.
Lawyers are being tought to think of themselves as salespeople.
An increasing number of law firms across the country are hiring business
development professionals to help them find potential clients and win
their business click here.
With their substantial earning power lawyers have become a political force
through campaign contribution. These contributions have risen
despite campaign reforms by lawyers who know how to circumvent the law
click here.
The Supreme Court clerkship placement from 1991 through 2005 term was
mostly from the Ivy League Schools, Harvard and Yale which is then a
spring board for further lucrative employment.
http://www.leiterrankings.com/jobs/1991scotus_clerks.shtml
It should
become clear that the majority of the public can be no longer misled by
the Bars of this country with claims in rose tinted rhetoric that
attorneys are selfless champions of justice. Nor is the informed public
impressed with arguments that, attorneys are "officers of the court" so
bound up in the operation of the courts that the courts could not
effectively operate without judicial oversight of the profession. It is
correct that vital issues of loss of life, liberty and property are at
stake. However, these can be taken away by the stroke of the pen, without
the required due process. What we have here is an unregulated business
profession whose stock in trade is their expertise in the law, which they
trade for profit within the judicial branch of the government.
Furthermore, in view of he fact that in many type of cases the padded
"billable hours" are subject to approval by the court, which hardly if
ever can be successfully objected to by the adversely affected party, an
apparent incestuous relationship exists between the attorneys and the
judiciary.
The primary purpose of government is not to provide economic
benefits and privileges to a chosen few but, to protect life, liberty and
property of its people. In a democracy the relationship between government
and the people is that of servant and master. Under our form of
government, all political power has its source in the people governed, the
people and not the government, being sovereign. However, the public
instead of being accorded a legal system, is subjected to a regal system
headed by judges and attorneys, in what has become the Golden Age of
unbridled frivolous and false litigation.
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