Sunday, June 16, 2019

Why Law Firms Must Change How They Work (or do they?)

The Financial Times has published an article with this title (£). It's a bit of a strange piece, and a number of the commenters agree.

The gist of the piece is that unless big law firms change their ways of working--long hours, lack of promotion prospects, especially for women--they are doomed. Their hegemony is no longer assured because upstarts can overcome barriers to entry and poach white shoe work. The example given is Kirkland & Ellis from Chicago taking over private equity work. So excuse the cliché, a swallow does not summer make...

While the upper echelons of big law seem to have been there for evermore a study of history shows otherwise. Yes some firms like Freshfields have been around a couple of hundred years but Allen & Overy came into being in the 1930s, and Baker & McKenzie was a positive late starter in the 1950s. And I haven't even mentioned Skadden Arps and Wachtell Lipton. So is it a surprise that Kirkland has targeted a field of work and made a strong incursion.

It is further interesting because, according to the FT article on Kirkland's success, says it succeeded by ousting Latham & Watkins, which is another relative newcomer coming out of Los Angeles. So maybe a possible different interpretation on this is whether New York is holding its lead in the world rankings of law firms. The crucial element that makes New York important is that it is where the major investment banks are based.

Law firm + investment bank is a combination that is hard to beat. Of all the firms I've mentioned in this post, Freshfields, A&O, Wachtell, it's their connection to banks that makes them superior to other practices. We'd have to include Sullivan, Cravath, and Slaughter & May as well.

So the criteria for success are bases in New York and/or London and a bank in your pocket. By all means compete for private equity, hedge funds, new tech, but they don't have quite the permanence and solidity of banking. I have made this argument many times before and throughout my academic career I've seen little to contradict it. The top cadre of global law firms are secure. They don't have to do more for less. They don't have to automate. They pretty much have to continue as they have done.

This doesn't mean having policies that make it hard for women or minorities to succeed are acceptable. Or work practices that promote divorce, depression or suicide. No, these are unacceptable in the 21st century. Nor do they promote efficiencies and better profits (PEP). In fact, changing these practices would probably improve all the metrics by which law firms measure themselves.

Troglodytes and dinosaurs have no place in the modern global law firm. With different regulatory frameworks we will see the traditional practices transform into something other than the traditional partnership. The organisation is under immense strain when a firm has over 7,000 lawyers. The notion of partnership is strained, to say the least. We may have instead corporate forms with more transparent finances and remuneration. Proper equity too. This is in the future.

The Financial Times called this one incorrectly because it thinks modernity and neo-liberalism necessarily trump tradition and history. That's not right. Cultures built up over time are hard to destroy so forms persist and endure. It's not merely the economics of the organisation, rather an anthropological view gives a much better perspective. Anthropologically, the legal profession has a very strong cultural patterning that does eventually respond to change and external pressures, but more at its own pace rather than that determined by others.


Friday, June 14, 2019

Blockchain and Standards: is it impossible?

Adrian McCullagh and I have put up a new paper on SSRN, titled, Blockchain's Future: Can the Decentralised Blockchain Community Succeed in Creating Standards? 

The abstract reads: Nakamoto proposed a new solution to transact value via the internet. And since 2009 blockchain technology has expanded and diversified. It has, however, proven to be inefficient in the way it achieves its outcomes, especially through the proof of work protocol. Other developers are promoting alternative methods but, as yet, none has superseded proof of work. The competing protocols illuminate a key feature of the blockchain community, namely, its inability to create consensus in a decentralised community. Because of this lack of consensus the formation of standards is particularly difficult to achieve. We examine three areas where some form of agreement over standards will be essential if blockchain is to evolve successfully. These three areas are blockchain governance, smart contracts, and interoperability of blockchains. We argue that because standards formation is such contested process the blockchain community will persist in creating difficulties for itself until it is able to overcome internal divisions.

We welcome all comments.


Saturday, June 01, 2019

Rake and Rumpole: Mavericks for Justice

I have put up a new paper on SSRN comparing Rake's Cleaver Greene and Horace Rumpole of the Bailey. They offer contrasting views of professionalism, among other things. To make sense of this I use Mary Douglas's ideas of Purity and Danger (or taboo). 

The abstract reads: 
My thesis is that lawyers regularly fall into two categories in various media— either saints or sinners; heroes or villains; conventional or maverick, representing the sacred and the profane. The classic saint is Perry Mason who was rather dull but a dependably good lawyer. Over the last twenty years or so, television has emphasised the sinner and the maverick. TV shows such as L.A. Law and Ally McBeal have played up the quirky aspects of lawyering, edgy, serendipitous, even whacky. And while US shows identify individual lawyers, they mostly operate in the context of a firm with partners who can function as a brake when needed. 

In the Anglo-Australian context the barrister tradition thrives. Here the individual lawyer is pitted against bigger opponents such as business or the state. There is considerably more space for outré personality traits and idiosyncrasies to flourish. The British series Rumpole of the Bailey and the Australian Rake illustrate two variants of a similar theme—the maverick against the powerful. The Bar as a profession represents a clubbable environment where class, status and education signify one’s position in the hierarchy. Horace Rumpole and Cleaver Greene, even though well educated, are portrayed as archetypes of Groucho Marx’s maxim, “I don’t want to belong to any club that will have me as a member.” They are barristers in spite of themselves, fiercely independent, clever, and ethically fluid. They seek a form of ethics bound to justice rather than ideas of discipline and governmentality. 

These two television series are not contemporaneous: Rumpole was filmed in the late 20th century and Rake in the early 21st. Nevertheless, they speak to each other over the years in small but detectable ways. Both the protagonists are Australian. Leo McKern (Rumpole) and Richard Roxburgh (Rake) are acclaimed actors of their generations with a range of roles, but both have been captured by these particular characters. Rumpole appears in both television and book form with the result that McKern’s physical representation became that of Rumpole. And although Rumpole has been performed in radio by other actors, no visual depiction has yet replaced the original. There is one connection that occurs in early episode. Cleaver Greene is a witness in a bungled robbery and his former lover, Scarlet, a Crown prosecutor, decides to cross-examine him instead of letting her junior do it. This breaches ethical conduct. As her questions cause Cleaver to squirm, he bursts with frustration and shouts at his somnolent counsel, “Oi, Rumpole”, in order to get him to object. It is the only time when the two shows acknowledge each other.

There are stark differences between the two shows despite the time differences. English lawyer shows tend to concentrate on the courtroom with the outside world only barely registering (Robson 2017). Rumpole of the Bailey is an exemplar of this. We see him at home with Hilda and we see him in chambers and Pommeroy’s Wine Bar drinking Chateau Thames Embankment, reciting Keats, but the majority of each episode is in court. Rumpole is also more genteel; on the whole people are decent to each other as befitting stereotypes of British society at this time. Rake, however, spends possibly more time outside the court than in and is far less genteel: many bad things happen to Cleaver as befitting the narratives of a more rough and tumble society in Australia. This is certainly so as the series progresses. Much of Rake revolves around Cleaver’s relationships, dysfunctional and functional. One other distinguishing aspect is how much of Rake is taken up with Cleaver’s own legal problems. The first few episodes show him in a tax tribunal because of his own non-payment. Cleaver is desperate to delay the proceedings as long as possible using all sorts of wiles—dodgy witnesses, half-destroyed evidence, and eventually succeeding when, as the judge is about to find against him, the judge conveniently has a heart attack and dies. As this chapter is taken up with comparison I dip in and out of the characters; for a sustained analysis of Rake as a larrikan see Lili Pâquet’s chapter in the same volume. 


Tuesday, May 28, 2019

Lawyers and Arbitration redux...

Back in 1993 Andrew Caiger (now a barrister in South Africa) and I submitted a paper to the Modern Law Review, which was then under the editorship of the late Simon Roberts. The topic of the paper was lawyers and arbitration in construction disputes based on a series of interviews we had done.

Simon was a wonderful editor helping me through the writing process with encouragement, never short, well, almost never. One of his requests was that we shorten the manuscript because of the word limits imposed by publishers. I had arrived at the final draft, duly shorter, and to make it easier for the editors I double-spaced it. After I emailed it to Simon I received a brusque call asking what it was about shortening I found difficult. For once, the explanation was easy.

That year the MLR instituted the Wedderburn Prize for the best article and Andrew and I won it. The day the letter came was soon after a discussion of the value of socio-legal research with my then head of school. He saw no value in it at all, a waste of time and a distraction from proper doctrinal work. With joyous glee I showed him the award letter--the MLR is a top journal in law and he knew that--and he shook his head and I believe his mouth was about to form an "O". He and I had no problems with research after that.

Simon Roberts sadly passed away in 2014. In honour of Professor Simon Roberts the Modern Law Review published a special issue in 2015. The first three articles are by Simon and the preamble continues "These articles are followed by a further seven MLR articles which are influenced by and relate to Simon’s work in these areas." Our paper was one of the seven. Andrew and I have made this paper available at SSRN for download.


Wednesday, May 08, 2019

Dirty Money and Lawyers

There's been a dramatic rise in "unexplained wealth orders" in the UK. And East European oligarchs are finding Britain a less accommodating place to hide their wealth. These are nasty orders because if you can't say what the source of your money is, then it's confiscated.

According to the Financial Times a survey of 59 law firms by the Solicitors Regulation Authority shows the firms have done little to manage money laundering risks and 26 of them now face disciplinary action. Now the SRA is reviewing 400 law firms about compliance with anti-money laundering rules.

The UK has always (and is) a convenient place for dumping dirty money, or transiting it through to off-shore tax havens. A former, but weak, British premier promised, and then didn't deliver, that all beneficiary owners of off-shore trusts and the like would be named in a register.

Private Eye has produced a number of reports on how the UK thrives on dirty money with government and financial collusion, including "Looting with Putin: City of London and the Moscow Gold Rush", and "Tax Havens: Selling England by the Offshore Pound". (Worth the subscription to Private Eye, believe me.)

My ex-partner used to tell me about Russians turning up in her law firm with suitcases of money, in the 1990s, wanting to buy houses in London. Everyone knew it was wrong but no one did anything about it.

It now appears with the moves by the OECD and the SRA to clamp down on money laundering we might see more concerted effort to curb this activity. But I doubt it. The banks, including the biggest like HSBC, have been ensnared and law firms, especially those in the City, are natural extensions of networks of financial and professional service firms that exist in order to ensure the smooth transition of money around the world.

A few firms will be clobbered by their regulators, maybe cop a plea, and will carry on much as before only with extra precautions against getting caught. Until we have transparency in what is an opaque system, it is inevitable that money--in all shades of dirt--will attract its willing adherents.


Tuesday, January 15, 2019

Legal Professionals of the Future: Their Ethos, Role and Skills

(Thanks to Persuasive Litigator)

I have put up a new paper on SSRN titled, "Legal Professionals of the Future: Their Ethos, Role and Skills". It is part of a new collection being edited by Professor Michele DeStefano and Dr Guenther Dobrauz-Saldapenna, New Suits: Appetite for Disruption in the Legal World, to be published by Stampfli Verlag this year.

The abstract reads: The paper examines the nature of professionalism and knowledge that underlie the legal profession and others. I argue that despite the huge effects and consequences of automation, lawyers will always have a role as counselor and trusted advisor. This is embedded in the nature of professionalism, which means lawyers' tasks and roles can't be simply decomposed into sets of tasks as put forward by Susskind.

Keywords: lawyers, ethos, automation, AI, Blockchain, profession, professionalism