Author: TSA Press

What automotive feature was, according to its inventor, developed out of his frustration with his lawyer’s driving?

Hint: The engineer, who was completely blind, earned a patent on this feature in 1950.

See the answer on the next page.

I stand before you as an alcoholic with 31 years of sobriety. I’ve never talked publicly about it.

—Husch Blackwell Chairman Greg Smith opened up about his addiction issues at the firm’s 2019 partner retreat. He went on to note, “Drinking was so much a part of the fabric of my everyday life, socially and professionally. How in the world was I going to succeed if I was not drinking as I had before?” But Smith found that by putting his career on the back burner for a year he had the time to begin treatment, “The shocking thing about this was how much my professional life improved without me trying… Basically, when you acknowledge your humanity and flaws, when you subjugate your ego and you try to live a balanced life, it’s amazing how much better an adviser, a trusted confidant you are to the people you represent.”

Smith also emphasized the importance of talking openly about addiction issues in the legal profession, “We have to quit whispering about this problem. I can’t tell you how many people talked to me about their own issues. Once you pull the curtain back, it’s a whole different environment. I think it’s important for people in leadership positions to talk about this.”

It may be difficult to remember in the ongoing avalanche of incompetence and worse at Wells Fargo over the past four years, but once upon a time the bank was seen as a the very essence of a well-run organization, at least from the perspective of one very not-well-run organization. And given all of the scandals and fines and non-scandal-related disasters and indigestion that emerge on a seemingly weekly basis, it may also be difficult to remember that first giant deposit in the continuing hailstorm of shit, the whole fake account thing. This has taken some time to unwind, possibly in part because not even Wells Fargo is sure how many of its accounts were legitimately opened by a customer and how many were unwittingly opened in that customer’s name to meet some quota. But they’re getting there: Last month, the Office of Comptroller of the Currency put a formal end to former CEO John Stumpf’s already quite over banking career. And now, what’s left of the Justice Department, along with the SEC, is ready to accept all of those billions Wells has been putting aside for this very purpose.

Legal tech prodigy Atrium surprised the industry last month when it announced it was drastically cutting back the number of attorneys on staff. Atrium had raised over $75M in venture capital to date, making this contraction and realignment of a core component of its business model both shocking and potentially ominous.

The move reminded me immediately of the collapse of Clearspire, the ambitious hybrid legal tech company/law firm that Atrium’s own business model owes an undeniable debt to. The similarities of those companies, and their key differences, may prove crucial to Atrium’s continued survival.

The Law Firm Everyone Loved And No One Hired

There’s no better history of Clearspire’s rise and fall than the post-mortem penned by Clearspire founder Mark Cohen himself, who I also interviewed for this piece. The vision of Clearspire was vast. Clearspire was composed of two sister companies, one a traditional law firm intended to handle sophisticated, high-value litigation traditionally reserved for Am Law 100 firms, and the other what we would now see as an Alternative Legal Service Provider aimed at less sophisticated work requiring less or no attorney attention. The two-company system was a creature of necessity, as one of the founders was a non-lawyer and couldn’t own a share of a law firm, and law firms themselves cannot accept equity investment from non-attorneys.

Clearspire had a number of core differentiators. Its biggest asset was an ahead-of-its-time custom technology platform called Coral, one that managed documents and tasks for attorneys while also giving clients transparent access to what their dollars were paying for and instant updates as tasks were accomplished. Clearspire leaned heavily on flat-rate representations, broken out into detailed Statements of Work, which are the norm in many industries but almost alien to the billable-hour dominated legal vertical. Clearspire eschewed significant real estate investment, adopting what today would be called a virtual law firm model designed to keep overhead low.

Cohen and his partner made their first investments in Clearspire two weeks before Lehman Brothers flamed out and declared bankruptcy. To Cohen and his partner, the timing was perfect. Their product ticked all the boxes that GCs were telling them they wanted as the financial markets collapsed. Clearspire offered transparency and accountability with their Coral platform, gave GCs an alternative to the billable hour nightmare, and offered their clients substantial cost savings over traditional firms. Clearspire should have been precisely the solution that cash-squeezed in-house counsel would be looking for.

It was a beautiful theory undone by ugly facts. While GCs were personally enthused by Clearspire’s concepts, the financial crash that made Clearspire’s pricing attractive also made its lack of proven track record a liability. Per Cohen, “nobody ever got fired for hiring IBM.” GCs preferred staying with traditional firms over risking their jobs hiring an unproven concept. GC’s also struggled with evaluating Clearspire’s flat fee pricing, choosing instead to cling to the familiar billable hour devil they hated, but knew.

Clearspire’s law firm struggled for traction. Per Cohen, he pushed his partner to pivot the company and focus on selling its Coral product to the many customers who expressed interest. The company ultimately refused to compromise its vision and stayed focused on the floundering law firm model. After four years, and roughly $7M in capital invested, Clearspire shut down operations in 2012.

Atrium’s Response

A decade after the fall of Clearspire, Atrium’s model reads as both a descendent of, and a direct reaction to, that company’s strengths and failures. Atrium is the brainchild of Justin Kan, the coder who founded and sold the e-sports streaming juggernaut Twitch. (I emailed Kan to request an interview, but as of press date have not received a response.)

Atrium borrowed Clearspire’s two-company model, with a tech company on one side and a traditional law firm on the other. It also borrowed Clearspire’s focus on a proprietary tech platform, one intended to lower costs, add client value, and facilitate legal team communication.

While the bones of Atrium owed a debt to Clearspire, the business plan was markedly different. Rather than target the risk-averse GCs of Fortune 500 clients like Clearspire, Atrium focused heavily on advising the startup industry, which should theoretically be more ready to embrace an unproven disruptor like Atrium. Instead of flat fees based on discrete tasks, Atrium offered its tech platform and limited access to its law firm attorneys for a $500/month membership, with additional firm services being available for additional fees.

In some respects, the changes to the Clearspire model worked. Customers appear to have flocked to Atrium to a problematic degree. Clearspire had a platform customers loved married to a firm they didn’t want to take a risk on. Atrium potentially has the opposite problem. Its tech by some reports is still maturing, but clients adored the flat rate for access to law firm attorneys. For less than an hour of attorney time at a traditional Biglaw firm, cash-strapped start-ups could squeeze large amounts of work and advice from Atrium’s lawyers. One Atrium client is reported as saying the law firm side of Atrium was very likely losing money on them based on the amount of free advice they received from their deal.

Atrium appears to have recognized that its law firm component is unprofitable. It laid off an undisclosed number of lawyers, offering to move them to its network of outside counsel to refer clients to. All indications are that Atrium is shifting its focus almost completely to the tech platform side of its company. The question now is whether the customer base they built off of underpriced attorney services will stick around for the tech platform alone.

To Clearspire founder Cohen, the move is unsurprising. “I’ve never known anybody, at least on this side of the Atlantic, who’s invested anywhere near $75 million into a small fledgling law firm. The money was clearly invested as a tech play, and I suspect that the investors got a little impatient and said ‘Let’s just forget this law firm that’s not making any money and just make this into a pure platform play.’”

History doesn’t repeat, but it often rhymes. Both Atrium and Clearspire grafted traditional law firm models onto tech platforms, to poor results. Clearspire failed as a company because it held onto its law firm aspirations too long, and didn’t leverage the platform its clients desperately wanted access to. Atrium is making the pivot, but only time will tell whether its platform is robust or different enough to hold onto its customers now that one of their key value adds is gone.

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James Goodnow is an attorney, commentator, and Above the Law columnist. He is a graduate of Harvard Law School and is the managing partner of NLJ 250 firm Fennemore Craig. He is the co-author of Motivating Millennials, which hit number one on Amazon in the business management new release category. As a practitioner, he and his colleagues created a tech-based plaintiffs’ practice and business model. You can connect with James on Twitter (@JamesGoodnow) or by emailing him at James@JamesGoodnow.com.

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Olga V. Mack is the CEO of Parley Pro, a next-generation contract management company that has pioneered online negotiation technology. Olga embraces legal innovation and had dedicated her career to improving and shaping the future of law. She is convinced that the legal profession will emerge even stronger, more resilient, and more inclusive than before by embracing technology. Olga is also an award-winning general counsel, operations professional, startup advisor, public speaker, adjunct professor, and entrepreneur. Olga founded the Women Serve on Boards movement that advocates for women to participate on corporate boards of Fortune 500 companies. Olga also co-founded SunLaw, an organization dedicated to preparing women in-house attorneys to become general counsels and legal leaders, and WISE to help female law firm partners become rainmakers. She authored Get on Board: Earning Your Ticket to a Corporate Board Seat and Fundamentals of Smart Contract Security. You can email Olga at olga@olgamack.com or follow her on Twitter @olgavmack. 

If, over the last twenty years, you prognosticated that each subsequent year would be more difficult to make partner than the previous year, you would be just about right.

Over the last twenty years, law firm leverage – the ratio between equity partners and all other attorneys – has increased every year, bar two. During this period, the number of equity partners has increased by a paltry 27%, while the number of “all other attorneys” has increased by nearly 77%. This has tilted leverage to a new high of 3.144 – up 57% from 2.13 in 1999.

For senior associates vying for partner positions, firms have become increasingly focused on business potential and less so on an associate’s ability to outclass others in the courtroom or at the negotiating table.

In the days of yore, the partner track in Biglaw was oftentimes a reward for consistent competence and professionalism. In an era of PPP and RPL, most firms (other than the Cravath, Wachtell, or Simpson Thacher types) are less likely to promote associates unless they see real revenue-generating potential. A failed promotion represents a substantial opportunity cost in comparison to the fees accrued in a lateral partner search, making the relative certainty of a known and battle-tested commodity much more enticing for many firms.

This growing bottom-heavy structure is an increasing impediment to partnership prospects. Because competition for limited partnership slots is so fierce, associates have to deliberately grow their practice with partnership in mind the minute they step foot in their first firm.

There is no one “right” way to become partner, and we see many of our clients take diametric routes to partnership, however, there is perhaps no factor more important to consider on your route to partnership than if you are at the right firm.

No two firms are alike, and ultimately chasing prestige or pay on the road to partnership can lead to a fatal jackknife off the track. Firms have certain reputations for being promotion or lateral adverse, and lateral metrics back these assumptions.

One telling metric is to determine the ratio of partner promotions to partner laterals.

The data – aggregated from the last two years – is heavily right skewed, with most firms preferring to bringing in lateral partners in lieu of promoting associates. What does this mean for you? Oftentimes, the best way to be promoted, is to move firms.

Another useful metric is looking at how a firm’s recent promotions compares to the number of associates they have. In an ideal world, we would track each associates outcome over a representative period, but that data is not available. However, since associate ranks are relatively stable year to year, we can generalize from the available data.

One important thing to note, is that these are percentages for a two-year period, meaning that Honigman didn’t promote 40% of their attorneys to partner over the last year. A larger period was chosen to avoid any idiosyncrasies in any one year of data. Nonetheless, the metric can be valuable in comparing firms. The distribution for this metric is much more normally distributed, though still somewhat right-skewed.

The last metric we chose to look at was the partner to counsel promotion rate. As leverage has increased, firms have co-opted the counsel role to punt on making the difficult decision of whether to promote an associate to partner, or to discard the investment they have made in an attorney by letting them go. That’s not to say everyone who is a counsel is a counsel for that reason, but its use in this manner is trending up. By looking at the ratio of partner promotions to counsel promotions for any given year, we can see whether a firm is particularly inclined towards promoting to one role over the other.

These three metrics on their own are useful, but to give them more power, we calculated how many standard deviations away from the mean each firm was for each metric (z-score). Since larger values correlated with a higher propensity for making partners, we summed each z-score, giving each metric an equal weighting, and created an index to determine the relative preference of each firm for promoting inwards. The index is hampered by the fact that the distributions are not perfectly normal, but the overall trends should give you an idea how your firm ranks relative to others.

Many firms pass up the opportunity to promote a partner-material associate. The list of reasons you may not make partner is exhaustive, from short-term firm finances to relatively strong competition in your class year, but just because your firm does not appreciate your prospects, does not mean that another firm will not. I and my colleagues at Lateral Link are happy to help you determine your chances of making partner at your firm, and help you make an informed decision in this vital stage of your career.

For nearly two decades, long before he was even at Morgan Stanley, let alone its CEO, James Gorman has coveted one thing above all else. And this thing, for some reason, was E*Trade. And it cannot be said that Gorman only loved the discount brokerage in the good times, and not only because there have not been a ton of good times for E*Trade over that period. He first fell for her in the aftermath of the dot-com collapse, and his hunger for her did not wane in spite of its huge pile of home-equity loans during the subprime mortgage crisis, although it did prevent him from buying her then.

“And she’s, I guess, from what I hear, a very strong woman, a very dominant person, so she can get people to do whatever she wants. And she got on, and then she became the foreperson, forewoman, on the jury.”

This is how the president referred to Tomeka Hart, the foreperson of the DC jury which unanimously convicted Roger Stone on seven counts of obstruction, false statements, and witness tampering. She dominated those poor, hapless other jurors and forced them to convict Roger Stone. Obviously.

“And I assume they asked her a question: ‘Do you have any bias?  Do you have any…’  She didn’t say that. So is that a defrauding of the court? You tell me,” Trump continued.

Indeed one would assume that Stone’s counsel worked diligently to weed out jurors with potential bias and demanded that they be struck for cause, particularly since Judge Amy Berman Jackson allowed dozens of jurors to be dismissed at the defense’s request. And yet, as David French pointed out last week, Stone’s lawyer Robert Buschel knew perfectly well that Ms. Hart was a politically active Democrat, and he didn’t care.

Here’s the sum total of their interaction during voir dire.

MR. BUSCHEL: Did you ever work for anyone in Congress?

PROSPECTIVE JUROR: No.

MR. BUSCHEL: You’ve worked on campaigns for Congress people running for Congress?

PROSPECTIVE JUROR: I ran for Congress.

MR. BUSCHEL: You ran for Congress?

PROSPECTIVE JUROR: I worked on my own campaign.

MR. BUSCHEL: And you have friends who worked for other congressmen?

PROSPECTIVE JUROR: Yes.

MR. BUSCHEL: Do you have any political aspirations now?

PROSPECTIVE JUROR: I don’t know, not federal.

MR. BUSCHEL: What might they be?

PROSPECTIVE JUROR: My home state in Tennessee. No local.

MR. BUSCHEL: Just recognize that there might be some media— What are your aspirations?

PROSPECTIVE JUROR: I served, can I just say I served in political office in Memphis in a local office on the school board. So I, one day I wake up and say I run for, you know, office again in Memphis to impact education. One day I wake up and say no way in the world would I do that. So I don’t have an immediate plan to run for office.

MR. BUSCHEL: The fact that you run for an office, you’re affiliated with a political party. Roger Stone is affiliated with the Republican party, Donald Trump. You understand what I’m saying and getting at?

PROSPECTIVE JUROR: I do.

MR. BUSCHEL: How do you feel about that?

MR. KRAVIS: Objection.

THE COURT: Can you make that question a little bit more crisp? Is there anything about his affiliation with the Trump campaign and the Republican party in general that gives you any reason to pause or hesitate or think that you couldn’t fairly evaluate the evidence against him?

PROSPECTIVE JUROR: No.

MR. BUSCHEL: Thank you, ma’am.

THE COURT: All right, you can step out.

R. BUSCHEL: Thank you, ma’am.

THE COURT: All right, you can step out.

(Prospective juror leaves courtroom.)

THE COURT: Mr. Buschel, you have a motion?

MR. BUSCHEL: No.

THE COURT: Okay, let’s bring in the next juror.

So, unless Hart lied on her jury questionnaire Roger Stone’s lawyers already had their shot. Not that fine distinctions like that will stop Donald Trump, noted Law Stuff ‘n’ Jury expert, from accusing her of using those scary brown-lady wiles to force the jury to convict Roger Stone.

But Trump wasn’t done. After insisting that “Stone was never involved in the Trump campaign for President,” which is hilarious since he very publicly fired him in August of 2015, the president went on to opine that his old buddy couldn’t possibly be guilty of witness tampering, because HELLO, NO GUN!

They talk about witness tampering.  But the man that he was tampering didn’t seem to have much of a problem with it.  (Inaudible) think they know each other for years.  And it’s not like the tampering that I see on television when you watch a movie.  That’s called tampering — with guns to people’s heads and lots of other things.

Donald Trump has seen the movies, man. He knows from witness tampering.

Although there is an argument that texting “Prepare to die, cocksucker” to a potential witness is ever so slightly tamper-y. Ditto for threats to take away that witness’s dog. And indeed that witness, whose name is Randy Credico, testified that he was extremely intimidated by Stone’s repeated threats against Credico’s friend Margaret Kunstler if Credico testified truthfully to Congress.

“You are so full of shit. You got nothing. Keep running your mouth and I’ll file a bar complaint against your friend Margaret,” read one message. But there was no gun emoji, so obviously, this doesn’t rise to the level of witness tampering, right?

Anyway, don’t worry that the president is about to pervert the course of justice by pardoning his old friend who lied to congress to obscure the Trump campaign’s contacts with Wikileaks about dumping emails stolen from the DNC by Russian hackers. Well, don’t worry yet.

But I’m not going to do anything in terms of the great powers bestowed upon a President of the United States.  I want the process to play out.  I think that’s the best thing to do, because I’d love to see Roger exonerated, and I’d love to see it happen because I personally think he was treated very unfairly.

He’s not saying that he’s going to pardon Roger Stone right away. But if the legal system fails to produce the result that accords with Tucker Carlson’s informative lectures on Law! How Does That Even Work, Bro?, well, all bets are off.

In other words, Roger Stone will be ringing in the New Year at Mar-a-Lago with Rod Blagojevich and Eddie Gallagher and the entire Trump clan. And you can take that one to the bank.

Is there a Stone Jury Scandal? Not So Fast … [The French Press]
Remarks by President Trump at a Commencement Address at Hope for Prisoners Graduation Ceremony | Las Vegas, NV [WH Press Office]

Excellent law firm is seeking an associate with approximately three years of federal income tax experience in a transaction based practice.

Clients served will include public and private corporations, partnerships, strategic investors, and high net worth individuals.

Please submit your resume to this posting or to jobs@kinneyrecruiting.com to learn more.