Category: News Feeds

Susman Godfrey founder Stephen Susman has passed.

The famed trial lawyer was in a coma earlier this year after a cycling accident and later contracted the coronavirus. His wife announced yesterday that “the combination of COVID and his weakened lungs were finally too much for his body.”

Susman founded the legacy firm in the 70s and over time the shingle grew into a 150 attorney firm securing over a billion in verdicts a year. The megaboutique — because you can’t just use “boutique” after a firm opens multiple offices — attracted all-star talent over the years. Some of that talent went on to politics. And the driving force behind the outfit was the Susman. From a Lawdragon profile:

He started out clerking for U.S. Supreme Court Justice Hugo Black and teaching at University of Texas Law School before helming an antitrust case for purchasers of corrugated boxes. He won $550 million and understood that his success should come from his results rather than his effort. There’s a sturdy Chevy truck in that recipe: federal clerkship, Texas and bet on yourself, even if there are today Rauschenbergs hanging on the wall.

Others quickly signed on. Rather than joining the big Texas firms, Lee Godfrey, Parker Folse, Mark Wawro, and a rustle of other smart graduates of, primarily, the University of Texas School of Law, bought into the Susman vision in the early days. It was big and bold, like Susman, and leavened by the elegant Godfrey. The contingent fee work had swagger, but necessitated the firm taking some small, not necessarily good cases to keep the lights on and everyone occupied. The vision was awesome, but the business model was a work in progress.

The business model worked out, with a heavy dose of contingency fee work, which was a novel concept for a firm doing that kind of work.

It’s a sad loss for the profession and a reminder of the stakes as we struggle against this virus. Above the Law’s thoughts are with Steve’s family and his friends at the firm in this difficult time.

Trial Bar Titan Stephen Susman Passes Away After Cycling Accident, COVID-19 Battle [Texas Lawyer]

Earlier: A Deep Dive Into The History Of One Of America’s Premier Law Firms

No matter how simple or minimalist you want your practice to be, certain costs must be paid periodically. For today’s column (and future ones), I will cover some of the more common recurring expenses every law practice should consider.

Practice management software (optional). Personally, I don’t use practice management software. But many attorneys have recommended getting it as soon as possible because it is better to be familiar with it as your practice grows. This makes sense as you don’t want to switch your massive files to a new system. But on the other hand, if you don’t have clients, you don’t need software to manage your zero clients. Letterheads and billing templates can be found and downloaded online for letters and billing purposes. Some older attorneys may even send you a copy of their billing templates.

Once you start forgetting clients’ cases or forget to collect, that is a good sign that you may need a practice management software to help manage your caseload.

You can pay several hundred dollars up front for the software or have a monthly subscription. I would recommend trying out some of the more popular ones to see which fit your practice style better.

Phone and internet. These two expenses are mandatory for the modern, mobile lawyer. At a minimum you will need a smartphone with internet and email capabilities.

If you have an office at home or in a separate location, you probably won’t need a separate land-line service. But you will need a dedicated high-speed internet service.

Your smartphone should also be able to act as a mobile wifi hotspot for your laptop and your home desktop but should only be used for emergencies. It should not be a substitute for a dedicated wifi internet service because using your mobile phone’s wifi hotspot will drain the battery quickly and possibly overheat it, thus damaging the phone. Also, the download and upload speeds are very slow.

It is generally a good idea to have a separate line for your practice. Google Voice is free, easy to install, and for the most part gets the job done. However, other paid services may provide more or better services.

Pick the phone service that provides the best reception coverage where you work and where you live, even if it means paying more. A dropped call or bad reception can leave a bad first impression with a client.

As far as the monthly phone bill is concerned, most people have their own phone plans. But some opt to be a part of a family plan. This is a cheaper option because most companies charge up to $50 for an additional line.

Lastly, most people replace their phones every few years for various reasons. Due to the high cost, the phones are usually paid through installment agreements. This cost should also be factored into the costs.

Cloud storage expenses. More lawyers and clients are using the cloud to share documents. In light of the COVID-19 pandemic’s resulting in more business closures, electronic file-sharing will be used more frequently. It is also likely that more people will store their files in the cloud in order to avoid spending large amounts of time transferring files between computers.

Some of the more popular cloud sharing services are Dropbox and Hightail. Most of them have free services, but they have limitations on file storage and downloads. You may one day need to upgrade to a pay version if your practice requires large storage space. Most cloud storage services charge on average $12 to $30 per month.

Student loans. While some consider a student loan a personal loan, these payments should be factored into your budget because your student loan lender will want their monthly cut. Even if you don’t have the money.

If you are on an income-based repayment plan, you may be able to get your payments reduced by sending your loan servicer a profit and loss statement showing how much money you don’t make. This is much better than ignoring your debt and being placed in default status.

However, if you are on track to pay off the loans in full, I highly suggest paying more than the minimum payment. This way, you can skip a payment if you are short in the future. Also, if you just started repaying the loans, paying extra will reduce the loan principal which will also reduce future interest payments. Ideally, you should pay at least two years ahead, which should be enough time to get you through a recession.

Rent. At some point, you will need to pay rent, either for office space, a virtual office, or a mailbox address. While it is possible to work completely from home, most do not like the idea of clients or opposing counsel (particularly upset ones) knowing where they live.

You might have heard about all kinds of formal and informal rental arrangements for new attorneys or ultra-small practices. Generally, they involve using the office for limited purposes and only during certain days and times.

If you enter one of these arrangements, I highly recommend getting a key and being able to access the office during reasonable business hours. It is a major, frustrating pain when a time-sensitive document or a payment arrives and you have to wait for your landlord to be in the office to get it. Also, make sure that you have access to the office wifi at all times.

Also, some people might offer to let you use their office space for free. This might be from a friend, a grateful clien,t or another attorney. While this sounds generous and very tempting, I do not recommend accepting this arrangement at least for the long term. While I won’t get too much into the legal reasons for this, I should point out that your use of the space might violate the tenant’s lease contract, and landlords are itching for a reason to raise the rent.

But if there is a problem, you will be at your landlord’s mercy. You see, if your simple practice grows, you start to get more mail, and clients come to the office more frequently, at some point it will interfere with your landlord’s own operations. The landlord can be especially annoyed when he learns that you are making $8,000 per month while he is making $7,000 per month and paying $2,000 in rent and utilities. He will one day pull rank by demanding that you pay your share of the rent or move elsewhere. Since you are not paying, you may not have legal recourse due to lack of consideration.

Finally, these free arrangements hurt you in the long run because they delay the inevitable lesson: rent is a very common business expense and most people have to get used to paying it to have a legitimate business. You should eventually offer to pay rent as it will give you some recourse in case of a conflict. Also, it displays gratitude and respect, and you won’t come off as a freeloader.

Whatever rental arrangement you enter into, make sure that you have flexibility to do whatever you need to do to run your business.

A simple practice should keep costs as minimal as possible. But don’t be too cheap, especially if it will reduce your productivity.

Next week, I will cover more recurring expenses such as staff and malpractice insurance. If you have any other suggestions, please contact me.

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Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at sachimalbe@excite.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

“Realize that you have nothing to fear from the truth.” It’s right up there at the top of Bridgewater Associates founder Ray Dalio’s Principles, just after “trust in truth” and immediately preceding “have integrity,” “be radically transparent” and “don’t tolerate dishonesty.” Nowhere, not even in a lettered or sub-numbered sub-principle, do we find “make things up when convenient” or “ignore the contents of the Bridgewater Blockbuster if it does not help make your point.”

A three-arbitrator panel found on July 1 that Bridgewater had fabricated evidence, withheld evidence and disregarded its own records in pursuing its claims, according to a July 13 filing by the former employees’ attorneys. The filing in New York State Supreme Court recounted aspects of the arbitration and summarized portions of the panel’s finding…. Bridgewater brought its claims “not to prove misappropriation, but rather, to adversely affect [Messrs. Squire’s and Minicone’s] ability to conduct a competitive business,” the filing said the panel found.

* A law professor will be hosting a fake class about Seinfeld in order to raise money for charity. Guess it’s easy to have a fake class involving a show about nothing… [ABC News]

* The first federal execution in two decades was carried out yesterday after the final stay of execution was lifted. [CNN]

* Ghislaine Maxwell’s lawyer cited the the case of attorneys accused of fire bombing an NYPD car when making arguments about Maxwell’s bail. [New York Post]

* Some bar candidates are expressing trepidation over the prospect of taking the bar exam online. [Hill]

* Defense lawyers in the case involving George Floyd’s death are accusing the Minnesota’s Attorney General of allegedly violating a gag order. [Star Tribune]

* An attorney made the news for having a deposition in his backyard. Please, I’ve done depositions in a school, a firehouse, hospitals, homes, a church, restaurants, hotel rooms, a gym, a college campus, a casino, and other odd places, and this never made the news… [CBS News]

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Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.

Ed. Note: Welcome to our daily feature Trivia Question of the Day!

According to data collected by Law.com, New York County (aka, Manhattan) has the greatest number of attorneys, but which New York county has the second largest number of attorneys?

Hint: The county has 14,953 attorneys, which is a lot, but nowhere close to New York County’s 96,543.

See the answer on the next page.

Because 2020 couldn’t possibly get any worse, Ruth Bader Ginsburg is in the hospital.

Thankfully, all indications are that she’s currently resting comfortably and will just stay in the hospital for a couple of days for observation. Ginsburg checked in after experiencing a fever and chills and had a bile duct cleared according to the Court.

This is as good a time as any to remind folks that the Chief Justice also ended up in the hospital recently but the Court did not let us know about that for days. Individual justices exert some influence over how these things are reported, but it’s telling that the presumption is that RBG’s health news is required to fuel a news cycle while Roberts gets to rest peacefully — if we’re going to do this, all the justices should agree to the same protocols.

But, for now, everyone just relax. Justice Ginsburg has a history of being appropriately cautious with her health and the public has a history of freaking out about it. Be less frantic and more grateful that Ginsburg knows enough to seek professional treatment when she’s feeling sick.

Earlier: John Roberts Fall Down And Go Boom

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Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

On December 30, 2019, Congress passed the Further Consolidated Appropriations Act of 2020, which was later accompanied by a Joint Explanatory Statement, directing the FDA to conduct a sampling study of the current CBD marketplace to determine the extent to which products are mislabeled or adulterated. Last week, the FDA met its obligation by submitted the requested report.

Alas, the report fails to adequately respond to Congress’ request to solve the proliferation of improperly labeled and unsafe CBD products in the United States. The report offers virtually no new insight and merely reiterates the well-known information that prompted Congress’ original request. Though the FDA shared the results of a short-term sampling study it conducted in the past six months, the agency ultimately admitted this data could not be used to draw definitive conclusions on the state of the market.

For the past 18 months, the hemp-derived CBD industry has consistently stressed the need to regulate these products to ensure quality control. Yet, the FDA has limited its involvement to issuing warning letters to CBD companies making egregious, unsubstantiated medical claims about their products.

Despite the fact that the agency “recognizes the significant public interest in CBD products,” the report concludes that the FDA is not yet in a position to regulate these products and ensure public safety given the limited amount of data available for these products.

This conclusion is frustrating because the FDA is pointing to a problem only it can solve. While the rulemaking process can be tedious and lengthy, it does not absolve the FDA for months of inaction on CBD-related issues.

For instance, the agency could have issued informal guidance — agency advice that influences regulated entities but does not carry the force and effect of law — to CBD manufacturers and distributors as opposed to offering broadly drafted FAQs that leave readers with more questions than answers. Over the years, the FDA has come to adopt informal guidance as its primary method of policy making. This nonbinding, informal process allows the FDA to efficiently deploy resources while maintaining administrative flexibility.

Moreover, by delaying its rulemaking process and limiting its enforcement actions to issuing warning letters, the FDA seems to have created the problem it is now addressing in the report.

Back in 2018, Pediatric Neurology Briefs published an article entitled Inadequate Regulation Contributes to Mislabeled Online Cannabidiol Products, which concluded:

Overall, the results of this study are an important contribution to the growing evidence that online CBD products have a high rate of mislabeling. A need exists for consistency and regulation of these products. There is potential for adverse events by having higher CBD concentrations than expected, resulting in changing serum antiepileptic levels.

As this peer-reviewed article suggests, until the FDA starts regulating CBD products, the proliferation of improperly labeled and unsafe products will continue.

In concluding the report, the agency explained it is planning a long-term sampling study that will be conducted by a third party, using the same methodology adopted in the short-term sampling study. The FDA expects the long-term sampling study to be initiated this year but provides no information as to the date of completion. This lack of specificity regarding the study’s timeline suggests that the agency is not close to implementing meaningful reforms surrounding CBD products.

As was shown again in this report, the FDA’s slow approach to carving a legitimate legal pathway for CBD products is not tenable. By failing to expeditiously serve its administrative functions, the FDA is further denying U.S. hemp farmers access to profitable markets for their crops, is preventing the CBD industry from following its course and succeeding, and is jeopardizing the very task with which the agency is responsible: to protect public health and safety.

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Nathalie Bougenies practices in the Portland office of Harris Bricken and was named a “2019 Rising Star” by Super Lawyers Magazine, an honor bestowed on only 2.5% of eligible Oregon attorneys. Nathalie’s practice focuses on the regulatory framework of hemp-derived CBD (“hemp CBD”) products. She is an authority on FDA enforcement, Food, Drug & Cosmetic Act and other laws and regulations surrounding hemp and hemp CBD products. She also advises domestic and international clients on the sale, distribution, marketing, labeling, importation and exportation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s Marketplace. Nathalie is also a regular contributor to her firm’s Canna Law Blog.

This week, I continue my written interview with Eva Shang of Legalist, regarding her experiences cofounding, and now leading, a successful litigation funder. Please see below for Eva’s answers to my second and third questions, focused on how the current pandemic has led to increased demand for litigation funding — and how that demand could serve positive social goals moving forward.

As usual, I have added some brief commentary but have otherwise presented Eva’s answers as she provided them.

Gaston Kroub: There are more funders than ever targeting IP firms and clients. What sets Legalist apart?

Eva Shang: The first and foremost thing that sets Legalist apart is that we are the only litigation funder which specializes in cases requiring less than a million in legal fees. Although we have the capital to make larger investments, our technology allows us to originate and underwrite the kind of volume that allows us to specialize in funding smaller claims. If litigation is a pyramid, the base of the pyramid are exactly these standard small claims. Most cases do not have tens of millions at stake, and that’s why the less-than-a-million bracket is where the greatest need in the legal industry lies. You can’t let the desire to deploy capital distract you from where the need is the greatest.

COVID-19 is forcing many clients and attorneys into considering litigation funding arrangements for the first time by necessity. Attorneys who work on an hourly basis are seeing clients with reduced legal spend unwilling to pay their usual monthly bills; contingency attorneys are seeing large settlement payouts delayed by court closures.

In practice, Legalist has deployed more capital in Q2 of 2019, since the advent of COVID, than any other quarter previously. However, our goal is to convert these first-time users of litigation finance into long-term clients who will continue to see us as a resource even when the pandemic passes. Our hope is that clients will get their first exposure to litigation finance during COVID by necessity, and then use it in the future by choice.

GK: It is clear from Shang’s answer that Legalist aims to develop relationships with firms, even if those firms end up first working with Legalist because of the fallout from the Covid-19 pandemic. At the same time, it is easier to establish longer-term relationships when your funding model welcomes volume and is targeted to the broadest base of potential firms. Legalist’s established success to date bodes well for its ability to capitalize on the increased need for litigation funding, whether that need is driven by Covid-19 claims or not.

GK: Is there a critical misconception you think exists around litigation funding, and if so, how would you correct it?

ES: The biggest misconception around litigation funding is that it’s not mission driven. By design, it is used by the financially disadvantaged party to get on an equal footing with their opponent in court. At Legalist, because we’re focused on individual and small business plaintiffs, we see this systemic imbalance in almost every case we fund, and we want to do even more to address widespread social issues.

The most notable change in litigation finance from 2017 to now is how widely accepted litigation finance is in the legal community. Three years ago,  law firms would frequently bring up issues such as champerty and fee-splitting as reasons why they couldn’t even entertain conversations with us. Ethical concerns were top of mind.

Today, the regulatory framework around litigation finance is much different. With the recent abolition of champerty in Minnesota, you’re starting to see the last few remnants of resistance crumble. Biglaw firms are increasingly engaged in litigation finance, and smaller companies are turning to litigation finance to pursue their claims before they even retain an attorney.

Since the inception of our first fund in 2017, we’ve invested in cases challenging police brutality, workplace discrimination, sexual harassment, prison conditions, and wrongful conviction. We’ve worked with leading exoneration nonprofits as well as with AmLaw 100 law firms. To me, funding can be a powerful tool to build the world we want to see. Providing money to lawyers and plaintiffs working on important cases is a way of literally putting our money where our mouth is. We won’t stop until the work is done, but our roster of mission-driven cases speak for themselves.

With the advent of COVID, you’re likely to see adoption of litigation finance accelerate even more. As both law firms and their clients experience cash crunches in the short term, the appeal of long-term capital from litigation finance firms will be even more apparent. Unlike law firms, who have annual revenue targets, and clients, who have limited legal budgets, litigation funders offer far more patient capital that can wait for two years before being paid out. Inquiries and applications have surged in recent months across the industry; if litigation finance was growing before, COVID-19 only accelerates its progress.

GK: It is not often that you hear how litigation funding can help drive beneficial social change, but Shang makes that case with aplomb. Likewise, her drawing of a contrast between the patience of a litigation funder versus the reacting to cash crunches approach to legal finance engaged in by most firms and clients hits the mark. Indeed, perhaps the greater counterweight to many of the important ethical considerations that arise when we think about litigation finance is the ability of the funder to provide capital and then recede into the background while the case advances on the merits. For one, that type of passive approach can help allay concerns about the litigation funder controlling settlement or otherwise encroaching on the decision-making ability of either the client or the law firm. At any rate, the work of many in the litigation finance industry, Shang and Legalist included, recognize the need to educate lawyers and clients about litigation funding. In my view, that is one area where many of the leading funders do an excellent job and have helped advance the uptake of at least considering litigation funding for many firms and their clients.

My thanks to Eva Shang for the insights and cooperation, and I wish her continued success at the helm of Legalist. It is always a privilege to hear from someone who has bucked the odds as a legal outsider that has found success in the industry, and I thank her for agreeing to this interview. I am always open to conducting interviews of this type with other IP thought leaders, so feel free to reach out if you have a compelling perspective to offer.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

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Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

In Biglaw, as in capitalism generally, the rich just keep on getting richer.

According to CounselLink’s 2020 Enterprise Legal Management Trends Report, the more attorneys that are employed at a firm, the more money that firm in able to command in its average billing rates. The biggest 50 law firms have an average partner billing rate of $575 per hour, which is 51 percent higher than the next band of firms. Those that are slightly smaller, with 501-750 attorneys, are averaging partner billing rates of $380 an hour. And it keeps on going down from there, with partner billing rates at firms with 201-500 lawyers 29 percent higher than those with only 101-200 lawyers.

As reported by Law.com, Kris Satkunas, director of strategic consulting at LexisNexis CounselLink, notes that these higher rates make the biggest Biglaw firms even more profitable, but there is an opportunity for the firms below:

“[The largest firms] really have a hold on those markets,” said Kris Satkunas, director of strategic consulting at LexisNexis CounselLink and the report’s author. “It’s almost a chicken-and-the-egg thing: the larger the firm, the higher its rate. But a higher rate drives up the firms’ average income, meaning the firm can grow even larger.”

….

“I don’t think people realize how strong the correlation is between the size of the firm and the rates,” Satkunas said. Firms slightly smaller than the “largest firms” category, ones with head counts of 501-750 lawyers, have an opportunity, she added, as clients look for high-quality legal work at a lower cost.

But the report also found that alternative fee arrangements are gaining traction — as Satkunas said, “I’m hopeful that we’re finally moving away from talking about alternative fee arrangements and starting to embrace them.” Last year, 12.1 percent of matters were under alternative fee arrangements and as the economic pressure of COVID-19 continues, that number is bound to continue to go up.

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Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).