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August 2006

What if the termite story was different?

Instead of the previous post, what if the facts were as follows:

The buyers purchase a summer cottage with the intent of turning it into a full time residence and selling off a lot for 125,000 as part of the transaction. The seller’s disclosure statement indicated there was no known infestation of termites or carpenter ants as well as a number of other items. The seller’s disclosure statement was not a contract – not a warranty. The contract they signed as part of this transaction said that if they didn’t get a pest inspection, then that pest inspection would of in all likelihood reveal termites then they have no right to sue the seller. That’s exactly what happened here.

The buyer did several things after identifying this property. He initiated the process for a land split to sell a lot and he got an inspection on the property. The inspection revealed all sorts of water related issues in the exact area.

I asked you what you thought before about the case when I described it in a neutral tone here. What do you think when I present the facts this way?

Four Days Before Trial

Ok, here’s the latest. This is a case that’s been going on for about 8 months. The case involves the sale of a residential home. The sellers did not know that there was termite infestation in the home. The buyers purchased the property and are now suing for innocent misrepresentation. They voluntarily dismissed the fraud and breach of contract counts today. The key issues in the case are whether the buyer relied on the seller’s disclosure statement which indicated there was no personal knowledge of termite or carpenter ant infestation.

Based on these facts alone, what do you think? Does Plaintiff win? Why or why not?

There’s something about… trial.

In all of the law there is something truly unique about going to trial. Trial demands all of your attention. It is an art form in many ways. There are so many types of trial lawyers out there with so many different styles. So many styles are effective. The most important thing for any trial lawyer to learn is that they have to develop their own style. You see little tricks that other attorneys play. Do you mimic them? As tempting as it is to mimic success, every trial lawyer eventually learns that you must have utmost confidence in your own style and the result. You must play within yourself. The moment you react to something that the other side does, you will have lost something important.

Every trial lawyer has moments of great success in front of the jury. The greatest of lawyers understand that the battle is never lost until the verdict comes in. More importantly, it is never won until the verdict comes in. The greatest trial moments can be lost in a single moment in front of a jury. Protecting your gains is perhaps the hardest and most important thing to achieve a verdict.

Going to trial once again

It has been a helluva summer here at the firm. We had Brian as our first summer law clerk. He will likely be joining the firm next year as a full fledged attorney and partner. Business has been booming as both the internet and local client basis have exploded. My old law firm has sued me as previously posted here. I had a great vacation with my college friends on the beaches of Lake Michigan. My wife and children spent the summer at the Homestead Resort playing on the beach and the waves. While several trials went away, I have one that starts next Tuesday which should be challenging and rewarding. I love my clients. They are great people. I like the case because it is extremely difficult. The claim involves a single count of innocent misrepresentation. There is no question that my client made a representation which turned out to be false. They didn’t know it was false. The only issues left are whether the Plaintiff relied on the statements in doing the deal and if they can prove any damages as a result. Like many cases, this one will come down to whether the jury likes the plaintiffs or my clients better. If the judge lets the innocent misrepresentation claim go to a jury, we certainly will have difficulty on the law.

Passion + Will = Innovation in the Law.

Before starting my law firm, I used to wonder why law firms seem so static. I used to think that law firms were simply content keeping things the same all the time. Innovation is often more happenstance than anything at most law firms. The idea of innovation is an attack on the status quo. Many firms feel very comfortable simply protecting the status quo.

But starting my own law firm makes me realize that many of these firms aren’t standing still by choice. They simply lack the will to move their firms forward. There is little question that innovation and change requires tremendous will. In fact, it takes a substantial amount of will simply to hang on to the status quo. Those who say the status quo is merely easy are wrong.

Another factor is in play here. Lawyers that are overly focused on billing hours don’t have time to be innovators or implement change. Every hour spent in those areas is an hour which is lost on the monthly total pushed on the clients. Some law firms have lawyers who do not need to bill many hours or work under formulas which simply encourage origination. Those lawyers don’t have to worry much about income and can spend time thinking outside the box. Unfortunately, those lawyers are the most likely ones to simply spend time fighting off anyone else who is trying to muscle in on "their share."

People who are most likely to be innovators in the practice of law – the lawyers, who have the will to make innovation happen, are the ones with passion for innovation. The lawyers who will lead the next generation of our profession by pushing the edges will be the ones who wake up in the morning with something on their mind beyond meeting their hourly billing target for the month. Penny pinching lawyers will spend their time protecting the status quo.

Will Large Companies Be Able To Compete In The Technology Age?

It used to be that small and medium size businesses would often have trouble competing with the larger companies. The larger companies had the financial resources to deploy infrastructure often necessary to perform at the top levels within the market. Start-up technology costs were once so high that only big players could launch businesses in many markets.

One of the interesting things that have occurred in our new technology age is a shifting of competitive balance. Small and medium sized businesses can now afford the same topflight technology deployed in the largest corporations, especially in the services markets. Hardware and software costs continue to come down. A small business can deploy the technology necessary to become a paperless office, for instance, for a couple thousand dollars or less.

What small and medium businesses often fail to realize is the competitive advantage they now have over their larger competitors. Deploying technology has become a critical feature within many markets. A large corporation often has layers of bureaucracy, which preclude the regular deployment of topflight and emerging technologies. Large corporations also have substantial barriers to technology deployment given the large workforce. These barriers include the logistical problems of installation and re-training, as well as the larger investment and license fees they often have to make because of the large number of workers they employ.

Take on the other hand a small business with five employees and one principle. That principle can identify a piece of technology on any given day, which will improve the internal process or the quality of their product or services. Within a couple days, that technology can be deployed and the workers trained. This process can be repeated throughout the year with relatively little effort and no bureaucratic barriers.

It used to be that a corporation would deploy a piece of technology and simply ride that technology for three to five years without giving it a second thought. Today, the turnover rate of technology is much higher.

Companies are often deploying multiple pieces of new technology many times throughout the year. Smaller companies are more flexible and therefore have the ability to be true innovators within their market. Large companies will often have a hard time keeping up with technology deployment.

The technology age will flatten many markets and reduce the competitive advantage of being large. Nimble fast-moving companies have an opportunity to be market leaders. In many instances, these will be smaller companies, which have a significant deployment advantage.

The Relationship Between Technology and Business

The march of business into the technology age continues at a heightened pace each year. But what many businesses don’t understand is that technology is only half of any effort to get things done, better, easier and faster. Technology offers the ability to change your internal business process in order to gain efficiency and improve quality. Without improvements in business process, you are only achieving half of the benefits which technology has to offer.

Businesses readily see the benefit of technology, for instance being able to communicate instantly with clients and customers by email or scanning documents into pdf files. But there is so much more to technology than speed. Take for example the process of routing mail internally. Every company has to do process mail, and has developed an internal process to sort and route mail. Scanners allow us to convert that mail into PDF files. PDF files can be stored in a particular incoming mail folder, summarized and routed by email or reviewed before scanning occurs. In many instances, the mail in PDF form will then have to be routed to other team members and in many instances people outside the company including clients and customers. Calendar dates and to-do items have to be pulled from the incoming mail and entered into calendaring and task systems. All of these things need to be done whether or not the piece of mail is paper or PDF. The ability to scan and convert documents to PDF creates a unique opportunity to rework the internal business process of incoming mail in ways that would have not have made sense in a purely paper world.

In a paper world, the business process of mail goes something like this. The receptionist routes the mail into piles, those piles end up getting distributed to secretaries who then open the mail and perform calendaring functions. That mail is then routed from the secretary to the inbox of the businessperson who then reads the mail and places a yellow sticky on the top sheet, indicating something like "please handle." The secretary then gets the piece of paper back and either files it or follows an undocumented process of routing.

Now let’s take a look at that same piece of mail in a digital world under an improved proces. The mail comes in to the receptionist who puts a document routing coversheet on the top page. The document routing coversheet includes check boxes and instruction boxes for every possible thing that can happen to that piece of paper. This not only includes lines for calendar dates and task lists, but a spot where document routing to all other persons is determined. The decision maker on that document can select routing by fax, email, encrypted file internet–based transfer, mail, fed ex or other means. The file path is identified which controls exactly where this piece of mail is going to be stored on the file server. The decision maker on the document receives the hard copy and the routing sheet and fills in all the boxes that the secretary has not already identified. Every single thing that is going to happen with that piece of paper is controlled by this first step. The decision maker on the document also has the ability to dictate all of the tasks that need to be done as a result of the issues raised in the particular document for entry into the task system. Cover letters or cover emails are dictated at the same time. The document is then sent to the scanning room where all of the tasks and functions that need to occur and have already been documented take place.

The technology allowed for the scanning of the document into PDF format. This also created an opportunity to improve the internal process of incoming mail. Instead of spending a relatively short period of time with an incoming piece of correspondence, scanning technology encourages a new process based on standards and documentation. The document routing coversheet provides structure and uniformity to the handling of all incoming mail. Instead of spending a few seconds with the document, the person in charge of that document spends time up front with that document making sure that all the bases are covered. Instead of reading a piece of paper and thinking about all the things that will now need to occur, the person in charge of that document dictates each and every task arising out of that document review for transcription into the company’s to-do system. The chance that to-do items will be forgotten or otherwise fall through the cracks has been eliminated. The ability to prioritize that document so that important tasks are handled immediately is now part of the process. The overall quality of the document review is improved significantly. Chance for error is virtually eliminated.

Yes, technology allowed for the scanning to occur. But a shrewd businessperson understands that the technology allowed for drastic improvements in the internal processes in order to improve quality and reduce the risk of inadvertent error. Virtually all technology, which is implemented in the office, creates new opportunities to improve your business process and therefore increase your competitive position in the market. Challenge yourself to think about whether or not the process that is surrounding your technology is really the one that makes sense. We are no longer in the industrial age. Industrial age processes will soon be obsolete. The most competitive businesses will be the ones that merge technology and process, creating new forms of business altogether.

Should Lawyers Who Breach Their Ethical Duties To The Client, And Are Thereafter Fired, Still Be Entitled To Quantum Meruit

As many of you know, my former firm sued us not too long ago on a quantum meruit fee split dispute. Some background concerning the case can be found here.

I have also, as promised, posted the pleadings below:

Old Firm's Pleadings

GAL's Pleadings

Suing Another Law Firm For Breach of Ethics Makes You Think About Ethics

I think I may be on an ethics kick. I have denied my former firm their fee because they tried to deceive their own client on the way out the door. In my opinion (defamation disclaimer), they put their own greed ahead of the client’s best interest. I had a thought in a previous post that we need to interject the words "client interest" into our conversations around the office and within the Bar Association so that lawyer decisions will better reflect their client’s interest. I came up with idea because it is clear that too many law firms do not even consider the issue when they are making decisions. Oh yes, they talk about their own or their firms obligation. However, they do not mean it in the ethical sense. They mean it in the "are we stuck?" sense. They mean it in the "how do we get out of this because our client cannot pay" sense. They mean it in the "where are the fences imposed by the ethical rules which might get in the way of what we want to accomplish for ourselves" sense.

Being in litigation with my old law firm (there is going to be a story in the news this next week) puts me in touch with my ethical side. We will be filing a grievance against my old firm next week so that the decision as to whether or not they breached their ethical obligations to the client in their efforts to retain the client violated the ethic’s rules. It would not surprise me if the ethic’s examiners failed to find a violation or impose a reprimand. Sometimes I wonder if even they impose the ethic’s rules on their own profession. Regardless, I will live with it either way. If I am the only one that thinks that what my old firm did was wrong, then I will gladly pay the money. I hope I am not the only one.