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A Trial Firm Questions Big Law’s Pandemic Litigation Tactics

Jan. 28, 2021, 10:41 AM

Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. This week, we talk to a trial firm leader about what the backlog of trials is doing to litigation practices. Sign up to receive this column in your inbox on Thursday mornings.

The Covid-19 pandemic has wreaked havoc for jury trials. Most of them have been on hold for months, until juries can sit in courtrooms together or judges find creative ways to utilize them.

How and when trials will get back on track is an important topic for those interested in the business of law firms. The delay can poke holes in law firm business models—and in varying ways.

Chicago-based Bartlit Beck had 30 trials scheduled for 2021—big trials for big companies: Walgreens Boots Alliance Inc., PricewaterhouseCoopers, FedEx Corp., Sterigenics U.S. LLC, The University of Chicago.

Already this year, three of the trials have been delayed. Whether the still-scheduled trials will happen remains something of a mystery, given the virus, said Jason Peltz, the firm’s managing partner.

The uncertainty creates a problem: Cases that may have reached a settlement on the eve of a trial instead are dragging on.

“It’s typically the threat of trial that ultimately leads to a resolution,” Peltz said. “How can judges push parties to resolve without saying that opening statements are slated for next week?”

Trials are an important part of Bartlit Beck’s business—and not just because it positions itself as being a leader in them.

Trials are how the firm gets paid.

The firm doesn’t bill by the hour. Instead, it charges a monthly fixed fee and negotiates a separate, success-based charge. So the firm relies on court victories or settlements for much of its revenue.

Covid-19 has limited the firm’s opportunities to earn the success-based fees, which remain on hold. The monthly fixed fees have continued, however, or been negotiated down if work slowed significantly. So, the hybrid billing model has shown benefits during the pandemic, Peltz said.

Firms on pure contingency models, where all their revenue depends upon successful outcomes, are likely feeling more anxiety as trials get delayed, he said.

Even with the delay in trials Bartlit Beck has had plenty of work to do. The firm of about 80 lawyers has been defending depositions and taking part in motion hearings, he said.

Bartlit Beck defended 376 depositions last year, Peltz said. That was an increase from previous years.

Firms have been more willing than in the past to schedule Zoom depositions or motion hearings because they are cheaper than they were in non-pandemic times. There are no airline tickets, hotels, videographers, or conference rooms to pay for.

“A firm that’s operating on a fixed fee is already making that cost-benefit analysis: Do we really need to depose all 50 people at a meeting or do we depose the 10 managers who were there?” Peltz said.

“A lot of times, firms that are billing by the hour who are on the other side want to depose all 50,” he said. “None of them are doing it on purpose to drive up costs, it’s just that they think the other 40 may have information so they may as well unturn every stone.”

The level of activity has caused Peltz to question whether firms are “litigating for litigation’s sake.”

“The goal always must be: What’s best for the client?” he said. “Are we really, efficiently, getting at the truth or the key issues that will lead to success at trial or a fair resolution?”

I’m sure Big Law firms would have a different perspective on this, and I’d love to hear it! Reach me here.

Banking to Big Law

The last time I spoke with Jeffrey Grossman was in the summer when he was telling us to expect a surge of lateral hiring activity at the start of the New Year. Back then, he was the head of business development and client strategy at Citi Private Bank’s Law Firm Group.

As of this week, Grossman has a new title: chief strategy and legal practice officer at Cooley. In the new role, Grossman will be helping advance “strategic goals and priorities,” the firm said in a statement.

Grossman jokingly told me he was “glad I was right” about the surge in lateral hiring he predicted, and that I wrote about, back in August. He said he saw the New Year hiring surge anecdotally and in Citi’s banking activity before leaving for Cooley.

His first task at Cooley will be to get to know the firm’s key stakeholders better, he said. But he said Cooley’s focus on emerging technologies like life sciences are the right areas for growth over the next decade.

“Being a generalist firm relying on relationships will get you part way there but I’m not sure it will get you home,” he said. “What really makes a difference with clients is having that specialization. It’s not necessarily about being big, it’s about being dominant in the areas that you play in.”

Worth Your Time

On Big Law Hires: It’s been a wild start to the year for Big Law lateral moves. Here’s a rundown of what our business of law team covered through mid-day Wednesday.

Paul Weiss hired a Sullivan & Cromwell deals partner. Winston & Strawn added two tax partners in Washington. Orrick hired Dechert’s former life sciences practice co-leader. Spencer Fane hired 10 lawyers in Denver. Sidley hired three healthcare partners from McDermott. Cooley hired Morrison & Foerster’s fintech co-leaders. King & Spalding hired Proskauer’s healthcare practice head. Quinn Emanuel hired a healthcare-focused trial partner from McDermott. And Davis Polk made its second lateral move of the year, picking up White & Case’s direct lending leader.

On Litigation Finance: A survey of litigation funding companies shows the industry’s amount of active investments grew about 6% last year to just under $2.5 billion. That was slower than some in the industry anticipated after initial reports that the pandemic would cause a spike in funding deals.

Nevertheless, litigation finance companies are still expanding. Omni Bridgeway, a large, publicly traded litigation finance company, is now operating in Latin America, the firm announced this week.

On In-House Leaders: Archer Daniels Midland’s Cameron Findlay has been viewed as a forward-thinking legal department leader for years, and my colleague Ruiqi Chen spoke with him about the moves he made to trim outside spend from 85% to 50% of his budget.

That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer in New York at copfer@bloomberglaw.comJohn Hughes in Washington at jhughes@bloombergindustry.com, Rebekah Mintzer in New York at rmintzer@bloomberglaw.com

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