Biglaw, In-House Counsel, Partner Issues

Why Exceptions Kill The Rules

Suppose your company has a system: All payments are run through the finance center in New York; all emails are encrypted by a certain process; all reports on a certain subject contain items 1 through 10.

As sure as I’m sitting here, someone on the sales side of your company will tell you that we must make an exception for his new client. For this client only, we should run the payments through Canada, use a different encryption service, or delete item 5 and add items 11 through 14 to the report.

Because you’re reasonable, you’ll explain that this isn’t possible: “We have a system that is hard-wired into the computers. We have 3000 different clients. We are able to offer clients only what the system permits. If we start making exceptions for particular clients, then costs will escalate and we’re sure to make mistakes. Please don’t ask us to tailor our systems to fit your client, because we just can’t.”

The sales guy will then sputter and turn red in the face: “But this client is different! This is the firm’s biggest client! And the best! And the one with the highest margin!” . . .

Or maybe he’s making a different pitch. He’s turning red and sputtering: “Although this isn’t currently our biggest client, this client has the most potential!”

Or: “Have you seen the size of the Porsche that I drive, and that’s parked out back? I’m a heavy-hitter at this company, and this is my client!”

Or, pleading: “But I have so few clients, and this one is mine. Surely you can make an exception just this one time?”

To the sales guy, of course, it’s “just one exception.” But for the IT (or finance, or whoever) guys, it’s re-jiggering the whole system, or doing something by hand that’s typically automated, or trying to remember every month to run a particular report in a particular way.

At law firms, some of these issues work themselves out through the natural pecking order: “We absolutely insist that every client give us an advance waiver of conflicts of interest. We cannot run the firm any other way. If a client won’t give an advance waiver, then we decline the business.

“Unless it’s the managing partner who can’t get an advance waiver from his new client; then, we’ll make an exception. And, of course, if the client will be worth $10 million a year, then maybe we won’t insist on an advance waiver. And if we’re about to land a matter for a Fortune 100 company that we haven’t previously represented and that may offer real future potential, then we’ll make an exception.”

The law firm pecking order naturally carves out exceptions for conflict waivers and other legal rules that cause tension, because in those situations the rule-makers are often also the heavy-hitters. Typically you can find some hitter who’s sufficiently heavy to decide which law-related rules are meant to be followed and which are meant to be ignored.

But the pecking order won’t naturally resolve certain non-legal issues that arise in law firms. For non-legal issues, lawyers are often leaning on the support staff to alter standard systems: Finance should alter how it processes bills or payments; information technology should change how the computers do something; and so on. In those situations, the managing partner really doesn’t care, and the IT guys are left to do battle on their own.

The same is true in corporations, but in corporations the lawyers are the support service. The heavy-hitters — the guys who bring in revenue — are all out in the business units, and it’s likely that no heavy-hitter cares much about enforcing tangential rules.

Some rules are of course meant to be respected, and others are meant to be broken. If a new client offers more revenue than all of our existing clients combined, it’s time to revamp the systems to accommodate the new client. But that’s not the typical situation; typically, it’s some mid-level guy in a business unit blustering about his Porsche.

And Mr. Porsche simply can’t understand the lawyers’ intransigence: “Why won’t you make an exception for just this one, absolutely unusual, situation? You should say ‘no’ to everyone else who wants exceptions to the rules, and make an exception only for me; that way, you could handle the one exception. Why are you being so rigidly bureaucratic?”

Ah, rules. Wouldn’t life be easier if they existed?

Mark Herrmann is the Chief Counsel – Litigation and Global Chief Compliance Officer at Aon, the world’s leading provider of risk management services, insurance and reinsurance brokerage, and human capital and management consulting. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at

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