Inside Straight

Law firm consultants have endless advice about how best to compensate partners at firms. The consultants analyze the extremes: Lockstep compensation avoids quibbles about pay, but it may reward less productive older partners at the expense of the young turks. Eat-what-you-kill compensation rewards people who bring in business, but may cause bitter fights over client origination credit or cause partners to hoard their clients.

Various permutations on those extremes have their own advantages and disadvantages. But riddle me this: Why don’t we see consultants debating the pros and cons of pure black-box compensation? Under this system, the managing partner (or a small committee) sets compensation for each partner in the firm. There is no specific formula for allocating the spoils, and partners are forbidden from discussing their compensation with each other. Each partner is told what he’ll make in the coming year (either as an absolute number or as a projected draw assuming the firm hits 100 percent of budget), and the process is over.

At least a few large firms use black-box compensation systems, so this subject surely deserves a moment’s thought. What do you think of a black-box compensation system — good, bad, or indifferent?

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Writing at Above the Law brings you fame, if not fortune: Two different groups (an ABA Committee and a CLE outfit) recently asked me to help design courses that would be irresistible to all in-house lawyers. These guys wanted me to pick topics for “must attend” programs — events that no in-house lawyer could afford to miss.

My first reaction was this: Are you kidding me?

If I’d stumbled onto the “must read” topic for all in-house lawyers, don’t you suppose I would have shared that insight in these columns? If I knew what everyone really wanted to know, would I still be filling my twice-weekly slot here at ATL with random musings and pontifications?

But my second reaction was better: Now, at long last, I’ve figured it out….

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At law firms, you only occasionally hear people criticizing lawyers for not “being proactive.” Maybe that’s the nature of the beast: When you’re a litigator at a firm, you’re always considering what moves to make, anticipating the other side’s responses, and planning several moves ahead. Being proactive is the name of the game.

But I often hear in-house lawyers either being criticized (or criticizing others) for not being sufficiently proactive. How can you prove to the world that you’re proactive?

There are two parts to this puzzle: First, you can create the illusion of proactivity. This takes no effort at all, and it will impress people. Do it! Second, you could actually be proactive. This takes a little effort; I’ll leave it to you to decide whether the game is worth the candle. But at least consider being proactive; you might enjoy it, and it might be good for your career . . . .

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Quick! I’m an in-house lawyer! How are my legal skills?

Admit it: You just thought to yourself, “So-so. The guy couldn’t hack it at a law firm and wanted a 9 to 5 lifestyle, so he took his mediocre skills and moved in-house. I’ll try not to be transparently condescending when I talk to him on the phone.”

I believed that, too, until I went in-house. (That was a joke. How do you put a smiley face on a blog post?)

A moment’s thought reveals that I’m a bundle of legal prejudices, and I suspected that others were, too. So I did a Rorschach test of some lawyer-friends. I named categories of lawyers, and I asked my friends to give their immediate reactions to those categories.

So what are our legal prejudices?

Quick! I’m a partner at a big firm! What do you think of me?

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You gotta love the reviewer who wrote of my new Inside Straight book: “What John Updike was to the suburbs, Herrmann is to the legal sector.”

Maybe you have to question her sanity, too, but you gotta love her.

Enough of that. Now, back to our regularly scheduled program:

Many lawyers at firms believe that in-house life is like the Elysian Fields — where “life is easiest for men. No snow is there, nor heavy storm, nor ever rain.” And, in some ways, those perceptions are right.

In one sense, however, the outside lawyer has it easy. He tells inside counsel: “The rule is X. Have everyone do X, and you will have complied with the law.” And then he goes back to reading cases.

The in-house lawyer is left with the hard part: How the heck do I get 100,000 employees, in 150 countries around the world, to do X?

In-house lawyers are often asked to operationalize rules, and it’s not always easy . . .

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In Proof of an External World, G. E. Moore famously defended the concept of certainty: Moore could put his hand in front of his face and say (with certainty): “Here is a hand.”

Ludwig Wittgenstein disagreed. Wittgenstein was uncertain whether he knew — with certainty — that the hand in front of his face actually existed. The first sentence of Wittgenstein’s On Certainty reads: “If you do know that here is one hand, we’ll grant you all the rest.”

(Hah! You thought you came to Above the Law to read about bonuses and pictures of naked judges. It turns out that we’re epistemology through and through. But I digress.)

On three recent occasions, I’ve heard (or heard of) people asking, “Are you sure?”

I’m with Wittgenstein on this one: I can’t even tell you that “this is my hand,” for heaven’s sake; how dare you ask if I’m sure about a legal judgment?

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We’ve done some hiring recently, and people seem to have three types of résumés.

Some résumés start with an “Executive Summary” that consists largely of the applicant explaining that the applicant believes that he (or she) is a great guy (or gal). I’m not quite sure how that distinguishes the applicant from the seven billion other folks who share this planet with us:

“A fast-paced, fast-track, high-falutin’ individual with exceptional interpersonal, communication, and persuasive skills, as well as boyish good looks and a toothy grin; who leads by example and coaches and develops others to deliver high performance; blah, blah, blah.”

To my eye, this is “telling, not showing.” You think you’re great? Wonderful. But, other than your own say-so, is there anything about you that might objectively indicate that you’re correct? Have you ever, for example, achieved something that’s worth talking about? If so, perhaps your résumé should find an excuse to lead with that.

Other résumés also start with an “Executive Summary,” but of a different type . . .

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Here’s something that never crossed my mind before I moved in-house, but it affects both the nature of in-house legal jobs and outside counsel’s relationship with in-house lawyers.

ParentCo has three business units: Gadgets, Widgets, and Muppets.

ParentCo will have a general counsel. Beyond that, however, ParentCo’s Law Department could be set up in one of two ways: (1) there may be three lawyers, one of whom is the chief counsel for Gadgets, one for Widgets, and one for Muppets, or (2) ParentCo may have a litigation counsel, an M&A counsel, and a contracts counsel, each of whom support all three business units.

In the first situation, the lawyers for the business units are generalists, helping their specific business units with whatever legal matters arise. In the second situation, the lawyers are substantive experts, helping all three business units with matters that fall into the lawyers’ areas of expertise. An in-house lawyer’s work environment turns in part on which structure the corporation’s law department uses, and outside counsel can better serve clients if counsel know how a law department is organized….

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Pay attention to the game when you go to the ballpark.

* If anything, baseball stadiums need less netting to prevent fans from catching foul balls. And if your six-year-old gets clocked in the head by a batted ball, it should be a lesson to wealthy fans in great seats to pay attention to the goddamn national pastime instead talking on your cell phone or watching the scoreboard or doing whatever non-baseball activity that distracted you from the 2-2 count with the lefty up at bat. [Legal Blog Watch]

* Pop quiz, law professors. What do you do? [Volokh Conspiracy]

* Here’s a great review of Mark Hermann’s book: Inside Straight, that focuses on Hermann’s use of the commenters in his material. This will provide excellent research for my own project: How I Became An Affirmative Action Walrus. [Simple Justice]

* Don’t you love how the Michigan Law walk-out on Rob Portman is now actually a bit of a thing in the VEEPstakes? [Gawker]

* It’s been a while since I studied commercial paper, but I’m pretty sure SpongeBob Squarepants coins aren’t going to pass muster. [Dealbreaker]

* Ohio tries to further regulate fracking, but efforts to frustrate fracking f**k-ups feel futile. [Fulbright Fracking Blog]

* Morrison & Foerster elects new firm leadership. [Thomson Reuters News & Insight]

The case had been tried (to a judge, in a country outside the United States) in 2008.

The potential exposure was, let’s say, material.

One can’t exactly wait with bated breath for four years, but one can be keenly interested in a judge’s decision.

So one can be slightly disappointed when the “re” line of an email from outside counsel reads (in its entirety): “Statement of Decision in BigCo v. YourCo.”

Did we win? No news yet.

Surely the news is just a click away.

But one could be a tad frustrated to read the contents of the email message that followed . . .

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