Litigators

Curiosity

Curiosity may kill the cat. But intellectual curiosity is essential for an attorney to properly service clients.

By Charles Hecht  
on

One of the beauties of being a lawyer is that the law is always evolving. The cliché, “curiosity killed the cat” is the antithesis of what a good attorney needs to do to properly service his clients. We are under a duty to try to stay abreast of important changes. We also need to realize that we don’t know everything, and we must give constant thought to the issues that affect our clients, both for the matters we are currently working on and matters that we will be working on in the future.

Examples occur frequently in our practice. At my firm we are working on a derivative case with a nontestifying expert. The general rule is that if you have a testifying expert, the testifying expert must be paid on an hourly basis and is entitled to payment no matter the result. A contingent basis destroys the testifying expert’s credibility. In our situation, the nontestifying expert realizes that this is a new and emerging area of the law and is willing to be paid at the conclusion of the case with the understanding that in consideration for reducing the expenses, the nontestifying expert would like an incentive payment if the lawyers receive compensation in excess of the lodestar. There is a general proposition that lawyers cannot share their fees with nonlawyers. Next, we need to research what the law is in the particular jurisdiction where the litigation is going to occur. The cases indicate that there is a split of authority where some courts hold that a nontestifying expert is subject to the same strictures as a testifying expert. Other cases hold to the contrary. Analyzing these cases will give us an understanding that will enable us to structure an agreement with the nontestifying expert such that when the case settles, the court will approve the disbursement of a premium to the nontestifying expert.

Another example: your client’s accountant receives a letter from a shareholder demanding financial information about a corporation and threatening the accountant that if he doesn’t furnish the information immediately, the writer is going to report the accountant, who specializes in tax matters, to the IRS and other appropriate regulatory bodies. We know as lawyers that it is unethical to threaten someone to pay money and, if they do not pay, report them to the authorities. But what is the law when it comes to someone who is not a lawyer? You have to be curious to find out what the law is before you respond to the writer of the threatening letter.

Attorneys are required to keep abreast of changes in the law. There are many sources for continuing education, including, at minimum, attendance at mandated CLE courses in order to maintain a license to practice law. But there are numerous other sources. Some are obvious, such as the New York Law Journal, the Wall Street Journal, and the New York Times. There are also blogs that deal with specific areas of the law.

A recent article in the New York Law Journal discussing the evolving law concerning the content of arbitration provisions in initial public offering documents was very helpful because it gave the kind of information needed to draft the appropriate corporate documents to ensure that the forum selection clause requirements for any claims relating to private placement or initial public offerings must be litigated under federal law. Some recent cases have permitted those types of cases, without the appropriate clause, to be litigated in the state courts. The last thing you want as a company raising money is to be subject to 50 different state laws when you have the opportunity to force litigation to be in one federal court system. An analysis of the cases cited in the article provide a roadmap for the proper type of clause to be utilized.

Another example is discussions with attorneys that practice in your area. I recently received a call from someone who is handling an arbitration similar to one that we are handling. He just received an adverse ruling where he believed the two lawyers on the panel had obviously misunderstood the concepts of the duties of a fiduciary; ironically, the nonlawyer dissenting clearly understood what those duties were and that the respondent(s) had violated those duties. That made me think that in my case I need to focus on explaining the duties of a fiduciary appropriately to my panel with three attorneys and not assume that they understand the relevant concepts. On the other hand, in my arbitration, the respondents’ attorney just wrote a demand letter to a third-party financial planner to the claimants threatening to sue them if there was an adverse award in upcoming arbitration. I discussed with this other attorney the pros and cons of using this letter as an exhibit in the upcoming arbitration.

Thinking and researching are only the beginning of the process. What I have done for years is when I have these kinds of thoughts and ideas, I immediately create a memorandum to the files and use that as a basis for working with more junior lawyers at the firm to do the appropriate research and come up with further refinements and new ideas on the use of the results of this research. If you don’t do this right away, you will lose the thought(s) as we are so involved in the day-to-day practice of law (and the rest of our lives), that there is no way to retain the nucleus of this idea in your head and hope that at the appropriate moment everything will come back. Your memo doesn’t have to be fancy. But it needs to cover your initial thought process, what needs to be done, if anything, and contain procedures to implement your idea(s).

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Curiosity may kill the cat. But intellectual curiosity is essential for an attorney to properly service clients. Lawyers have to understand this and realize that following through on curiosity requires time above and beyond the daily practice routine.

Charles Hecht was a partner at Balestriere Fariello, a trial and investigations law firm which represents clients in all aspects of complex commercial litigation and arbitration from pre-filing investigations to trial and appeals. You can reach firm partner John Balestriere at [email protected].

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