Legal News

Is Plaintiff-Side Work BigLaw?s New Pathway to Riches?

By Ashby Jones

Is more plaintiff-side work on the horizon for BigLaw?

Yeah, it might sound a little crazy, and we freely admit that we might be a little premature in even asking the question. But let us take you, if we might, fair LBer, by the hand and walk you through our thinking.

The wheels got turning this morning upon reading this National Law Journal article on Crowell & Morning’s 2009 revenues. The firm fared well. According to the NLJ story, gross revenue at the firm jumped 14.5 percent, climbing from $296 million to $339 million. Revenue per lawyer increased by 9 percent to $809,231.

A law firm reporting decent earnings isn’t anything new, as we’ve recently learned. But what piqued our interest were the comments made by Kent Gardiner, the firm’s chairman. To the NLJ, Gardiner partly “credited greater use of alternative billing arrangements with helping the firm bring in new clients and receive additional business from existing clients.”

Now, of course, everybody and their brother in the BigLaw world is thumping their chests over how much they’re using contingency-fee arrangements and partial-contingency arrangements; flat-fees and holdbacks. But how are firms boosting their revenues through their use?

To get a little more on this, we chatted on Wednesday with Scott Winkelman, a member of the firm’s executive committee and head of the firm’s torts practice.

Hi Scott. Thanks for taking the time. So you’re using alternative fees more and more, eh?

Very much. We’re getting deeper and deeper into value billing. The core premise is that we want to win when our clients win, and we’re prepared to suffer when our clients suffer. Aligning ourselves with the interests of our clients has been a game changer for us.

What do these arrangements look like in, say, your average litigation arrangement?

Well, for almost every litigation, we suggest a holdback performance arrangement, In other words, we don’t get paid the entire bill until we can show we succeed, either by meeting a budget or by winning a case. We also have pure flat-fee arrangements where we take all the upside risk, and in some matters we work on a pure contingency fee basis.

Gardiner said in the NLJ story that about 30 percent of the firm’s business is billed through alternative arrangements. And you’re looking to do more of this work?

Yes. We’re striving to increase this sort of work every day.

The NLJ article said that last year, the firm scored two big antitrust victories on behalf of plaintiffs, and that these wins brought in big contingency fees. [Reads the NLJ story: "The first one came on behalf of a group of rubber chemicals buyers, Bridgestone Bandag, who filed suit against participants in a worldwide price-fixing cartel. An arbitration panel in Washington awarded Bridgestone Bandag $14.3 million. In the second case, Crowell represented Sun Microsystems and others against computer chip manufacturers for their alleged involvement in an international conspiracy to fix the price of dynamic random access memory."]

Have these wins encouraged you to take on more plaintiff-side work?

Well, I should note that the plaintiffs in these cases were our corporate clients. And we might have handled these on an hourly basis. We’re always willing to help clients find money when they feel they’ve been cheated.

But if you’re aligning your interests with those of your clients, you might have a new incentive to find work that has the potential to make your clients money, right? I’d imagine you might seek out these types of lawsuits more now than you did, say, 10 or 15 years ago when the majority of your work was on an hourly basis?

I think that’s right. I think our increasing use of contingency fee work is incenting us to find and define the pockets of wrong that our clients are facing. If you’re billing by the hour, working in the traditional manner, you might not have these incentives.

Interesting. Do you think this will apply to your practice area (product-liability and personal-injury)?

For now, that tends to be defense oriented. But I could see us taking on more plaintiff-side work in a variety of areas, from antitrust to tax to customs work, and others.

Great. Thanks much for taking the time.

Anytime.

LBers, any thoughts? We shouldn’t overstate this as a trend. Law firms have handled contingency work for clients before, and many institutional pressures (like conflicts) will likely keep BigLaw from becoming plaintiff-side firms overnight. Still, we think the logic makes sense: as alternative-fee arrangements become more commonplace, firms might become more comfortable taking on plaintiff-side work. And provided this brings firms a diversity of litigation and makes them more enterprising places, we can only imagine it’ll make them more interesting places to work.

A lot of ifs here, but still. Food for thought.

Full post as published by Law Blog - WSJ.com on February 24, 2010 (boomark / email).