Five Things Lawyers Should Know About Lawsuit Funding

Recently, I was asked what benefits a lawsuit funding company can offer attorneys who represent clients in need of pre settlement loans. That is, clients who have an immediate need for cash but who have already exhausted or otherwise do not have other avenues of cash currently available to them.

Lawsuit funding companies sometimes meet resistance from law firms when their clients apply for a cash advance. The reasons are many but usually revolve around a negative stigma attached to the litigation finance industry with regard to price AND the idea that counseling clients with regard to financial transactions is usually outside the scope of representation originally agreed upon by the attorney and client.

Below I address the top 5 things attorneys should know about the lawsuit cash advance business in an effort to address some of these concerns.

1. Not All Lawsuit Loan Terms are Oppressive.

I have touched on this in earlier posts, but the lawsuit funding industry has evolved since its inception almost 15 years ago. Not only have origination and processing systems become more efficient, but there is also much more competition in the marketplace. Thus, lawsuit advance outfits are forced to take a more competitive approach to pricing. In fact, case loans are routinely offered at lower pricing structures than at any other time previously. All of this has occurred in an economic climate where available risk capital is scarce and inflation rampant.

Today, it is not uncommon for lawsuit advances to be offered for up to 12% of the case’s value. And for less than it costs for an advance on a credit card. Of course, there are some lawsuit funding companies who have different portfolio objectives and must charge more expensive “rates” and fees to meet their objectives.

2. Rate is of Paramount Importance when Settling the Case.

Lawsuit funding operations are well aware of the need to settle cases. Attorneys who work on a contingency fee basis, such as personal injury lawyers, understand the best interests of all parties are served if the case settles before trial. Most plaintiff attorneys would agree even if a favorable verdict is reached, they still have to spend considerable time and money pursuing justice in the appellate courts. Lawsuit funding professionals, many who are attorneys themselves, are intimately aware of this fact.

Therefore, lawsuit cash advance liens rarely inhibit settlement. In fact, many steps are taken to ensure this unfortunate circumstance remains the exception rather than the rule. One such example is the limiting of the “lawsuit loan” to 10% of the estimated value of the case. With today’s rates and fees, an advance would normally fail to reach a level where the plaintiff and his attorney would be unable to settle the matter because of the lien.

Further, funding companies are usually flexible for purposes of settlement. If an unforeseen issue arises which would negatively impact the ability to recover damages, funding outfits – like most investors who want to ensure the safety of their risk capital first – would be likely to compromise the requirements of their contract in an effort close the file and move on.

3. Lawsuit Funding Applicants Need Attorney Cooperation.

The whole process of offering money against the future proceeds of a legal proceeding depends on the participation and cooperation of plaintiff’s counsel. From the moment an applicant requests funds, the attorney’s participation is required. First, his office must forward the relevant documents supporting the claim. Next, a conversation between the funding company and the attorney must occur prior to approval. Once approved, attorneys must then acknowledge the lawsuit funding agreement and recognize it as a valid lien on the file. The transaction is finalized and matter concluded when the attorney forwards a check from his trust account directly to the funding company.

I am unaware of any funding operation which will advance money against a lawsuit without the attorney participating in the transaction, at least on a limited basis. Without attorney participation, the funding process simply cannot happen.

4. Clients Need Speed.

The majority of lawsuit funding clients need money immediately. It is doubtful any attorney who practices personal injury law has not had a client request an advance on his case. Of course, many state ethical rules prohibit this type of assistance. Yet that hardly helps plaintiffs who are behind on their bills or otherwise have financial difficulty.

What attorneys should realize is the process can and will move smoothly if the documents requested are forwarded in a timely manner. Most lawsuit loans are approved with less than 30 pages of documentation being analyzed. These papers can be faxed or emailed with minimal amount of time spent on the part of the lawyer or his support staff. This makes the approval process move quickly so the pre-settlement funding company can do its job and the client can get much needed relief as soon as possible.

Similarly, approvals for many lawsuit loans, especially the larger deals, depend heavily on a successful conversation with the attorney about the merits of the case and other relevant issues. Realizing an attorney’s time is limited and valuable, lawsuit funding underwriters do whatever is necessary to keep the conversation focused on only the most material considerations.

Keeping it “short and sweet” helps funders, attorneys, and clients alike by keeping the process moving along. The sooner the case can be underwritten, the sooner the client can get the help he needs. The attorney gains the reward of a grateful client and another task deleted from his list.

5. Lawsuit Funding is a Business.

Attorneys who have clients wishing to obtain money from litigation finance professionals should keep in mind the business of offering legal loans is exactly that – a business. Like any other business, there are origination costs in the form of advertising or other marketing efforts, cost of inventory (money), and administrative expenses just to name a few. Further, it is the goal of any service based business to provide the service and turn a profit.

I mention this because many attorneys feel the need to negotiate the terms of a lawsuit funding transaction AFTER the case settles. Understandably, plaintiff’s counsel will try to negotiate all liens if it increases the chance to settle a case. However, some attorneys want to negotiate the payment terms after a settlement is in place simply because they feel they can.

However, the appropriate time to negotiate is before an agreement is executed, not after. Further, offering the lawsuit funding company its money back, for example, is not operating in good faith. It is simply good business to allow a business to turn a profit. As we all know, a win – win scenario is the goal. If any business is not allowed to make money, it will soon be out of business. Lawsuit funding is no different.

Fortunately, the pre settlement finance business is becoming more efficient every day and offers clients the ability to weather the financial storm while the case is being litigated. In other words, lawsuit funding is part of the personal injury game. A game that keeps reinventing itself from year to year. Though many changes arise, the main goal remains the same – to help clients achieve justice.

The Bedside Lawyer

Today’s hospital administrator faces a number of challenges including rising costs, labor shortages, increased regulatory requirements and the potential for costly, credibility damaging lawsuits. We live in a litigious time. Disputes are played out in the court system and in the realm of health care, lawsuits can take millions of dollars and years before they are concluded. It is in the best interest of hospitals to do all that is possible to mitigate the risk of litigation. Every hospital will face litigation but there are ways to reduce the opportunity and /or reduce the damages if sued. While in no way a comprehensive list, the following guidelines can help.

Risk management must be facility wide. All Hospitals have Risk Management Departments but risk management cannot be confined to a department to be truly effective. It is not enough to satisfy the requirements of the various governing bodies during times of accreditation. An effective risk management program is embedded into the culture of the hospital. Every employee at every level is in effect a risk manager. Risk management is sometimes viewed as a necessary evil. Hospitals must move beyond doing what is required to adopting a risk adverse culture. This requires active involvement of staff at all levels, continuous monitoring and communication.

Internal Service. Employees that do not feel valued by the organization will not invest in its policies. Studies have shown that employee satisfaction leads to greater productivity and loyalty. Hospitals must make everyone feel like part of the team, physicians, nurses, clerical, every person that works in the hospital must feel like an integral part of the healthcare team. In no other environment is teamwork a life and death matter. More importantly, happy employees treat patients well. Patients that have a positive hospital experience even in the event of a problem are more willing to resolve the dispute without litigation. It is human nature to not wage a hostile battle with someone who has treated you well. Treat your staff well and make them feel valued and patients will receive better care and you will lower your risk of litigation.

Doctor-Patient Relationship. There is a great deal of evidence to support the importance of the impact of the doctor-patient relationship on litigation. This relationship is a significant determinant of the physician’s claims experience (Hickson et al., 1997; Levinson et al., 1997; Pontes and Pontes, 1997; Beckman et al., 1994) Hickson et al. found that “high-malpractice” physicians were also likely to be “high-complaint” physicians; meaning in a survey of physicians in one teaching hospital they had the most patient complaints on file. Complaints fell into categories of communication, care and treatment, humaneness, access, environment, and billing. Physicians who have a bad rapport with their patients had a higher incidence of every other type of complaint listed. In other words, patients were more likely to report adverse outcomes or diagnosis problems when the physician was considered rude or communicated poorly.

Quality management. Quality programs must be more than the program du jour. Just as risk management must be embedded in the hospital culture, there must be a bottom up commitment to quality procedures. Quality when viewed through the lens of “must do” policies and procedures becomes devalued as “one more management program.” However, an organization that involves everyone in the quest for quality and the pride that accompanies providing an excellent product or service will be far more effective.

Infection Control. In the United States more than 1.7 million people will get a drug resistant infection from a hospital. More people die from hospital infections than AIDS and breast cancer combined. Hospital acquired infections is a well documented problem and disturbingly most can be prevented through the implementation of rigorous sanitary and bacterial testing procedures. Infection control needs to be vigorously monitored and should be a vital piece of the overall risk management strategy.

Any risk mitigation strategy will require an organized, rigorous surveillance and management to be effective. Physicians, and hospital staff all play a part in risk management activities but hospital management must make decisions and provide sufficient resources for risk management activities. Staff and physicians should have an active voice in policy and risk events need to be clearly communicated to all. As risk is identified there also needs to be a clear mechanism for correcting or eliminating the risk. The absence of problem-resolution mechanisms in hospitals is a major cause of poor quality and unnecessary risk.

Managing risk will not only reduce the potential for litigation but will provide hospitals with a clear competitive advantage. A hospital that adopts a risk adverse culture will provide better patient care and that translates to success in the highly competitive marketplace of healthcare.

Dealing with Value Crashes in the Marketplace – Nu Leadership Series

An intellectual is a man who takes more words than necessary to tell more than he knows.
Dwight D. Eisenhower

With fierce competition increasing on every plain, organizations are realizing something has to change. Communications continue to improve; there, the world continues to grow smaller. Change is all around us. Market forces are demanding more responsiveness from businesses. I have discussed the concepts of building organizational culture with the input of business stakeholders. Is co-creation of values a good thing, however? This is an interesting question. It is probably better suited for lawyers than scholars or business people. Let’s examine this matter closer.

First, I think co-creation of values runs counter to the genesis of value exposition. Prahalad and Ramaswamy, authors of The Future of Competition, maintain that consumer and firms should be intimately involved with value formation. Historically, businesses have provided products/services with little regard to customers’ values and their inputs. Build a product and customers will come. However, products/services often reveal an organization’s value system. Therefore, organizations must connect with market values; however, I won’t make the leap of supporting co-creation.

Second, many people use religious configuration to support this new approach. However, I feel there is only one a biblical basis for this action. I believe value formation is developed and innate. God gives us discernment of good and bad; however, our environment plays a critical role. Prahalad and Ramaswamy portray an arrogant management structure that cares little for the opinion of others.

Consequently, value creation does support the postmodern culture. Although value creation provides an innovative way of dealing with this leader shortsightedness, it has little biblical support. Competition is changing the status quo. Effective organizations are looking for numerous options. Co-creation of values may be a solution for some. Do your homework. Examine the positives. Make this decision before it is too late.


Hamel, G. (2002). Leading the Revolution. New York: Penguin Group.

Prahalad, C.K. & Ramaswamy, V. (2004). The Future of Competition: Co-creating Unique Value with Customers. Boston, MA: Harvard Business School Press.

Tips on How to Choose a Good Business Lawyer

Finding the right attorney for your business can be a daunting task. Whether you are new to the marketplace and are in need of a lawyer for your new business or you are in the market for a new business lawyer, the issues remain the same. You need an attorney with the right experience and who is attentive to your business needs.

Ultimately, you should ask yourself, “Do I trust this person with my business?”

To help you answer this question, below are a few issues and questions you should address in evaluating whether or not a prospective business lawyer is right for your business:

Check out the lawyer’s background.

It should go without saying, but you need to check with the local bar association to determine if the attorney is currently licensed to practice law and whether he or she has had any major disciplinary actions.
Don’t be afraid to ask for referrals.
Find out what is their area of practice.
You need an attorney who spends most of of his/her time practicing business and commercial law.
When dealing with the health and future prosperity of your business, you want a specialist who can quickly diagnose and efficiently find the solution.
Ask how much of their practice is devoted to business and commercial law.
What areas of business law do they specialize in? In what (and how many) other areas do they practice? – are these areas complementary to your business needs?

Assess their experience and knowledge.

Make sure your attorney has the right experience and knowledge of your industry.
You need a lawyer who has significant experience with companies like yours so you do not have to pay for the attorney’s learning curve in getting up to speed on the legal issues affecting your industry.
On the other hand, you should want an attorney who is willing to invest the time to understand your legal issues and the challenges facing your business, rather than provide a cookie-cutter solution.

Don’t forget relationship count!

While most of your communication with your lawyer may occur on the phone, through email and mail, a face-to-face meeting is still crucial in an attorney-client relationship.
You need to meet your prospective attorney in person. You can learn many things from a face-to-face meeting that do not communicate well over the phone or email.
Be wary of any lawyer who is unwilling to meet you in person or insists on a “retainer” before your initial meeting and/or any discussion about your business, your particular issues and the scope of their engagement.

Personality can play a key role in how effective a lawyer will be for your business.

You need to be comfortable with your legal counselor.
Would he/she mesh with your executives, managers and your team (i.e., your accountant, financial advisers and other advisers)?
Is he/she the right fit for the job?
Do you want a team player? Or do you need an independent person to review your business and keep your managers and employees in check?
Are they aggressive and outspoken? Or they merely combative?
Do you want a risk taker? Or do you want someone who is conservative and takes the safe and secure route?

To further help you in your search, below is a list of some of the key characteristics of a good business lawyer (in no particular order of importance or relevance):

An Advocate for your Business: An attorney needs to be supportive and not just sympathetic to your cause. You do not want a “yes” man. A good attorney is supposed to tell you where you may be wrong. Can the attorney be straight-forward with you?
Good Business Judgment: Are you comfortable with their business judgment? Do they seem to exercise reasonable and sound business judgment? Or are they too theoretical, impractical and/or out-of touch with your business reality well-thought ideas and reasons.
Readily Available: Do they have adequate time to take on your matters. Make sure to get a commitment from the attorney.
A Great Communicator- No “Legalese” please: Your attorney must be able to explain to you even the most complex issues into terms you understand. Your attorney is supposed to find solutions for you, not mystify you.
Foresight & Proactive: Does the attorney think of ways to help you and your business? Do they seem to understand the problems you are likely to have? Do they have a plan to avoid likely problems?
Exudes Professionalism: Are they organized and handle themselves with professionalism? Are they respectful of your time – were they on time?
Have Resources – Will Travel: Does he/she have the resources and connections you may need to support your business? Do he/she know the players in your industry? Do he/she have contacts within your industry? Does he/she have contacts with your customers or prospects? Ask about their affiliations with accountants, financial advisers, bankers, and other professionals. Can you leverage their resources, connections and referrals?

Finding the right attorney for your business does not have to be overwhelming. With a bit of preparation, you should be able to find a lawyer with the right experience and who is attentive to your business needs.

Why Social Media Can Help Lawyers Survive The Cull In Law Firm Numbers

The recent ‘The Future Of Legal Services’ conference that was held in Birmingham (UK) highlighted the challenges many lawyers face as they try to survive or grow. Many of these have been mentioned in various blogs and articles such as ‘Goodbye to all that’ by Jordan Furlong.

There were a couple of statements made at the conference which really stood out:

As institutional operators and larger practices move onto their patch, some traditional High Street firms will struggle to compete unless they adapt;
Law firms which use technology in the right way will have an edge going forward.

The business model used by many law firms will not help them survive the competitive forces they come against.

Jordan Furlong says lawyers should “…study the means by which you accomplish the work you sell to clients and determine whether and to what extent you can adopt new technologies and processes to be not just more efficient, but also more effective in terms of quality, relevance and responsiveness.”

This brings me to social media, and what lawyers should do about it.

As law firms start to use social media to gain mindshare, deliver better services and build relationships with prospects or clients, it is becoming more and more important for the majority of law firms to consider how they use this media platform within their marketing communications.

Differentiating oneself from competitors and improving the ability to engage with prospects or clients are benefits that result from having well thought-out social media strategies.

The key question lawyers need to ask themselves is “what channels do I need to use to differentiate myself and become the lawyer of choice for potential clients, and does this include social media?”

Basically, lawyers need to figure out what their strategic business goals are, and how they can then use social media or technology to help me achieve those goals.

Many lawyers that simply pick a social media tactic without integrating it into their lead generation or client nurturing programmes will get frustrated pretty quickly. It is not enough just setting up a Facebook page (which looks like the company website), a corporate Twitter handle and LinkedIn profile, or attracting 5,000 followers. Anyone can do this!

Lawyers have to make social media support overall business goals, which means integrating it tightly into measurable lead generation and conversion strategies. If social media does not make it easier for prospects to find you, stick to you because you point them towards content that they are actively looking for and, ultimately, select you for because you have articulated the benefits that result from working with you, then it is pointless!

And, if social media does not make it easier for lawyers to engage with clients more effectively, resulting them in having more time to focus on delivering high-quality services to target niches, then it is time for a re-think.

Social media technology platforms can have a very positive impact on the bottom line and, more importantly, help law firms build positions of authority in an increasingly competitive legal services marketplace.

But, it has to support overall business goals, and be measured in terms of new leads generated, sales made, increase in referrals made and improved client retention rates. It should also result in a marked improvement in the way lawyers handle any negative comments made about the services they deliver and the speed with which they resolve customer problems.

Eria Odhuba helps lawyers implement social media and new online business models to attract more clients to their practices, giving them the chance to be successful and enjoy the things they would like to do but can’t because they have no time or money.

New Law for Lawyers in Loan Modification Companies As Mandated by the FTC

The Federal Trade Commission was established in the year 1914 and it has regulated the U.S. economy fairly well since then. One of the many responsibilities of the FTC is to implement practical and effective law enforcement in order to regulate the global marketplace and prevent unfair practices. Recently, the subprime mortgage crisis has resulted in over a million of foreclosures in the United States and desperate homeowners turn to loan modification companies to help rescue their precious houses. Although many loan modification experts do their job in saving homes, fake firms are sprouting virtually everywhere which causes more trouble to homeowners. As a result, the FTC has received so many reports from American borrowers saying that their money was spent in vain.

In response to this, the FTC has made a new rule for all loan modification companies offering their services to the American people. No upfront fees must be collected to their consumers unless a letter from the mortgage lender was sent saying that they agree for a loan modification. However, since lawyers in companies may require up fronts for professional fee, there is also a law regarding the terms of payment.

Lawyers must deposit the advance fees to the client’s trust account which is held or settled in trust. The account must have clear written investment objectives and both parties must come up with the terms of agreement. The reason for such account is to separate the client’s payment from that of the lawyer’s fund. The attorney can only get the money once their agreement has been accomplished. This is important to make sure that the lawyer does his or her job; only with a trust fund can the client be secured of their contract.

The Federal Trade Commission and the state Attorneys General Offices plan on strictly implementing the program by enforcing injunctions, civil penalties, or even imprisonment. Furthermore, any lawyers caught practicing fraudulent activities in the loan modification industry will be sued by the federal government.

The American Bar Association has opposed to the new rule set by the FTC saying it interferes with the courts’ regulation of attorneys but the FTC cannot be swayed. Even the chief program officer of the NCRC or the National Community Reinvestment Coalition agreed on the new rule. He said that the abuse of power of lawyers over the desperate homeowners only shows that they are not following their vows of commitment to the American consumers. Fraudulent companies and lawyers must be stopped otherwise thousands of homeowners will continue losing homes which consequently leads to the declining housing market. The FTC has no other way to do this but to be tougher on barring up fronts and disciplining loan modification lawyers.

Angie Andrews assists homeowners in trouble on her blog that specifically addresses loan modification []. Take control of your own finances, discover options to modify your loan and save your home. There are government sponsored options available and you can get all the information you badly need in AllmandandLee Loan Modification Blog.

The Top Law Firms in the United States

The top law firms in the US are actually not all based in New York or Washington DC, some are in Chicago and Pittsburgh, the main industrial centres, and these firms specialize in helping businesses which have a global market. Some of these are Baker and Mackenzie in Chicago and DLA Piper also in Chicago, along with May Blain in the same city and Kana L Gates in Pittsburgh. These firms are among the law firms with the highest number of attorneys, partners and associates in the US.

Baker and Mackenzie and DLA Piper specialize in commercial and business law with offices in many countries, and Baker and Mackenzie pride themselves on employing people from 60 different nationalities, pointing out that this gives them an edge when it comes to knowing how to deal with the business laws in different countries. They assist businesses which trade in the global marketplace and can advise on the laws in different countries. They also have expertise in the culture of the countries in which they have offices -all 68 of them.

Then there are the law firms which also deal with Pro Bono cases and have a more philanthropic outlook, and the top among these are Latham and Watkins who are based in New York and Skaddon, Arps, Slate, Meagher and Flom also based in New York. The former also has a Diversity Scholarship Program so that more students from different social and ethnic backgrounds get a chance to become lawyers and both take on Pro bono cases. Latham and Watkins won the prestigious American Bar Association Pro Bono Publico Award in 2003, a testimony to their commitment to take non-paying clients as well as the more affluent clients. Latham and Watkins feature regularly in Top 10 lists of American law firms for various reasons, not only because they are the fifth largest employer of attorneys in the US. They have stuck to their roots which were in labor law and tax, before they began their global expansion.

A very well-known law firm, Hogan Lovell’s began in 1904 in the US with Frank J. Hogan who successfully won high-profile politically charged cases soon after he established his firm. On 1st May 2010, Hogan and Hartson merged with Lovell’s of the UK to become one of the top10 global legal services providers. This company is based in Washington DC but has offices all over the world.

Benefit Your Business – Protect Your Intellectual Property

If you have developed a superior way of doing something – from manufacturing, through to software or a business process – then your first move should be to protect your idea from others who might seek to copy it.

It is a good idea to retain an intellectual property lawyer you will advise you on the best ways to use the law to protect your new idea and the man hours that you have put in to it. It may be that you can patent your idea, as vacuum cleaner magnate James Dyson has done successfully. Dyson’s company has registered dozens of patents covering innovations in cyclonic air handling technology, and developments to electric motors. Without having this patent, his ideas would have been copied by other manufacturers and he would not have made anywhere near the same amount of money. Alternatively there are options to do with copyright or trademark registration, which may suit your business better and provide adequate protection for your needs.

An experienced intellectual property solicitor will know the latest developments in the law which will effect the protection of IP, they will thus be in the best position to advise you on how to stop others from using your commercial advantage.

A good way to market your business may be by licensing your protected technology or idea to others and take a royalty from them using it. This recognises the value you have created, but allows you to harness the effort of others to help take your new development to a wider marketplace, more quickly. The Apple iPhone is a good example of a innovative product reeling in 3rd parties by allowing them to create apps, which in turn furthers the phone’s appeal across the market place.

Intellectual property law is fast paced and constantly developing, therefore chances are if you rely on old documents or cases you will inadequately protect yourself. It is frequently the case that new ideas or process struggle for money in the early days and therefore it is tempting to not pay out for legal advice, however if it turns out that your IP is not adequately protected then you will loose money in the future. By having a soundly protected concept, it is all the easier in the future to defend your unique idea against those who will try to copy or mimic it. Many legal battles are fought over whether one new product or service copies an existing one – and the impact for both parties can be dramatic, particularly if the product has high value or mass market appeal.

Clickbank What Can it Do For You

Clickbank can have you up and running in an Internet Marketing business Pretty quick. There are other things you need to know to run an Internet Marketing business but promoting Clickbank products is probably the easiest way to get started and is where most marketers start. Why is it so easy to start with Clickbank? Because there are over 10,000 digital products for you to promote. Most Clickbank products are e-books but there is some software and there are some membership sites listed in the Clickbank marketplace. The commissions are really good on most products.

Information, everyone is looking for it. They may want to learn how to build a deck on their home, they may want to learn how to make beer or wine or get their dog to listen. There is about a 90% chance they could find that information at Clickbank. If you have your own information product you can market it through Clickbank. When you market Clickbank products you don’t have to worry about having getting paid by the customer or collecting credit cards. Clickbank does it all for you. All you have to do is put a link to the product on your site and when someone clicks the link and buys the product Clickbank takes the payment and puts your commission on your account and gives the rest to the product owners account. You get paid by Clickbank every 2 weeks. There are marketers making thousands a month marketing Clickbank products. I know about a marketer who had been an Internet Marketer for about a year. He made a post in a success forum and showed some screen shots of his Clickbank account for the previous few months and he was doing between 20 and 60 thousand a month. Screen shots can be faked but it was a very reputable forum and you have to be a member to be on it. The guy was a lawyer. You know what they say about lawyers but I believe he was making some great money. He said that all he was marketing was Clickbank products. The month before he posted this post he said he did $59,000 with Clickbank. This wasn’t the first time I’ve heard of people making great money money with Clickbank but it is the highest monthly amount I have heard of. Lot’s of people don’t even make that in a year!

Trust Me – I’m a Lawyer

Legal partnerships are inefficient because when it comes to driving a law firm forward or doing “non-lawyer” work, such as marketing, or being innovative, no one wants to take any action because they think that someone else will do it, so nothing gets done.

Nothing useful anyway.

(Yes, there are a number of firms that have partnership models and do grow, but they tend to have a nominated leader or quasi-dictator; but in general, in these recessionary times, a partnership model is not the way to go)

I had thought, in researching this article, that pluralistic ignorance in itself prevented law firm growth, but there was always that niggling suspicion that something else was at play and it wasn’t until I read a book entitled “The Moral Basis of a backward Society” that I realised what it was.

The book describes a fictitious town in Italy called Montegrano, where the people share a great deal of trust with their own family members but they are highly suspicious of anyone outside of the family network and so they were unable to build businesses that were bigger than an extended family unit. Because of this inability to grow, they became stuck. They had placed a ceiling on what they could earn as a community and it was entirely self-generated.

The book established that Montegrano’s predicament was entrenched in the “distrust, envy and suspicion displayed by its inhabitants’ relations with each other”. Fellow citizens would refuse to help one another, except where their own personal material gain was at stake. Many attempted to hinder their neighbours from attaining success, believing that the others’ good fortune would inevitably harm their own interests. Montegrano’s citizens viewed their village life as little more than a battleground. Subsequently, what transpired was social isolation and ultimately poverty. An inability to work together to solve common social problems, or even to pool common resources and talents meant that they were stuck in a progress-resistant culture.

But to take this in context, I could see that within law firms – even quite large firms – that lack of trust in something bigger than a family unit survives and inhibits growth.

I’m sure you’ve heard or read the phrase “operating within silos” as it relates to legal firms.

Quite a lot of firms operate as large entities but in reality they are nothing more than a collective of silos with a partner as the “head of the family” and they tend not to trust other silos or “families” even within the same organisation.

That lack of trust is what really inhibits growth.

When it comes down to it, partners in law firms don’t really trust their fellow partners. They may say that they do, but their actions betray otherwise. Partners meeting are often fractious affairs where individuals hold on to their people and fight to make sure that any work they or “their people” have done is correctly billed to their department.

Yet Trust is the glue that binds commerce. Business relationships are forged in trust and when people working together communicate effectively and co-operate with each other, they build up trust.

Trust creates the perfect environment for growth to take place and the lack of has the opposite effect.

As a culture, the law is and lawyers are, naturally suspicious.

Anything that is said, suggested or especially written needs to be corroborated. Every action they undertake as lawyers needs to be exact, certain, precise.

To be otherwise is to invite criticism, a complaint or a lawsuit so this manufactured tendency will naturally permeate through all aspects of a lawyer’s life; and dealing with fellow partners is no different.

There therefore tends to be suspicion seen in every action no matter how small and this in combination with pluralistic ignorance is the real reason that many law firms fail to grow or even fail to get themselves to a position where they are even ready to be taught to grow.

The firms that can encourage a truly trusting culture will be the firms that go on to dominate the legal marketplace.

If you were to start a law firm from scratch, now, today, there is no way you would want to follow the partnership model. Not for all the pasta in Italy.

Raymond McLennan is a qualified lawyer from Edinburgh, Scotland, UK. He has worked in corporate law but now works in business investment.