Employment Practices Liability Consultant
Summer 2002

THE ROLE OF THE LEGAL PROFESSION AND EMPLOYEE RISK MANAGEMENT

By Donald A. Phin, Esq.

"A lean compromise is better than a fat lawsuit."

—Italian Proverb

"Settling a dispute through the law is like losing a cow for sake of a cat."

—Chinese Proverb

A number of years ago, I litigated what I considered to be a pretty clear case of sex discrimination. But in my opinion, the manner in which my corporate "opponent" defended the case caused substantially more damage than it tried to prevent. The corporation's attorneys coerced four employees into testifying according to a company-developed script. This so disillusioned the employees that eventually all four voluntarily left the firm. Given the price of turnover, their resignations cost the company approximately $240,000, if not more. Even worse, the defense attorneys' approach only increased my client's desire for revenge and strengthened her resolve to fight. How many times has an attorney been hired to resolve an employment dispute only to make things much worse because of his or her hardball tactics?

It occurred to me that in 2 1/2 years as editor of EPLiC, we've written nothing about the critical function served by one of the most important players in the entire employee risk management arena—the attorney.

Realities of the Legal Profession

Let us begin with several unpleasant realities of the legal profession.

Most attorneys need and thrive on litigation. If employment attorneys were able to eliminate workplace claims, they might well put themselves out of business.
As many underwriters know, the incidence of employment practices lawsuits against attorneys is higher than that of the clients these attorneys advise! On average, a law firm is more likely to be sued by one of its own employees than are other types of businesses. During my own practice of law, there have been a disproportionate number of occasions on which law firm partners, associates, and staff have come into my office wanting to sue the firm they work for or were fired from.
Lawyer jokes and bashing are a national pastime. The public doesn't trust, respect, or like lawyers. The most recent statistics I could locate, which were compiled in 1994, indicated that only 17 percent of Americans gave lawyers high ratings for honesty and ethical standards. I doubt this percentage has improved since then. (See Carl T. Bogus, The Death of an Honorable Profession.)

Why Do People Become Lawyers?

My classmates in law school were there for one of three reasons.

They had a passion for justice. Such passion was either shared by family members who were lawyers or they viewed themselves as heroes, wanting to effectuate positive change.
They sought a financially lucrative occupation that also carried great prestige.
They didn't know what else to do with their lives, and they, or their parents, thought law school might be a good idea.

How and why we become lawyers has a lot to do with the stories we tell ourselves as mature professionals. It affects our values and the advice we give.

Would Lawyers Do It All over Again?

In my 19 years of practice, I have had the opportunity to converse with numerous attorneys about their careers. A surprisingly high percentage of them said they would "rather be doing something else," but because of financial obligations they felt "stuck" and were forced to continue practicing law.

At a recent continuing legal education workshop, the presenter indicated that more than half of all litigation attorneys surveyed wished they were doing something else. Approximately 80 percent of them would not recommend that their children go to law school! The presenter also noted that litigators have much higher-than-average rates of stress, divorce, alcoholism, and suicide, compared to the general population. As already noted, lawyers also tend to be sued by their employees and clients more frequently than other types of businesses. Burnout is rampant in the profession, so much so that lawyers have a difficult time purchasing disability insurance coverage.

The Quest for Billable Hours: Root of All Evil?

The presenter talked about how the majority of large law firms required their associates to bill more than 2,000 hours per year and some as many as 2,400. According to Carl T. Bogus, a lawyer working 6 days a week has to work 10 hours per day to bill 2,000, 11 hours to bill 2,200, and 12 hours to bill 2,400!

Indeed, persons working such protracted hours are either seriously out of balance or lying about their billing. Either way, I'm not so sure I would want such a person as my attorney. According to U.S. Chief Justice William Rehnquist, lawyers forced to produce more than 2,000 billable hours are tempted to inflate their time. An associate of a New York law firm was anonymously quoted as saying, "The reason why we get paid so much is because we are doing work that nobody else would want to do." I guess that's what happens when you finish law school and come to work with more than $100,000 of debt.

Where is the real incentive for defense counsel to either prevent or immediately resolve claims? I cannot begin to tell you the number of times in private discussions with counsel they mention how many hours they can potentially bill on a claim. Heck, one case alone can sometimes fulfill half of an attorney's annual billable hour requirements. Statistically, the average defense attorney earns more than the average plaintiff's attorney. Since this might not be the case if they were truly able to prevent or resolve claims, perhaps client companies and insurers can offer an incentive bonus payment for attorneys who manage to resolve claims early on?

How many times has an employer heard an attorney make the argument that the company needs to fight with as many dollars as necessary to "send a message" that the organization will not be subject to frivolous lawsuits and "copycat" claims. While it is easy for an employer to buy into this position, the end result is usually even greater expense, heightened internal turmoil, lost productivity, and added negative media exposure.

The Adversarial Nature of Legal Training

I think one of the greatest challenges lawyers face is "overcoming" the very training they receive. Such training is adversarial by nature. We are educated to be warriors for a cause. We are taught to be advocates, not mediators. We are conditioned to engage in battle rather than eliminate the need for battles. We are glorified but only when we win our trials. The fact is it's not much fun if we spend all of our time behind the scenes and none of it in the courtroom. Where's the drama in that?

Now, having said all that, I do know a handful of lawyers who keep things in balance and give principled advice. Some of them even love their jobs! Problem is, there are not enough of these attorneys to go around.

Attorneys: Problem Solvers or Warriors?

Because lawsuits are being filed in record numbers, one must seriously question the effectiveness of the legal profession in preventing claims. Perhaps lawyers remain best at establishing themselves as the experts, allowing them to litigate the problems their expertise creates.

I am well aware that many fine attorneys will be reading these words. I am also well aware that many fine attorneys do their best to prevent and resolve claims. Unfortunately, many of the attorneys I have dealt with don't have prevention and resolution as their mantras. Quite frankly, one of the reasons I stopped litigating claims was the attitude of such fellow attorneys, with whom I was forced to deal on a day in/day out basis. I got tired of their hardball tactics, their promising to do one thing and then doing something else. And among the few attorneys who attempted to settle or mediate claims, too many did so with an "in your face" attitude. Finally, I got out of litigation altogether—and I've never been happier or more successful.

Again, I don't have an "all attorneys are bad" attitude. Rather, I believe many attorneys don't fully understand that their actions can be as destructive as they are beneficial. In my view, the legal profession is at a crossroads and unless it wants to continue falling further down the ladder of public perception, it needs to get its house in order.

This includes the judiciary as well. For example, decisions by the Ninth Circuit that encourage litigation, as opposed to arbitration, don't help matters much. Nor do judges who are poor gatekeepers and allow frivolous suits to go on ad nauseam. Judges unwilling to impose sanctions against vexatious litigants for damages, fees, and costs also contribute to the problem.

In short, we are dealing with a legal profession in significant decline. Who really benefits from hard-core litigation other than the lawyers, judges, and adjunct industries that serve the legal industry? I truly believe that corporations don't change their employment practices primarily because they are told to do so by some judge or jury. Rather, they would be willing to change these practices if lawyers were more oriented toward convincing them that it makes good business sense to do so—rather than trying to win at any cost.

Plaintiff's Counsel: Assigning Blame or Taking Responsibility?

When I came out of law school, I thought I would save the world by representing poor, oppressed, and victimized employees against their dastardly, villainous bosses. And I was willing to work like a maniac to do so. I had visions of million-dollar verdicts and notoriety as a champion for "the cause."

When I began practicing in 1983, it was at the very beginning of today's employment law explosion. Our icons were the personal injury and bad-faith attorneys who had made themselves millions and also wielded considerable legislative clout. My brethren and I viewed them as the model of a successful hero. It sounded pretty attractive at the time. I was so fueled by the desire to do right and make a buck at the same time that I did so at the expense of my first marriage (not an uncommon theme in legal circles). I was a risk taker, willing to put all of my finances and time on the line, because one day, I would hit that big case and liberate myself both emotionally and financially. Sure, I got my million-dollar verdict, 15 minutes of fame, and moments of financial comfort, but the truth is, I was on one enormous roller coaster—both emotionally and financially.

Filing a Lawsuit To Reinforce Victim Status

A few years ago, I started to notice that most of my clients who received 6-figure settlements ended up broke within 3 years; no different than people who win lotteries, obtain personal injury settlements, or receive surprise inheritances. Give a victim some money and they will find sanctity in their victim role. It reinforces the victims' belief that sooner or later a hero will come along to save them once again. Problem is, all they became was a victim with money and an even bigger target for the villains out there. Is this how plaintiff's attorneys are saving the world? Are they really making a difference, or do they have a love affair with an illusion? Are attorneys who file large class action lawsuits really saving employees? Or, are they just lining their pockets and obtaining their 15 minutes of fame?

Accepting Responsibility and Overcoming Victim Status

I have come to learn that forgiveness—rather than a lawsuit—is often a better answer. In most situations, we cannot begin to heal until we let go of our pain. Unfortunately, the legal system encourages neither of these paths. But in reality, the quickest road to personal salvation is the taking of responsibility, not the laying of blame or justification. Regrettably, they don't teach these principles in law school.

Now, when someone asks me if they should file a lawsuit, I ask them if it is possible to walk past their pain. I ask them if they were, at least in part, responsible for their circumstances. Yes, this is a tough-love message. How do you discuss with a woman who was sexually harassed the possibility that she bears some responsibility for an illegal act? The point is, you have to, because if you don't, you will end up doing a disservice to that person. You will have to ask them why they didn't listen to their "inner voice" that said, "There is a problem here." The voice that said to them, "This married man shouldn't be flirting with me."

How do I explain to the minority group member, disabled person, or older person who comes into my office and says they were treated unfairly that life was not designed to be "fair"? How do I tell them that the most successful people I have met—despite being in a protected classification because of their minority status, age, sex, or handicap—have never played the victim trump card? A recent cover story in Time magazine profiled the country's top black business leaders. Every one said that playing the race card is more often destructive than not. They concluded that the greatest form of leverage in the workplace is not one's rights but one's education, dedication to purpose, and value-added productivity for the organization. How do you tell this to someone without being insensitive? Well, the fact is you must or you are, in fact, being insensitive. I firmly believe that if you want to hold someone back, ask him or her to focus on his or her rights as opposed to his or her responsibilities and opportunities. Yes, there are times when a lawsuit is the only answer. But it should only be used as a last resort. Better the client walk past his or her pain than file a lawsuit. If he or she can forgive, that is even better.

Defense Counsel: Pursuing Victories or Finding Solutions?

Over the past few years, I have worked in an "of counsel" position to a number of employment practices defense firms in San Diego. Every attorney I met at these firms was an articulate, educated, and highly skilled professional. A number of them maintain a sense of balance and an understanding of the "big picture." Unfortunately, far too many are out of balance and have lost sight of the forest for the trees. Too many work endless hours engaging in never-ending conflict. When I try to pin them down as to the rationale for such tactics, they have a very difficult time articulating a response, other than "meeting the client's needs."

Case Study I: A (Hollow) Victory

I'd like to share a classic example of just what scares me. Last year, I went to a continuing education conference that was attended primarily by human resource professionals and attorneys. A good-sized firm that practices nothing but employment law was providing its annual update. Since the firm is located in California, as you can imagine, the vast majority of the decisions they shared were pro-employee. Not a lot of good news going around that day for the employers.

One of the attorneys then told a story of a case the firm defended for an employer where, in his words, they actually "... won the case ...." A woman at the company requested a leave of absence to help her mother relocate from her family home to a retirement facility. The employer told the employee that she could not take that leave. (Perhaps she had already taken too many days off or was just too valuable to do without.) Apparently, the company was counseled by the firm that because her mother was not "sick," she didn't fall within the protections of the Family and Medical Leave Act (FMLA). Despite the lack of coverage under FMLA, the woman decided to take the time off to assist her mother. The employer dismissed the employee. As a result, she filed a wrongful termination claim, asserting her belief that she was protected by the FMLA. The court held in favor of the employer, ruling that the employee was not entitled to the FMLA leave. The decision was upheld on appeal, hence the employer "victory."

I don't know about you, but to my mind there is something wrong with this picture. Assume the plaintiff was a valuable employee. As a result of her termination, she no longer works at the company. However, it is also a safe assumption that it cost the company at least $50,000 to find and train her replacement. What sense does that make? What message was the law firm sending to every woman in that seminar audience about how we treat women in the workplace? How would you feel if you needed time off to help move your mother? What was this company and its law firm thinking? I don't know about you, but if it were my company, I would have done everything humanly possible to help that woman under the circumstances. Sadly, this case is not an isolated incident. A number of other recent decisions, both in favor of the employee and the employer, have involved companies that refused to give employees time off to address elder care needs. Almost always, these needs were related to tragic family events over which the employee had no control.

Case Study II: A Solution

In the last lawsuit I tried to a jury, I represented an employer. During the 3-week trial, plaintiff's counsel focused on blaming the company for all of the plaintiff's problems, including the fact that he was on the verge of bankruptcy—before ever being hired! While it would have been very tempting to "justify" terminating the poorly performing executive, that would have been a dangerous approach because most jurors identify with the "victim mentality" of an employee. (I have yet to see a chief executive officer or high-end manager on a jury.) I realized that to win the case I had to speak in terms of responsibility, including the employer's. I told the jury that we had made a mistake; that we were responsible for a poor hiring decision. I also reminded the jury that while we had a responsibility to the employee, we did not have a responsibility for the employee. Rather, that responsibility lies squarely on the employee's shoulders. As a result of this approach, we received a favorable verdict (which of course went through a series of appeals).

Preventing and Resolving Conflict or Achieving Victory at any Cost?

Perhaps the most valuable advice a defense lawyer can give his or her client relates to why the claim was filed in the first place. Did the firm fail to follow effective hiring procedures and instead bring in a "lawsuit waiting to happen?" Did management fail to make sound promotion decisions or neglect to train managers in the all-important "soft skills?" Did the company fail to listen to an employee's complaints in a timely and sensitive manner? Did the organization fail to resolve conflict through dialogue?

The best defense counsel I know take the emotion out of a case. They simply explain to their client "... this is a business decision. Never mind the fact it may be a `legal mugging.' Better to resolve it for the lowest cost/benefit ratio available. Let's get this thing to a mediator as soon as humanly possible. Rather than playing Solomon and get a claim resolved by cutting it in half, we should take it to someone who will `tell the parties like it is' and get things resolved for what they are really worth."

Clearly, courts should put greater emphasis on getting claims resolved through mediation. In my personal experience, it is actually the heaviest-handed judges who are most successful in getting cases resolved. The emotional challenge of this approach is that such judges do not allow the attorneys to be a "hero" for their clients because mediation precludes "total victory." Sadly, for many warrior-litigators, it is sometimes difficult to view conflict resolution of this kind as a win and not as a surrender.

Final Thoughts and Possible Solutions

As I've noted, it has been 3 years since I last litigated a case. I can see things now that I couldn't possibly have seen while I was embroiled in the day-to-day battle. In the courtroom, a win/lose approach to conflict resolution does not end the drama but rather perpetuates it. While in the workplace, a win/lose mentality fosters an "all employees are victims" and "all employers are villains" emotional stance.

To overcome this destructive thinking, here are some suggestions.

Require some form of screening process before a plaintiff is allowed to file a lawsuit. Relegate cases that don't pass such initial screening to mandatory arbitration where the maximum allowable verdict is $50,000. Finally, similar to Federal Rule 11, impose strict sanctions on plaintiff's counsel who file frivolous lawsuits.
We should move past the nonsense of challenging the enforceability of arbitration agreements. If at all possible, we should attempt to resolve cases through arbitration. I rather doubt that our founding fathers would perceive the current scenario as substantive due process.
The state bar should publish guidelines on the maximum annual number of billable hours allowed by an attorney. In a well-publicized case out of Chicago, a mid-40s attorney with a family was found to have billed his client more than 5,000 hours within a year's time. Such practices are not merely unethical, they are criminal.
Attorneys who engage in unscrupulous, unethical, or immoral practices should not get off with a mere slap to the wrist.
We should stop using the Equal Employment Opportunity Commission (EEOC) and similar state agencies as turnstiles for employee grievances that have little or no validity. One official recently lamented to me "all we get are the dreg cases that no attorney wants." No wonder 9 out of 10 Americans with Disabilities Act (ADA) cases filed with the EEOC are dismissed as being without merit.
We should carefully reconsider where we are going with both class action claims and punitive damage awards. A number of years ago, my client received a $1 million punitive damages award in a case where he sustained only $75,000 in out-of-pocket losses. At the time, I thought it was a fabulous award. Today, I realize that it was a ridiculous award.
We need to begin holding perpetrators individually responsible. Harassers and abusers typically quit before they are ever fired. They are adept at going from one job to the next, without ever being held fully accountable. Yet because employers are so afraid of giving a negative reference, these perpetrators get away with repeat violations of illegal conduct.
Our law schools and professional seminars can do a better job of training in mediation and conflict resolution. Attorneys should be taught that adversarial relations are destructive by their very nature.
Lastly, whether you are an attorney or client, consider using the Client Bill of Rights form I created. It helps prevent the most common complaints filed against attorneys. E-mail me at don@donphin.com and I'll send you a copy.

Please remember that the ideas published in this article are mine alone, not those of IRMI. I fully welcome your thoughts, comments, and suggestions. We will gladly publish them in an upcoming issue. Hopefully, this article serves as a beginning and not an end point.

Postscript: Two Responses from Attorneys

I sent out the draft of this article to a number of attorneys to obtain their input prior to publication. Let me share with you two of the comments I received.

"An interesting article, and probably more true than not. Perhaps one of the problems in having lawyers perform risk management rather than litigation is their temperament. Let's face it, most lawyers have acrimony as part of their character, hence their attraction to the practice of law! ...

"Only a handful of lawyers seem able to truly counsel employers and pass along practical business advice based on the lessons we learn from litigation. In fact, most end up being just as condescending and adversarial with their clients as they are with their opponents.

"I think you are correct—the emphasis for lawyers needs to be on building relationships, not hours. If we carefully groom our associates, we can pass along this work ethic, at least to the ones who care to be at the firm long term. Not only does it make for a better law practice—which is balanced with both litigation and lifelong clientele, the lawyers feel better about the job they do and are less likely to burn out.

"Someone told me that there are now more women in the profession, the effect of which was to push the average salary down ... isn't THAT sad? Perhaps we are gentler and kinder, or some would just say we have more patience and less testosterone ... then again, I've had some very acrimonious relationships with female attorneys, and one actually hung up on me (after she tried to tell me that any argument between a male and a female in the workplace was an attempt by males to suppress women)."

—Beth Schroeder, Esq.

"You really hit a few chords with me. My acknowledgment years ago of the `billution' vs. `resolution' mentality of most defense counsel moved me away from the day-to-day practice of law. I think that while the legal industry has morphed to a significant degree vis a vis downsizing, team up, etc., there is still the clear and present reality of `how much can I bill this case for' out there. Although you are bucking the system, I share many of your views. There may just be too much `ego and cement' built into the current system such that change, if at all, will be painfully slow. That being said—publish on! Perhaps insurance companies will hire you to interface with defense firms to make sure that cases needing to be litigated are, but those that clearly should be resolved in a much more inexpensive way, are handled accordingly." [A great idea!, Ed.]

—Jay Wentz, Esq.

Donald A. Phin, Esq., EPLiC coeditor and the human resources consultant for IMMS, has been an employment and business litigation attorney since 1983. He is the author of Building Powerful Employment Relationships, and LAWSUIT FREE! How To Prevent Employee Lawsuits, and coauthor of Victims, Villains, and Heroes: Managing Emotions in the Workplace. He can be reached at (800) 234–3304 or by e-mail at don@donphin.com.

Employment Practices Liability Consultant Summer 2002