Why we lawyers can seem like such weasels (even though most of us really aren’t)

Introduction

I once took part in a discussion in which one commenter talked about “legal weasels.” That commenter decried “unscrupulous lawyers [who] snooker otherwise intelligent clients into thinking they have legal claims to recompense that the law doesn’t actually support.”

NOTE: All the Dilbert cartoons in this post are legitimately reproduced, using “embed” links provided at the Dilbert.com site; thanks, Scott Adams!

Are unscrupulous lawyers really behind aggressive lawsuits? Perhaps in some cases.

But my experience has been that most lawyers try hard to balance the conflicting demands of legal-ethics rules.

The conflicting demands of legal ethics

The canons of legal ethics send mixed signals to lawyers:

• We’re supposed to be dispassionate advisors, and to say “no” to clients when necessary. [1] And in our role as officers of the court, we’re supposed to function as judicial gatekeepers.
• At the same time, we’re supposed to be zealous advocates for our clients’ interests.

How do lawyers reconcile these two things?

It’s all about the incentives

A big part of the answer, I think, can be found in a 1995 speech at Harvard by Warren Buffett’s business partner Charlie Munger (himself a co-founder of a major Los Angeles law firm): Always look for the incentives.

In an on-line transcript of his speech, Munger is reported to have said, “I think I’ve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it.”

Let’s look at how lawyers’ financial- and reputational incentives come into play when dealing with clients.

“Sure, we can sue them”

Elroy Executive calls up Lisa Litigator. He and his management team are outraged by what another company has done. They want to file a lawsuit, or maybe they want to defend against the other company’s lawsuit.

After hearing Elroy recount the facts, Lisa has doubts whether Elroy’s company has a great case. She wonders whether the management team has an overly-developed sense of entitlement.

No matter what, though:

• Lisa knows that Elroy, in his heart of hearts, is looking for a lawyer who is “on board” with his company’s cause, someone who will tell him, we’ll punish those people for the outrageous things they’ve done.

• She quickly recognizes that Elroy’s company has money; the lawsuit could generate some nice legal fees; and she has bills to pay.

• Lisa can take comfort in the bedrock legal ethics principle that even the most unpopular or unappealing client deserves his day in court.

• She knows she doesn’t need to have an airtight case to represent Elroy’s company in court. That’s because court rules, such as Rule 11 of the Federal Rules of Civil Procedure, are designed to allow arguably-sketchy cases, so as not to discourage potentially-worthy cases.

• Lisa also knows that the overwhelming majority of lawsuits settle before trial — meaning that she likely won’t ever be held accountable for her legal judgments.

• If Lisa practices in a law firm, she knows her compensation and her status in her firm depend not just on her expertise, but on her ability to attract billable work. If Elroy were to take his business elsewhere, Lisa’s law-firm partners would ask pointed questions, maybe even to her face.

• The legal profession celebrates “creative” lawyering. Litigators who take on and win tough cases can become the subject of flattering articles and even movies. They get interviewed on TV and asked to speak at continuing legal education conferences. They get hired by other clients seeking to capture some of the magic for themselves.

Taking all these incentives into account, it should be no surprise that, when a solvent client like Elroy wants to file a lawsuit, litigators like Lisa can think of plenty of reasons to justify going along with him, even if the outside world might conclude Elroy’s case was completely bogus.[2]

“No, you really shouldn’t do [X]”

In contrast, business lawyers have a reputation for being Dr. No, for pointing out all the problems that can arise and telling clients, no, you can’t do that. Why is that?

Put yourself in Barry the business lawyer’s shoes. Elroy Executive calls him up and says, I want to do X — can I? And oh by the way, I need your answer right now, because we’re all set to move on this.

Barry knows that Elroy may well be going through the motions; he’s going to go ahead with X, but he’s checking the box, so that later he can say “the lawyers said this was OK.”

Barry feels pressure to give a quick answer; if he doesn’t, Elroy is likely to go ahead with his idea anyway (and might well bad-mouth Barry for being unresponsive).

Or maybe there’s no clear-cut answer to Elroy’s question, but Elroy doesn’t want to hear that, so Barry does the best he can.

Then later a problem comes up in Elroy’s transaction. People start to ask embarrassing questions. If the problem in the transaction is at all legal-related, the path of least resistance for Elroy might be to throw Barry under the bus.

Barry knows all this. He recognizes that his professional self-preservation may well lie in having looked under every rock, in having called Elroy’s attention to every possible pitfall, and in having taken the time to document his advice in writing.

So Barry is caught between two (dis)incentives: He doesn’t want to be thought of as Dr. No, or as unresponsive. But neither does he want to have his advice backfire on him. Which is the lesser of these two evils?

It doesn’t help if Barry doesn’t have the business experience to appreciate that some risks can safely be taken. That’s true of more than a few lawyers (even senior ones). Sometimes it’s less important to cover a particular legal contingency than it is to just get ink on the signature lines so the parties can move forward. But knowing when that’s the case — there’s the rub.

And of course let’s not forget that if Barry is outside counsel who bills by the hour, he has an additional financial incentive not to say “yes” to Elroy until he can research the issue thoroughly.

And so …

Are we lawyers really weasels, then? Some of us are, sure. But most of us genuinely try to do the right thing, within — or sometimes in spite of — the incentive structure in which we work.

Notes

[1] Elihu Root, an early 20th-century super-lawyer, U.S. secretary of state, and Nobel Peace Prize recipient, is quoted as saying, “About half the practice of a decent lawyer consists of telling would-be clients that they are damned fools and should stop.”

[2] Contingency-fee lawsuits are a different matter, because the litigator doesn’t get paid unless she wins, and often she must advance the expenses of the case as well.