Join us for a spirited conversation about the legal business in Birmingham in this roundtable . Participants are Andy Campbell, Augusta Dowd of White Arnold & Dowd, Alan Rogers of Balch & Bingham LLP, and Sam Ford of Fuston Petway & French, LLP.
The discussion was wide ranging, moving from the makeup of today’s legal industry
to advertising to delivering real value to clients.
Boutiques and Super Regionals:
What Birmingham’s legal business looks like today.
Alan Rogers: The business here is in multi-state and boutique firms. For a while, when Birmingham had all the banks headquartered here, there were firms that grew pretty large and they began to have satellite offices. Now that has somewhat flipped, where some firms have offices headquartered here but their offices in other markets are beginning to ascend to be the more dominant economic engines for those firms. I still think there is a enormous space for boutique firms. I think regionals also have their place especially with businesses that are regional or national. But so too does local advocacy. If you came to my firm and you spent some time with us, you would see that much of the work is still very local in nature. You have to know the government and the courts in those jurisdictions.
Augusta Dowd: I don’t see many mid-size firms. It is either boutique or larger regional firms. As far as firms like mine that have a diverse practice and a white collar component, if you don’t have a reason for existence that is different from the people next door, it is a lot harder for you. Companies and entities want the bigger footprint for the most part, so they can get better pricing or more consistency.
Navigating the Industry:
Alan Rogers: Both sophisticated users of legal services and individuals who have never used a lawyer need navigation through our industry all of the time. It is a complicated industry. You have casualty and plaintiff firms, real estate firms and tax firms, white collar criminal firms. The public doesn’t always know the difference and many businesses don’t. The most obvious case I see of people trying to help navigate the legal industry are the lawyers advertising on television. I have zero problems with those in the casualty niche of our market who are telling people who have never used a lawyer that you can come to me.
Augusta Dowd: Lawyer advertising is an area of consternation from some and delight from others. But there is a lot of pressure on the state bar, asking them why they are not stopping this billboard splash that we see everywhere. And the truth of the matter is the U.S. Supreme Court has dictated the parameters of legal advertising. It is considered free speech. The state bar monitors it as best they can within those parameters. You have to have the disclaimer and it has to be legible to the reader from the street. If I am driving along and I see a billboard and can’t see the disclaimer, I snap a picture send it to the state bar and I am done. I think that the explosion of legal advertising is a volatile area, but I don’t have any doubt that it has impacted many plaintiff firms. From defense firms, I hear cases are being resolved much more quickly, short of trial, and cheaper. They are not getting the level of business of the lawsuits being filed and the development of cases as before.
Andy Campbell: In the old days when we all started, it was all about referrals. Personal injury work was referred by the small town lawyer, who took a referral fee. You had a system that worked because you had a lot of lawyers in small towns making a living simply brokering cases. Now when I talk to a small town firm, they are dying because people are not calling them. They are seeing a Shunnarah billboard and they are calling them directly. So you see a lot of push back from small town lawyers who no longer get that business. People are responding directly to the advertising.
Internet Legal Services:
Augusta Dowd: Another area that is potentially eroding business, especially in small towns, is this whole LegalZoom and advocacy online groups. That is a very real issue, not so much in the Birmingham area, but out in the smaller communities.
Andy Campbell: We had a case against LegalZoom over performance where there was a problem with a will. We filed suit, but it was very sketchy as to whether we could hold them to a jurisdiction. There is no state bar really governing that lawyer’s performance or what he is representing. We got it settled quickly, but the governance issues are a real concern of mine. It is sort of what we have now in Alabama with internet lenders. There is no one regulating those people.
Alan Rogers: What in part is happening is that these internet entities and television lawyers and others are placing information right in the lap of the consumer, the legal services navigation that the small town lawyer used to do. People have figured out that if you could put it right in front of people in a billboard or on the internet, it is easy for them. Whether that is good or bad I don’t pass judgment on, but it is unfolding right in front of our eyes.
Sam Ford: One big issue we in plaintiff firms have is when someone sees on a billboard “I got a $100,000 for a sprained wrist.” Already their expectations are sky high. So when I look at their case and see they have $3,000 in medical bills, I have to ask ‘tell me what justifies this six figure settlement that you conjured up.’ My main goal as a personal injury attorney is to manage client expectations. I am starting to get in the habit of telling them upfront that your award is going to be based on what your medical bills are. That is a big problem today with people having expectations of what they think their case is worth and it not being anywhere close to that.
Augusta Dowd: We have the technology where they think we are just sitting on a computer. Now it is: “I sent you an email three hours ago and I haven’t heard back.”
Alan Rogers: There is no time to reflect. Reflection is really the salt of our trade in many ways. We can use it well for clients, but often we don’t get that time.
Andy Campbell: Often clients want an immediate answer and it is a crisis. Often legal matters require deliberation with your partners. You really have to hash things out because they can be life and death multi-million dollar matters. The problem with our high tech society is that sometimes clients are asking for immediate responses—shoot from the hip type answers. It is not like it was years ago when you could say, give me a couple of weeks and we will get back to you. Society moves so much faster now and expectations are higher.
Sam Ford: It is even more difficult for associate attorneys who have to run things up the chain and be concerned about binding the firm to certain things.
Andy Campbell: You have to be very creative with clients. I do a lot of family company breakups and you can shoot yourself in the foot very quickly if you give the wrong advice. Sometimes you just need to buy some time to give you a chance to work through things.
Efficiency and Expenses:
Alan Rogers: In my career in this service business we call the legal industry, there is more focus than ever on the efficiency of lawyers delivering value to clients; which means more than just the rote practice of a legal skill. It also means I understand you. I understand your business. I understand your industry. Clients want efficiency and expertise, and they want value. I think more than ever that is where this whole industry is moving. I can do what I do on a tree stump with a cellphone. Even the offices we are in may one day be very different than they are now.
Augusta Dowd: On the defense side, you are seeing the client say I am not going to pay for you to go down the hall and talk to Alan Rogers. I will pay for one of you, not both of you. Before you could really get your brain trust and bill for it, but now there is much, much more oversight on exactly what you are billing them for. There is much more demand for creative ways you can bill your client so that they feel value has been added.
Alan Rogers: The key question is what is the client’s goal. If the goal is to do it within a fixed budget than we need to talk about a flat fee, rather than an hourly rate. If your goal is that you can’t afford to lay anything out right now and if I take some risk with you, you will reward me with a contingent arrangement. It all depends on what the client wants.
Augusta Dowd: Clients tend to want you to assume more of the risk. I do think our client base is more sophisticated than they were. I think it is an issue for smaller firms to keep that pace and stay current, which is why you see fewer and fewer mid-size firms. System filings are way down in state and federal court, a very significant drop in filings. That impacts firms that have an Alabama or locally based practice. Think of all the work filings create for courthouse and judges. When filings are down business is down community wide. It is down a third at the courthouse since 2010. Jefferson County is set to lose two or three judges because the filings are down.
Andy Campbell: The expense of litigation is driving that. When I started you could file a $50,000 case and actually make some money on it. You can’t do that any more. The nature of litigation has become very, very expensive. The cost of court reporters used to be a dollar a page; now it is four times that. So much of the cost of litigation now is in expert witnesses and forensics, taking depositions and travel. Used to be I could use an accountant in a case and it would cost me $30,000; it is now $100,000. I wish we had a small claims court for under $200,000 cases where parties could elect to take one deposition and go try the case. The danger is people are going to be denied justice because you can’t find lawyers to take the case. I am not sure how we reverse the trend. Everybody should be able to afford a day in court and right now we don’t have that.
Sam Ford: We make sure the client knows ahead of time that if we file a lawsuit, the cost is going to go up. You may end up in the same place you are now and wait a year to get there. The cost benefit analysis of filing needs to be made.
The Birmingham Bar
Andy Campbell: Birmingham is blessed with an outstanding bar and great specialists in tax, real estate and litigation. It is a very ethical bar as well. Compared to Atlanta or New York, it is a collegial bar and people respect each other and are very ethical. There are always exceptions, but we have a quality group of people in this city. I think Birmingham can hold its own with any other city in the country.
The quality of our lawyers and their dedication to the rule of law is more advanced than what we see in the political arena. We have public officials who seem to lose their way quite a bit and we have a bar that plays a role in making sure the trains get back on the track.
I remember when I worked in the legislature during law school. There were not those ethical issues then because we had a legislature full of lawyers. And they were great people. Those guys did not cross the line. They did the right thing by the state. It was run very well and we did not see the kind of drama we see today. I wish we could return to a time when lawyers become more popular again as elected officials.
I get up every morning and I am excited about coming to work in this great city. It is small enough to have a collegial relationship with other attorneys.