We would like to thank Tom Basehart, co-contributor Mike’s father-in-law, for clipping newspaper and magazine articles of interest for our blog, which we now synopsize.
New York Court of Appeals Comes to Different Result than Jewel v. Boxer.
Much like Northern District of California federal judge Charles Breyer did in In re Heller Ehrman, 2014 WL 2609743 (N.D. Cal. June 11, 2014) [discussed in our June 14, 2014 “In the News” post], the New York Court of Appeals (its highest court) recently found that pending hourly fee matters are not a dissolved law firm’s property or unfinished business such that the bankrupt firm’s trustee has no “clawback” rights against successor firms doing work for the ex-clients of the bankrupt firm. In re Thelen LLP, 2014 WL 2931526 (N.Y. July 1, 2014), in tandem with Heller Ehrman, may signal the demise of the California decision in Jewel v. Boxer, 156 Cal.App.3d 171 (1984) — though admittedly, in Heller Ehrman, Judge Breyer was at pains to distinguish Jewel v. Boxer, a case in which the new law firm was formed entirely of partners from the old law firm, the old law firm dissolved voluntarily, and the attorneys in the new law firm continued to work off of old retainer letters.
Discovery Costs Are Huge.
Although no surprise to any attorney litigating for even a short period of time, discovery is a primary culprit for excessive costs and delay in federal litigation. A 2010 survey of Fortune 200 companies by Lawyers for Civil Justice, the Civil Justice Reform Group, and the U.S. Chamber Institute for Legal Reform found that, in 2006-2008, companies at the low end of the range were paying $620,000 per federal case and those at the high end were paying almost $3 million in discovery costs. According to the survey, only one-tenth of 1% of the materials produced in discovery was used at trial. Since 2010, according to research by the RAND Institute for Civil Justice, the median cost of discovery expense is now $1.8 million per case. As another example cited in a January 21, 2014 article by Jon Kyl in The Wall Street Journal, the Office of Federal Housing Enterprise Oversight—a government agency that wasn’t even sued in a Fannie Mae case—had to spend over $6 million, more than 9% of its annual budget, accessing electronic data to respond to defense discovery subpoenas.
Law Internships Are Up and Law Graduate Market Improving from Recessionary Levels.
February 24, 2014 and June 23, 2014 articles in The Wall Street Journal “Law Journal” section show some bounce back upward for law students doing summer internships and law graduates seeking post-graduation employment. According to figures from the National Association for Law Placement, a nonprofit group tracking legal employment, 92% of law students who worked as 2013 summer interns last year received job offers, comparing favorably to the 93% rate in pre-recession 2007 (although the 2013 summer class sizes were much smaller). Also, the offer rate in 2009 was only 69% versus the 90% summer offer rate in 2012. However, there is a disturbing sign for law firm management: a survey of 180 law firms by Citi Private Bank showed only modest 2013 firm revenue growth of 2.5% on average (although the 50 top grossing firms did much better).
With respect to post-graduation hiring of law students as a whole, entry-level hiring at major law firms is ramping back up from recessionary levels. Of 2013 class law graduates working in private practice about nine months after graduation, 20.6% landed a job at a 500-plus law firm, compared to 16.2% for 2011 graduates.
American Law Schools Are Paying Some Law Graduate Salaries.
A March 15, 2014 article in The Economist caught our attention, as well as surprised us somewhat. There is a “striking trend” (the article’s words, not ours) for certain U.S. law school to pay the salaries of their alumni when they go to work in legal firms, non-profits, or the government—labeled “bridge to practice schemes” in the article. Examples were: George Washington University paid the starting salaries of 22% of its 2012 graduates, while University of Virginia was not far behind at 15%. Here is an opinion expressed at the end of the article: “But so long as graduates put on these schemes are lumped in with those who found genuine paid work at law firms, the schools will in effect be buying themselves precious U.S. News ranking spots for a few million dollars a year.”