Article Originally published April 1, 2016 By Nevada Business Mag
Most industries have experienced an energetic pick up in business as the economy has recovered. Nevada law offices are enjoying an improved economy but are still facing their share of challenges. While clients continue to practice caution after the recession, numbers are showing improvement for lawyers in the Silver State. Top attorneys recently met at the Las Vegas office of City National Bank to discuss factors affecting their practice today, from industry professionalism to the new Court of Appeals.
Connie Brennan, publisher of Nevada Business Magazine, served as moderator for the event. These monthly meetings are designed to bring leaders together to discuss issues relevant to their industries. Following is a condensed version of the roundtable discussion.
How is the economy affecting business?
WILLIAM URGA: We’re still a fragile economy. All the numbers are looking better, but they have to look better. We couldn’t have gotten much worse. People are starting to get more comfortable in using their disposable income. Businesses made it through this tough period and now they’re hanging on. I just don’t feel that the confidence is quite there yet.
JEFF SILVESTRI: You see an increase in some of the business deals and some of the transactions. In litigation, you can sense that people are still pretty cautious about pulling the trigger on filing lawsuits because it’s expensive and they want to work it out any way they can before they start spending the kind of money it costs now to litigate a case.
SAMUEL SCHWARTZ: Bankruptcy filings went from a peak of 2.2 million to just under 900,000 last year. You’re talking about a drop of 60 percent. Looking at the bigger scale Alon, [a hotel-casino project] is stalled now because the credit markets aren’t where they need them to be. Genting, [developer of Resorts World] is struggling on more of a national frame. They’re slowly starting to work, but the Great Wall they’re doing across from the Wynn isn’t moving like it was going to. Fontainebleau is on the market. I see some good redevelopment going on in a lot of the hotels on The Strip. The numbers are going up, but I’m curious to see how well it will go up with those projects stalling again. To me, it’s a sign that we’re still going to go sideways for a while here.
MANDY SHAVINSKY: I’m a real estate lawyer and one of the bread-and-butter components of my practice is leasing work. Now people are taking leasing work and taking the lowest bid, maybe shipping it overseas to have people in other countries do it. It’s a commodity. On the litigation side, things like document review and different things that you learned when you’re a younger lawyer are being shipped out too to the lowest bidders. While that is pretty disconcerting and is a big blow to our business model, if you are a creative problem solver for your clients you can provide some value and solve the problems that they have every day. Those are the kinds of things that will never be commoditized.
JOHN MOWBRAY: The consumer liquidity index is improving, the confidence level is growing, the net worth is growing and is on the upswing, disposable income in Southern Nevada is growing, inflation is low. Oil prices are low, which is good for the traffic coming in. North Dakota leads the nation in growth in the last period report. Colorado is number two and Nevada is number three. We’re right at the top there. Seventy-two percent of the non-farm employment in Nevada is improving. That’s with the tourism and gaming industry. The Las Vegas Convention and Visitors Authority
has projected a 2 million visitor increase in tourism this year over last year. That’s a healthy sign for our economy.
NILE LEATHAM: What we’ve seen in the bankruptcy world is, after the beginning of the recession, there was a lot of activity and a lot of work. That has dropped off significantly in the last couple of years. When the economy was strong, and this is counter-intuitive, Chapter 11 was also very strong. There were people that were venturing capital. They were taking risk. They were doing things to look for opportunities in the economy. I have not seen that as I have in the past.
MICHAEL FEDER: From a litigation side, it seems pretty stable. I’m starting to see different types of cases starting to come out again. We went from all the foreclosure actions, now the number one case you’ll see out there are quiet title actions. The court systems are inundated with those cases.
DAN WAITE: I’m very encouraged. It seems like, from a lender standpoint, money is flowing again. At least it’s loosening up. I’m not a real estate attorney, but our real estate and business attorneys are doing deals again, which for quite a while they were all but shut down. We used to see something a few years ago that you never saw – plaintiffs suing their clients for unpaid fees. An indication to me that things are getting better is you now rarely see that. We have other things to occupy our time.
How has professionalism in your industry changed in the last few years?
SCHWARTZ: The acrimony among the lawyers [is one change], we see it in the Supreme Court, we see that coming through the legal community. There’s just a healthy amount of divide. I hear clients saying, “You’re being too nice.” They’re mistaking professionalism for being nice, and it’s not the same thing. We’re winning, we’re just being professional about it. It’s frustrating.
URGA: I pride myself in being professional. I’ll fight you tooth and nail in the courtroom, but if we can’t have a beer afterwards, something’s wrong. In today’s world, I don’t think it’s quite that way anymore. We’re seeing less professionalism among the attorneys and with the courts, even. That doesn’t help the profession. If the judges would start sanctioning attorneys for some of the things they do, that may make a difference.
SILVESTRI: I’ve seen some of the more effective judges starting to do that. In the state and federal court, they’re admonishing people. It’s also a bigger group. There’s more lawyers. There’s probably less control over how they’re trained and there’s more lawyers who come in from out-of-state. You can sit in court and almost identify, as you’re watching people argue, which lawyer is from Nevada and has been here a long time and which lawyer is here on a one-time case from some other state.
DUANE FRIZELL: I noticed that the judges that are more willing to hold the counsels to be respectful get a better result. It would be great if the judges could continue to set the example, not only in terms of the rules and applying them, but in the courtroom when they make their rulings, the way they treat counsel, the way they treat the witnesses. That sets a tone in the courtroom.
JOHN STEFFEN: I think we’re all aware how people view our reputation. National polls show that lawyers are some of the most despised people on Earth. I think that we all try to do a better job to make sure when we counsel clients that we’re not overselling, that we’re realistic in what the outcome will be and what it will cost. All of us here much prefer when we see that we’re dealing with an opposing counsel that’s experienced versus a young litigator that’s just trying to make a name for himself. It comes down to training and having more integrity in how we teach and help inspire young lawyers.
FEDER: I talk to young lawyers all the time and a comment I make to them is, “All you have is your reputation.” At times, you might have a client that is pushing you. They have to understand that you practice here everyday and you have to maintain that [reputation]. Some of the younger attorneys have a privileged perspective; they think because they went to law school, they know it all. You have to bring them down to reality.
How have generational issues factored in?
SHAVINSKY: There is an increasing number of people who, for whatever reason, may not want to put the amount of work in [traditionally expected of lawyers]. I’ve noticed that doesn’t mean they’re not smart. It doesn’t mean that they don’t want to work hard and put out a good work product. They just don’t want the lifestyle that they perceive a lot of the partners having. Part of what’s resulted for all of us is we have to come up with more flexible ways to accommodate someone who is a good lawyer, great with people, can do good work, but doesn’t want to have to put in the time over seven to 10 years to generate the kind of business to become a partner in a firm.
FEDER: Not everyone wants to be a partner or shareholder member of the firms. People just want to continue working, so they know that expectation from the get go. Some people don’t have the gift of gab. They can’t just go out and take control of a room, but they can garner business by their work product, for the stuff they put together and how well they do. They can start garnering business off of that.
ANTHONY MARTIN: You have to have some form of professional development and inclusion program that allows you to be adaptive and flexible in how you manage the expectations of your attorneys. You don’t have to be stuck to your desk with a library that doesn’t really exist anymore, except for in the cloud, to be able to do your job as an attorney effectively, especially when your clients expect you to be plugged 24 hours a day, seven days a week. You have to have that flexibility. We just hired an of counsel, and there is a business plan before they walk in the door that says this is what we expect of you. Be very proactive, but also be inclusive and communicative so they meet your expectations. It’s not as easy as you need to bill 2,000 hours a year and we’re just going to let you get there. It’s giving them the tools to a professional development program. Also, recruiting people from atypical places so you have a much more diverse workforce when it comes to demographics. That’s part of the problem with law firms. They keep going to the same well instead of expanding that pool.
URGA: I understand that the younger people want to have more time out doing other things, but we’re professionals. You’re supposed to do the best you can for your client. If that takes more than eight hours, you better do it. Otherwise, you’re not doing what you’ve taken an oath to do. The oath is to represent your client to the best of your ability, and your ability doesn’t always run nine to five.
SILVESTRI: The challenge is, where I was a young lawyer, we sat at our desks. You got there at seven in the morning and you stayed there because there was no other way to get your work done. Now we have to work with younger lawyers and acknowledge that they can sit at home on their laptop from eight in the morning until noon, come in and work maybe from noon to six, then go home, have dinner with their families, pick up their laptop and work again. As long as the work’s done and the client’s happy, that’s okay.
How do you manage client expectations?
MARTIN: Technology allows you to be plugged wherever you are in the world. In the new normal, it’s instant gratification. It’s training, not only the new generation to meet that expectation, but training us as leaders for succession planning. To understand that, we have to allow flexibility to occur because not every client works nine to five. You have to be available all the time, effectively.
SHAVINSKY: The challenge with getting back to your clients immediately, you start typing out a response that you think is well-versed and incorporates the answers that they want, and you go back and read it and say, “You know, I need to think about this.” If I don’t go back and redo this email or at least try to flush these issues out, I’m going to give them bad advice and that’s a bigger disservice than not getting back to them in half an hour. They need an immediate response, but they also don’t need the wrong information. It’s a very difficult judgment call to figure out when to do that and when not to do that. I know we’ve all sent emails we wish we could take back because it wasn’t exactly what we meant to say in the spur of the moment to try and get back to somebody.
FRIZELL: Managing expectations is a big part of our practice in terms of having an open conversation [with clients]. From the very beginning, I like to sit down with my clients and say, “We want to provide you the best service. I know that you want immediate responses, but you have to understand that sometimes I’m going to be in court or in deposition, meaning I’m not going to be able to meet with you right then. I am going to take your email, your text message, your voicemail and I’m going to get back to you as soon as I can, but I want to have a very good conversation when we do.” Helping to manage expectations helps them feel that, yes, they are being validated that they’re important, but at the same time understanding that you have limitations.
How have your fee structures changed?
SILVESTRI: You can get clients to agree to a flat fee structure, or you can find some alternative fee structure that they understand what the cost is going to be and we don’t have to itemize everything we do, but those are pretty hard to put together.
URGA: One of the frustrating things is, if I’m talking to one of my partners or an associate, you can only bill for one attorney. It makes it artificial because you’re still going to talk to that attorney because that attorney is the one who’s done the research or has had a case similar to that. It’s becoming much more difficult for my practice to keep track of all the costs. Plus, you’ve got in-house counsel for all these companies that look at everything. I mean everything. So you’re dealing with a different world. Lawyers now, with format billing, are having to spell out everything.
MARTIN: We have a pricing committee that forms these types of AFAs (alternative fee structures) for companies that we work with, but we still are required to itemize everything we do for purposes of justifying the bill if we seek a fee award, or something of that nature, in court. We wish it was as simple as the flat rate. We could just go ahead and say it’s $3,000 for a statement of position. That’s a standard flat fee commoditization of a particular task, but not every task can be commoditized. Some things do require hourly thinking and hourly analysis.
WAITE: There’s been a lot of discussion over recent years about alternative billing tools and mechanisms and the death of the billable hour. Maybe the commoditization of routine, repetitive work, you might be able to structure a flat fee that’s a win-win situation, but many of us here are litigators. I don’t know what your experience is, but mine is that it’s extremely difficult to be predictive of what’s going to happen in litigation. What you do when a client is asking for some sort of a fee is you have to estimate on the high side. Then you risk pricing yourself out of the market. It just doesn’t work.
How has the Court of Appeals affected the industry?
STEFFAN: Our appellate partner said that it’s a game changer. What used to take two or three years with the Supreme Court, he just got his first decision back in six months from the time he filed his opening briefs. Clients are now a lot more apt to use that vehicle, file appeals and take that risk, when they know that it’s timely.
MOWBRAY: I’ve got this report for the latter six months of last year. It’s a push down model. You still file like the old way, then the [Supreme Court] decides what is going to go down to the Court of Appeals. They were assigned 500 cases and disposed 304, which is a disposition rate of 61 percent. That’s pretty good. With only being operational for six months, the number of pending appeals with the court, as a whole, went from 1,985 down to 1,739, a decrease of more than 12 percent.
SILVESTRI: It’s helping the Supreme Court get its backlog down and it’s getting cases adjudicated through the Supreme Court more quickly as well.
URGA: They started with the Appellate Court having a very limited number of things they could really hear. I have a feeling after about a year they’re going to start pushing more of them down.
WAITE: One of my partners said the Supreme Court is still very much crushed, but what this has demonstrated is that a panel of three judges can very effectively handle 500 to 600 cases a year. The next step is if a panel of three can handle 500 to 600 cases a year, a panel of six can handle twice as much. That’s probably what’s coming next.