Risk Update

Financial Risk and Related — Firm Ditches Verein Pain in Pursuit of Profit, Lawyer Time Entry Swaps Spark Stayed Suspension, Federal Judge Seeks Details on Litigation Funders

Posted Dan Bressler

“DLA Piper to Ax Verein Structure in Play to Boost Profits” —

  • “DLA plans to dissolve its verein, a structure used by some law firms to connect loose networks of affiliates with separate profits pools operating under the same brand, its leaders said Thursday. A new global holding company will oversee two partnerships: DLA Piper US and DLA Piper International.”
  • “‘We’ve never had a single leadership team that together drives the strategic direction of the firm,’ said Frank Ryan, the New York lawyer who will serve as the firm’s chair and global co-CEO, alongside London-based Charles Severs. ‘So now we’re going to be looking at the best opportunities for the firm and lawyers in the firm in unified fashion, as opposed to one group is looking after its own or the other after itself,’ Ryan said.”
  • “Another imperative is to drive profitability in both partnerships of the new company, Ryan and Severs said. The firm is looking to competing with elite law firms for top tier talent and has already made in-roads picking up key hires from Wachtell Lipton Rosen & Katz, Kirkland & Ellis, and Akin Gump Strauss Hauer & Feld.”
  • “‘Some of that profitability will and can be shared, but not all,’ Severs said of the US and international operations, citing regulatory, tax, and other hurdles.”
  • “The change will give DLA Piper a unified global strategy at a time when it is vital for firms to have deep benches of lawyers in critically important markets across the globe, according to Ryan. ‘It’s almost like the world is coming to us right now as there’s more and more pressure on globalization,’ Ryan said.”
  • “The verein structure offers some benefits, but its not the best option for firms looking to compete globally for the best talent in the most important markets, said Mark Jungers, chief strategy officer of global recruitment firm Centerpeak LLC.”
  • “‘There are currently and will be in the future, winners and losers for the battle for talent and the battle for the best work and this enables them to compete more effectively for those two things,’ Jungers said.”
  • “Those hires ‘are just a symptom of what we’re going to do,’ Severs said. ‘It’s the beginning of our ability to attract talent on a global basis—a truly global basis—and we just have not done enough of that before,’ he said.”

“Florida Federal Judge Seeks to Unmask Funders Behind Her Cases” —

  • “A recently-appointed federal judge in Florida wants to know if outside funders are backing cases in her court.”
  • “Judge Anne-Leigh Gaylord Moe earlier this month began instructing parties to name any outside funders involved in the cases and state whether their approval is necessary for litigation or settlement decisions. Moe also wants to know if any funders or related entities are affiliated with foreign governments.”
  • “‘Sanctions including dismissal of the action, entry of a default, or monetary sanctions may be entered against a non-compliant party or counsel,’ Moe wrote.”
  • Full text of order: here.

David Kluft asks: “Can I swap time entries with other billers so we all meet our daily quotas?” —

  • “A CO lawyer worked at a firm with daily billable hours requirements for legal staff. In at least one instance, in order to meet the requirements, he ‘swapped’ billable hours with a legal intern who had a lower billing rate, resulting in a .1 hour change in the amount the lawyer billed that day.”
  • “The lawyer received a stayed suspension for this violation of rule 8.4(c) (deceptive conduct) and other misconduct, including client neglect and negligent misuse.”
  • Ruling: here.