In This Issue

Did You Know?

Chambers USA 2008 has named Susman Godfrey L.L.P. and eight of its Texas lawyers as leaders in their field.The results:

Litigation: General Commercial

Susman Godfrey, Lee Godfrey, and Steve Susman (Band 1)

Your Editor, Neal Manne, and Mark Wawro (Band 2)

Kenneth Marks (Band 3)

Litigation: Securities

Terry Oxford and Kenneth Marks (Band 2)

Antitrust

Susman Godfrey, Lee Godfrey, and Steve Susman (Band 1)

Your Editor (Band 2)

Harry Susman (Band 3)

So now you know.

Don't Try this at Work.

Your Editor recently got an email about lawyer marketing. It included an article that promised help on getting "'top dollar' for your work", avoiding "under pricing yourself", and overcoming the fear of "rais[ing] your fees".

Hmmm. But as I skimmed down the html page, alarm bells started going off. For under the rubric of "The Market Method of Pricing", the author offered these suggestions (with bold emphasis mine):

[The market method] is a good way of determining pricing. Get your assistant to support you in this task and spend time discovering what the range of pricing is in the community.

Have your assistant do a "mystery shopper" study by calling around as if he/she were a potential client. Find out what your competitors say on the phone around pricing. Your assistant may need to call from his/her home phone to avoid caller ID. As another option, you could have him/her call other legal assistants or paralegals at your competitors' firms and offer to exchange your fees for their fees -- or you could do that yourself with other lawyers in your market.

If you really want to get into it and have maximum data, write to a few dozen competitors in your market-place and say you are doing a fee survey. Explain that if they would send you their fee list, you will create a composite list that does not identify those responding and send them a copy of the results. To keep it simple for them, include a stamped, self-addressed envelope with a list of the most common services offered in your practice area.

Remember that in general it is not a good practice strategy to compete on price. Most potential clients will see pricing that is too low as a signal that there is something missing either from the service, the provider, or the firm. And people who are looking for a low price will follow that low price wherever they can find it rather than becoming long-term clients. So be sure that your price covers your costs and a reasonable profit margin.

I doubt the marketing guru intended any-thing untoward. And unless the surveying activity results in an agreement among competitors to fix, maintain, or stabilize prices, nothing illegal may have happened. But systematically collecting and sharing competitors' pricing data can lead to just such a thing.

Which section 1 of the Sherman Act forbids. And we wouldn't want that.

Hot Lunch.

Your Editor hears and reads a lot about meritless lawsuits. I wonder what the speakers and writers mean by that.

The word can't signify only that the lawsuit-bringer loses. Tons of stuff can bring defeat: Lack of jurisdiction, suing too late, suing too early, sanctions for discovery abuse, failure to meet deadlines, estoppel, issue and claim preclusion, volenti non fit injuria, running out of money for fees and expenses, and a thousand other shocks that claims are heir to.

Nor does meritless imply a trouncing on the merits. We have gobs of procedural hurdles that aim to balance our desire to correct wrongdoing against the risk of collateral consequences. Fraud pleadings thus must allege deceit with particularity; after Twombly's horror of discovery, averments must (sometimes) meet a (vague) plausibility test; and certain types of claims have to satisfy a clear and convincing standard of proof.

So what does meritless mean. Probably just this: that the lawsuit, or its handling, failed any of the multivarious challenges that our system puts in its way.

A random day in May reminded me of how seldom a jury, instead of a judge, passes judgment on whether the lawsuit has merit . The 13 federal courts of appeals published eight opinions in regular civil cases. One reversed denial of a motion to vacate a default judgment; another overturned a refusal to allow intervention; three upheld summary judgments; one affirmed a dismissal for failure to state a claim; and one okayed a judgment on the pleadings.

The eighth case went to trial. A jury rendered a verdict. The district court entered judgment on it. But then the court of appeals reversed and remanded for entry of judgment contrary to the verdict.

I guess that one was meritless, too.

How the Federal Courts Got Their Inefficiency.

Rudyard Kipling (1865-1936).

Kipling's Just So Stories (1902) include the marvelous one about "The Elephant's Child". It tells how the elephant got its trunk.

In what manner did he obtain it. Kipling tells us that, because of Elephant Child's "'satiable curiosity", he wanted to know what Crocodile eats for dinner. Questing for and then finding the object of his interest, he believes Crocodile's promise to whisper the answer and leans close to hear.

But Crocodile means to devour him and so clamps toothy jaws on Elephant Child's diminutive proboscis. Elephant Child tries to pull away, and soon his friend the Bi-Coloured-Python-Rock-Snake coils around his back legs and commences a-pulling too. The double-teaming works, separating Elephant Child from hungry Crocodile, but not before stretching the pachydermous pug to five feet and more.

If we stop here, we would think that Kipling intended a cautionary tale about nosiness. But the author of The Jungle Book, If--, and Kim meant no such thing. His tale instead goes on to demonstrate how useful the accidental product of 'satiable curiosity became to Elephant Child and his posterity.

"That may all seem well and good to you, Mr. Editor," we hear you say, "but what does that have to do with the judiciary and its acquisition of inefficiency. Please, good sir, do get to the point. And do it efficiently, mind!"

We shall endeavor to start doing so now.

In 1905 -- his "miracle year" -- a Kipling contemporary, physicist Albert Einstein (1879-1955), wrote four path-breaking papers. One of them revealed his special theory of relativity . In it, he disclosed that electromagnetic waves, including light, always travel at a constant speed -- about 186,000 miles per second -- but that our observation of them depends on our movement relative to their source.

Got that?

Your Editor confesses a sensation of doubt. Big time.

But I feel more confident that our current subject -- the efficiency vel non of federal courts -- depends ever so much on the judiciary's perception of case velocity relative to some reference point. Huh.

Consider that federal judges hold Vast Power. They display a great deal of Independence. And, with few exceptions, they enjoy Near Invisibility outside the courtroom.

All of which leaves Their Honors with tremendous discretionary influence over their dockets. They can move the cases or not move them, push them fast or slow them down, work them hard or hardly at all.

Your Editor hypothesizes that how quickly judges choose to dispatch their dockets depends on whether they look at cases as moving towards trial too fast, too slow, or at just the right speed.

Next time, I'll attempt an approximation of which view predominates in 2008 -- and, more important perhaps, why.

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ALI Tables Vote on Aggregate Settlement Rules.

The ALI held its annual meeting in our nation's capital this year.

Remember that 1L who talked in class all the time? The one whose hand shot up even if the prof hadn't asked a question? The gunner who made you wish Socrates kept his method to himself?

Every law school section had an individual like that. If you ever wondered where they all went, speculate no more. They joined the American Law Institute.  And they have gathered at The Mayflower -- the sometime home-away-from-home of a law classmate, Eliot Spitzer, and until Wednesday the temporary headquarters of law geekdom.

(Note the they.)

The session on May 19 devoted several hours to chapters 1 and 3 in Principles of the Law of Aggregate Litigation, Tentative Draft No. 1 (Apr. 7, 2008). Members aimed comments, criticisms, and a few barbs at the Reporter and Associate Reporters, who handled them in good cheer. The discussion produced several revisions and clarifications. It also resulted -- with a big exception -- in consensus approval of both chapters.

The sections dealing with aggregate settlements -- 3.17, 3.18, and 3.19 -- failed to gain general acceptance. At the suggestion of ALI's Director, Lance Liebman, they didn't go up for a vote. The reporters will instead revisit the provisions and present them again at the next annual meeting in 2009.

Sections 3.17-3.19 would make a major change to what people call the "aggregate settlement rule". The ASR in general invalidates an agreement by multiple clients to abide by a majority vote on accepting an aggregate settlement. Section 3.17(b)-(d) would reverse the ASR, allowing enforcement of such agreements if the joint clients knowingly consent, in writing, to an approval mechanism by a "substantial majority" of the clients.

The consensus broke down over concern that the new rule would cede undue authority to mass tort lawyers. Some commenters suggested support for the rule in the context of business litigants but worried that many personal injury claimants lack enough information and sophistication to give effective consent at the time of hiring counsel. A third group supported the rule as an improvement over the ASR, which now impels plaintiffs' lawyers to abandon representation of clients who refuse to take their share of an aggregate settlement (think fen-phen and Vioxx as examples).

Your Editor can't predict how the reporters will navigate the fault lines within the ALI, but two options look possible if not likely: First, they will build even more client protections into Sections 3.17-3.19 and, second, they will scale back their ambitions -- for now -- and deal only with classes of clients that satisfy a test for sophistication.

The latter strikes me as a prudent incremental step towards a better regime for handling settlements in aggregate litigation. If experience proves it good, the ALI and courts may extend it to other situations.

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Banishing Jury Trial -- Update.

Judge Chamberlain Haller (Fred Gwynne) put the parties to jury trial in My Cousin Vinny (1992).

In February 2007, Your Editor reported a steep decline in Texas state court jury trials in civil cases. In 1996, district court juries rendered 2,971 verdicts but only 1,428 during 2006 -- a drop of 52 percent. District judges also directed verdicts 253 times in 1996 but 473 times in 2006 -- an increase of 87 percent.

I wondered whether the trend continued after 2006. Let's look at the results.

According to The Texas Office of Court Administration, juries decided 1,643 district court cases in 2007, and district judges directed verdicts in 384. The performance improved the decline in jury verdicts to less than 45 percent from 1996 and the jump in directed verdicts to below 52 percent.

Will the trends towards more jury trials and fewer directed verdicts continue in 2008. The statistics through April 2008 give good news and bad. The 459 jury verdicts in the first four months translate into 1,377 for the full year -- raising the drop-off from 1996 to 53.6 percent -- but the directed verdicts so far (103) equal 309 for all of 2008 -- a rise of only 22 percent versus 1996.

Note that a fall-off in caseloads cannot account for the trend. In 1996, pending district court cases (including criminal matters) totaled a bit more than 700,000. By 2006, the number had grown to more than 900,000 and in 2007 to about 950,000. We should have more jury trials now rather than fewer.

The overall results suggest that trial by jury in civil cases remains under pressure if not in danger of extinction.

Section 12 of the Texas Constitution provides that "[t]he right of trial by jury shall remain inviolate. The Legislature shall pass such laws as may be needed to regulate the same, and to maintain its purity and efficiency."

What happened?

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