Pre-Emptive Lawyering: What’s the Incentive?

Many lawyers entered the profession because of a desire to do good, to help people, to support the rule of law. That’s their motivation.

Once in the workplace, though, their primary incentive is the need to make a living. That space between motive and incentive can create some cognitive dissonance for those lawyers who can’t take on the cases they’d like to tackle, particularly if it’s a question of the would-be client’s inability to pay; or the fear that the return would not justify the investment of the lawyer’s time.

Richard Susskind, in a paper prepared for the CBA’s Legal Futures Initiative, suggests that you can change behaviour by changing the incentive.

One commenter on the Futures website echoes the suggestion that a change in approach is what’s needed.

“We need to be proactive versus reactive – develop our role not as the problem solver once the problem has developed, but by developing pre-emptive strategies. The more information and knowledge we can provide at an earlier stage to people who are just starting to encounter difficulties which could easily escalate, the more we can help reduce or avert the conflict or ensure it does not escalate.”

Susskind suggests that just as preventative medicine can keep incipient health problems from becoming serious, preventative lawyering could keep disputes, if they can’t be avoided altogether, from gaining traction. “The aim here is to discourage disagreements from spiralling and mushrooming, unnecessarily and destructively,” says Susskind.

But he adds, “if lawyers charge by the hour, then it can assuredly be in their interests to prolong rather than pre-empt a dispute.”

The clash between motivation and incentive needn’t make your head explode. Another background paper for the Futures project discussed new business models – including an online dispute resolution system called CyberSettle that is the brainchild of former trial lawyer Charles Bronfman. Clients enter their demands and offers for settlement, and the claim instantly settles when the offer is greater than or equal to the opposing party’s demands. Cybersettle also offers telephone facilitators who can help finalize a settlement. Over the past 10 years CyberSettle has handled more than 200,000 transactions and facilitated more than $1.6 billion in settlements.

CyberSettle isn’t appropriate for every case, but it’s an example of how changing the incentive can change the behaviour – and serve, perhaps, the motivation.

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Comments

  1. Some would say that the work of the solicitor, the transactional lawyer, the estate lawyer – probably most of the lawyers in the country aren’t litigators – is mainly ‘preventive’ lawyering, where the focus of their work is not disputes but legal ordering, problem-solving. Access to this kind of legal advice is also access to justice.

    Cybersettle is a good model for disputes that are only about money. Money disputes can always be sawed off for some amount. It’s when the parties want to be heard as well as paid, or even more than being paid, that the machine-mediated solution doesn’t work.

  2. David Cheifetz

    Two points:

    1. To the CBA Futures writer(s)

    But [Susskind] he adds, “if lawyers charge by the hour, then it can assuredly be in their interests to prolong rather than pre-empt a dispute.”

    If you’re citing this as truth, without emphasizing “can be” and without context, you’ve either never practised or forgotten a few very important points.

    In my experience, and I suspect the experience of most lawyers, the fraud Susskind refers to – that’s what it is – rarely happens. Where it does (if it does) it’s due to dishonesty or incompetence. I’m going to guess it’s more the last, which means it’s not intentional.

    I’m not suggesting there aren’t instances where more work is done thant needed to be done – whether by one lawyer or a team – but that’s not to prolong the file. In fact, in many instances it’s to the lawyers’ – but not the clients’ – advantage to do work at the front end of the file because, if the file settles, the work isn’t needed.

    Apart from all of that, Susskind’s statement is true if and only if the lawyer doesn’t have enough other equally or more lucrative work to fill his or her day. If you need that explained, you shouldn’t be writing. The corollary, by the way, is that expertise is not good for profit if one doesn’t have that amount of work or can’t set one’s own rates.

    And, in all of the common law jurisdictions in Canada – I’ve just realized if I ever knew for Quebec, I’ve forgotten, the client has the ability to get the bill reviewed by a court officer. It’s easy enough to tell when a lawyer has put his or her interests ahead of the clients by churning.

    Referring just to Ontario, there’s a good sized handful of lawyers who make a good living by (almost) specializing in assessing lawyer’s accounts. It’s almost a given that, at least at the lower end, the effective cost of winning, to the lawyer whose bill is being assessed, is about what it will cost to settle early on.

    2. John – it’s my experience that most disputes which financially justify lawyers becoming involved aren’t just about money, whatever “just about money” might mean where that is true. That’s even truer where there are institutional litigants.

  3. Gary Luftspring

    David I think the point by Richard Susskind and the writer is more subtle. I agree with you the incidence of fraud or dishonesty in docketing is in my experience relatively low (in fact those of us in management often have to lecture lawyers on their failure to docket their time) however the incentive to be efficient is non-existent. I have seen many examples over the years of work not being allocated effectively and of files not being managed correctly. Whether the billable hour encourages such behaviour or simply does not discourage it is debateable but in my experience the behaviour is common.

  4. Gary,

    “I have seen many examples over the years of work not being allocated effectively and of files not being managed correctly.”

    I agree that’s far more endemic than it should be. But I believe it’s usually a competence issue not a dishonesty issue.

    Knowing one’s subject better will lead to efficiency if one is honest. Many of us want to know our subject better because we believe that’s the right thing to do, not merely because of a CLE requirement. To make the claim that Susskind and the CBA Futures group have made amounts to asserting all of us are dishonest or incompetent or both.

    I’m probably at the far right of the Bell curve scale when it comes to cynicism but even I’m not prepared to claim that dishonesty is the natural condition of the legal profession. That, though, is the essence of the Susskind / CBA Futures claim, if the latter’s recap is accurate.

    It’s ironical that the claim is entirely inconsistent with the sentence that begins the CBA Future’s piece.

    “Many lawyers entered the profession because of a desire to do good, to help people, to support the rule of law. That’s their motivation.”

    Cheers,

    David

  5. In theory, an emiprical study would be easy enough to formulate, if perhaps difficult to accomplish in practice.

    If you could measure the time a flat rate or contingency biller spent on an average file versus the amount of time an hourly biller spent, and then correct the data to account for frequency and degree of success, you could test the hypothesis that hourly billing incentivizes ineffeciency.

    This might be easiest to do in a field like employee side wrongful dismissal, where many lawyers are willing to work on either an hourly or a contingency basis, depending on client preference. The challenge might be getting lawyers to accurately measure their time when working on a flat or contingency basis.

  6. Gary Luftspring

    Robert, firms are doing that kind of study all the time. Many firms that do fixed fee work still docket to the file and then measure the result. This then leads to changes as to how that work can be done more efficiently. They invariably find that they get better at it. They also in my experience find that work is more properly allocated. David we will have to agree to disagree. I actually think what you are calling is dishonesty is simply mismanagement. If you incentivize something people naturally perform in a particular way. Perhaps the middle ground is that by incentivizing time you disincentivize efficiency. I have seen time and again inefficiency because lawyers simply say it doesn’t matter. I dare say no one can argue that in any firm on many files work is not allocated on the basis of the best person in a group to do it. There are many many human factors that affect allocation. I am prepared to say that the need to utilize one’s time is one of them. Is that dishonesty?

  7. Gary, thank you for your comment, and I completely agree with your suggestion that you can behave honestly while still reacting to incentives.

    Are you aware if any academic study has been done with this data you describe? If not, it is encouraging to know that the raw info needed for such a study may already have been collected.

    I would be surprised if it is ultimately shown that billing method had no impact on time taken per file.