A bit ago here in New York a dinner was held with the legendary Ben Heineman (GE SVP/GC from 1987 to 2003, Harvard BA and Yale JD [editor-in-chief of the Yale Law Journal], Rhodes scholar, Potter Stewart clerk) and 50 or so GC’s or senior inhouse counsel from Fortune 500’s.
I wasn’t there, more’s the pity, but what follows is from an impeccable source.
As you can imagine, much of the conversation focused on the GC/law firm relationship. I won’t saddle you with more stress than your day may already hold, but I was told the level of hostility towards outside firms was palpable.
That’s not why I’m writing.
I’m writing to urge you to have spine and backbone when you counsel your clients. Yes, even if it’s an unnatural act to deliver bad news. Particularly if that’s the case.
Why should I need to point that out? Isn’t that your job and much more than your job—your solemn professional obligation? I would have imagined and so, I hope, would many of you, Dear Readers, assume that to be the case. The sun rises in the east, we breathe oxygen, etc., and we advise our clients with the “punctilio of an honor the most sensitive.” (Go ahead, read the whole thing: Meinhard v Salmon, 164 N.E. 545 (N.Y. 1928) (Cardozo, J.))
It gives me no pleasure to continue, but the story I’m about to relate concerns a Fortune 10 corporation and at least three different n AmLaw 15 firms.
Bruce,
As always, thanks for sharing. Too bad in the examples above there was significant costs that made this a pricey lesson for the client.
One way to avoid this is to get the gulliable and guitly to revealing themselves early on in the process when the stakes a lower in order to avoid “finding out” when the stakes are greater.
Freakonomics dealt with it in the Van Halen rock band rider example. By finding out if there was No Brown M&M’s (contract rider – low cost stakes), it signalled to the band if the promoter even read the contract that involved technical requirements for pyrotechnics (high cost stakes).
http://www.wsj.com/articles/how-to-trick-the-guilty-and-gullible-into-revealing-themselves-1399680248
Another example is one where a bank CEO takes the hiring prospect for a high level position to an interview over a restaurant meal. The CEO calls the day prior to the interview and says to the wait staff, “I want you to mess up the interviewee’s order. I’ll tip you well, no matter what.” Here the bank CEO sees how the interviewee handles others when mistakes are made, or even if acknowledged. (I can’t find the link to this.)
Short answer – creating low cost stakes events singals how high cost stake situations pan out.
JC,
What happens if one turns the lens around and asks what could be done to limit the risk of this sort of behavior within the law firm? How does one establish and maintain the “punctilio of an honor the most sensitive?” Is it entirely an issue of individual initiative, or is it a learned behavior? What are our associates learning were we to be behave in such ways, and what might they learn if we were to behave differently?
Mark –
Thanks for the feedback.
I’ll say that the issues will not be addressed by the firms themselves unless they first acknowledge there is a problem/situation. Many firms don’t even think this is an issue. This is a major theme in many throughout the Adam Smith Esq blog posts, including this one.
Bruce does offer one way to make sure the firm knows it is a problem. At the end of the matter/working relationship – call the firm and make it clear why the client is ending the relationship.
“(I don’t know if he told the firm this or not, but if he’s a typical GC, the firm never actually informed–the phone just never rang again.)”
The hardest thing to hear is the silence of those who matter.