Legal Commentary

What Do Clients Pay For Certainty? Is It Worth It?

By Patrick J. Lamb

When  speak before groups that include in-house lawyers or business people, I always ask at what level of certainty business decisions are made.  The answers tend to range from 40% to 60%.  There have been lower numbers, but I can't recall any that were higher.  A high degree of certainty is a luxury most business people don't enjoy.  I always follow-up by asking what degree of certainty outside counsel operate at.  Interestingly, the most frequent numbers from both outside lawyers and inside lawyers is 90% or 95%.

I won't go into an analysis of the personality traits that drive lawyers to this level of certainty.  They have been discussed elsewhere and often.  The question that nags me, however, is why clients tolerate the lawyers spending time and treasury to achieve that level of certainty.  Certainly it is appropriate on some matters.  But on most ordinary, day-to-day matters, why not operate at the same level of certainty as the business does normally?  And the corollary is how much extra has to be invested to get from 60% certainty to 90%? 

I wish there was data on this later point, because my suspicion is that the data would show the a disproportionate share of the cost comes in the effort to move from 60% northward.  In other words, it sure seems that the cost per unit of certainty increases as the level of certainty increases.

If my surmise on cost is correct even most of the time (exceptions to every rule), and businesses are happy with decisions made on a 60% level of certainty, the excess cost being paid is substantial, albeit unquantified.  So if an inside lawyer wants to have her outside counsel operate at a lower level of certainty, how is that accomplished?  There is, of course, a trust issue.  Inside counsel will have to acknowledge that some key facts might not be learned if depositions or document review are limited.  Likewise, if the chance of summary judgment is 25%, some summary judgments that would be won won't be.  The key, it seems to me, will not be persuading inside counsel to run these risks.  Instead, the key will be getting everyone on board as to what will be done and what will not be done.  After a few cases, these meetings should hopefully become routine. 

The specter of having to invest time to save it may prove an impediment to change.  But given the magnitude of savings that could be realized with this kind of change, perhaps it is worth it.

Full post as published by In Search of Perfect Client Service on September 02, 2009 (boomark / email).