Littles management series: Loss leading in the law is – you guessed it – a loser

Peter Little

Founder. Director. Accredited Specialist

If you ever watched the ABC show “The Checkout”, consider this blog a bit like its #ifIcouldsayonething segment.

I’ve worked in personal injury law for more than three decades now as a solicitor, partner, legal practitioner director and CEO, and now plain old board member. Over that period, I’ve seen some of the most heartbreaking situations you can imagine. I have had the privilege of helping many clients in these situations get the justice they deserve. However, equally, there have been many that I’ve been unable to help, because running their claim is not in the best interests of them, myself or the firm (even if they might have had a resounding win in the Court of Public Opinion).

If this sounds cold-hearted, it is not. Every good lawyer must know that taking on a client whose claim has low prospects of success – whatever your motivations – hurts no one more than the client themselves.

Most of us become lawyers with the aim of helping people. I certainly did. However, as a lawyer, you often have to be the person to tell someone that the help that they are seeking is simply not going to come from the law. They are in a room with one door, and you are the person tasked with showing them the exit. This is a fundamental skill lawyers must possess, and not one exclusive to PI.

There are a number of reasons why lawyers may be inclined to ignore this rule.

#1 When you are running a legal business and times are tough, or you’re trying to grow your practice, the temptation is to take on all comers, that “beggars can’t be choosers”, that a bad file is better than none.

#2 You may not want to offend prospective clients or referrers, particularly if they come to you in difficult or sad circumstances and look to you for answers.

#3 You buy an entire practice even though you only want certain files.

#4 A case that appeared strong has turned bad.

These are pitfalls that often capture less experienced lawyers who

aren’t yet skilled in the art of managing client expectations (universities, please take note)
don’t look at the business side of running a practice (translation: it costs money to run a law firm. You can’t help people if the coffers are bare)
can’t see the legal hurdles ahead, and/or
are ego driven and think that they’ll run the file to “teach the other side a lesson”. Let me assure you that the lesson will be learned by you, and it will be unpleasant. I believe in boxing they call it ‘rope-a-dope’.

#5 Five is a bit different. For some firms, taking on all cases is an intentional part of the business strategy – to put it simply, they run on large volumes. Now, these firms market themselves as champions of the little guy. However, what you don’t hear when you’re signing on is that your claim will be run by paralegals; it will likely be disposed of as part of an afternoon settlement ‘job lot’; and the end result will be a lot different to the fairytale that was spun when you signed your costs agreement.

So what are the consequences of taking on – or continuing to run – a bad case?

#1 For the client: they spend money they don’t need to spend, and most likely couldn’t afford to part with in the first place. You give them false hope, lead them down the garden path, and make a bad situation worse. At best, you’ve left them upset. At worst, you’ll leave them looking for a new lawyer to run their professional negligence claim.

#2 For you and the firm: You take a reputational hit, you spend time and effort on a case that’s not going anywhere, at the expense of progressing matters that will, and – of course – you will eventually run out of money. Say you take on three files. Two of them are sure-fire winners every day of the week. One of them is not. This is the one that will see you at the door of the court, instituting proceedings, and in a tense meeting with your client explaining that the result is not going to be a good one. The time, effort and expense involved has obviated the other two cases. If you do this too many times, you don’t need to be a mathematician to work out the outcome.

To wrap up, keep these key rules in mind if you want to maintain discipline around file acquisition:

#1 Everything comes back to client care. What is in the best interests of the client?

#2 Run quality cases, and put them in the hands of high quality lawyers who know what they are doing.

#3 If a strong file has turned bad, ensure your client has all the facts, act quickly to help them find a suitable exit and protect them from an adverse costs order.

#4 Park your ego at the door. Confidence is a great thing, hubris is not.

#5 Follow your firm’s business rules. Every law firm has (or should have) a business model and a risk profile that in turn manifests in many systems, processes and business rules, at the end of which every person in the joint should know whether you should act in a given matter or not. Firms that loss lead are often those that don’t have a clear, promulgated, entrenched set of business rules, or, if they do – where their lawyers do what they want with insouciant indifference to those rules (see #4 above).