Immigration Insider

Workforce Compliance: Outside Counsel vs. Outside SOLUTION

Counsel to Counsel magazine ran an interesting article in its October 2007 issue entitled "Choosing the Right Outside Counsel"  The article is a helpful analysis of what GCs should look for when reaching outside of their own corporate resources for the solution of a legal matter.

The article begins with an astute analysis of the increasing focus on corporate ethics and the need for transparency.  Among the suggestions the writer mentions to assist in house attorneys in finding outside counsel are networking forums, law firm networks, and, of course...peer review ratings.  (Double disclosure before I continue:  1- Martindale, the benchmark for attorney peer rating co-publishes the magazine along with InsideCounsel; 2- My Martindale A/V rating is a badge I've worn proudly for a decade and half and despite where I'm going today in this article, I still believe Martindale Hubbell to be the single best identifier of excellence in attorneys.)

The article, in and of itself, is great; the underlying premise -- that GCs must go to "outside counsel" for legal solutioning, is what is flawed.  Agreed: the vast majority of corporations are not quite at an aggressive "think outside the box" stage of legal evolution.  Still, the notion that outside law firms are the ONLY option is terribly mistaken.  A new generation of solutions is here for large corporations, and some of the mightiest have been blazing the path toward outside legal solutioning.

Consider James Buda, vice president and general counsel for Caterpillar.  Five years ago, at the 2002 Law Vegas, Mr. Buda met the attorneys of 10 law firms and told them in no undercertain terms that the party was over and the rules were changing.  When Mr. Buda headed Cat's litigation department in the 90's, the company relied on over 400 outside law firms for litigation; he trimmed that down to 20. And these 10 in Vegas were the half which remained after he became GC in January 2002.

You can read the full article here (in fact it is from Corporate Counsel magazine, Inside Counsel's predecessor) but the bottom line is that Mr. Buda totally reinvented Caterpillar's litigation solution to save the company a great deal of money while consolidating control and making the firms accountable for performance via a grading system. 

GCs like Mr. Buda are few and far between and bucking the trend of historical outside firm outsourcing is no small feat.  But in areas LIKE litigation support, intellectual property, contract management and my own area of immigration and labor law compliance, smarter alternatives continue to evolve for folks who, like Mr. Buda, want a better SOLUTION, not just another firm letterhead.

Compliance needs to be integral.  Talk to me and let me show how our solutions can affordably and seamlessly infuse bulletproof workforce compliance into your company.  Think outside the box and your company too can walk the way of the Buda.

2007 in Enforcement: Business in the Bullseye

Back on August 9th, ICE -- U.S. Customs and Immigration and Customs Enforcement -- released a five page memo euphamistacally entitled "Protecting National Security and Upholding Public Safety".  The memo, signed off by Asst. Secretary of Homeland Security Julie L. Myers, attempts to stamp the administration's current employer-sanctions initiative with the seal of "national security" and "Public safety".  Consider the proud list of raids detailed within and see how much safer you feel from Al Qaeda:

-Fresh Del Monte Produce 160 farmer workers rounded up with fake social security and other documents; each faces, according to the memo, up to 15 years imprisonment and a $500,000 fine...roughly one fruit picker's earnings over 112 years the GNP of his village in Sonora (when combined with the next 15 villages in the vicinity.)

-George's Processing Plant- 136 southwest Mississippi chicken-pluckers/gutters/cleaners/packagers.  Of those, one was charged with "being an illegal alien in possession of a firearm".   Sounds like Al Qaeda to me.

I could go on and enumerate the other 10 raids proudly hailed as "protecting our national security" , but it doesn't seem worth the tedious effort:  the dining room wait staff, landscapers, pork processors, sweatshop seamstresses, cleaning crews, hotel maids, etc. which make up the balance of those arrested and placed in criminal proceedings didn't really sound like, uh, terrorists.

Should U.S. immigration laws be enforced?  Absolutely!  Should employers who willfully violate such laws be sanctioned?  By all means.

Should the administration take a deep breath, regroup, and rethink its policy of linking chicken pluckers with national security in its wholly incredulous attempt to justify its heavy-handed intrusion on private sector employers while offering them no viable means of legalizing their workforces, made up of mostly decent foreigners willing to do the work you and I prefer not to do?

I think so.  The whole WMD fiction that got us into Iraq is now hitting even closer to home, and no lawn, hotel room, or unpicked tomato in America will be safe until someone slaps this sadly chaotic administration upside the head with a wake up call for sane solution which doesn't villanize employers of low-skill laborers and the workforces upon which the depend.

The Fear Factor Hits HR

Why, oh why, am I always right?

Like some latter day Nosferatu infused with the wisdom of the immigration elders, I've been calling this whole "Attack on U.S. Employers" deal for about four years...and once again my voice calling in the regulatory wilderness proves prophetic.

The call came yesterday: an old friend/client whom I'd transitioned to U.S. permanent residency several years back was in a panic.  It seems an audit letter requesting an I-9 review of his employer, a substantial South Florida enterprise with several hundred workers, had landed on the boss's desk a few weeks ago and the boss bellowed for the usual suspect: the Director of Human resources...my friend's new position.

"What do we do, Jose?  I've looked through the files and it's a mess!   It was all before I was in the job and most of the I-9s are incomplete or don't have copies of the proof of work.  I already have called in about 50 Latin employees to update their files and bring in their proof of permission to work. You have to help me!"

Here we go again, I thought to myself.  After explaining the concept of "Privacy Act" and advising him to revisit his approach as far as correcting the problematic I-9s, I gave him a few suggestions as to how to assemble the documentation for the site visit...which is tomorrow.  I could hear the gnashing of his teeth as I said goodbye.

They're in big trouble.

Experiencing a bit of a deja vu, I dug deep into my archives and tracked down an email I'd sent my friend's boss about two years ago, advising them that given their industry sector (can't say) and profile, it was essential to conduct an internal I-9 audit to remedy any issues since the company was a prime target for workforce audit.  I read the email history and saw it was my second such email to the company's owner, and that he had responded to neither.

No prophet is welcome in his hometown.  Perhaps those of you reading will heed the Book of Workforce Compliance Revelations and get thee to I-9 Advantage before the fire and brimstone hits your HR team.

Simplifying Workforce Compliance for Inside Counsel

Political tides shift, and the historical benevolence extended to corporate America by Republican administrations has given way to an enforcement-driven policy designed to salvage conservative voter discontent.  The losers, of course, are not just the corporations suddenly facing a barrage of potential fines and sanctions.  Both undocumented AND lawful workers are being caught in the fine bureaucratic net intended to enforce existing -- and often conflicting -- Social Security, labor, and immigration laws.   And while they will not receive much sympathy from either the U.S. government or the public, corporate legal departments are in the front line of the current battle.

The October 2007 issue of Inside Counsel magazine features an excellent discussion of this phenomenon by Charles James, Chevron's General Counsel and Vice President.  Mr. James astutely points out that the days of "innocent until proven guilty" are long past for U.S. companies, and GCs must carefully determine how best to deal with this reality:

"In today’s world, law enforcement personnel expect that a mere government letter questioning company behavior will prompt the company to launch a comprehensive investigation and deliver the results to government enforcers. The government also expects that a company of any significant size will maintain its own internal police force—not just a passive organization that comes when called, but rather one that aggressively patrols, monitors, detects and investigates all aspects of legal compliance."

The question suggests, he says, is clear: "Should corporate legal departments also act as the corporate police or, more politely, the corporate compliance group?"

Mr. James argues that the GC is ill-equipped to serve as that "internal police force", and here's why:

"First and foremost, there’s the question of resources. A corporate compliance scheme that meets current government expectations must involve ongoing monitoring, testing and auditing programs. These activities, which must be integrated into daily business operations, are more in line with what auditors and accountants typically do. If the corporation is going to task its legal department with performing such duties, it must be prepared to provide the expertise and resources necessary and to deploy those resources in a manner that provides a clear line of sight to potential problem areas."

You can read Mr. James' article in its entirety here.  He goes on to explain that in Chevron, they keep compliance distinct from the law function, but acknowledges that there are a number of ways to "skin the cat".

Staying on top of workforce regulatory issues which can damage a company is what I-9 Advantage group does 24/7.  Email me at j.latour@i9advantage.com to see if our version of cat-skinning is what the doctor ordered for your enterprise.

"Astronomical" Bonuses, Marble Lobbies and Other Legal Fictions

The headline with the biggest font on the front page of this morning's WSJ is captioned: "A Stingier Job Market Awaits New Attorneys."  The piece is pretty significant and well researched, attributing the glut in lawyers to a variety of factors. The critical component is demand: more young Americans want to become attorneys in the U.S., and in response more universities opening new law schools, which are big money-makers.  After giving us a couple of colorful examples (including a recent Seton Law grad earning $50K in Manhattan who calls his law degree "a waste"), the article then moves on to discuss the economic climate in the big law firms, concluding that "the prospects for big-firm lawyers are growing richer".  My favorite line in the article:

"While offering robust minimum salaries, those firms are paying astronomical amounts to their stars."

And therein, precisely, lies a key problem afflicting the U.S. legal sector.  I recently wrote the "$1000/hr." attorneys who made ANOTHER cover of the WSJ not too long ago.  In that article, one senior in-house counsel didn't think it unreasonable to pay that kind of money for a true expert.  Perhaps not, but the question for corporate decision-makers responsible for legal budgets is quite simple: "Do I need a megafirm attorney with a megafirm hourly rate to deal with routine legal processes?"  I venture to guess that 95% of the legal work outsourced by the Fortune 500 is neither esoteric nor sufficiently complex to warrant that kind of pricing.  And right there is both the waste and the smug entitlement plaguing our distinguised profession.

The truth is that our culture has taken the vile reality of the Gordon Geckos of law and deified them.  We joke about them, but we sure we like to be in on that joke.  We listen to a pompous Donald Trump as if he actually has something to contribute to our knowledge and his seminars are packed with wannabe billionaires.  We read the articles about the PI attorney with his three jets and think "man, just ONE jet..."

But the truth is obvious to all of us, smacking with resonance of your grandfathers' pragmatic response to this phenomenon:  It's all bullfeathers.

Gordon Gecko was a bad person.  He was a caricature of unethical, ruthless greed gone wild in our culture, the same greed plaguing the legal profession every bit as much as it has Wall Street.   

Ironically, young legal grads like the $50k-per-year Manhattan attorney -- I'm still trying to imagine how he can survive on that in the city -- are the ones graduating with hefty six figure student loans...loans which will increasingly end in default.  For reasons which continue to escape me, we have turned a generation of Mr. Rogers-driven "I am special"/"I can be anything" and somehow left them with the notion that all that adds up to the right to great financial success irrespective of the realities of the economy in which they intend to exist within.  They believe they are immune from market forces.  Moreover, for those of us who became attorneys for reasons beyond our potential income, hearing a new grad call his law degree a "waste" saddens us; the article goes on to mention a Texas law grad oozing with compassion in his criminal practice, saying that it's sad to find himself "thinking it's a great day when a crackhead brings me $500."

Honestly, it just makes me feel old.

Sigh.

We who practice law -- old timers or new grads -- are no more entitled to a fat paycheck than anyone else.  With increased globalization -- hate it or love it -- it is the responsibility of every player in a free market economy to A) Identify his/her part in the marketplace, B) Reconcile their skill set with their areas of personal interest and C) Undertake the training/education/personal growth needed to harmonize A and B and create for themselves a marketable position in the economy which will meet their personal and financial goals, subject to their limitations and strengths.

To paraphrase Jay Foonberg, author of "How to Start and Build a Law Practice": set out to become a rich lawyer, you'll get nowhere fast; set out to become a great lawyer...and you can't help but make a lot of money.  It is innovation, not entitlement, which shall drive the success of tomorrow's "player" attorneys, and the times are indeed "a-changin".

As the Fortune 1000 awaken from their dogmatic slumber and realize that the best interests of their companies are not being met by their current outside counsel, the trend will shift toward more cost-effective legal solutions better integrated into existing internal processes.  Shareholders will applaud, the delivery of legal services will change...

...and that jet you wanted will be available at a very attractive price...

"Astronomical" Bonuses, Marble Lobbies and Other Legal Fictions

The headline with the biggest font on the front page of this morning's WSJ is captioned: "A Stingier Job Market Awaits New Attorneys."  The piece is pretty significant and well researched, attributing the glut in lawyers to a variety of factors. The critical component is demand: more young Americans want to become attorneys in the U.S., and in response more universities opening new law schools, which are big money-makers.  After giving us a couple of colorful examples (including a recent Seton Law grad earning $50K in Manhattan who calls his law degree "a waste"), the article then moves on to discuss the economic climate in the big law firms, concluding that "the prospects for big-firm lawyers are growing richer".  My favorite line in the article:

"While offering robust minimum salaries, those forms are paying astronomical amounts to their stars."

And therein, precisely, lies a key problem afflicting the U.S. legal sector.  I recently wrote the "$1000/hr." attorneys who made ANOTHER cover of the WSJ not too long ago.  In that article, one senior in-house counsel didn't think it unreasonable to pay that kind of money for a true expert.  Perhaps not, but the question for corporate decision-makers responsible for legal budgets is quite simple: "Do I need a megafirm attorney with a megafirm hourly rate to deal with routine legal processes?"  I venture to guess that 95% of the legal work outsourced by the Fortune 500 is neither esoteric nor sufficiently complex to warrant that kind of pricing.  And right there is both the waste and the smug entitlement plaguing our distinguised profession.

The truth is that our culture has taken the vile reality of the Gordon Geckos of law and deified them.  We joke about them, but we sure we like to be in on that joke.  We listen to a pompous Donald Trump as if he actually has something to contribute to our knowledge and his seminars are packed with wannabe billionaires.  We read the articles about the PI attorney with his three jets and think "man, just ONE jet..."

But the truth is obvious to all of us, smacking with resonance of your grandfathers' pragmatic response to this phenomenon:  It's all bullfeathers.

Gordon Gecko was a bad person.  He was a caricature of unethical, ruthless greed gone wild in our culture, the same greed plaguing the legal profession every bit as much as it has Wall Street.   

Ironically, young legal grads like the $50k-per-year Manhattan attorney -- I'm still trying to imagine how he can survive on that in the city -- are the ones graduating with hefty six figure student loans...loans which will increasingly end in default.  For reasons which continue to escape me, we have turned a generation of Mr. Rogers-driven "I am special"/"I can be anything" and somehow left them with the notion that all that adds up to the right to great financial success irrespective of the realities of the economy in which they intend to exist within.  They believe they are immune from market forces.  Moreover, for those of us who became attorneys for reasons beyond our potential income, hearing a new grad call his law degree a "waste" saddens us; the article goes on to mention a Texas law grad oozing with compassion in his criminal practice, saying that it's sad to find himself "thinking it's a great day when a crackhead brings me $500."

Honestly, it just makes me feel old.

Sigh.

We who practice law -- old timers or new grads -- are no more entitled to a fat paycheck than anyone else.  With increased globalization -- hate it or love it -- it is the responsibility of every player in a free market economy to A) Identify his/her part in the marketplace, B) Reconcile their skill set with their areas of personal interest and C) Undertake the training/education/personal growth needed to harmonize A and B and create for themselves a marketable position in the economy which will meet their personal and financial goals, subject to their limitations and strengths.

To paraphrase Jay Foonberg, author of "How to Start and Build a Law Practice": set out to become a rich lawyer, you'll get nowhere fast; set out to become a great lawyer...and you can't help but make a lot of money.  It is innovation, not entitlement, which shall drive the success of tomorrow's "player" attorneys, and the times are indeed "a-changin".

As the Fortune 1000 awaken from their dogmatic slumber and realize that the best interests of their companies are not being met by their current outside counsel, the trend will shift toward more cost-effective legal solutions better integrated into existing internal processes.  Shareholders will applaud, the delivery of legal services will change...

...and that jet you wanted will be available at a very attractive price...

How much is TOO much? Attorneys fees are out of control

From the August 22, 2007 Wall Street Journal:

"The hourly rates of the country's top lawyers are increasingly coming with something new -- a comma"

Quietly and without much fanfare, leading law firms have been steadily increasing their hour billing rates and the WSJ's timely article broke the silence, creating an online avalanche of outrage and disbelief via blogs and editorials from diverse sources.  Everyone seems to be asking: "How on earth can attorneys possibly justify $1000+/hour billing rates??"

Well, Microsoft may have perhaps put it most succinctly:

“This is grossly excessive by any measure, and truly proves the maxim that human greed has no bounds..."

That comment, triggered by $4702.50/hour billing rates from plaintiffs' counsel in a Wisconsin antitrust class action suit against Microsoft, was included in court pleadings after Microsoft -- which admitted no wrongdoing -- decided to settle the case via the payment of plaintiff counsel fees.  Lead plaintiffs' counsel Richard Hagstrom was apparently perplexed by the defendant's comment and is quoted as saying that he "can’t figure out what they are talking about".  He patiently explained to the newspaper that  in contingent fee cases like the one in Wisconsin, plaintiffs lawyers deserve a premium. Okaaaaay...

What Mr. Hagstrom describes as an entitlement befitting the heroic defenders of the hapless general public sounds a lot more like greed to the rest of us...even those of us not known for our low hourly fees.  Look at it this way: broken down into a 40 hour work week, that hourly fee adds up to $188,100 per week.

That's some premium.  But it's downright reasonable compared to what high flying Willie Gary, the flashy Florida plaintiff's attorney, bills per hour: $11,000.  Quoted last April in the WSJ online, Gary had this to say about a settlement agreement wherein he asked for hourly compensation in that amount:  “Look, had we won the case, we would have gotten $4 billion in fees.”  The poor guy was getting stiffed!

As egregious as these rationales sound to the rest of us, they are but the tip of an iceberg of legal billing practices and philosophies that corporate America and its shareholders are increasingly unable to choke down.  The reason: a fundamentally ineffecient business model which the U.S. bar continues to perpetuate despite global economic realities and pressure from its corporate client base. 

As early as the mid-90s, other service sectors -- most notably the accounting sector -- realized that without intelligent evolution responsive to client needs, they would become dinosaurs.  In contrast, our increasingly litigious society has deified those who milk the system's inefficiencies.  The bar members most recognized in our communities can be gauged not by their published articles or A/V ratings but by their advertising budgets.   And let's be honest: behind the barrage of advertising that the plaintiff's bar has deluged upon the U.S. for the past few decades is a population which, more often than not, views any minor fender bender as a potential lottery winning ticket.  By no means is the greed we witness limited to those of us with law degrees.

One sector of the population which can and is doing something about this is corporate America, which has had enough of the nonsense, and general counsels are leading the way.  Thomas Sager, assistant general counsel of DuPont Co., told the WSJ in that same article that he recently balked when a New York lawyer cited $1,000 as his hourly rate. Instead, Mr. Sager says, he agreed to pay the attorney a flat monthly fee. "One-thousand dollars may be someone's choke point, but mine is actually a lot lower," he says.   Others like legal maverick James Buda, vice president and general counsel for Caterpillar, have decided that enough is enough and created competetive bidding processes and other mechanisms to keep outside counsel fees under control.  Mssrs. Sager and Buda are representative of a growing number of inside counsel who realize that while law is far from a commodity, neither is it some sort of mystical force immune from the rules of the market economy.

Recently we presented an immigration services proposal to a significant international client.  The client, which is growing very rapidly, has about a dozen folks in its internal immigration team, operating in an offshore jurisdiction favored for high workforce ability and low cost.  The team could not keep up with volume and outside counsel was relied upon more and more for immigration solutioning.  Given that the outside firm was billing the client about 300% the going per-visa rate for large-volume clients, we were fishing in a barrel.  But imagine our surprise when, after crunching the numbers, we realized that our per-visa delivery cost was lower than their in-house offshore per-visa cost...even though we were doing 100% of the work inside the U.S.!  Wherever it is being deployed, the efficient delivery of legal services is what corporations and their shareholders demand, and intelligent process workflow is what leads to cost control.

Law is anything but a commodity and skilled legal practitioners are entitled to the economic benefits associated with expertise.  But we are also ethically bound to our clients, and protecting their financial interests is an inherent part of that.  In these Dylan-esque changing times, law firms will increasingly fall into two camps: those who respond to their clients needs and those with nostalgic memories of "how great things used to be..."