My favorite IT guy, Ross Carlson clued me on a recent lawsuit whereby a landlord is suing their tenant over a tweet whereby she besmirched their name.

The tenant tweeted that her apartment was moldy and that her landlord thought it was okay.  Despite her having only 20 followers, the landlord claimed "damaged business reputation" and has sued her for $50,000. 

Ugh.  Note to landlord and lawyers:  get a life.

I suppose that I should be on the lookout from AT&T and/or United for lawsuits against me for all the horrible things I say about them on Twitter, but then again, all of my claims are true.  So maybe I’m still safe. 

As an added bonus, I’ll leave y’all with this lawyer joke (Thanks to Gabor Garai for this one):

One afternoon, a wealthy lawyer was riding in the back of his limousine when he saw two pathetic-looking men by the side of the road, eating grass. He ordered his driver to stop and got out to investigate. He asked the men, "Why are you eating grass?"

"We don’t have no money for food," the first man replied.

"Then you must come with me to my house," insisted the lawyer.

"But, sir, I got a wife and three kids here," said the man.

"Bring them along!" replied the lawyer.

The second man exclaimed, "I got a wife and six kids!"

"Bring them as well!", the lawyer proclaimed as he headed back to his limo.

They all climbed into the car, and once underway, one of the men expresses, "Sir, you are too kind. Thank you for taking all of us with you."

The lawyer replied, "I’m most happy to do it. You’ll love my place. The grass is almost a foot tall."

When is a layoff not a layoff?  Simple.  When your firm basically says "you suck – find another career."  But we don’t do layoffs. 

Sounds crazy, but this is exactly what Wilmer Cutler Pickering Hale and Dorr is doing.  But don’t call it layoffs.  They’ve, instead, decided that they have a material amount of folks on payroll who don’t meet their standards.  Maybe they should tell their recruiting department to find another career, as well. 

From Jeff Jeffrey of The Blog of Legal Times:

William Perlstein, co-managing partner of the firm, tells the BLT that some associates and counsel have been told that they won’t have jobs at the firm after this coming fall. Perlstein acknowledges that at least some of the cuts are tied to the economic downturn, though he stresses that the firm isn’t having layoffs.

“There is certainly an economic component in situations where you have someone who is doing OK and who would otherwise be kept. But with less work, and if they’re not making the progress they should, they are being told they should start looking for another position,” Perlstein says. “Nobody is being handed a check and told that they have to leave tomorrow. They’re being told they have a number of months to find other work.”

Perlstein says that the reductions for senior associates and counsel come as a result of a new career advancement program that the firm implemented late last year. Under the new program, associates and counsel are either promoted within specified time frames, or told to “pursue other careers” if they aren’t likely to be recommended for advancement. With promotions scheduled for later this year, Perlstein says that for the first time, the firm is issuing advanced warnings to those unlikely to make the cut.

“This isn’t anything formal. It’s is more of a heads up,” Perlstein says.

As I’ve written before about layoffs, different firms take different approaches.  Some are straight forward and honest about their layoffs, while others try to hide them in stealth.  This strategy by Wilmer, however, is new to me.  Wow. 

You are a lawyer.  You represent a hot start up that is venture backed.  One day the CEO comes to you – out of the blue – and says “you’re fired.”  (Cue Donald Trump frown).

You’ve stuck it out through the lean times with the company even when they weren’t funded and now you are on the outside looking in.  What gives?  It must be the evil venture capitalist (me).  He must want one of “his guys” at the legal helm.

Not so fast.  Even ex-lawyers like me who believe we can evaluate the best of legal talent don’t take this action lightly.  And I never like to have a heavy hand with my CEOs.  It’s their company to run and I work for them.

I, however, have seen some unbelievably stupid things that company counsel lawyers have pulled that has ruined their credibility with the VC (me) and thus found their way out the door, either by my strong urging, or by agreement of the entire company.

So, today is the list of “quick ways to get fired.”  Before you laugh or go “duh” EACH of these are real events that I’ve dealt with personally.  And all of these have happened in the last 3 or 4 years, so these are not “back in the day” events.  Furthermore, there is no monopoly on stupidity. The mess ups below happened at small, medium and large firms all over the country.

I’ve divided them into three categories:  1. Screw ups that get you immediately fired.  2. Actions that get you fired sooner than later.  3.  Things that probably get you fired over time. Without further delay (and in order of egregiousness)…

Screw ups that get you fired immediately

1.  Screw around with redlines.  You and my counsel are negotiating the Series A financing.  As normal, there are several revisions of the documents.  My counsel notices that paragraphs are reverting back to previously rejected ones, but are NOT showing up as redlines.  They assume it is a mistake, but when the junior associate is asked “what’s up” he says that you told him to make the changes.  You’re fired (and you probably get reported to the state bar and the head of your law firm).

2.  Endorse the chief competitor.  We find a quote made by you on the primary competitor’s website extolling the wonders of the competitor.  First, it would have been nice to know that you represented our competitor.  Secondly, you providing the quote shows amazingly poor judgment.  You should never pick sides.  (And in hindsight, we kicked the other company’s butt, so you chose wrong).  You’re fired.

3. You provide little leadership and wait for someone else to come up with the answer.  The company is in a sticky situation.  It’s unique and it’s dire. There are many phone calls with lots of other partners and associates on the phone billing away.  You and your team provide absolutely no thought leadership on how to “fix” the problem.  Instead, the CEO, another executive or I come up with the solution, but you (probably in order to save face) tell us that we are idiots and that it will never work.  We have to hire another law firm to vet our idea and they say “great idea – it works.”  Company survives.  You don’t.  You’re fired.

4. You provide advice to the CEO adverse to the company’s interest.  Things aren’t going well at the company.  The board is mulling around thinking about replacing the CEO.  In contentious discussions to remove the CEO, it becomes apparent that you and the CEO have been having side discussions.  Specifically you have advised him regarding his leverage that he has against the company in order to either keep his job or extort a larger settlement agreement.  Guess what?  You’re Fired. (But not by the CEO, the board makes it a “two-fer” and you and the CEO are out).

Actions that get you fired sooner than later

1. Be lax in your advice and get it wrong.  Yeah, we all make mistakes, but being lazy and riffing off the cuff about legal issues and then being proved wrong is something that can doom your relationship.  If you come to the board meetings, sit back and offer opinions that later turn out wrong, you will have a short stay as company counsel.  Specifically what annoys me the most is when lawyers riff about subject areas that they aren’t experts (e.g. corporate guy guessing about litigation issues) and don’t bother to check their own advice with their own firm after the board meeting.  Let’s call this: “You’re fired over time”

2. Being inefficient, getting lost in the woods, billing for small stuff that doesn’t matter.  You are the epitome of Why Startup Lawyers Frustrate Me.  Despite how stupid it is to negotiate crap like registration rights, you waste your time, my time, my counsel’s time and your client’s bank account doing so.  Again, you’re fired (over time).

3. Bait and switch.  You bring in the client, but you never show for board meetings, phone calls, etc. and send junior folks in your stead.  Or worse yet, the company hires you to run an important litigation matter and you don’t show for court, rather your less skilled colleague does.  You’re fired (over time).

4. Not knowing who your client is.  You have trouble figuring out that you represent the company, not the CEO.  Nothing as heinous as the above example, but you seem to have a “what’s good for the CEO filter” on all of our advice.  You’re fired (over time).

5. Letting summer associates run wild on the account.  You let a dozen different summer associates bill out (at first year rates, no less) to the client during a 3 month stint.  You’re fired (over time).

Things that probably get you fired over time

1. Being annoying.  There are a ton of them, but some that come to immediate mind are talking too much at board meetings and trying to prove how smart you are, spending the entire board meeting on your blackberry or constantly complaining about my counsel choice during a financing.  (Don’t you understand that you are just insulting me and that I probably use these guys all the time?).  Additionally, you make grand promises of VC intros or other introductions into your “vast network” and you never come through.  You probably don’t get fired for any of these, but if the CEO decides that they want to make a switch, I’m certainly not going to stick up for you.

All of these actions seem to suggest that you don’t realize that as soon as the financing is done that you are representing me as a board member, or that you don’t understand that I have many different investments and have a long memory.

Then again, if these aren’t obvious to you, then you are probably one of the folks who committed one (or more) of these acts.  To the rest of you, hopefully you got a sick chuckle out of these real-life events.

While at the NVCA meeting, I had a good discussion with a general counsel of a venture capital firm (name unreleased) who posited that cultures at law firms are dead / dying.

His theory was that 10 years ago, one could hire a law firm not only based on skill, but also culture.  Some firms where aggressive, some more laid back, some more nerdy technicians, etc.  In short, you could find good lawyers with cultures that either were similar to yours, or were needed for a particular matter.

Today, however, his feeling was that law firms have become homogenous.  The last ten years have seen legal fees and legal salaries grow exponentially.  With this, we’ve seen more transition and firm switching with lawyers than we’ve ever seen.  Because of this, firm DNA has been diluted.  Consider it the free agency era in law firms.

Furthermore, the layoffs that are occurring are only speeding up this process.

It’s an interesting theory and one that sounds correct.  I’ve certainly noticed over the years that the unique firm cultures that existed a while ago are disappearing.  Yes, there are still cultures at firms and some of the "old guard" still reflect the attitudes 10 years ago. That being said, I think he has a point.  What do you think?

No, not weed, get your mind out of the gutter…

I’ve recently joined a site called Legal On Ramp.  It’s a discussion and collaboration forum for lawyers and it looks really interesting.  I’m new to the group, but there are many good discussions, including a current one on the American Law Institute’s proposed changes to software agreements.  One of of the key gripes is that ALI has a very closed system in determining best of breed practices.

Legal On Ramp is not open to the public – you have to register and show that you are a lawyer.  (Show them a bill?  ).  Apologies to the non-lawyers.   The legal eagles out there – join the club!

Today, Wilson Sonsini Goodrich & Rosati announced the release of a new client tool:  The Venture Financing Term Sheet Generator.

I’ve been using beta versions and it’s cool what they’ve come up with.  And to note, their own attorneys are using the tool.  Per their statement:

Our attorneys use a more extensive version of the tool to generate initial drafts of documents for Series A preferred stock financings, including Certificates of Incorporation, Preferred Stock Purchase Agreements, Investor Rights Agreements, Right of First Refusal and Co-sale Agreements, Voting Agreements, corporate approvals, and closing documents.

Anyone who knows my Law Firm 2.0 series knows that I’m a huge fan of technology in the law firm.  Congratulations to WSGR on taking a real positive step. 

I saw a billboard last week for Who Can I Sue? and nearly puked.  Their stated mission is to:

"provide (i) an efficient portal for its users to browse and find relevant information about a variety of legal claims, (ii) an ability for users to determine if they are qualified for a particular claim, and then (iii) a mechanism for the user to review pertinent information about attorneys and law firms in the user’s geographic area and connect in real-time with the attorney of choice when the user is ready."

To me, this sounds like a bunch of plaintiffs lawyers encouraging the "only" growth industry current in the U.S. I know that there are many people out there with legitimate claims, but from where I sit, I see even more bogus ones.

Viva la lawsuits.  Sigh.

In case you haven’t heard, lawyers and legal professionals are being laid off at a rate never seen before. According to Law Shucks, one of my favorite blogs, over the past twelve months 3,489 lawyers have been laid off. This doesn’t include the 4,890 staff (paralegals and assistants) laid off, nor does it include “stealth” layoffs or layoffs from smaller firms. Law Shucks has been all over the carnage and if you want to see detailed information by date and firm check out their Layoff Tracker.

Yes, this is somewhat due to the current economic climate, but also indicative of what’s wrong with the current big firm business model that I’ve been critiquing in my Law Firm 2.0 Series. I won’t belabor those points today; rather provide an opinion on what the layoffs might mean to you.

It depends who you are: client or lawyer. And for that matter, let’s look at the law student perspective, too.

Layoffs are bad for clients. If you note, few partners have lost their jobs, rather associates, paralegals and other staff have been let go. This inevitably will lead to what a colleague of mine refers to as “billing creep.” To paraphrase him:

What has been really noteworthy to me with all the announced law firm cuts is their focus on associates and staff. Partners seem to be saved for the time being. If the slumps of the early 90′s and 2001 are any guide, work will now move up the chain. Associates will hold on to work previously delegated to paralegals in response to less work and partners will do work they would previously hand off to associates. Add to this the natural tendency for overkill and inefficiency when you are struggling to meet billable hour targets (ignoring the increased likelihood of flat out padding) and you have the recipe for many billing disputes and billing creep.

I couldn’t say it any better. The irony is thick that law is one of few industries that can tighten the corporate belt and its customers end up paying more in the end.

Layoffs are bad for the lawyers, too. Duh, Mendelson, they lost their jobs. But it’s actually much worse than that. I don’t think that any economic recovery will create enough big-firm jobs to absorb those who were laid off. I think that most of the lawyers laid off will be permanently dislocated from the big firm profession.

This doesn’t mean that they won’t continue to be lawyers, but they most likely will get jobs at smaller firms and make less money. They certainly won’t be on partner track at an AmLaw 100 entity.

The junior lawyers laid off are going to have to compete with the 1000s of law student graduating each year and vice versa. If you are a law firm that decides to hire a junior lawyer, would you rather have a laid off 1^st through 3^rd year attorney or a newbie direct from law school? Well, it depends…

If you are a mid-sized or smaller firm, you probably hire the more experienced lawyer. Your business model doesn’t work so well to take on direct from law school folks. If you are the large firm, you are wary of hiring a big-firm layoff (prestige and all), but also you need to re-create the pipeline of associates from the law schools which you’ve effectively shut off today. So you begin to hire again directly from law schools to fill your junior ranks instead of reabsorbing those left behind today.

Then again, the big firm is probably never going to hire law students at historical rates given they’ve experienced two sets of layoffs in the past 8 years and from what I see are the certain changes coming their way in the future. All in all, it’s a scary time to be in law school. What seemed like a reasonable expectation to go to school, do well and come out making $150,000+ a year now seems like the exception, not the norm.

Whatever may happen, I’m fairly certain that the situation is completely different from the last few instances of layoffs and it’s not because of the unusual economic circumstances that we are facing, rather I think it’s a permanent change in the legal ecosystem.

So, I’m not your lawyer, but…

I’ve seen many presentations over the past day or so that have been missing some crucial legal boilerplate.

Copyright:   Any time you give a PowerPoint/Keynote, etc. presentation the footer should read “(C) 200X ‘Company Name’ Proprietary and Confidential” where X is the year that you are claiming protection.

It’s technically true that you don’t have to have a copyright notice to claim protection of the IP that you created under U.S. law.  The problem is without putting people on notice, you may lose your ability to say they’ve purposely infringed.  Also, the year is crucial because without the notice, you may end up getting into a fight about “who created something first” if someone is trying to steal your ideas and thoughts.  It takes two seconds to put a notice and may save you many headaches later.  If you think about all of the cases that one hears of Company X stealing Company Y’s idea, my bet is that there is a lot of legal discovery on presentations, because that’s what most people start with when building a company – the idea, not the actual execution.

Trademark:  If you have a name / logo and want to protect it, you must include “TM” in superscript after your mark, or your are not protecting it.  If you’ve registered with the PTO, you can utilize the (R) superscript, but otherwise, you must use “TM”.

Boring post, I’m sorry, but after three days of seeing many presentations not conform to these rules, I thought that I should mention.

Every time we make an investment, we blog about it on our Foundry Group site.  Today, I’m especially excited about our latest announcement, as the company is a "bulls eye" in my Law Firm 2.0 thesis. 

You can read all about FirstDocs on the Foundry post, but what I’ll tell you shortly here is that they are a Westwood, MA located legal process automation company that I believe, are poised to change the way law firms and in-house legal department deliver value to their clients.

I’m particularly excited about this opportunity given that the CEO Dan Gaffney reached out to me after having read several of my posts about the inefficiencies in the legal ecosystem.

At the time, Dan thought it would be nice to get to know me, see if I could provide him any customer leads, show me the demo, etc.  Being a venture capitalist, I wasn’t sure if I was getting the softest fundraising sell of all time, or if they didn’t need any money, so I asked.   

Dan said they were all set for money and had customers.  I remember being a little sad, but still excited about what they were doing, so we kept in touch. 

Over the next few months, however, our conversations really intensified and the ideas on how to take their already released product to a completely new level began to take shape.  It was at that time, I began to sell the Foundry Group to Dan in hopes that he’d consider taking some money from us and thus, allowing me to join the board of directors.

I’m happy to say – mission accomplished!  I’m very excited to work with Dan, Luke, Anil, Muthu and the rest of the FirstDocs team.  Hopefully one day I’m writing a Law Firm 2.0 post about the increased efficiencies of lawyers!