Settling is bad for business

News this week that a well respected San Francisco litigation shop is in trouble and may close.

The main reason being offered is that Heller Ehrman has settled too many of its cases and gave away 60% of the firm's revenue... highlighting once again the tightrope attorneys walk when weighing up the various tensions (client and firm) involved in deciding whether to negotiate or mediate.

'So what has happened to Heller, which has long ranked as one of the top firms in San Francisco and one of the top litigation shops in the country? For starters, the firm had many huge litigation matters settle in rapid succession last year, including its representation of Ernst & Young in securities fraud suits against AOL and Cendant. About one-fourth of its litigation business settled last year–a huge blow given that litigation makes up about 60% of the firm’s revenue, according to a Heller attorney. And that revenue has been hard to make up in a soft litigation market' [read more]

So, should a law firm's interests be part of the decision to mediate?

Those interests might be around future fees, especially if there is a contingency deal where the firm effectively has an equity stake in the asset (aka claim) they now share with the client.

Those interests might also be around getting partners into the courtroom on a strong case and being seen to win it, any number of competing interests...