The Enemy of Efficiency: Diminishing Marginal Returns

The Enemy of Efficiency: Diminishing Marginal Returns

By: Mark E. Best, Esq.

Clients want, expect, and are entitled to efficient handling of their cases.  The block-billing model of the past, which allowed for full-day time entries on “research” or “document review,” gave way to standard tenth-of-an-hour billing increments with verbose time entries designed to help clients determine whether they were getting their money’s worth.  And even this model is now showing its age, having to compete with fixed and alternative fee agreements designed to give more certainty to future litigation costs.  No matter the billing method, when the client is writing out that check, she wants to know she isn’t paying for unnecessary work.

Most defense firms create efficiencies using common methods like new technology (e.g., paperless work flow; video conferencing; electronic document review software), appropriately tiered staffing (e.g., delegation of simple tasks to clerks, paralegals and secretaries), and assessment of cases for early resolution through motion practice or settlement.  At Kuchler Polk Weiner, LLC, we take efficiency efforts one step further—out of the physical office and into our collective mindset.  One way we do this is by focusing on the archenemy of efficiency—the law of diminishing marginal returns (“DMR”).

This economic principle states that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output.[1]  Put more simply, you can continually add more of a given resource to creation of a product but, at some point, it will become inefficient to do so.  The practice of law is not immune from the law of DMR.  There comes a point in every project or case when spending additional hours working on it yields an ever-decreasing return for the client—potentially even a negative return, which occurs when additional work input results only in increased costs to the client, without any benefit whatsoever.  So what does this look like in the real world?

In the first three hours an attorney spends constructing a brief, she may formulate an outline, read the latest case-on-point, and identify the key supporting exhibits.  That work is very productive and highly valuable to the client.  In the last hour of brief preparation, however, he may read and re-read the draft, ultimately deciding only to change the word “Firstly” to “First.”  Some would (rightly) argue that the last hour was quality-control work necessary to ensure top quality.  From an economic perspective, however, the last hour created “diminished” value for the client relative to the first three hours.  And yet, the client is charged for the last hour at full price.

We cannot fight the law of diminishing marginal returns, but we can maintain a higher level of efficiency by being mindful of it.  An efficient attorney should consider the following questions at each stage of work-product preparation:

 

  1. What is absolutely essential to this work product, and what is not?
  2. Have any essential parts of the work product already been created, such that I need not reinvent the wheel?
  3. Have I reached the point in the creative process where I am merely fine-tuning?
  4. Is the fine-tuning still creating good value for the client?

The goal of this mindfulness exercise is to create an automatic internal alarm system, pinpointing the moment when the return on investment of time begins to diminish.  Once the alarm bells go off, there should be a shift in mindset to “wrapping things up” and moving on to other, more productive tasks.  The benefit to the client’s bottom line does not go unnoticed and (bonus!) we tend to avoid those headaches that come from staring at the same words on the computer screen for hour after hour.

[1] https://www.britannica.com/topic/diminishing-returns

 

Always be Closing, Even on Day One of a New Maritime Case

Always be Closing, Even on Day One of a New Maritime Case

By: Mark E. Best, Esq.

Nothing jump-starts a legal mind like a brand new case.  As you read the Complaint for the first time, the former law student in you begins issue-spotting automatically and fires off a barrage of questions:

What’s the jurisdictional basis?  Is it a vessel?  Seaman or Longshoreman?  Are punitive damages available?

Not to be outdone, the seasoned litigator in you adds to the growing pile:

When are responsive pleadings due?  Who is opposing counsel?  Who’s the judge?  Didn’t we just handle a similar case?

Sometimes it seems hard to know where to begin.  But the answer is pretty simple—begin at the end.  There is nothing more valuable to defense clients than a quick win, and attorneys should strive to develop a reputation for ending litigation or delivering file closure before it’s expected. With rare exception, contractual indemnity is the fastest and least expensive way to get a new maritime file off of a client’s desk.  Here are steps we strive to complete on Day 1 of a new maritime case.

Identify Plaintiff’s Employer

First, we want to identify our target—the contractor who is going to cover every dime of our client’s expense.  Contracts for offshore work commonly require an employer to defend and indemnify those who are sued by its employees, so plaintiff’s employer is usually the first and best option.  In Jones Act cases, the employer will always be a named defendant and the employment relationship will be clear from the allegations in the Complaint.  In the event the employer is not identified in the Complaint, we pick up the phone and ask plaintiff’s counsel.  Our client’s time is money, and it should not be wasted waiting for formal discovery on non-controversial matters.

Get the Contracts

Next, we get the signed documents.  On the day a new file is assigned, we request copies of the relevant contracts and work orders between the client and plaintiff’s employer.  Our efficiency-focused maritime clients understand our goals and provide these contracts with the new case assignment, before we even have to ask.

Master service agreements and vessel charters can be quite complex and the risk allocation, indemnity, and insurance provisions are thoroughly and carefully reviewed.  We confirm that the contract language identifies the client as an indemnitee and that it contains specific language allowing the indemnitee to be indemnified for its own negligence.[1]  If our client did not contract with plaintiff’s employer, we request and examine its agreements with other named defendants in the suit.  Oftentimes, contractual indemnity and defense obligations “pass through” other entities and provide coverage to our clients.  By maintaining familiarity with our clients’ contract language, we can expedite the analysis.

Determine Enforceability

Once we’ve confirmed that our client is owed defense and indemnity pursuant to the contract terms, we need to ensure that those terms are enforceable under applicable law. Our seasoned maritime attorneys are well-versed in choice-of-law analysis, state anti-indemnification statutes and, importantly, the exceptions thereto.[2]

Follow Client/Contract Procedures

Assuming the contract terms are enforceable, we check the contract for dispute resolution and claim notification procedures.  We strive to recommend next steps to our clients in every status report and, in this situation, those steps must conform to contract requirements.

Some agreements require notices to be sent to particular individuals or office addresses.  Others allow the indemnitor to recover attorneys’ fees and costs if the indemnitee fails to employ alternative dispute resolution before filing a cross-claim or separate lawsuit for defense and indemnity.  We avoid pitfalls by being accustomed to the terrain and our clients rest assured that we will take no action on this issue without specific authorization.

Finally, we consider our client’s internal procedures and preferences.  Some companies’ legal departments require approval from their business units before a formal tender letter can be issued to a contractor.  Some clients wish to issue tender letters directly, while others prefer to present them on our firm letterhead.  Some clients prefer lengthy demand letters that attach the Complaint and all contract documents, along with a full legal analysis.  Such letters project strength because they imply that formal legal action is a mere “cut-n-paste” away.  Other clients see lengthy demand letters as giving away too much information, preferring instead simple demands merely attaching the Complaint and referencing a contract number.  We seek out our clients’ individual preferences to deliver precisely what they want, when they want it.

Send the Demand

The best practice is to send copies of the demand letter by certified mail or other trackable means to (1) the entity’s registered agent for service of process; (2) the notification addressee identified in the contract; and, (3) the entity’s counsel of record in the underlying litigation (if applicable).  This increases the likelihood of a prompt response, which can save our client time and money.

Our clients may not always remember opening a new case file with multi-million dollar exposure and a litigation budget of hundreds of thousands of dollars.  We only want them to remember how Kuchler Polk Weiner, LLC closed it, at little or no cost to the company, in a matter of weeks.

 

[1] Indemnification for an indemnitee’s own negligence must be “clearly and unequivocally expressed.” An indemnification of “any and all claims” standing alone is not sufficient to indemnify the indemnitee for its own negligence.  Seal Offshore, Inc. v. Am. Standard, Inc., 736 F.2d 1078, 1081 (5th Cir.1984) (citations omitted).

[2] The number of potential fact patterns, legal issues, pitfalls and outcomes of this analysis are too numerous to discuss in this space, and may be the subject of future posts.

Motion for Summary Judgment Win obo Oil Company

Monique M. Weiner and Mark E. Best won a motion for summary judgment in the United States District Court for the Eastern District of Louisiana in a personal injury action filed against the owner of an offshore oil platform. The court agreed that the oil company owed no duty to the plaintiff and further, even if it had owed a duty, plaintiff could not show that the duty had been breached.

Multiple Motions for Summary Judgment Win

Monique M. Weiner and Mark E. Best won several motions for summary judgment in the United States District Court for the Western District of Louisiana in consolidated lawsuits arising out of an emergency shutdown and release from a natural gas compressor station. The court dismissed the toxic exposure and property damage claims of numerous plaintiffs after agreeing that none could prove causation.