Drinker Biddle: Meeting A Recession's Employment Litigation Challenge

Saturday, November 1, 2008 - 00:00

Editor: By way of background, you co-founded Connelly Sheehan Harris LLP, and you and the team from that firm recently joined Drinker Biddle, further enhancing its already strong employment litigation bench strength.

Sheehan: Yes. Connelly Sheehan Harris was founded in 1990 as a labor and employment boutique. We represented employers on any issue involving employee-employer relationships.

We grew slowly. We started as three lawyers and a secretary, and before we came to Drinker Biddle we were 15 lawyers, all of whom litigate everywhere across the country. We had large corporate clients and because of that decided it was time to make a move.

Editor: We are now facing the most severe economic crisis since the Great Depression. In light of this, why was it important for Drinker Biddle to increase its employment litigation bench strength?

Sheehan: As was true in earlier recessions, this economic crisis will immensely increase employment litigation. In times of economic downturn there are not only layoffs but also there are more performance-based terminations.

Unlike in sound economic times, discharged employees are offered less attractive severance options and are almost always less successful in mitigating losses with a new job. This time, the impact on workers is compounded because the plunge in the securities markets affecting benefit plans coincides with the largest number of retirement-ready employees.

Employers are going to have a real challenge because of how this crisis hits the baby boom generation. You've now got a large part of the working population that was planning to retire and who will instead be facing involuntary severance. In addition to the problems of age discrimination there, those boomers can no longer afford to retire so you're also going to see more and more challenges to how employers have invested 401(k) assets.

Editor: Do you see unions becoming more active in terms of fighting back against some of the things that will necessarily take place, like reductions in force?

Sheehan: Yes . Curtailment in health benefits as well as reductions in force will be big issues for unions. I've been involved in the last two years in defending a class action where the United Auto Workers is involved in a health benefits curtailment issue.

The Employee Free Choice Act has been on the table in Congress for a while and hasn't been passed. But, with a largely Democratic House and Senate and a Democratic President, it's expected that it will become the law. That legislation will permit unions to skip elections and go right to certification, so the numbers of organized workers is going to increase.

Editor: Are there any presently active types of litigation that could become an even greater problem for employers as jobless workers facing financial hardship seek recourse against their former employers?

Sheehan: Absolutely, and it is the wage-hour class actions under the Fair Labor Standards Act or various state laws. Plus, these are strict liability laws so it doesn't matter what the employer's intent was. The laws of California are even more draconian than the FLSA, so employers there have to be particularly careful.

For example, consider a case involving whether members of the class are exempt or nonexempt workers. The potential exposure for employers can be tens of millions of dollars.

Editor: I see that the clients of Connelly Sheehan Harris LLP included AIG, MetLife, Tellabs and the Bosch Group - pretty impressive?

Sheehan: Good lawyering attracts good clients. So does a fierce commitment to concierge servicing of those clients' needs. None of that changed since we've come to Drinker Biddle.

Now, fortunately, we also have more good lawyers in San Francisco, Philadelphia, Washington, D.C., New Jersey, New York and here in Chicago.

We still hop on the next plane to meet the needs of such clients, but we've got the luxury of a much deeper bench.

Editor: Is there anything special about the way you approach a case?

Sheehan: I think so. We always approach the case with the end in mind. Each case is a problem to be solved, no two problems are alike, and the desired solution is always different and unique to the circumstances. From the outset, together with our clients, we decide what a win means, and we work toward that.

Plus, we don't use forms or checklists. We demand original and customized thinking. We think cookie-cutter production templates are like bumpers in bowling alleys - just for the little kids.

Editor: How does your group from Connelly Sheehan Harris LLP rate among trial lawyers?

Sheehan: We're pretty good trial dogs. People say there's no substitute for preparation and I agree with that. Preparation is what builds confidence - and there is no substitute for confidence. Without confidence, without projecting confidence, you cannot persuade. It's as simple as that.

Editor: You once tried a jury case, won it, and then you retried it and lost it. What can you tell us about that experience?

Sheehan: You don't ever try the same case twice. Your opponent won't let you if you won the first time, and you won't want to try it again in the same way if you lost the first time.

I also learned that it's a greater challenge to retry the case.

Editor: Do you feel that the hourly rates that outside counsel charge have gotten out of hand?

Sheehan: Yes. That may sound like heresy, but it's the truth.

The current economic downturn will, I hope, cause more clients to demand that outside counsel become creative about how to price their services. I would prefer to first agree on a price, say a flat fee over a period of time for a set piece of work, and then to focus single-mindedly on delivering good results - rather than wasting so much time on the red tape of hourly billing.

Editor: Do you actually do this?

Sheehan: Yes, but not nearly as much as I'd like. It involves building trust between our lawyers and the client, and spending quite a bit of time looking for ways to achieve cost savings for the client and yet still be profitable.

I have done flat fees for all cases for a set period of time or for a set number of cases. I have also done it for single cases with agreement on a target price, and then, at the end, a true-up - no one's looking to make a windfall either way.

What we're looking for are the right efficiencies and the right metrics so our interests are aligned. The hourly rate, by creating a disincentive to keep costs down, introduces an inherent conflict of interest into the economic aspect of the relationship.

Editor: Why did you choose Drinker Biddle?

Sheehan: Because our client base included a number of major companies with big cases that required us to have more bench strength in our traditional practice areas, we decided that we either had to grow our firm more quickly than we thought we were capable of doing and still maintain quality, or find a large firm and partner with it.

Over 18 years, we received invitations to serve as the Chicago office of a national firm or to join a larger firm with offices in Chicago. We decided let's not let them pick us, let's us pick them. We listed the firms that were most attractive and then shortened the list. Drinker Biddle was at the top.

For us, Drinker Biddle strikes the right balance. It always puts clients first. It's a full-service firm. It has top-tier expertise in several areas, including labor and employment and litigation. That was very attractive to us and to our clients.

Editor: Why did you turn down an offer to become general counsel of a major company?

Sheehan: I would have missed the courtroom too much.

Editor: Conventional wisdom says that trial lawyers are hired guns, not the best counselors. Would you agree?

Sheehan: That's a complete myth. In fact, at least with respect to employment, the opposite is true. Our experience in the courtroom gives us a far better perspective to render advice.

Litigators instinctively consider all those hidden issues that you wouldn't even begin to think of if you had not had to face those before in the courtroom. Sometimes, it is the emotional impact that a decision will have on a jury; other times, it is what needs to be privileged or unprivileged.

But, what is going to end up in the courtroom needs a gunslinger's look before it goes final. Only a gunslinger like Doc Holliday would have known to remind the Earps to bring shotguns to the OK Corral.

Please email the interviewee at michael.sheehan@dbr.com with questions about this interview.