As the market continues to pound out a separation between the niche players and the global elites, major legal consumers are increasingly turning to boutique firms for some of their more challenging work. Between their dexterity, fee flexibility, and, depending on the size of the boutique, deeper resources, we are seeing a growing interest in boutiques and niche firms in the legal market.
With 34 attorneys, Lewis Baach is a DC-based litigation boutique that, though they’ve managed to escape the limelight of some of their higher-profile peers, has worked with some of the best in the business, including Abu Dhabi Commercial Bank, The World Bank, Fan Duel, and the liquidators of Bank of Credit and Commerce International (BCCI) in what was the largest bank collapse, largest multinational fraud, and largest restitution in history.
Today we hear from Eric Lewis, co-founder and senior partner of Lewis Baach, about the way that his eponymous boutique law firm is navigating the pressures of today’s market. Please see our exchange below:
On Starting Lewis Baach
Parnell: Can you give me a bit of background on Lewis Baach? How did the firm come to be? What was behind the decision to hang your own shingle?
Lewis: I began practicing law wanting to have an opportunity to rise or fall quickly and on my own efforts. I did not want the long wait to get into court that larger firms appeared to require. I often say that Ronald Reagan made me a capitalist, as I graduated from law school in 1983 and neither the government nor the non-profit sector seemed like viable options. Our firm is 20 years old this year. Our founding core is a group of litigators that were together previously at small litigation firms. Our model was that of an English barristers’ chambers. I did a great deal of international work early in my career and realized that international clients were less interested in the name branding of Big Law and more interested in the quality of the work and the ease of working relationships.
On The Advantages To Being A Boutique
Parnell: In this legal market where most firms seem to be increasing in size and footprint, what are the advantages you see as a boutique? How do those advantages translate from a lateral hiring or new business perspective?
Lewis: I think the market is moving in two directions—toward fewer but much larger firms, but at the same time toward niche players that provide experienced practitioners with less bureaucracy and hierarchy. Clients pay for judgment and are more resistant to paying for large teams of junior lawyers. More and more, clients want to hire individual lawyers they know or come well recommended rather than simply a firm that designates the team. This is especially the case with litigation. That works well for us. For lateral hiring, we look for people who like the autonomy and flexibility that a small firm provides and are less concerned with the structure and predictability of a large law firm. With respect to new business, we understand that most of our referrals come from our networks of lawyers and clients we know and have worked with before, all over the world. We understand that a large New York financial institution is unlikely to hire a small firm for its “bet the farm” litigation, because the General Counsel is on the line. That is less the case in many foreign markets or with businesses that are more entrepreneurial. If we have worked together before on a multi-billion dollar case, there is an ease, indeed, an excitement about working together again.
Eric Lewis: "... the government missed a teachable moment in terms of investigating a business model... [+]
On The Increasing Internationalism Of Today’s Litigation Market
Parnell: Can you discuss the international nature of today’s litigation world? Are there specific challenges in needing to understand and coordinate throughout various jurisdictions? How are you handling those challenges?
Lewis: Virtually every case we have crosses borders. We have coordinated litigation that was ongoing in more than a dozen jurisdictions at a time, from Pakistan to Panama, Saudi Arabia to Switzerland, Andorra to Argentina. Consideration now needs to be given as to where a dispute can or should be litigated, based on a variety of factors. One needs to understand the basic structure of other legal systems and be able to communicate effectively with lawyers from very different legal cultures. It takes time and also knowing what you don’t know. When we gained recognition of the first non-Arab League judgment in Saudi Arabia, for example, we had to make sure the judgment from the US court was sharia compliant. It takes constructive dialogue: do it the “American way” is a surefire way to alienate your colleagues and fail to implement an effective strategy. Language is important too; we have a half dozen Arabic speakers and Spanish speakers in the firm. You also need to be willing to get on an airplane and go out and visit your colleagues and go to court. The dialogue is better and there are certain jurisdictions where much more happens when you are together in a room rather than on phone or email. I have found out critical facts in cases in nightclubs in Buenos Aires, drinking camel’s milk in the Saudi desert, fishing on the Little Red River in Arkansas and training falcons in the UAE. Our lawyers have spent plenty of time in Saudi Arabia, Pakistan, Egypt, Kuwait, Poland, Bosnia, Russian, sub-Saharan Africa, and South America over the years. Relationships are important and it is fun to dive into other cultures.
On The Market For White Collar Crime
Parnell: White collar work has jumped in importance to many firms recently. In your perspective, how has white collar/financial litigation evolved over the last five years?
Lewis: One of my great disappointments was how little prosecutorial and regulatory activity came out of the financial crisis. This is not a complaint from a business perspective, but rather the government missed a teachable moment in terms of investigating a business model where investment banks turned out collateralized debt instruments filled with bad underlying securities, got ratings from agencies that would only get paid if they gave these debts ratings, and sold them, largely to foreigners because the smart money knew better. These were hard cases to understand and bring and it fell largely to civil litigation to hold the players accountable. Sometimes the government needs to take on hard cases, but often it is the low hanging fruit of insider trading or going after banks, which always pay up, rather than individuals who knew that they were selling securities that were under water. With the election of Donald Trump, whose agenda is likely to veer toward deregulation, I think that civil litigation—through plaintiffs’ securities actions, qui tam actions, whistleblower suits, and consumer class actions—is likely to be the premier mechanism for avoiding corporate overreach. Because we have a base in Washington as well as New York, we also consider the geopolitics involved in many of our matters as well as managing client reputations.
On White Collar Crime Trends
Parnell: What are some trends you’re seeing that will affect the practice of white collar litigation within the next five years?
Lewis: AML and sanctions compliance are taking on more importance. International banks are being scrutinized. China, for example, has four of the five largest banks in the world by total assets. Many of these banks are coming into international banking without the compliance infrastructure that has been in place in New York and London for years. The same is true in the Middle East and Latin America. FCPA litigation is likely to expand as prosecutors are looking more closely at the involvement of US persons with foreign state owned entities. I also think that in the wake of the Panama Papers, there will be more efforts to persuade or pry open offshore jurisdictions. The entire offshore structure has become vulnerable to the disgruntled employee or determined hacker. This is likely to lead to litigation not just for tax evasion but regarding the proceeds of corruption from politically exposed persons around the world. I think that the Trump administration may have limited tolerance for wealthy people that offshore their funds. I also suspect that countries that Trump has indicated do not play ball on trade and currency may be targeted.
On Lewis Baach’s Compensation Model
Parnell: Can you talk to me about LB’s compensation model? If you could talk more about the structure. Are you lockstep, modified-lockstep, subjective, etc.? And can you talk to me about how that is facilitating cooperation within the firm?
Lewis: I look at all the year-end numbers in terms of work, business, public service and other contributions and talk to folks and make a proposal to my partners that is voted up or down as a single points proposal. We have also always had a strong commitment to pro bono, and we value that highly, so that is part of the gestalt. What is important is that while everyone wants to do well, that is not the only reason to be here. It is always good for senior people to pass some of the money downwards. If we have a good year, everyone shares in it from partners to secretaries and messengers. We have always made sure that we have good health care that is free to all employees. People also know that if they get sick or have an emergency or a difficult year, they are not going to be penalized. No one has ever voted against a compensation proposal.
On The Consolidating Market
Parnell: What are your thoughts on the consolidating market? Have you felt pressure to merge? Are you open to a merger?
Lewis: We have been approached quite a few times and we appreciate the attention. I think that for most people here, autonomy is extremely important. I think that if one of our foreign partner firms wanted a US platform and we thought we would retain autonomy, still be able to do Guantanamo and death penalty cases and expand our platform, we would be open to discussions. But it would take a firm with a similar culture that does what we do and operates in a similar way. I suspect it would require people that we knew and had worked with in the past so that there was comfort on both sides.
On Technology
Parnell: Can you talk to me about some of the technology you are using, or keeping your eyes on, to provide better value to your clients?
Lewis: A number of my partners have become deeply versed in cybersecurity. The most important thing we can offer is absolute security of information for our clients and we have spent time on that. We are in the midst of moving to new document management systems as well. When I started practicing law, we wrote on yellow legal pads and there was one terminal for inputting. I tend to rely on the more tech savvy people and our IP team, which has a number of electrical engineers. They tell us what we need and assuming that ordinary mortals can use the technology and the cost/benefit calculation is sensible, we invest in the technology.
On Pro Bono Matters
Parnell: You have a very active pro bono practice and you are also the chairman of Reprieve US. Can you talk to me about the firm’s involvement in pro bono matters? How do lawyers balance that with other client matters?
Lewis: We have a skill set that sets us apart from investment bankers and hedge fund managers. There are many lawyers that go into those fields and that is fine. But the earnings expectations for lawyers have gotten a bit out of hand. We are in a special profession that I think imposes a special obligation to give back and to try to do justice, as we see it. I believe in balancing a strong commercial practice with a pro bono practice that makes a difference. When Guantanamo Bay was opened and the US government was torturing people, I thought a line had been crossed. I still do. I think that Guantanamo, indefinite detention and torture present the signature legal and moral challenges of our era. Robert Bork taught me constitutional law. He was conservative on many issues, but he was horrified about the result in the Japanese internment cases. That was a terrible blight on Earl Warren as Governor, on the Roosevelt administration and the Supreme Court. It was panic in the face of war, a war that was, to be sure a true existential challenge, although the Japanese-Americans presented not such challenge. I was perhaps a bit whiggish and a bit naïve in thinking that we had learned from our mistakes, that our country was strong, and the rush to find scapegoats would not happen again. I was wrong.
So we have been working on cases involving torture and indefinite detention at Guantanamo and in Afghanistan for about fourteen years. For me, it is about the rule of law. These matters are treated like all other matters in the firm. I have done many of these cases personally, as have other senior people. As we consider the specter of Guantanamo being open indefinitely, about prisoners dying without ever having been charged about the return of waterboarding and much worse, we as lawyers have an obligation to keep up the pressure in the courts.
On The Future Of Bet-The-Farm Work
Parnell: It is safe to say that you are handling bet the farm matters for at least some of your clients. What is the future for bet-the-farm work? Will there be more or less? What will clients want in a trusted advisor that they are comfortable giving this type of work to?
Lewis: The critical things that clients expect on bet the farm work are honesty, steadiness and perseverance. You need to evaluate risk exposure and understand weaknesses to understand whether a case can or should be settled before losing the farm. You can’t get too high or too low, as clients need to know you believe in their case but are objective and consistent. And you need to be able and willing to try the case. Trials are hard and there are many litigators that haven’t tried a case or haven’t tried a case for a long time. Too often, lawyers are too bullish early and not bullish enough on the eve of trial. Clients and adversaries need to know that while most cases should settle, cases that should be tried will be tried. A tiny fraction of cases are ever tried, for many reasons. Most cases should be settled, but some should be tried and the system presses hard against trials.
