Attorney Journal, San Diego, Volume 129

SAN DIEGO

Volume 129, 2014 • $6.95

Forget About Revenue: Why are So Many Firms Preoccupied with Revenues Instead of Profits?

Gerry Riskin

The “No Budget” Problem: How to Respond to this Common Objection

Mike O’Horo

MEDIATOR OF THE MONTH

Hon. David Moon Jr. Maximum Effort Leads To Successful Outcomes

Goals vs. Objectives: A Real Difference

Dr. John Burnett

RISING STAR OF THE MONTH

Kevan McLaughlin Taking On Tax Controversies

Attorney of the Month

Cathy Fitch

THE LAWYER’S LAWYER

PROFESSIONAL PROFILE OF THE MONTH NCG Courtroom Visuals Millennium Settlements Raises the Bar in San Diego Celebrating 25 Years of Hometown Pride and World Class Presentations

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2014 EDITION—NO.129

TABLE OF CONTENTS features PROFESSIONAL PROFILE OF THE MONTH

6 NCG Courtroom Visuals

Celebrating 25 Years of Hometown Pride and World Class Presentations

by Jennifer Hadley PROFESSIONAL PROFILE OF THE MONTH

10 Millennium Settlements Raises the Bar in San Diego

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by Karen Gorden

12 COMMUNITYnews EXECUTIVE PUBLISHER Brian Topor

ATTORNEY OF THE MONTH

16 Cathy Fitch

EDITOR Jennifer Appel

The Lawyer’s Lawyer

by Karen Gorden

CREATIVE SERVICES Skidmutro Creative Partners

21 Goals vs. Objectives: A Real Difference

CIRCULATION Angela Watson PHOTOGRAPHY Bronson Pate Vinit Satyavrata STAFF WRITERS Jennifer Hadley Bridget Brookman Karen Gorden CONTRIBUTING EDITORIALISTS Mike O’Horo Christopher Walton Monty McIntyre Dr. John Burnettt WEBMASTER Mariusz Opalka ADVERTISING INQUIRIES info@AttorneyJournal.us SUBMIT AN ARTICLE Editorial@AttorneyJournal.us OFFICE 10601-G Tierrasanta Blvd., Suite 131 San Diego, CA 92124 P 858.505.0314 • F 858.524.5808 www.AttorneyJournal.us ADDRESS CHANGES Address corrections can be made via fax, email or postal mail.

by Dr. John Burnett

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MEDIATOR OF THE MONTH

22 Hon. David Moon Jr.

Maximum Effort Leads To Successful Outcomes

by Jennifer Hadley

RISING STAR OF THE MONTH

26 Kevan McLaughlin

Taking On Tax Controversies

by Jennifer Hadley

28 Forget About Revenue

Why are So Many Firms Preoccupied with Revenues Instead of Profits?

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by Gerry Riskin

30 The “No Budget” Problem How to Respond to this Common Objection

by Mike O’Horo

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Editorial material appears in Attorney Journal as an informational service for readers. Article contents are the opinions of the authors and not necessarily those of Attorney Journal.

Attorney Journal makes every effort to publish credible, responsible advertisements. Inclusion of product advertisements or announcements does not imply endorsement.

Attorney Journal is a trademark of Sticky Media, LLC. Not affiliated with any other trade publication or association. Copyright 2014 by Sticky Media, LLC. All rights reserved. Contents may not be reproduced without written permission from Sticky Media, LLC. Printed in the USA

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Hometown Pride, World Class Presentations NCG COURTROOM VISUALS CELEBRATES 25 YEARS OF PROVIDING SAN DIEGO ATTORNEYS WITH LOCAL SERVICE AND WORLD CLASS COURTROOM GRAPHICS, VIDEOS AND 3-D ILLUSTRATIONS Jennifer Hadley

“We started out in a dark room with an opaque projector displaying X-Rays on illustration boards and outlining them for display in court,” says John Alesi who co-founded North County Graphics Courtroom Visuals (NCG) with his wife Lisa Alesi 25 years ago. “We used traditional artist chalk and 2B pencils and cranked out type from large machines for press-on titles,” he adds.

In what might be best described as kismet, in the 1980’s Lisa was studying anatomy and planning a career in radiology. John was pursuing a degree in illustration when they realized that their respective passions could be combined for the benefit of personal injury attorneys. One weekend Lisa brought a cat cadaver home to earn extra credit for removing the pituitary gland intact. “John started illustrating the anatomy, and the rest is history,” she recalls.

Little did the two know that their burgeoning business would grow to include a legal design team of elite artists and 6

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3-D graphics experts capable of producing world class visuals including medical illustrations, charts and 3-D images directly from CT and MRI scans. Yet that’s exactly what John and Lisa have done with NCG.

WORLD CLASS SERVICE FOR PERSONAL INJURY ATTORNEYS Naturally, NCG has far superior tools for creating compelling courtroom visuals than they had in 1989. “We bought our first Macintosh computer with 2 MB ram and a 40MB hard drive and were told we would never run out of room. Today our hard drives are measured in Terabytes and there is no end to the amount of ram our graphics gobble up,” Lisa says.

Indeed, the two have always embraced technological advances. John says, “We had one of the first large format printers in San Diego which enabled us to print exhibits 24

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FEATURED

“ With witness testimony and a compilation of photos, we are able to recreate exactly what the accident scene looked like in a photo format.” hours a day if necessary. We learned early on not to depend on outside service bureaus for case sensitive material and opted to buy a printer at a time when they cost as much as a luxury car.”

The decision to embrace technology has been worth it. “As a result we gained the trust of clients and have been able to meet extraordinary deadlines,” he adds.

The two were also quick to maximize the advantages brought about by computer programs as they became available. “We did not foresee when we started how large a part the computer would play in our exhibits,” Lisa says. However, by the mid 1990’s, “We realized the powerful role of Photoshop in recreating accident scenes. All too often accident scenes are altered before photos are taken of how it looked at the time of the injury. With witness testimony and a compilation of photos, we are able to recreate exactly what the accident scene looked like in a photo format,” Lisa says.

In more recent years, NCG has become known for their expertise in creating 3-D images from CT and MRI scans.

“This has allowed us to put a verifiable source for the injuries right on the exhibit,” John says. Depending on the attorney’s needs, NCG will either provide a 3-D image in a digital format, or will create a medical illustration side-by-side with the image to convey even more clarity to the judge and juries.

“Judges are more likely to accept exhibits that come directly from the imaging modalities than from a graphic designer’s interpretation.” Moreover, upon request, “We can colorize hardware and fracture lines, remove bones or visualize softtissue damage,” he says.

KNOWN FOR NEVER SAYING NO NCG’s impeccable work and expedient delivery of courtroom visuals have earned them the respect of prominent San Diego attorneys. “We have great relationships with the legal and medical community. Having been in this business this long, we have grown up with the men and women who were once the newbies in the legal community and have now become trial stars in San Diego,” Lisa says. “Each client brings their case to us a little differently, therefore there is no single way we handle a case. We are comfortable whether it starts with a sit-down in an office, a phone call, an e-mail or a package in the mail with all pertinent medical reports.”

San Diego attorneys confirm that NCG provides custom services as their cases require. Personal injury attorney Skip Babbitt says, “In a recent motorcycle accident case, NCG did bio-illustrations on a total knee ACL, illiotibial band, meniscus

and collateral ligament tear reconstructions using cadaver ligaments and all. They also illustrated the hand fractures with pins and rods at the last moment, and with chilling accuracy and detail. The doctor said it was an effective teaching tool for him to work with in trial. It made it easy for him to show the jury how the injury happened, what the repairs took to do and residual problems with flexion contracture.”

John and Lisa definitely appreciate the respect they have won in the San Diego legal community, but admit that the reputation has been hard-earned through vowing to never say no to an attorney, no matter what the deadline may be. “We appreciate that attorneys are a demanding group, and we have always worked with great flexibility on time lines for finished products and budgets. Our motto is to always say yes, no matter how big or small a case is, or when the deadline is,” Lisa says. Continuing, John explains “Not all of the cases allow us to have weeks to prepare. Some are given to our clients with short notice and we will always prepare something for them. We have never said no because there is always something we can do in a short period of time.”

This philosophy of never saying no has helped Lisa and John to build relationships that span decades. Case in point; NCG has worked with Benjamin Bunn “since almost the beginning,” Attorney Journal | Volume 129, 2014

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NCG is a family business. Lisa, John and their son Christopher Alesi.

Lisa says, and Bunn confirms that the work NCG has provided is exceptional. “NCG is exactly the type of company a trial lawyer needs; excellent work, extremely dependable and always creative. No job is too small, too big or too late to handle. Their help always makes our case clearer and more understandable,” he says. Likewise, NCG has counted attorney Michael Goldstein a longtime loyal client. “NCG has been creating exhibits for me for over 20 years. The results have always been

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high quality exhibits that are clear and comprehensible to the jury, and the jury verdicts have reflected the quality of their great work,” Goldstein says.

NCG’s help extends beyond creating graphics and/or videos that attorneys need. Instead, Lisa and John strive to go the extra mile as part of a “team, working along the same path for the same outcome,” John says. By way of example, he explains, “For complex surgeries, we do the medical research and collaborate

with the medical experts to produce illustrations accurately and effectively. Medical cases are summarized and categorized for the best use of descriptive terms and for formulating the best graphical layout.”

NCG also offers in-house video editing of client footage, or is happy to work with attorneys and their teams at their preferred location. “The Law Offices of Thomas M. Diachenko recently had some raw footage they needed prepared right away for a settlement video, and they wanted to direct the cuts. We came to their office and did all of the cuts right there for them and prepared a DVD for the morning,” Lisa says.

John and Lisa are also happy to extend their office hours and open their doors to attorneys needing a quick break during trial.

“We are close enough to the courthouse that over the years we have fed our clients while they rush in to make copies or quick changes on exhibits. We are lucky enough to get to know some of our clients very well, and we are there for those even on the weekends, to make their lives a little easier,” Lisa says.

the Vista Art Foundation, a non-profit dedicated to keeping art alive in Vista. Both Lisa and John are members of Art Beat on Main Street where some of John’s personal art is on display. Both serve on fundraising committees for the Alley Art Festival, which brings old and young artists together to collaborate, create murals and enlighten young artists along a path of education and eventual careers.

As for the future of the family business? It may very well be passed on to John and Lisa’s children one day. “All three of our boys spent many days and evenings with us and learned a lot about running a business and art. Our son Christopher joined us last year to help with our company. He has been a tremendous asset,” Lisa says.

For now though, John and Lisa are immensely rewarded by playing a role in helping injured victims rebuild their lives.

“Sometimes we get to meet directly with the clients that are injured and that keeps us focused on the real goal. We hope that in five years or twenty years, the work at our company will always reflect that goal,” she says. n

FUTURE PLANS FOR THE FAMILY BUSINESS “As long as we can provide a quality exhibit that enlightens the jury and brings a financial settlement to the people who need it, we will be satisfied. We will continue to keep pushing along the technological curve,” Lisa says of the future.

But the founding duo has not forgotten that art was one of their first loves. “We are very involved in the art community in Vista,” says Lisa. As such, John serves as the Vice President of

Contact: NCG Courtroom Visuals www.exhibits4court.com legalexhibits@mac.com (800) 427-8712 207 Main St. Vista, CA 92084

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Structured Settlements Exclusively for Plaintiffs and Plaintiff’s Attorneys Millennium Settlements Raises the Bar in San Diego

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illennium Settlement Consulting is a structured settlement company that designs structured settlement annuities for plaintiffs only. “Our loyalty to the Plaintiff’s Bar is unique and has implications that are crucial for plaintiffs and their attorneys,” says Marjorie Smith, Structured Settlement Consultant for Millennium Settlements in San Diego. Millennium is a full-service structured settlement company and works with partner companies in lien resolution, Medicare Set Asides, trusts, litigation finance and client financial relief. “We specialize in designing attorney fee structures, which allow attorneys to defer an unlimited amount of compensation on their contingency fees and elect to have those funds directed—on a pre-tax basis—toward an array of fixed income and/or market based products, designed in conjunction with a licensed financial professional,” Margie adds.

Millennium opened its doors in 1984 and established its West Coast corporate office in 2009. Margie attributes the company’s 30 years of success to its exclusive loyalty to the Plaintiff’s Bar, the company’s insistence on working with the most talented professionals in the industry and the company’s ability to anticipate the Plaintiff Bar’s needs and innovate to meet them.

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Unwavering Loyalty to the Plaintiff’s Bar Margie is proud to work exclusively with plaintiffs and plaintiff’s attorneys. “We are devoted to maximizing recoveries in the most responsible and appropriate way,” she says.

Most of Millennium’s work is for victims of physical injury or wrongful death, but claimants to any kind of case taken on contingency can structure all or a portion of their recoveries.

“Claimants on cases such as employment, business litigation, legal malpractice, etc., can defer tax liability and have the benefit of tax deferred growth by structuring at least a portion of their recoveries,” Margie explains. She encourages attorneys to let their clients hear about their options: “Even if clients choose to take their settlement completely in cash, at least they’ve been advised of their right to structure, given that they have only one opportunity to do so.”

Millennium extends its loyalty to the Plaintiff’s Bar through its efforts to give back monetarily to the plaintiff’s community.

Millennium’s Angel Foundation provides financial relief to those who have been injured, Margie explains. For example, Millennium Case Manager, Rosa Florentino, applied to the Angel Foundation to procure a bed for an impoverished and injured claimant living in Mexico. “One weekend, Rosa and

her husband transported the bed across the border and into the claimant’s home. I didn’t even know she’d done it until afterward. She saw a need, saw how she could help, and acted,” Margie recalls.

Margie’s personal business practice is to donate to her attorney client’s preferred nonprofit organization, in the attorney’s name. “While I enjoy sponsoring local Bar Associations and their events—especially the educational events—donating to my attorney client’s preferred nonprofit is how I like to give back,” Margie says.

It’s the critical thinking and eye for detail that sets Millennium apart from other similar companies, Margie says.

“Every claimant has special and difficult circumstances, and many cases have several components: Special Needs Trusts to protect government benefits, Medicare Set Asides to efficiently account for Medicare’s interests, multiple defendants with their own lists of approved annuity providers, etc.,” Margie explains. “We must ensure that documents are consistent and correct, that a plaintiff is getting the best value for his/ her money, that the life insurance company’s credit rating is appropriate for the plaintiff, that Medicare will be satisfied going forward and that the person will still have access to Medi-Cal or Social Security Income if it’s needed.” Margie says that Millennium’s professionals don’t just run annuity numbers and collect documents but that they all serve as an integral part of the settlement team to attorneys/claimants and ensure that everything is done correctly to prevent problems from arising down the line.

Margie says she will travel to meet any claimant: “It’s that important to establish trust with claimants and to show that we take their questions and concerns seriously… every legal recovery deserves our full focus. In working with claimants, I know that my time is not my own; my time belongs to the injured person who is trusting me and counting on me for guidance.”

Innovative Products for Attorneys Millennium’s philosophy of providing responsible and innovative structured settlements extends to attorneys as well. “Many attorneys don’t know that they have access to a unique tax benefit: the ability to defer compensation on their contingency income so as to defer tax liability and put their pretax dollars to work for them,” Margie says. “We are constantly following tax trends and the state of the economy so that we can help attorneys spread out tax liability appropriately.”

Margie clarifies that neither she nor her company is licensed to sell securities or provide legal, tax, accounting or investment advice. “Attorneys must consult their legal, financial and tax advisors for specific recommendations as individual circumstances may vary,” she says, “but I encourage attorneys to ask about Millennium’s unique and proprietary attorney fee structure products.” Millennium is the only company in San Diego to offer Fee Structure Plus™, in addition to the standard fee structure annuity. Margie explains that with Fee Structure

Plus™, attorneys can direct their fees on a pre-tax basis towards most any investment vehicle while having the funds managed by their own financial planner or a trust company. “It really offers the best of all worlds,” she says.

Wide Reaching Experience, Localized Service Margie is proud that every single San Diego team member brings unique skills and experience.

Rosa Florentino, Case Manager, earned her Bachelor of Arts degree in Criminal Justice from San Diego State University, and is a Bar-Certified Paralegal. A former federal corrections officer and police dispatcher, Rosa is a notary and is fluent in Spanish. Margie says that many clients have appreciated Rosa’s ability to translate legal documents and to explain technical terms to claimants in Spanish. As Rosa adds, “We do not let a language barrier make the settlement process more confusing.”

Case Manager Jill Laird brings 28 years of life insurance and annuity experience from her previous role at Pacific Life where she played a vital part of the product development and management team of the Structured Settlements program.

Jill carries a license in life, health, disability insurances and annuities and is a Certified Structured Settlement Consultant.

Margie holds a Masters Degree in English Literature from the University of Virginia. She was a high school and university English teacher and also taught ESL in London and Budapest.

“Our unique backgrounds and communication skills shape the way we communicate and empathize with claimants,” Margie says. “We listen closely and break down complicated material into smaller, more manageable pieces.”

Unwavering Focus on the Client Margie focuses on growing Millennium’s presence in San Diego: “We understand that our clients’ business is high stakes and that our attorneys bear inordinate pressures and a multitude of responsibilities as they’re investing personally in their cases while having clients who depend on them for financial relief.”

She promises to help with anything she can: “Whether it’s meeting with claimants in their homes, helping claimants find health insurance post-injury, running hard copies of documents for signatures or putting claimants in touch with others who can help them when a structure isn’t appropriate; we want to help.” Margie understands that the way to ensure a long career in her industry is to “view everything through the lens of what’s best for the client.” At Millennium, “we eschew tunnel vision and will follow through with supporting our attorneys on any front that we can until the case is properly closed.” n Contact: Margie Smith, Settlement Consultant Margie@msettlements.com www.millenniumsettlements.com 858-784-1189 402 West Broadway, Suite 1240 San Diego, CA 92101 Attorney Journal | Volume 129, 2014

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COMMUNITY news The law firm of Butz Dunn & DeSantis is pleased to announce the addition of David D. Cardone as a shareholder of the firm. Cardone’s practice focuses on the defense of professionals, complex civil litigation and business disputes, and employment law matters. After graduating from The Pennsylvania State University in 1999, he received his Juris Doctorate from the DAVID CARDONE Duquesne University School of Law in 2003. Cardone joined Butz Dunn & DeSantis in 2008 after completing a two-year judicial clerkship with the Pennsylvania Supreme Court.

Butz Dunn & DeSantis is a well-established civil litigation law firm focusing primarily in the areas of professional liability, employment, transportation and complex business-related matters. In addition to trial and litigation services, the firm provides risk-mitigation and selected transactional services.

LAW FIRM & ATTORNEY SPECIALIST

Frederick Schenk – a partner with the law offices of Casey Gerry Schenk Francavilla Blatt and Penfield – was elected by the Board of Directors, 22nd District Agricultural Association (San Diego County Fair Board), as its president.

Schenk now oversees the Board of Directors, 22nd District, which runs the San Diego County Fair – as well FREDERICK SCHENK as all operations at the state-owned fairgrounds in Del Mar. Members of the volunteer, ninemember board were appointed by Governor Jerry Brown or by former Governor Arnold Schwarzenegger to four-year terms.

Schenk, a longtime San Diego resident, was previously vice president of the Board of Directors, and will serve as president for two years. He had been appointed previously to serve on the Fair Board by former Governor Gray Davis, serving from 2002 to 2006, and was vice president of the board in 2006.

Monder Law Group is proud to announce the launch of their new website, www.monderlaw.com. The new website showcases information about the range of criminal & DUI case types the office accepts and provides a valuable resource of useful information for current clients as well as potential new clients in the VIK MONDER area of criminal & DUI defense.

“I am confident that our new website better promotes our commitment to excellence in all aspects of our relationships with our clients and I feel that this demonstrates our professionalism and dedication to our client’s legal concerns in the area of criminal & DUI defense” noted Vik Monder.

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LAURIE LARGENT 12

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San Diego Volunteer Lawyer Program, Inc. (SDVLP), a nonprofit organization that provides free civil legal services to thousands of low-income San Diegans annually, is pleased to announce that two new members have joined its board of directors: Mary V. J. Cataldo, a litigation attorney with Procopio, Cory, Hargreaves & Savitch LLP and Laurie Largent, a litigation attorney with Robbins Gellar Rudman & Dowd LLP. Additionally Robert Gaglione of the Gaglione Law Group will serve as the liaison between SDVLP and the San Diego County Bar Association.

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THE LAWYER’S LAWYER ATTORNEY

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Cathy Fitch and Partners at Coughlan, Semmer, Fitch & Pott, LLP Focus on Professional Liability Defense, With a Specialization in Legal Malpractice B Y KA R E N G O R D E N

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awyers get sued by disgruntled clients when they settle, when they lose, and even when they win. They bear the blame for business deals gone bad, messy divorce disputes and all manner of unanticipated jury verdicts. The reason lawyers are often targets will vary, but each malpractice suit, no matter how meritorious or frivolous, requires particularized attention” says Cathleen Fitch, partner with Coughlan, Semmer, Fitch & Pott, LLP. Even though plaintiffs bear a heavy legal and factual burden when it comes to proving the elements of a legal malpractice suit, that doesn’t deter many of them from proceeding anyway.

But that is where Fitch steps in. She fights for lawyers for the challenge of often complex litigation and the honor of “knowing that I can help a fellow professional,” she explains.

FITCH’S FOCUS: LEGAL MALPRACTICE DEFENSE Fitch spent the first 8 years after earning her J.D. from Hastings College of Law working in construction, real estate and employment law. But in 1988, when her partner at Wharton & Fitch became a judge, Fitch saw the perfect opportunity to expand her scope of practice and joined the firm which was to be the predecessor to Coughlan, Semmer, Fitch & Pott, LLP. “The firm was opening its doors and developing a niche specialty in professional liability,” she says. Fitch was thrilled to step into the firm’s legal malpractice defense practice.

“The cases are very challenging because we need to not only master legal malpractice law, but also all aspects of the underlying case or transaction handled by the lawyer. “My background in construction was of course useful in defending 16 Attorney Journal | Volume 129, 2014

the underlying case against a construction or real estate lawyer, for example. But with all legal malpractice cases we must analyze and develop the underlying matter to defend the ‘casewithin-a-case.’ My job is challenging and enjoyable because I learn about all aspects of the law – from trust and estates matters, probate cases, real estate transactions—to family law, etc. I like the diversity and difficulty of the practice,” Fitch says.

Indeed, Fitch has had 26 years to learn the ins and outs of legal malpractice defense, and today counts 70% of her caseload as these types of cases. As a Certified Legal Malpractice Law Specialist, and a named Super Lawyer® in professionals’ defense for three years, Fitch was a founding member of the San Diego County Bar Association Committee on Legal Malpractice and chaired the committee in 2002. She has guest lectured at San Diego State University and teaches at the annual southern California NITA Deposition Skills program. Fitch has also lectured for the State and County Bar and various continuing education groups on topics including legal malpractice, malicious prosecution, professional liability insurance, the use of expert witnesses and the attorney-client relationship.

Understandably, Fitch prefers not to cite her own published cases --because her attorney clients aren’t exactly eager to have their names synonymous with a malpractice suit, even if they’ve won-- but Fitch is happy to provide a general synopsis of some of the recent victories she’s achieved for clients. “My typical client is an attorney who has been sued for any type of contract, tort claim or fee dispute,” she says.

For example, “In a legal malpractice case involving underlying real estate transactions, I uncovered evidence that contradicted the plaintiffs’ declarations as to the timing of their knowledge of

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Firm Founders: Jerry Coughlan, Cathy Fitch & Earll Pott

claimed attorney wrongdoing. After the trial call, and based on our trial brief and discovery of that evidence, the court reopened and granted our summary judgment motion on the statute of limitations issue. That case in particular taught me to not give up in discovery and to relentlessly pursue all avenues of factual inquiry through court order and writ if necessary,” she recalls.

In another jury trial, in which the claimed wrongdoing involved complex securities transactions, the judge, after hearing some three weeks of evidence from the plaintiffs, found the evidence insufficient and directed a verdict in favor of our lawyer clients. Recently “a rare verdict against our client law firm was overturned on appeal in a published decision. That important case analyzed the improper use of expert testimony by the plaintiff,” Fitch adds.

Moreover, on more than one occasion, the lawyers at the firm have not only defeated malpractice charges but won attorney’s fees due the client. “In a jury trial, we won a cross-complaint for fees of over one and one half million dollars, while defeating all claims of attorney wrongdoing,” she says.

FIRM FOCUS: PROFESSIONAL DEFENSE While Fitch counts legal malpractice defense a large portion of her business, her firm’s niche is in the defense of all professionals 18

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(including lawyers) and businesses in any type of civil, administrative or criminal matter. The Martindale Hubbell AV rated firm which includes partners Jerry Coughlan and Earll Pott has endured for more than 25 years due in large part to the composition of the firm and the cumulative trial experience of its partners. Collectively, the attorneys at Coughlan, Semmer, Fitch & Pott have tried more than 100 cases to judgment.

“We have had great success not only at trial, but in winning summary judgment and anti-SLAPP motions that bring early resolution to cases. We pay unique attention to spotting legal issues and presenting them successfully in a variety of dispositive motions.” By way of example Fitch says “We’ve defeated many malicious prosecution and related claims with anti-SLAPP motions, which are then subject to an immediate appeal, so there can be a lot of moving parts.” Continuing she adds, “We are also well versed in the proper use and scope of expert testimony and have successfully limited or barred such testimony against our clients.”

The breadth of cases that the firm handles is extensive.

Partner Jerry Coughlan’s practice includes more than 100 cases tried involving banking, trusts, securities, legal malpractice, medical malpractice, Bivens and Federal Torts Claims Actions, accounting malpractice, product liability, aviation, admiralty, negligence, defamation, partnership disputes, title insurance, government contracting and a wide range of criminal cases

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particularly involving public corruption and corporate fraud.

He has briefed and argued approximately 50 cases on appeal.

Partner Earll Pott focuses on white-collar criminal defense and related matters, complex federal and state civil business litigation and state court criminal proceedings, including cases alleging murder, extortion, vehicular manslaughter, fraud, embezzlement and sexual assault. He also has substantial experience in matters involving criminal securities fraud, false claims and political corruption, and has defended professional licenses before the medical and psychology boards, as well as the State Bar. However, there are other reasons for the firm’s success, according to Fitch. “We bill at reasonable rates. We have good relationships with major insurance carriers. We successfully develop all legal issues and defenses so that if a case should settle, it settles. But if it has to go to trial, that is just fine too,” Fitch says.

Continuing she says, “We work to develop the respect and trust of all members of the legal community so that we can effectively negotiate a settlement or urge our client’s position with authority. Mediation is an important tool in professional liability cases and we have mediated dozens of cases to resolution to the satisfaction of our clients. Moreover, she adds, “Our multi-faceted experience in the civil, administrative and criminal areas of the law allows us to offer a full range of services to the professional and bring these varied disciplines to bear on all issues facing our clients.”

Coughlan, Semmer, Fitch & Pott, LLP has remained a small firm by design. “We are very hands-on,” says Fitch, who says that she’s interested in growing her caseload, but not necessarily firm size. “The partners of the firm are all trial attorneys. We want our fellow attorneys to have the direct benefit of that experience and expertise, so we prefer to delegate sparingly,” she says.

FOCUS ON TRAINING FOR A FIGHT: A UNIQUE PARALLEL For those meeting Fitch for the first time, her calm demeanor is instantly apparent. She chooses her words carefully and calmly articulates her thoughts in relatively soft-spoken manner. Those who have faced in her in a lawsuit however, immediately find that her quiet confidence belies a fierce competitor, and she attributes a great deal of this to her 20 year practice and study of karate. As a third degree black belt who has medaled in both sparing and kata, Fitch is quick to acknowledge that she has learned a great deal from her karate Sensei Miko Peled “who has taught me not only physical strength but mental stamina and how to face adversity,” she says.

Fitch tries to train 2-3 times per week, participates in tournaments and says that she initially got interested in the martial arts when her son -who now holds an advanced degree in international relations and conflict resolution- and her Attorney Journal | Volume 129, 2014

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Contact: Cathleen Fitch COUGHLAN SEMMER FITCH & POTT cfitch@csfplaw.com www.csfplaw.com (619) 232-0800 550 West “C” Street, Suite 1400 San Diego, CA 92101

© Bauman Photographers

EXPERIENCE daughter -who is now an architect working in Los Angeles- were taking karate lessons as children. “My husband is a land surveyor who owns a land surveying company in Sorrento Valley. He had trained in traditional Okinawan karate style since college. He found a local dojo offering classes in his style and started our children at age 5,” she recalls. It then became a family affair.

When it comes to the parallels between her profession and her passion for martial arts, the link between the two is clear to Fitch. “I think I am known for my tenacity in pursuing results, but people are often taken by surprise because I can appear unassuming,” Fitch says. “In karate you are trained to fight, but never to pick one. It is both a mental and physical workout combined with moral elements. You learn what to do in a bad situation and you learn to think defensively, but you never brag about your training or wear your belt outside the dojo. You don’t swagger. If you tell people you have a belt, someone will want to challenge you, and that is not the objective. The objective is to be trained for the fight, if necessary,” she says. Suffice to say, “My training has had a big influence on my life and my law practice,” she adds. “And karate is also great for stress management which is a necessity for any litigator.” n

» EDUCATION • Hastings College of Law J.D. (1980), where she was Chief Articles Editor of Hastings International and Comparative Law Review • University of California at Davis (1977), where she was Phi Beta Kappa and graduated summa cum laude with a B.A. in Economics • Studied Economics and Swedish at the University of Lund, Lund, Sweden (1975-1976).

• Certified Legal Malpractice Law Specialist

» AFFILIATIONS • Founding member of the San Diego County Bar Association Committee on Legal Malpractice and chaired the committee in 2002 • Teaches at the annual NITA Deposition Skills program • Lectures for the State Bar and continuing education groups on the topics of legal malpractice, malicious prosecution, professional liability insurance, the use of expert witnesses and the attorney-client relationship • Served as an arbitrator for the San Diego County Bar Association fee arbitration panel • Member of the San Diego County Bar Association

» AWARDS • San Diego Super Lawyers for 2013 20

Attorney Journal | Volume 129, 2014

Goals vs. Objectives: a Real Difference

by Dr. John Burnett Dr. John Burnett is the President of John Burnett Marketing, expert witness, consultant, and author. He can be reached at, jburnettdba@me.com. If you are interested in learning more about legal marketing planning you might check Dr. Burnett’s e-book, “How to Avoid Random Acts of Marketing: A Plan for Small to Midsized Law Firms.”

“The goal is where we want to be. The objectives are the steps needed to get there” —Peter Drucker

INTRODUCTION It happened again last week. I was meeting with a new client and her staff. It was our second meeting, and we were discussing their new marketing plan—my primary task. The discussion was coming along nicely, when, predictably, it happened. It always happens! Mr. X [MBA NYU] and Ms. Y [MBA Florida] got into a heated argument about the most appropriate goals [term used by both] for their marketing plan. Mr. X pushed for increased sales, while Ms. Y insisted that, “customer retention needs to increase by 10%.” Grace, the President, thought that both objectives [her word] were on target. No big deal, right?

For me, it is, and I contend it should be important to you. I have to admit that I have a bias about these sorts of things. After 41 years teaching marketing, I feel a personal obligation to make sure that the use of certain business terms are used correctly.

I should acknowledge that I recognize that industries often use different terminology than academics. Still, one social benefit of academics like me is to study concepts and provide standard understandings.

I also understand that, in general, most business managers are not big on definitions unless they can see a clear benefit.

Typically, they are accepting of the jargon used in a particular sector of business. I posit that the distinction between goals and objectives is real and important. It is not just semantics.

I wish to address three areas: [1]order, [2] differences, and [3] benefits.

In respect to order, goals always come before objectives.

The business plan delineates the business goals, followed by the business objectives. Goals are the bases for the objectives.

Many companies have essentially the same overarching goals, i.e., increase sales, increase profits, decrease operating costs, and reduce churn. Objectives are specific.

This sequence follows through into the various business functions as well. Accounting has a set of goals followed by specific objectives. This is true for marketing, finance, human resources, manufacturing, and so forth. For example, a good starting point would be to provide the marketing function with the goal of

sales. Without the integral intermediary step translating that type of goal into concise and actionable marketing objectives that align the product attributes, brand assets, and user needs, success is limited.

The differences are real as well.

Goals are: • Broad and generic • Intangible • Cannot be measured • Long term • Based on ideas • Example: Decrease costs in order to enter new markets.

Objectives are: • Narrow and specific action plan • Tangible • Can be measured • Short term • Based on facts

FOR EXAMPLE Decrease operating costs in our Eastern European plants by 30%

by January, xxxx.

So, what are the benefits ? The primary benefit of understanding the differences between goals and objectives is that it makes a company more strategic. Instead of various company managers using various versions of goals/ partial goals and objectives/ partial objectives, the process will be standardized and implemented the same by all. Essentially, the specificity of objectives will identify the optimum set of strategies, which, in turn, will implement the most effective/efficient tactics. Optimum strategies and effective tactics are two additional benefits.

I end this blog with a bit of academic thinking. When creating cogent objectives, four elements should be considered. First, an objective should identify the subject , e.g., customer, country, department, competitor. Second, what action needs to be taken?

Third, how should that action take place? Fourth, what is the time line? Let me give you a marketing objective for the company I mentioned earlier: Increase Internet sales tJanuary 1, 2013.

I hope you will take the ideas expressed here seriously. Using correct terms does matter. n Attorney Journal | Volume 129, 2014

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JOURNAL

FEATURED MEDIATOR

OF THE MONTH

© Bauman Photographers

2014

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MAXIMUM EFFORT LEADS TO SUCCESSFUL OUTCOMES Trial Attorney, Judge, Mediator, Arbitrator & Referee, Hon. David B. Moon, Jr. (Retired) Goes The Extra Mile, Yet Still Settles Disputes Efficiently and Economically With Judicate West JENNIFER HADLEY

“I regard myself as a full service mediator. I am there to settle the case, so I put maximum effort into solving the problem. I will make follow up calls and I welcome particularly challenging cases that attorneys have almost given up hope of ever settling,” says Hon. David B. Moon, Jr. (Retired). “I’m available as a mediator and arbitrator, or to serve as a CCP 638 referee (by stipulation), a CCP 639 referee (court appointed), Article 6 temporary judge (with rights to appeal) or case evaluator.

I specialize in trust and decedent estate administration, real estate, eminent domain, homeowners association disputes, general business matters, CEQA cases, professional malpractice and title insurance,” he adds.

For Moon, the desire to become a judge emerged early on in his years as a trial attorney. “I admired and respected the state and federal trial judges before whom I litigated many civil and criminal cases. I knew my temperament fit the job. I wanted to become competent in other legal areas, such as medical malpractice, eminent domain and probate.” Moon was initially appointed to the San Diego Municipal Court where he served in all departments, including Presiding Judge. He also spent time as Assigned Judge for the Court of Appeal 4th District, Division One, before becoming a Superior Court Judge where he worked in all departments, including Supervising, Probate, Adoptions and Independent Calendar, where he also presided over civil settlements. When he decided to retire he says, “It was a natural progression for me to gravitate to mediation.”

With years of experience as a trial attorney and decades as the ultimate decision maker, Judge Moon welcomed the opportunity to put his wealth of expertise to use in settling cases more efficiently and economically through mediation.

Specifically he says, “I am facilitative, evaluative and pro-active —in that order—as the circumstances demand.”

THE EXTRA MILE: FACILITATIVE FOCUS For Judge Moon, going the extra mile ironically often means taking short cuts. To that end, his facilitative approach to settling disputes means cutting to the chase wherever possible.

Using analogies to his passion for fly fishing, Judge Moon will often set the stage for the parties by using imagery, which conveys complex concepts in easy to understand terms. “If you (plaintiff) cast a heavy streamer into the top of a pool, the trout (insurance company) is going to be spooked and gone in a flash. As a plaintiff you are not here merely to fish (massage the claim), but to catch a fish (get the money). Don’t scare away the fish by making an outrageous demand at the outset.”

Other ways that Judge Moon invokes short cuts to expedite the process, and save money, while affording the parties swift resolution to the psychological stressors, seem simple but are extraordinarily effective. For example, Judge Moon will often use a white board for diagramming, creating flow charts, charting damages, listing assets and more. “Studies have shown that an overwhelming percentage of what we perceive is visual.

If I can write something on a board with a marker, people get it. They may not agree with the numbers initially, but they get the concept. It’s a matter of distilling the information in black and white,” he says.

Judge Moon has also found reason to pick up the phone during mediations and speak directly with professionals and potential witnesses relevant to a case to obtain information necessary to resolve issues. In probate cases in particular, when there are disputes over estate assets, he’s found that siblings may have very different ideas regarding what the decedent had been told by a financial advisor as to how trust assets should be handled after death. “Why wouldn’t I short-cut the system and go directly to the source in question and get right to the heart of it?” Judge Moon says, “My goal is to expedite the process.”

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© Bauman Photographers

Find tuning his casting skills and relaxing between cases.

He is also open to inviting an expert witness to appear at mediation to give both sides information which would otherwise involve costly deposition testimony. Though it may be unusual, there are certain types of cases which warrant the attendance of key witnesses. “In eminent domain cases, it is essential. We have to have the appraiser there,” he explains.

EVALUATIVE: GIVING POWER TO PARTIES “Parties are entitled to have the opportunity made possible to them to settle their cases without a mediator twisting their arms,” Judge Moon says. To put it another way, Judge Moon prefers to be more like a teacher providing exercises or assignments as opposed to a dictator handing down mandates.

“Wherever possible, I believe in helping the parties work it out without their feeling like I’m telling them what to do,” he says.

To accomplish this, he makes sure to keep both sides engaged during the process. As such, he often gives each side a task to work on while he is meeting with the other side. In many cases this will include a “reality check” where Judge Moon will request that parties answer a series of questions that range from “What do you think the other side is willing to give/take to settle the case?” to direct questions that achieve the objective of 24

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allowing parties to see for themselves what may be in store for them if they do not settle the case.

Judge Moon has asked the parties to write their answers to questions such as: ‘What is the likelihood the claimant can establish liability and causation?’ He also requests answers to questions such as: ‘What do you think a judge or jury may actually award in the case?’ and ‘What do you think the cost for attorney fees may be if the case goes to verdict or judgment?’

In this way, Judge Moon is able to engage the parties in successful resolution by allowing them to see for themselves the consequences of failing to reach a settlement. Moreover, by employing these types of strategies, Judge Moon has found that the honesty and candor of the participants enables him to “frame a bracket or range of value for settlement.”

PRO-ACTIVE IN COMPLEX PROBLEM SOLVING Judge Moon becomes pro-active in disputes as the situation warrants. “Finding out the real agenda of each party is an art,” he says. “There is no script for how to do this, but you still have to read people successfully and you have to establish trust,” he adds.

For his part, Judge Moon particularly enjoys cases that have been

“ I’ve been hooked on the law since I took a prep school course focusing on the history of the U.S. Supreme Court.” © Bauman Photographers

-Hon. David B. Moon

Judge Moon enjoys entertaining family and friends.

deemed unresolvable, often by both parties and their respective attorneys. “As a sitting judge, I developed an expertise in, and a reputation for, settling difficult cases,” he says.

“When an attorney says to me, ‘Judge, this case is not going to settle,’ that becomes a challenge for me. I enjoy being brought difficult cases. Even when both sides are pessimistic, I’ve found a mediator’s optimistic attitude frequently produces results,” he says.

As far as the future, Judge Moon is quite happy in his role as the ‘go-to-guy’ for probate and trust mediations. While he has never kept track of the specific number of cases he’s handled in his 13 years as a full time mediator and arbitrator, suffice to say he has helped thousands achieve resolution. He also has plenty of business and fraud cases flowing in and he anticipates the arrival of more eminent domain cases as well. “I used to do a lot of condemnation cases, but then the state nearly went bankrupt and could no longer buy land to build freeways, so they’ve slowed down for awhile,” Moon says with just a hint of a chuckle. “I expect to be seeing more again soon.”

Personally, he’s incredibly content as well, though he admits that his wife Lynn would prefer he cut down on work and spend more time “doing the important things in life.” “I’ve

been hooked on the law since I took a prep school course focusing on the history of the U.S. Supreme Court. I enjoy doing cases and I love legal issues. I really, really enjoy what I do. Preventing parties from spending exorbitant amounts of money when their cases can be resolved, is rewarding.”

Aside from fly fishing, in his spare time Judge Moon plays tennis, swims, plays guitar, walks his dogs, vacations with his wife and visits daughters and grandsons. n

Contact: Hon. David B. Moon, Jr. (Retired) www.judgedavidmoon.com dbm@judgedavidmoon.com (858) 759-6119 Judicate West 402 W. Broadway - 24th Floor San Diego, CA 92101 (619) 814-1966 www.judicatewest.com

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Taking On TAX Controversies

Kevan McLaughlin’s Tax Controversy Practice Allows Individuals and Businesses to Go Toe-To-Toe with the IRS, California Tax Agencies and the U.S. Tax Court

by Jennifer Hadley

RISING STAR

OF THE MONTH

© Bauman Photographers

2014

“I practice in a very specialized area: defending taxpayers and resolving tax disputes. Our niche is civil and criminal tax litigation and controversies. We represent taxpayers during audits, administrative appeal, litigation before the U.S. Tax Court and criminal tax investigations,” says Kevan McLaughlin, Founder of McLaughlin Legal. However, he admits that he never really planned on a career in tax law, and instead always planned to have a career in federal law enforcement.

“I thought I wanted to go into the FBI. I met with a recruiter who said that agents either needed to be CPAs or attorneys.

I chose the latter,” he says. McLaughlin eventually honed in on tax law and saw that there were three main areas he could choose as his specialty. “There’s planning, compliance and reactionary areas of tax law. I had a romantic notion of standing at the podium and advocating for clients as opposed to being 26

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in a board room drawing up tax plans. That led me to choose the reactionary field of tax litigation and controversies,” he says.

Grateful for Guidance McLaughlin embraced his new career decision, and after graduating from Golden Gate University School of Law, decided to pursue his LL.M in Taxation from the University of San Diego School of Law. “I was finishing up my Master of Laws in Taxation degree during a terrible hiring market.

Richard Carpenter was a professor of mine at USD. I went to him and asked what he thought I should do, because I wanted to leave my firm at the time and go out on my own someday.

He gave me an unbelievable opportunity to work for him in his private practice. He was kind of a halfway house. He gave me experience and exposure it would have taken decades to

learn on my own. Basically, he gave me the means to start my own firm. I was extremely fortunate to find such a fantastic mentor and I will be grateful all my life for what he did for me,” McLaughlin says.

While working towards building his own practice, Kevan began to formulate a couple of guiding principles while at the same time, identified his own weaknesses. “Taking on both the business owner and practitioner roles can be difficult. The two worst qualities to have are hubris and complacency. I saw that finding the right spot between the two is key,” he says.

Moreover, he was not in denial about his biggest weaknesses as a new lawyer in the highly specialized field. “Lack of experience and youth were my biggest obstacles,” he says.

Education to Empower In order to overcome his perceived weaknesses, McLaughlin immediately dove into networking and began establishing himself as an expert by immersing himself in tax controversies and the legal community in general. “I decided that I would try to speak once each quarter and I would publish once each year on tax litigation topics I was experienced and knowledgeable about,” he says. This decision would serve a dual purpose. First, it would enable him to begin reaching clients who by and large didn’t know that they could even challenge tax charges brought against them. Secondly, it would present opportunities for McLaughlin to build a referral pool.

“The reality is that roughly 1% of people are audited each year. It really doesn’t happen often, but there is a perception that you may be audited at any time and you may go to jail, and this perception is a tool the IRS and California tax agencies use to further our voluntary tax compliance system. It’s an intimidating system, and most people don’t know they can fight these charges,” McLaughlin says. As such, McLaughlin began carrying this message to consumers and potential referral sources early on so that if they did find themselves being audited or under investigation, they would know that they have options to fight back.

Continuing, he explains that while civil audits are not as common as many believe, criminal charges are even fewer and far between. “Criminal tax cases mean that an individual willfully committed some act that violates their obligation under the tax laws. But many also don’t realize that a criminal tax case can involve a variety of acts, such as traditional tax fraud, willfully failing to collect, truthfully account for or pay over taxes, willfully failing to file a tax return or submitting fraudulent documents. We hear about these cases, largely because they are intentionally chosen high profile targets such as Wesley Snipes, who is a celebrity, so the media covers it,” he adds.

The second reason McLaughlin dedicated himself to educating others was a strictly business decision. “I take networking very seriously,” he says. As such, he intentionally spoke to audiences of CPAs and fellow attorneys who “may dabble in tax controversy, but don’t include it in their areas of specialization.”

He’s also served as the local secretary and co-chair, and later publication chair of the Young Tax Lawyers of the California State Bar Tax Section and Co-Chair of the San Diego County Bar Association’s Taxation Section. He has presented seminars and lectures for organizations and associations including the San Diego County Bar Association, University of San Diego, the 2013 IRS National Forum, the Legal Aid Society of San Diego and California Society of CPAs. His published articles have also appeared in the Journal of Accountancy and Tax Notes Today.

The education as empowerment strategy has paid off.

Within 2 years of practicing in the field of tax controversy and tax litigation, McLaughlin­—who has been co-counsel on several published U.S. Tax Court cases on the issues of Civil Fraud, deducting real estate loses and the ‘rescission doctrine’-was named a 2011 Top Attorney (Tax) by San Diego Metro Magazine. He also began to earn nominations to the San Diego Daily Transcript’s Outstanding Attorney lists and was named a finalist in 2010 and 2013.

Narrow Niche, Wide Open Opportunities For McLaughlin, just because he works in a highly specialized field doesn’t mean that opportunities are limited. On the contrary he is confident that the future of his firm is laden with opportunities. “The thing that makes me most unique is my concentrated practice area. Even within the specialized field of tax law, not many concentrate on tax litigation and controversy.

I am not all things to all clients, but within this concentrated practice area, I am able to provide service equal to any other large firm. I am fiercely competitive and hard working,” he says.

By way of example, in just five years of practice, McLaughlin has worked with the California State Board of Equalization Taxpayer Appeals Assistance Program, the Legal Aid Society of San Diego and the San Diego County Bar Association’s U.S. Tax Court Pro Bono Program. He has also been successful in representing countless individuals and small business owners in tax controversies and litigation. “I have helped defend numerous taxpayers from various tax agencies including the IRS and U.S. Department of Justice, to the tune of millions of dollars in dispute,” McLaughlin says.

As far as the next five years go? “It is our goal for McLaughlin Legal to be synonymous with defending taxpayers in criminal and civil tax controversies. We want to, without a second’s hesitation, be the first thought for the best tax controversy and tax litigation law firm in San Diego.” n

Contact: Kevan McLaughlin kevan@mclaughlinlegal.com www.mclaughlinlegal.com (858) 678-0061 5151 Shoreham Place, Suite 265 San Diego, CA 92122 Attorney Journal | Volume 129, 2014 27

P

rofits are a better way to measure a law firm’s financial health. This article explores why so many firms are preoccupied with revenues instead of profit and what you can do about it...

If you double your revenues and your margins remain constant, you will double your gross profit. If the number of partners doubles in the same period, you are standing still (well, less the cost of champagne).

Why are so many firms preoccupied with revenues instead of profit? Here are the most common reasons firm leaders focus on the wrong numbers: • Various publications rank firms by revenues. Firm leaders are therefore motivated to try to achieve as high a ranking as they can, for both wholesome and unwholesome reasons—wholesome including positioning to obtain marketing advantages, and unwholesome being basically ego.

• The partners themselves understand the simplistic measure percentage increase, and it is appealing if you don’t know any better.

• Percentage increase included inflation, without highlighting it, so even if there are margin squeezes, revenue enhanement still sounds good.

• Revenue is simpler to calculate than profit, at least firmwide.

THE VISIBILITY TEST

Forget About Revenue

by Gerry Riskin

Gerry Riskin, B. Com, LLB, P. Admin, is an internationally recognized lawyer, author and management consultant and Founder of 30 year old Edge International. A graduate of commerce as well as law, he practiced since 1973 and was Managing Partner of a firm in Canada and Hong Kong. Gerry is author of The Successful Lawyer (published by the American Bar Association). His other books include: Practice Development: Creating The Marketing Mindset, Herding Cats and beyond KNOWING. He is co-creator of the acclaimed programs PracticeCoach® and Rainmaking®., has served the Conference Board of Canada and is a Visiting Fellow of The College of Law in London, a visiting lecturer at Fordham Law School in New York, a Visiting Fellow of the College of Law Practice Management and a Visiting Professor at the University or Pretoria in South Africa. Gerry specializes in counseling law firm leaders and partners on issues ranging from leadership to business development. Gerry is currently actively serving clients in Canada, the USA, the UK, Europe, South Africa, Latin America, Australia, New Zealand and India.

When it comes to measuring the performance of individuals, many firms still focus on recorded billable hours. Recorded hours are perceived to have value, so if we know the billable hours of two lawyers, A and B, and B’s are 120 percent of A’s, we can safely assume that B is producing more for the firm than A. Or can we?

Some slightly more sophisticated firms measure billings, and even more sophisticated ones measure cash receipts. These measurements fail to disclose the true profitability of the practice, which is ascertainable only by going beyond hours or billings or receipts to include costs allocated to the revenue source.

For example, knowing that a lawyer recorded million worth of time is a beginning.

Knowing that 0,000 was billed is better, and knowing that 0,000 was received is better yet. But we cannot really assess the value of the practice until we know that the costs associated with that revenue generation were 0,000—producing a net contribution of 0,000.

ALLOCATING COSTS (THE DARK SIDE) Why are so many firms reluctant to allocate costs? Here are some of the reasons: • It is not simple to allocate costs. What do you count and what don’t you count? It may be easy to allocate staff if there is a 100 percent allocation to a group or team, but in the real world it usually gets a lot messier than that. And then there are issues like this: Is the new office in Timbuktu, which specializes in Practice Area X, a cost of that practice area, or is it the beginning of a presence that benefits and adds international credibility to the entire firm and therefore a cost of all practice areas? Having discretion as to allocation creates dilemmas. And we hate dilemmas.

• The computer systems may not allow the flexibility to do the combinations and permutations of calculations, or the people who operate those systems may be ill-equipped or just plain reluctant to handle the changes.

• Change means some uncertainty, and therefore discomfort. It won’t be done the way we have always done it so successfully. It’s not broken, is it?

• Politics. Individuals with significant personal power are not about to allow any new measurement process that they have not already analyzed to the nth power to determine exactly how it might affect them personally. Partners are as sensitive about cost allocation as they are about compensation.

• The ramifications of doing the analysis may be dangerous. If practitioners in Practice Group A were to learn how much more profitable they really are

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compared with Practice Group B, they may begin putting tremendous pressure on decision-makers as to compensation and other important issues. There might even be a drive to expel Practice Group B from the firm. Worse, the entire Practice Group A may shop for another host firm where they will be more appreciated, or break away to become a boutique. Either way, the firm’s fabric is torn.

If you are truly managing, you need the data to determine profitability. How you share the data is a different matter.

Profit is typically deduced by subtracting expenses from revenues, usually firmwide.

Instead, financials ought to calculate profit from many more perspectives: by lawyer, practice group, industry served, client, geographical location, and by any other useful dimension within the firm.

I am not saying you should publish this information; I am saying you need to ascertain it.

If your systems won’t give you the data (or worse, if the data are not being captured), priority one is to create systems that will. You may have to make reasonable compromises, but sit down with your data processing people (internal and external) and determine what is possible. Talk to your counterparts in firms using the same software and find out how far they are going in this direction. Compare notes.

Next, begin to analyze—even if you have to guess—what is going on. Begin to formulate your views (or educated suspicions) as to where profitability is being enhanced and where it is under attack.

Third, manage accordingly. What does that mean? Well, individual situations are far too unique to generalize here, but you may find this list of questions helpful. Whether you are analyzing individuals, groups, or locations, thinking about these issues might get you started: • Are we placing excessive emphasis on hours?

• Are we placing insufficient emphasis on rates?

• How can we get rates up, if not today, then over time?

• Are we honestly assessing the quality of the client list?

• Are we accurately assessing the contri-bution each client makes to our firm?

• Should we fire some of the clients at the bottom of the list?

• Are we measuring individual performance accurately (as opposed to simplistically believing billable hours or cash receipts in the absence of data on related costs)?

• Are we still recruiting based on linear thinking like the quality of the schools and class ranking, or are we beginning to think about other attributes, such as collateral experience (summer jobs), other degrees, and how that nonlegal experience and education may fulfill future firm needs (even several years from now)?

• Are we tolerating people who are hurting us?

In the long term, it may be sensible to tolerate and even foster less-profitable practices if they complement more profitable practices and the people in them are part of the glue that holds the firm together (leaders, founders, facilitators, and mentors of value).

On the other hand, it may be imperative to stop tolerating less-profitable practices if they include people who are difficult, unresponsive, or adversarial to management, harsh with junior professionals or support staff (or peers), or who consume a lot of time and energy (high maintenance).

PRACTICE GROUP LEADERS When the firm doesn’t know how to properly measure your group’s performance, ignore the Neanderthal measurements and focus on making your group powerful and successful. The suggestions above can be applied to your group as if it were a firm. Your success will give you options. Be patient, but over time if you cannot persuade your firm to measure the group’s real profit contribution rather than merely revenues, maybe your group would be better off in a more enlightened environment.

If you are managing the top line without regard to the bottom one, you are on a perilous journey—a slippery slope to oblivion. There are as many bottom lines in a professional firm as there are ways to examine a multifaceted gemstone. Firm leaders who begin to explore true profitability (even secretly, so the billablehours-and-revenue freaks don’t find out) will enhance the real performance of their firms.

It’s like having a new indicator on your car’s instrument panel showing fuel efficiency by miles per dollar. After all, this is what partners are really seeking: maximum return on their financial interest in the firm. n

• Do our marketing efforts bring us sufficiently high-quality new clients?

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The “No Budget” Problem

By Mike O’Horo Mike O’Horo is a serial innovator in the law business. His current venture, RainmakerVT, is the world’s first interactive online rainmaking training for lawyers, by which lawyers learn how to attract the right kind of clients without leaving their desks.

For 20 years, Mike has been known by lawyers everywhere as The Coach. He trained more than 7000 of them, generating $1.5 billion in new business. Mike can be reached at mikeohoro@rainmakervt.com.

If you’re in the habit of pitching legal services straight out, i.e., “We’re great at real estate finance; let us help you with that,” stop reading. I can’t help you. Nobody can. There’s no market for product-centric pitches. If, instead, you’re bringing fresh thinking to prospects or clients whom you believe would benefit from applying it (with your help, of course), read on.

When you hear “no budget,” you should interpret that as representing one of two problems, each of which can be resolved by shifting your perspective and applying one of a few simple disciplines: (1) You’re talking to the wrong person; (2) The person you’re speaking with perceives the Cost of Doing Nothing as too low (either because you didn’t explore it thoroughly, or it’s actually low).

The first condition usually exists because of the second. Being “the wrong person” doesn’t necessarily reflect the person’s purchasing authority. It reflects their low personal stake in the problem or issue. They have the luxury of delaying action, or eschewing it completely. As a result, they have no reason to embrace the risk associated with taking action or even advocating that others take action. It’s time to shift your goal with this

person. They’re no longer a prospective buyer; they’re now an intelligence source and potential referrer. You’re already discussing the problem’s consequences and impact with them. Ask who is most likely experiencing those first-hand.

In either case, you have to identify other stakeholders in this problem who, because they’re living with the problem and its consequences daily, perceive the cost-ofdoing-nothing as much higher. It’s not all that difficult to motivate the stakeholder you’re now speaking with to connect the three of you. Even if your current contact is unwilling to make the connection, it’s not all that hard to cold-call those experiencing more acute and concrete consequences.

If you can’t find a stakeholder who perceives the cost of doing nothing as high, it’s time to walk away. People only make the decisions they MUST make. Low cost of doing nothing means they don’t have to make a decision, at least now. Put them in your tickler file and ping them every three months or so, or whenever industry media publishes something that suggests the problem is becoming more widespread. After all, it’s a dynamic world; things change. n

Areas of Expertise Business/Commercial • Class Action Complex Litigation • Construction Employment/Wage and Hour Insurance Coverage/Bad Faith • Intellectual Property Legal Malpractice • Medical Malpractice Personal Injury • Probate Real Property/CEQA/Land Use • Wrongful Death

Past President: San Diego County Bar Association 2014 President of the San Diego Chapter of the American Board of Trial Avocates (ABOTA) Listed in The Best Lawyers In America, Super Lawyers and Top Attorneys 26 Years of Experience as a Mediator and Arbitrator 34 Years of Extensive Civil Litigation Experience Representing Plaintiffs and Defendants

M A. MI, E.

Mediator, Arbitrator & Referee ADR Services, Inc.

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