By Mcallister Jimbo L’13
On Tuesday Nov. 27, Stephen D. Susman, Founding Partner of Susman Godfrey LLP, delivered the 25th annual Irving R. Segal Lecture in Trial Advocacy to a packed audience at the University of Pennsylvania Law School. In his lecture, entitled “The Joy of Lawyering: Partnership Agreements, Fee Agreements with Clients, and Pretrial Agreements with Opposing Counsel,” Susman discussed his experience founding Susman Godfrey, the rationales behind his pioneering fee and pretrial agreements, and his passion for trial lawyering.
With a rich legal career and numerous accolades, Susman is celebrated as one of the nation’s top litigators, having litigated several high-profile cases. He represented Frank McCourt, owner of the Los Angeles Dodgers, in his battle over sole ownership for the team with his estranged wife and former Dodger CEO, Jamie McCourt. He also represented plaintiffs in a number of successful private antitrust actions against Microsoft Corporation. Who’s Who Legal: The International Who’s Who of Business Lawyers has twice named Susman the Leading Commercial Litigator in the World, and The Best Lawyers in America recognized him as being included in a distinguished group of attorneys who have made the list for 25 years or longer.
Susman began by describing how he found happiness in his own legal career, emphasizing the importance of removing unnecessary stress by securing the right agreements from partners, clients, and opposing counsel. After spending 7 years at a big law firm, Susman realized that he was not having fun practicing law. “I didn’t like representing defendants on an hourly basis,” he explained. “Big firms in the mid-70s were all about billable hours, except that you really didn’t get compensated based upon how much you produced.” He decided to take a leave of absence from the firm, teaching law classes at The University of Texas at Austin.
One year later, Susman decided to reenter the practice of law. But this time around, he wanted things to be different. “There had to be an alternative to the large firm, particularly since the whole idea was to do something that made a lot of money,” he said. Susman had heard about plaintiffs lawyers in big cities making fortunes from antitrust and securities class actions taken on a contingent fee basis. Realizing there might be a market for such a practice in the Southwest, he joined Mandell & Wright, a small Houston maritime personal injury firm, to start a new commercial litigation practice there.
In setting up the practice, Susman implemented several measures designed to alter partner and associate incentives and promote efficiency. “First, I wanted to create a firm that was a complete meritocracy when it came to partner compensation,” he explained. “Second, I wanted a firm that unlike the one I was leaving, was democratic in its governance and transparent in its finances.” After successfully developing the practice, Susman decided to go out on his own, founding Susman Godfrey LLP in 1980. Since then, Susman Godfrey LLP has grown to 90 lawyers, with offices in Houston, Dallas, Seattle, Los Angeles, and New York.
Susman also discussed his firm’s innovative fee arrangements with clients. “Our firm prides itself on pioneering the creation of fee arrangements that reward lawyers for results, not effort,” he said. “On the plaintiff’s side, that is usually a contingent fee agreement that is heavily negotiated and carefully drafted. On the defense side, we have developed similar arrangements that award us for result, not effort: fixed monthly fees that cover part of the value of our projected time, plus a variety of bonuses dependent on various results, like obtaining a dismissal or summary judgment, or settling the case within a short period of time or for less than a certain sum.” Both fee structures reduce incentives to waste time, duplicate tasks, or prematurely settle.
Additionally, Susman described various forms of pretrial and trial agreements with opposing counsel. In explaining the agreements’ utility, Susman noted, “I found that getting along with opposing counsel by making and honoring agreements meant for a much less stressful life. It also produces a better result for your client. You can better keep your eyes on what matters if you are not getting mad from bickering with opposing counsel.” Some examples of such agreements include determining deposition procedures, requiring that all papers will be served by email, and banning either side from discovery of communications with counsel or draft expert reports. More examples can be found on the TrialByAgreement.com.
In his closing comments, Susman noted that traditional jury trials are declining, with clients increasingly preferring arbitration. Despite this decline, Susman believes there will always be a market for trial lawyers. “The skills required to persuade a jury are the same ones needed to persuade arbitrators,” he said. Susman also foresees that the world’s economic and environmental woes will require more regulation at the state, federal, or international level, which will continue to fuel a demand for trial lawyers. Addressing the audience, he concluded, “How much fun you have in filling that demand will depend on how you frame your agreements with your spouse, your law partners, your clients, and opposing counsel.”
The Irving R. Segal Lecture in Trial Advocacy seeks to invite renowned oral advocates to speak at Penn Law. This lecture series was established by the late Irving R. “Buddy” Segal C’35, L’38, who was a leading member of Schnader Harrison Segal & Lewis LLP in Philadelphia. Past speakers have included The Honorable A. Raymond Randolph, David Boies, and Walter E. Dellinger III.