"Caveat Employer--
Firms that understand - and follow - personnel laws are in the best position for employment challenges ahead"
by Richard S. Rosenberg

As businesses go, law firms tend to be a somewhat conservative lot. Typically, law firms are not eager to embrace what's new or fashionable in the business world until it is time tested. Most of the time this serves the firm well. However, this tendency has gotten us into trouble lately regarding the issue of personnel management. In the past decade, we have seen a tremendous upsurge in the number of cases where a law firm is the defendant case. Given the public's generally negative perception of lawyers this is a dangerous place to be. From the vantage point of an employment law counselor to several law firms, I have every reason to believe that this trend will continue until law firms begin approaching personnel transactions in a professional manner. Too often the people running law firms simply are not aware of the significant legal implications of day-to-day personnel decisions. Unless this changes, the news is only going to get worse.

A principal objective of any personnel manager is to make unencumbered decisions. When you make a personnel change, you want to move on without having to devote hundreds of billable hours managing the aftermath. Personnel decision-makers must understand that the legal landscape affecting personnel decisions has changed dramatically in the past quarter century. Law firms that rely on intuition and common sense when making personnel moves are asking for trouble.

The road to success starts with the realization that the employment relationship is one of the most regulated of all business relationships. Employment law compliance consists of a whole lot more than making sure that the right posters are up in the kitchen or that we have workers compensation insurance for our employees (although these are two very important compliance steps). The courts and legislature are constantly creating new ways to make it more difficult to manage employees. Personnel decision -makers must keep abreast of such issues as the developing law of pre-employment testing (drug and alcohol, medical and job content), medical records privacy, the array of time off statutes (military, jury duty, vacation, drug and alcohol rehabilitation, occupational injury and family leave), sexual and other forms of workplace harassment, disability accommodation obligations and workplace privacy -- just to name a few.

Another variable is the shift in attitude among most employees. The economic hiccups of the 80's and 90's, together with the incantation that law firms must be operated as "businesses," have taken their toll. The employment bargain has changed dramatically as employees at all levels witness outsourcing of entire departments, the use of temporary staffing to augment spikes in the demand for services, the elimination of paid benefits for dependents, a lengthening of the partnership track, the institutionalization of the career associate position and a host of other management driven techniques designed to maximize profit. Employees no longer come to work expecting a mutual long term commitment, and institutional loyalty is a thing of the past. Indeed, the well counseled firm has "employment at will" disclaimers conspicuously placed in the employment application, the employee handbook and elsewhere just to be sure that employees do not harbor a contrary expectation. Ironically, these efforts to retool as viable businesses have created a new monster as firms grapple with how to retain their best employees when a more lucrative offer comes along. Also, although employees can be the firm's greatest asset, they undoubtedly can be the firm's Achilles heel as well. Witness the recent pair of sex/race harassment suits filed against Lynberg & Watkins alleging the firm forced employees to engage in unethical billing practices. The specter of intense scrutiny into such business practice is a risk in many employee suits.

The days when employees were unwilling to assert their "rights" or challenge management decisions are long gone. The number of new filings against law firms and the jury sheets demonstrate that law firm employees and their lawyers are eager to go toe-to-toe with their brothers and sisters at the bar. In short, we now have a workforce that is less connected to the organization, more willing to sue and there is no shortage of lawyers willing to take these cases.

The risk of a claim being filed against a law firm is enhanced because we have a much more rights conscious work force. Labor law matters often are front-page news. Who among us didn't follow the Paula Jones sex harassment case, the nasty pregnancy discrimination trial involving Christensen, White, or the sex harassment difficulties of Councilman Nate Holden, just to name a few. Also, labor law regulators require that several informational posters be hung conspicuously in the lunchroom and other work areas. I call these "how to sue you" posters and I recommend that every member of the law firm's management read what the government is telling employees. Perhaps the biggest information equalizer of all is the Internet. There is no shortage of Web sites where employees can be counseled on what the firm is (or is not) supposed to be doing labor law wise.

Moreover, employment law cases are more attractive than ever to the plaintiff's bar because these cases have become high stakes personal injury litigation. A quarter century ago, any employment law verdict was virtually unheard of because the common law and most statutes giving rise to employment cases simply did not provide for jury trials. Nor did they provide for the array of personal injury damages (including punitive damages) commonplace today. Baker & McKenzie found out the hard way when they set the record in the sex harassment arena with a verdict in excess of seven million dollars. Everyone knows that President Clinton paid Paula Jones $800,000 to settle her purportedly meritless sex harassment case. Actress Hunter Tylo of Melrose Place received a verdict in excess of three million when she sued Aaron Spelling in her well publicized pregnancy discrimination case.

Personnel management demands in the coming century will be the greatest ever as the complexion and composition of our workforce continues to evolve and the demands for non-discrimination and accountability in all personnel transactions increase. Added to that mix are very active courts and legislators, and a plaintiff's bar that is relentlessly pushing the envelope of employee rights and employer responsibility. Law firms of every size must begin to manage the firm's personnel in a professional and legally compliant manner.

Firms must follow the old adage: "Measure twice, cut once." Careful planning is the foundation of a sound litigation prevention program. Law firms also must heed the wake up call and allocate sufficient resources to assure that they have state of the art prevention-oriented policies and work practices. Firms also should train everyone who supervises others on precisely how their decisions, language, and behavior (on and off the job) can detract significantly from the firm's overall compliance efforts.

The adage "the cobblers' kids go without shoes" tends to be especially true of busy lawyers who must manage the firm in addition to carrying a heavy case load. As law firms move into the next century, the ones that are most likely to succeed are those that take stock and commit the time and resources necessary to properly position the firm for the many challenges that lie ahead.

Richard S. Rosenberg is a founding partner in the Universal City management labor law firm of Ballard, Rosenberg & Golper. The firm represents several area law firms in their personnel matters.