Legal Times: How prevalent is the firm's use of alternative fees?
Graeme Bush: Based on talking to my colleagues at other bigger firms, we may do a little less of that than some of the other firms that have institutional client relationships where their client is maybe giving different types of business — some litigation, some corporate, some regulatory. There are package deals to handle a whole variety of things. We don't tend to do that. A contingency fee is to some extent an alternative fee arrangement, and we do a fair amount of that — including with some business clients, not just with individuals. We have also done what I call collar arrangements, which is a flat fee with a collar. We will take X amount and then if it goes a certain amount above the collar in terms of time, we will get the amount above that, although sometimes at a reduced rate. If it is below that, as long as it's within a certain range, we will keep the difference. If it is way below it, then we will adjust the fee. That is one thing we do on a fairly regular basis with certain clients. Honestly, I think a lot of what passes for alternative fees these days is simply a discount on your hourly rate.
LT: How has the Washington legal market changed over your career?
Bush: When I started in the late '70s, if you had a big derivative suit or a securities class action, the litigation was by and large defended by law firms in New York, D.C., L.A. and maybe Chicago. Over that period of time and certainly beyond, I think the bars in other cities have been recognized as having very competent and very good lawyers who are capable of handling that. I think the carriers are happy to be paying rates in other cities maybe where the litigation has been brought. It's not a given that a D.C., New York, Chicago or L.A. firm is going to have the primary defense role in those kinds of cases. I think there were always very good lawyers in other jurisdictions, but now there are more good lawyers. I think the carriers are looking for lower rates and less expensive representation.
I know in the legal malpractice area that having a local lawyer who really knows the court is important. As long as that person is capable of handling the whole case, they don't need somebody from a big city to ride shotgun.
LT: What is your take on the current legal environment?
BUSH: I think the leverage model is under pretty severe attack. It doesn't affect us as much because we never had a high leverage model. I think one of the really interesting and unique things to D.C. is the question of how much some of the virtual law firms are going to force fees down for certain kinds of work. They have no overhead and their fee structure is such that they can do a big corporate deal. They aren't going to do a $10 billion corporate deal with securities and regulatory issues. But a $100 million deal maybe they can do. Some of that work is going to get pulled away from firms that used to do that. They are either going to have to figure out how to do it as cheaply as the alternatives or they are going to lose the work. What happens when that happens? It's nice to have the $4 or $5 billion deal, but you don't have five or six of those a year. If you're losing all the lower-end work, then you can't keep people busy and you can't support the kind of staffing and you are not going to be as profitable. I think that is a real challenge. It may be a challenge for firms like ours. I think it's harder to use that virtual law firm model to do litigation. If somebody is under a criminal investigation, I don't think they're going to a virtual law firm anytime soon.
LT: You've got some sports memorabilia peppered around the office. What's the significance?
Bush: The firm used to have season tickets to the [Washington] Capitals, and there was one year where they were so bad that literally we did not use one ticket for the entire season. We couldn't give them away. People on the executive committee said this is silly and we have to get rid of these tickets. Within two years, they had [Alex] Ovechkin and they started to be the hottest ticket in town. We still have Wizards tickets and I refuse to give them up because I know what will happen.