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The “11-hour letter” was the epitome of bad behavior by outside counsel, according to Mitchell Falber, general counsel of ABC Carpet & Home. Talking from his office in an out-of-the-way nook amid the sprawling flagship site of the home furnishings and floor covering retailer, Falber describes a letter his company received a couple of years ago from one of New York’s largest and most respected law firms. His company had hired the firm to work on a corporate transaction. “We determined after an extensive review of their billings that we were billed 11 hours for a letter we never received,” Falber says. BIG BLUNDERS That was one of a string of unforgivable mistakes cited by Falber. The firm also billed ABC Carpet & Home for the training of young associates, duplicative reviews by partners, and fancy dinners for secretaries � all big blunders in Falber’s eyes. “It was a complete billing nightmare,” he says. Falber vowed never to use the firm again. For Falber, who regularly lectures on outside counsel to law firms at bar association gatherings and other venues, client relations are a widely misunderstood art. Big and small firms alike, he says, repeat the same mistakes. And those that cannot conform to his expectations do not receive any new business no matter how glossy their reputation may be. Headquartered in New York’s Flatiron district, ABC Carpet & Home functions as a collection of privately owned corporations operating out of New York City with retail stores in the metropolitan area and Florida. With annual revenues of about $165 million and 800 employees, it ranks among New York’s largest privately held businesses. After graduating from Ohio Northern College of Law in 1980, Falber, 49, did personal injury work in a small law firm. ABC Carpet & Home’s chairman, Jerome Weinrib, who is Falber’s cousin, called him to help on a multimillion-dollar commercial dispute. A four-month jury trial ended with a significant victory for ABC Carpet & Home. Years later, in 1985, Weinrib called again, this time offering Falber the job of general counsel. To this day, Falber has run the law department with no other lawyers on staff. “The most fun thing about the job is the diversity of the practice,” Falber says. On a given day, he might tackle issues involving employment law, real estate, risk management, pension plans, workers’ compensation, regulatory oversight, customs, contractual deals, and licenses. As a senior vice president and general counsel, “I’m wearing two hats,” he explains. Falber regularly visits each of ABC Carpet & Home’s locations and makes an effort to meet each of the company’s employees, particularly managers. “It’s good to be reachable and have an open door” for employees, he says. The close-knit relationship he enjoys with ABC Carpet & Home’s rank and file and his longevity are the key to his effectiveness, he says. These are also key ingredients in relationships with outside firms. He is loath to describe this relationship as one between client and lawyer and instead insists on making it a “partnership.” HOWDY, STRANGER “Outside counsel need to view the general counsel as a partner rather than seeing him as a stranger or someone who should be bypassed,” says Falber. The partnership, he says, rests on basic concepts often overlooked by lawyers. “The smartest advice I can give anyone is listen,” he says. “Don’t be arrogant, and leave your ego at the door.” He finds that many attorneys are arrogant because of their expertise, but by failing to listen seriously, they turn off in-house counsel and arrive at less-than-ideal solutions. Outside lawyers who fail to understand a client’s business operations often offer short-sighted solutions that miss the longer-term goal, he says. “I don’t want an outside lawyer to tell me to litigate” to achieve a one-time payment when it could destroy a valuable relationship with a longtime vendor. “That accomplishes nothing,” Falber says. Yet he finds that lawyers are often excessively aggressive because they underestimate the business value of relationships and focus narrowly on legal options and strategies. “I see there is far more room for conciliation” among lawyers, on both sides of a dispute, says Falber. To preserve business relationships, he prefers to use mediation and arbitration over what he calls “gladiator litigation.” GIVE AND TAKE “Business is all give and take,” he says. “It is rarely all take. It is rarely all give. The same applies to dispute resolution.” Pressing for conciliation does not indicate weakness, Falber emphasizes, when a company is willing to fight the battles that are truly important. This concern with over-aggressive lawyering applies to corporate transactions as well. Lawyers tend to “show off” by arguing arcane provisions that distract deal-makers and create an air of hostility among negotiators, says Falber. “Good lawyers stay out of a business transaction until the principals have reached an agreement,” he says. “The chairman doesn’t want to hear you’re arguing . . . over the force majeure clause” or some other provision unlikely ever to matter. For Falber, an outside counsel’s appreciation of ABC Carpet & Home’s business needs is one element of the partnership he seeks. He also expects to play an interactive role with outside lawyers in the nitty-gritty work, he says. In the litigation setting, that means he receives copies of pleadings, transcripts, and other materials. He does not expect to second guess the work of outside experts, which would undercut their effectiveness he says. Instead, with his deep knowledge of ABC Carpet & Home, he sits as a second chair during trials and helps to draft pleadings. “Who best knows what personality [at ABC Carpet & Home] will make the best witness?” says Falber. “Not an outsider.” This cooperation, he explains, produces a better work product by combining the expertise of both the outside lawyers and in-house personnel. Falber screens law firms with these principles in mind, regardless of whether ABC Carpet & Home has had a relationship with the firm in the past. Law firms often fail to sell new lines of services, he says, because they lack enough knowledge about ABC Carpet & Home’s business. “One of the largest public relations mistakes a law firm makes is not enlightening me about all of their areas of work,” he says. BAD BILLING When he lectures to law firms, the most common question he receives is: How do we get our bills paid? The topic of bad billing is a pet peeve for Falber. He looks for clarity in billing. If he cannot understand an item, he says, he is less likely to pay the full amount. Some bills, he says, charge for blocks of time with no breakdowns of the specific tasks completed, and fail to match personnel with these tasks. Falber also dislikes getting charged for extravagances like expensive dinners, and he refuses to pay for what he considers training of inexperienced associates and duplicative oversight by multiple partners. The myriad of firms used by ABC Carpet & Home include Orrick, Herrington & Sutcliffe and Anderson Kill & Olick. Falber does not limit his choices to large firms, however. “Many small practitioners offer the same quality of work,” he says. No matter the size of the firm, Falber insists on establishing long-term relationships with outside firms, the same principle ABC Carpet & Home applies to its business relations. “I’ve attended all of [Orrick's] employment sessions for 10 years,” Falber says, emphasizing the importance of maintaining relationships that some other firms allow to fade. Even with expertise and efficient billing, a law firm may not make the cut if the “partnership” Falber desires does not come to fruition. “If I have to force it,” he says, “then that law firm will not work with us in the future.” Michael Bobelian is a reporter for the New York Law Journal , the ALM publication where this article first appeared. He can be contacted at [email protected].

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