A recent Washington Post article on Enron’s former chief executive Jeffrey K. Skilling notes how O’Melveny & Myers LLP, the firm who has represented Skilling since 2001 on both criminal and civil charges has collected $40 million in fees.  However, at least one source says the firm is owed another $25 million on top of what they have already received.  Indeed, experts say the Skilling defense is one of the most expensive in history.

Legal Cost Control Inc. says O’Melveny & Myers had a blank check.  The goal was to keep Skilling out of jail.  “Very little thought is given to cost.  It is not a concern,” according to Legal Cost president John Marquess.

But in the real world cost is a concern.  It’s a big concern and the O’Melveny invoice is but one of many costs incurred by Skilling.  Sure, Skilling cashed in Enron stock while it was riding high.  But once he was criminally indicted prosecutors froze close to $60 million of Skilling’s assets.  To make matters worse, the settlement of Enron board members siphoned off any recoveries available from insurance policies.  Actually, those policies based on fraudulent financial statements were void anyway — leaving zero dollars for recovery.  It’s an ironic twist of legal consequences that has left a very rich man cash poor.

The working capital issue, however, may be more than temporary.  The government is now expected to seize Skilling’s assets and to distribute the ill-gotten gains to the victims at whose expense the gain was achieved — the shareholders.  Thus, if the government gets its way Skilling will never get his hands on that money again.  The battle over big bucks tees up more legal wrangling and more legal fees.  Some would call it a financial death spiral. 

These are just a few of the hidden costs of high stakes litigation and one more reason why litigation should be avoided whenever possible.

“Lawyers are a necessary evil, and I don’t know if I have enough evil for you to be necessary.”  S. Truett Cathy, founder of Chick-fil-A restaurant chain when interviewing Bureon E. Ledbetter for the position of Chick-fil-A’s first general counsel in 1979.

Like S. Truett Cathy, most business people don’t like lawyers.  They think lawyers slow them down.  To bridge the gap between law and business it helps for lawyers to look beyond the legal silo.

Indeed, according to Dan T. Cathy, who to over the Chick-fil-A reins from his father in 2001, one thing that sets Ledbetter apart from other lawyers is his ability to see the big picture.  “He’s a broad thinker who doesn’t just focus on the legal issues but on the overall landscape.  He knows how all the parts fit together, and in this business, if you change one thing, two or three other things change too.”  Click here to read more about Ledbetter’s success as Chick-fil-A’s general counsel.

The story of Chick-fil-A offers two interesting lessons:

1. to earn a seat at the table requires lawyers to examine how the law dovetails with business and leverage that knowledge for competitive business advantage, and

2. to unleash the power of legal leverage requires clients to listen with an open mind.

A tip of the hat to Chick-fil-A!

For more ways to build stronger attorney-client relationships see chapter 10 of The Business Guide to Legal Literacy: What Every Manager Should Know About the Law (Jossey-Bass, 2006).