Sunday, September 01, 2019

O'Melveny's revenue-obsessed lawyers might not give the best advice

       The judge ruled against Johnson & Johnson and O'Melveny in the Oklahoma opioid trial. The decision received quite a bit of press, and it might have permanently tarnished Johnson & Johnson's reputation. Yet in all of the analysis, no one discussed the law firm economics aspect of the ruling -- i.e., that O'Melveny might view it as a flow of funds down a revenue "pipeline." 

       Not all law firms are the same, and not all lawyers give the same advice. I never heard of Johnson & Johnson during my time at O'Melveny and certainly don't know what O'Melveny is telling them. But based on O'Melveny's rapacious culture -- I do wonder if their advice is designed to drag the case out, to maximize the partners' "margin."

       If O'Melveny is doing that, it may have exacerbated the damage to their client's reputation. The opioid crisis isn't just another case. It could kill more Americans than World War II. In terms of public relations, there is a big difference between what the two other law firms did for their clients, Purdue and Teva, and what happened here. Those other firms negotiated deals to quickly get aid to the victims. Here, the case went to trial. And although I haven't looked into the factual and legal issues, and only watched a small part of the trial, the video clips of testimony that I saw seemed damning, and so did the front-page articles.

       Beyond damaging their client's reputation, dragging this matter out could kill people. Just yesterday, an autopsy revealed that it was opioids that caused the tragic death of a star Angels pitcher. This happens every hour, and people will likely die because -- unlike the Purdue and Teva settlements -- the life-saving abatement funds ordered by the Oklahoma judge will not be paid until all of O'Melveny's appeals are complete. 

       And of course there is the direct cost. Those other two settled for a combined $355 million, whereas the judgment against Johnson & Johnson was for $572 million, not to mention the higher legal fees. 

       At the end of the day, both Johnson & Johnson and the victims may be harmed by extensive litigation, with the only winners being O'Melveny's partners.

       In closing, I want to re-emphasize that I'm not accusing O'Melveny of giving their client bad advice to drag this matter out for profit. I don't know what they told them, and I'm far from an expert on the facts and law of this case. Rather, the point of this post is to make readers aware of the incentives that might guide their advice, and the possibility of perverse outcomes.

       [Addendum: Here is O'Melveny's chair, Brad Butwin, boasting about the money his firm made on the Oklahoma opioid trial, as well as the money he expects to make on future opioid trials.]
Johnson & Johnson, Michael Ullmann Executive Vice President and General Counsel, J&J, Janssen Pharmaceutica, opioid, opiate lawsuit, Charles Lifland, Richard Goetz, Sabrina Strong, Steve Brody, Michael Yoder, O'Melveny