The Ten Roads to Riches
Page 16
Then again, these two felons served only part of their sentences, as happens with almost all felonies. An imperfect rule of thumb is that convicts serve about a third of the stated sentence. Lerach and Weiss spent less than two years behind bars. They’re banned from legal practice forever, but they’re rich. No one knows how rich but them. Recall from Chapter 4 that entertainers don’t end up as wealthy as folks commonly think. I’ll bet Weiss and Lerach are both wealthier than any TV or movie personality except Oprah. Lerach spends his time tending his garden and bird watching at the aviary on his $24 million seaside La Jolla estate.34 For having screwed it up so badly, they aren’t so bad off. See it another way: America has tens of thousands of petty pirate-like criminals who would love to trade a year or so in the big house if they could sail quietly away afterward into the sunset, a fraction as wealthy as Lerach or Weiss. This form of pirate’s life is lined with booty.
Don’t Lerach yourself.
THE INSIDE TRACK
PLs won’t openly admit this (but will in private): Success is rarely about the law. In civil trials, arbitrations, or even nonbinding mediations, the key is your ability to convince the jury, judge, arbitrator, or mediator that you’re the good guy. Judges won’t admit it, but pretty much once he or she, or the jury, decides who are the good and bad guys, the rest is detail and degree of judgment. The law slides in around that character judgment. Once you convince the judge you’re the good guy and the other the bad guy, it’s basically over. This is why top PLs don’t need top law schools. It’s investigation, theatrics, and street-savvy reading of the judge and players—not legal nuance. Winning is strategizing—then creating the image convincing the judge or jury somehow, some way, you’re good and your opponent’s bad. Pretty ironic in a world of pirates!
There is an inside track. Many top PLs belong to the Inner Circle of Advocates. Join—if you can! It’s an honor. (Visit them at www.innercircle.org.) They let in only the top-earning PLs. Membership is limited to just 100. Can you qualify?
Typically, applicants are expected to have at least three verdicts of one million dollars or a recent verdict in excess of ten million dollars to be considered for membership.35
There are obviously many more than just 100 top PLs. Lots of famous ones aren’t on the list. Yes, John Edwards was once a member. And actually, only seven are women. This road definitely has a male bent at the top. Yet these 100 have taken down some serious bucks. Maybe some of that can be yours.
Legal Reading
Because these books teach you to persuade and negotiate, they’re useful for anyone—not just those on the pirate road.
Rules of the Road: A Plaintiff Lawyer’s Guide to Proving Liability by Rick Friedman and Patrick Malone. These authors are successful been-there-done-that PLs telling you how—better than law school. Friedman is one of the infamous Inner Circle of Advocates.
Theater Tips and Strategies for Jury Trials by David Ball. Professor Ball has turned a background in theater arts into a career as a leading courtroom consultant. He teaches trial lawyers the art of storytelling to evoke trial-winning emotions from the jury.
David Ball on Damages by David Ball. More from Professor Ball. See the inside of jurors’ minds—how they think, what you must do to manipulate them. It’s about convincing them you’re good and the other guy is bad. A must-read on this road.
Legal Blame: How Jurors Think and Talk about Accidents by Neal Feigenson. This covers the same subject as David Ball but from a more psychological perspective.
The Guide to Stealing It, Legally
You generally should graduate college and law school (though it’s not an absolute). You must pass the state bar exam where you reside and/or practice. You find far fewer college dropout lawyers than CEOs. But for those who graduate from even dreadful law schools, this road rocks. The big riches aren’t about pedigree. Loneliness warning! Some people will fear and dislike you and shy away—like from any pirate.
Be the right kind. Just being a lawyer won’t do. For big bucks, become a plaintiff’s lawyer—a proud pirate.
Think client and target. All you need are: Sympathetic clients: Those perceived as poor and downtrodden make good clients: the sick, kids, low-level workers, Joe Six-pack.
Villainous-looking targets: Targets must be easily painted as villains. Big business is good—big oil, tobacco, or pharma. Finance, too—areas perceived as having deep pockets. Small firms can also be easy hits because they can’t afford to fight back, so they settle easily. Think volume.
Complex subjects: Sue on grounds that can easily confuse juries so you can control the image of good and bad. Then, it’s more about who they like than facts.
For the biggest bucks, focus on class action lawsuits. Collecting a percentage of these settlements is huge with a big class. Same rules—helpless clients, deep-pocketed corporate villains, complex subjects. Be a good storyteller.
Get a dog. Being a pirate can be lonely. Some people may dislike you. You will make enemies. A big dog provides protection and love.
NOTES
1. Peter Elkind, “Mortal Blow to a Once-Mighty Firm,” Fortune (March 25, 2008), http://money.cnn.com/2008/03/24/news/companies/reeling_milberg.fortune/ (accessed April 23, 2008).
2. Jeffrey MacDonald, “The Self-Made Lawyer,” Christian Science Monitor (accessed June 3, 2003), http://www.csmonitor.com/2003/0603/p13s01-lecs.html (accessed April 23, 2008).
3. American Bar Association.
4. “2015 Salaries and Bonuses of the Top Law Firms,” LawCrossing, http://www.lawcrossing.com/article/900045281/3rd-Year-Salaries-and-Bonuses-of-the-Top-Law-Firms/ (accessed September 14, 2016).
5. U.S. Department of Labor, Bureau of Labor Statistics, “Occupational Outlook Handbook” (December 17, 2015), http://www.bls.gov/ooh/legal/lawyers.htm (accessed September 14, 2016).
6. Saira Rao, “Lawyers, Fun and Money,” New York Post (December 31, 2006), http://www.nypost.com/seven/12312006/business/lawyers__fun__money_business_saira_rao.htm?page=1 (accessed May 19, 2008).
7. Sara Randazzo and Jacqueline Palank, “Legal Fees Cross New Mark: $1,500 an Hour,” Wall Street Journal (February 9, 2016), http://www.wsj.com/articles/legal-fees-reach-new-pinnacle-1-500-an-hour-1454960708?cb=logged0.10928983175737395 (accessed September 14, 2016).
8. Towers Watson, “2011 Update on US Tort Cost Trends,” (January 2012), https://www.towerswatson.com/en-US/Insights/IC-Types/Survey- Research-Results/2012/01/2011-Update-on-US-Tort-Cost-Trends.
9. Institute for Legal Reform, “International Comparisons of Litigation Costs,” June 2013, http://www.instituteforlegalreform.com/uploads/sites/1/ILR_NERA_Study_International_Liability_Costs-update.pdf (accessed September 14, 2016).
10. Michael A. Walters and Russel L. Sutter, “A Fresh Look at the Tort System,” Emphasis (January 2003).
11. “Joe Jamail, Jr. Profile,” Forbes (September 14, 2016), http://www.forbes.com/profile/joe-jamail-jr/ (accessed September 14, 2016).
12. Steve Quinn, “High Profile: Joe Jamail,” Dallas Morning News (November 30, 2003), http://www.joejamail.net/HighProfile.htm (accessed April 23, 2008).
13. Ibid.
14. Cheryl Pellerin and Susan M. Booker, “Reflections on Hexavalent Chromium: Health Hazards of an Industrial Heavyweight,” Environmental Health Perspectives 108 (September 2000), pp. A402–A407 www.ehponline.org/docs/2000/108-9/focus.pdf (accessed April 23, 2008).
15. Walter Olson, “All About Erin,” Reason Magazine (October 2000), http://www.reason.com/news/show/27816.html (accessed April 23, 2008).
16. Ibid.
17. Marc Morano, “Did ‘Junk Science’ Make John Edwards Rich?,” CNSNews (January 20, 2004), http://www.cnsnews.com/ViewPolitics.asp?Page=%5CPolitics%5Carchive%5C200401%5CPOL20040120a.html (accessed April 23, 2008).
18. “Parents File $150M Suit Against Naval Hospital,” News4Jax (February 8, 2007), http://www.news4jax.com/news/10965449/detail.html (accessed April 23, 2008).
19. Jim Copland, “Primary Pass,” Natio
nal Review (January 26, 2004), http://www.nationalreview.com/comment/copland200401260836.asp (accessed April 23, 2008).
20. Robert Steyer, “The Murky History of Merck’s Vioxx,” TheStreet.com (November 18, 2004), http://www.thestreet.com/_more/stocks/biotech/ 10195104.html (accessed April 23, 2008).
21. Ibid.
22. Peter Loftus, “Merck to Pay $830 Million to Settle Vioxx Shareholder Suit,” Wall Street Journal (January 15, 2016), https://www.wsj.com/articles/merck-to-pay-830-million-to-settle-vioxx-shareholder-suit-1452866882 (accessed February 28, 2017).
23. Peter Lattman, “Merck Vioxx by-the-Numbers,” Wall Street Journal Law Blog (November 9, 2007), http://blogs.wsj.com/law/2007/11/09/merck-expected-to-announce-485-billion-vioxx-settlement/ (accessed April 22, 2008).
24. American Bar Association, “Tort Law: Asbestos Litigation,” http://www.abanet.org/poladv/priorities/asbestos.html (accessed March 6, 2008).
25. Patrick Moore, “Why I Left Greenpeace,” Wall Street Journal (April 22, 2008), http://online.wsj.com/article/SB120882720657033391.html?mod= opinion_main_commentaries (accessed May 30, 2008).
26. Peter Elkind, “The Fall of America’s Meanest Law Firm,” Fortune (November 3, 2006), http://money.cnn.com/magazines/fortune/fortune_archive/2006/11/13/8393127/index.htm (accessed April 23, 2008).
27. Ibid.
28. Ibid.
29. Michael Parrish, “Leading Class-Action Lawyer Is Sentenced to Two Years in Kickback Scheme,” New York Times (February 12, 2008), http://www.nytimes.com/2008/02/12/business/12legal.html (accessed April 23, 2008).
30. Ibid.
31. Peter Elkind, “Mortal Blow to a Once-Mighty Firm,” Fortune (March 25, 2008), http://money.cnn.com/2008/03/24/news/companies/reeling_ milberg.fortune/ (accessed April 23, 2008).
32. Jonathan D. Glater, “Milberg to Settle Class-Action Case for $75 Million,” International Herald Tribune, June 18, 2008, http://www.iht.com/articles/ 2008/06/17/business/17legal.php (accessed June 17, 2008).
33. Editorial Staff, “The Firm,” Wall Street Journal, June 18, 2008, http://online.wsj.com/article/SB121374898947282801.html?mod=opinion_main_review_and_outlooks (accessed June 19, 2008).
34. Ann Woolner, “Convicted King of Class Action Builds Aviary, Regrets Nothing,” Bloomberg (October 11, 2011), http://www.bloomberg.com/news/articles/2011-10-12/convicted-king-of-class-actions-bill-lerach-builds-aviary-regrets-nothing (accessed September 14, 2016).
35. The Inner Circle of Advocates, http://www.innercircle.org/.
7
OPM—NOT OPIUM: WHERE MOST OF THE RICHEST ARE
Like telling folks what to do? Have nerves of steel? OPM may fit you fine.
This road is paved with fees from Other People’s Money (OPM)—money management, private equity, brokerage, banking, insurance, and so on. It’s easy entry. You don’t need a PhD or a brain surgeon’s brain. There are lots of crossovers here, too. OPMers frequently found big firms (Chapter 1) and generate very rich ride-alongs (Chapter 3). Some OPMers end up heroes, some in prison—there’s ample room for conflict of interest. But a good OPM richie efficiently and ethically makes his (or her) clients rich at the same time. Getting rich while making others rich—what’s more blessed than that?
OPM is the commonest road for the ultrawealthy. It isn’t how you get to be the very richest, but it’s how most of the mega-rich get there. Ninety-three of 2016’s Forbes 400 members got there on this road—the most of any category. And more modest piles of $2 million to $50 million are commonly made, often over just a few years.
BASIC OPM CAREER RULES
Folks often think they must first know technical aspects of finance or they can’t succeed here. No! It’s just as good to learn to sell first and learn finance later—maybe better. One counterintuitive rule I learned from watching others navigate this road is:
Young people learn to sell and communicate better than older people, and somewhat older folks learn finance better than younger ones.
Start by learning to sell. There’s time later to learn finance and investments. Learning selling is like skiing—the younger you start, the faster and better you learn. But learning to analyze investments is like learning to hire people well—years of real-world experience make discernment easier. Time helps.
Learn to Sell. The Rest Follows.
Often young people want to start as hotshot research and investment analysts or portfolio managers—certain they’ll be the next Warren Buffett or Peter Lynch—often naively disdaining anything sales-related. They almost never get their desired outcome. My advice to the young: Start by learning telephone sales—even if not investment-related. Here your youthful appearance won’t hurt you. Then, move to in-person sales, first with simple, then more complicated products or services. Sales competence comes fast when young. But the ease of learning to sell drops steadily with age. People in their 40s who’ve never sold can learn, but it’s harder, takes longer, and feels unnatural (like skiing!).
Product knowledge is less critical—it can be learned fast as needed. Thirty years ago Ken Koskella, who originally built sales and marketing at Franklin Resources (he retired rich and now does stand-up comedy for fun—the old business guy in a suit joking about how old business guys are funny), taught me if you really know how to sell, you could be dropped into America’s most remote town and make a living by the end of the week. Maybe not the living you’d want later, but you could get by—without knowing anything else beforehand.
Many think they don’t need to sell—they’ll start a firm and hire salespeople. On this road you simply can’t hire and manage salespeople well if you can’t sell yourself. Won’t work. This isn’t a book on how to sell or manage sales (I offer a list of those books later), but one reason to learn sales is so you can hire and manage a salesforce—key to many roads. Fact: Firms need salespeople more than they need 23-year-old ambitious but skill-less know-it-alls. Young folks on this road should learn to sell—anything—in their 20s, then sell finance products. You’ll learn some finance naturally en route. In your early 30s, reposition yourself to plumb finance’s analytical and technical depths. By then your extra real-world experience aids in learning finance.
Find the Right Firm
Any firm is the right firm if they teach you to sell. Big firms hire in volume. It doesn’t matter much if it’s Merrill Lynch, JP Morgan, or New York Life. Visit, interview, talk, and decide which one doesn’t make you want to jump out a window before you’ve learned to sell. Or go with a boutique firm—every major town has them. Neither is inherently better or worse. Big finance firms regularly hire folks straight from college or with no real experience—in volume with a
Learn to sell. It’s the most important OPM skill.
“throw spaghetti at the wall” mentality. If newbies flame out fast, no skin off the firm’s nose. (This won’t be you if you focus only on learning to sell.) For a more touchy-feely start, try a boutique. But learning to sell is key. For that, buy or borrow these books and keep practicing what they teach repeatedly:
How to Win Friends and Influence People by Dale Carnegie
You’ll See It When You Believe It by Wayne Dyer
The Psychology of Selling by Brian Tracy
The Difference Maker by John Maxwell
Confidence by Rosabeth Kanter
See You at the Top by Zig Ziglar
Spin Selling by Neil Rackham
Then you must pass licensing tests before engaging clients. The tests are customized—based on what you’ll sell. They aren’t hard—if you study—and you don’t need a degree to take them. But beware: At many firms, if you don’t pass the first time—sayonara.
Then it’s selling time. And if you don’t sell, you’ll soon be shown the door. Most firms have periodic quotas—you must bring in maybe $500,000 or so in new client assets monthly. Fail to do so, and you’re history. This isn’t to discourage you but to emphasize the importance of learning to sell. You may be a super market forecaster, but if you can’t get clients to
hire you, take a different road. Your firm should help with lists of names to call, but then it’s up to you.
STEPS TO OPM WEALTH
Next, what type of OPMer will you be? Consider two camps—commission-based and fee-based—defined by how you charge fees and maybe what you sell.
Commission-based OPMers—like stock and insurance brokers—sell products (e.g., stocks, bonds, mutual funds, even insurance) for commissions. What you earn all hinges on the sale. A client has $1 million. You sell him stocks paying you a 1 percent commish. You make $10,000. Keep finding clients and selling products—income keeps coming. The basic commission-based business model is:
Get the client.
Sell the client product(s).
Get a commission.
You make what you sell. Want a $250,000 salary? With a 1 percent commission you must sell $25 million of products. How? Find 100 clients with $250,000 each, or 50 with $500,000! Your call. The drawback? Unless you get them to sell what you sold them and buy something new, you need another slew of clients next year. Your time is spent hunting for clients. If you’re a great hunter, no problem! That’s commission-based.
Fee-based OPMers—like investment advisers, money managers, or hedge funds—provide services for some percent of assets involved. Say you have 100 clients. Each invests $250,000 with you. You charge 1.25 percent per year (a typical fee for fee-based advisers). That’s $312,500 in annual revenue as long as the clients remain. The more their assets grow, the more your fee does. If you keep your clients and the market helps out, you make even more next year! But you get paid less if their assets shrink. The basic fee-based business model is: