Episode 17 – David Stone: Building a Firm with a Laser-Sharp Focus on Litigation

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David Stone

David Stone

Senior Managing Partner, Stone & Magnanini

David Stone and his partners are building a firm that focuses exclusively on complex high-value litigation, whether handling contingent plaintiff or billable defense work. The firm is nimble, typically around 10 lawyers, but also works regularly as co-counsel with much larger firms when cases requires it. They litigate with a “surgical strike” approach, only taking actions with an intent to influence the fact-finder.
Full Interview Transcript

Michael: My guest today is David Stone, the Senior Managing Partner of Stone & Magnanini, a firm that handles complex litigation in high stakes cases.

Before we officially started the interview, we were chatting just a bit and I told him I would ask him some questions around challenges of leadership: were there times that he struggled, figured something out, and then things got better from there…

Michael: …So I wondered, are there any… just as you reflected on it, any experiences that fit that profile?

David: Well, before I became a leader of the law firm, I would say my guiding principle was finding mentors. I read in a book somewhere—I don’t remember where—that if you associate yourself with successful and intelligent people, you have a greater likelihood of becoming successful. You may not become intelligent. You are what you are, but you have a better chance of becoming successful and so I always try to do that in my life. I always try to find a mentor.

I started out and I had Alan Dershowitz and Larry Tribe when I was at Harvard Law School. Then later on I had Herb Stern, who was a former federal court judge and left the bench to become a trial lawyer. I became his partner. He taught me how to try cases and look at a case and take it apart. Then David Boies of course.

So I always tried to surround myself with these people and learn from them. I think that’s also a good lesson for someone who’s going to run a law firm. One of the things that I do all the time now and I did less but I should have done more when I first started out running my own law firms was to speak to other managing partners of major law firms. I used to meet with Ted Wells who was managing Lowenstein Sandler and now he manages Paul Weiss and just talk to them about the problems they face and how they solve them, so you’re not reinventing the wheel, which there’s a lot of when you’re trying to start out a business, whether it’s a business or a law firm.

You want to do as little of that as possible. I would say that’s one of the lessons I learned. I probably could have done it better, frankly. I think I had an idea about what I wanted to do with my law firm and I figured, “I’m in the smartest guy in the room so I’ll just do what my idea is. Unsurprisingly that didn’t work so well because I’d never done it before and I couldn’t anticipate issues, particularly business issues where I hadn’t run a business before of this magnitude that you just don’t even think about.

That’s why talking to other people and talking about the problems that they’ve had and how they’ve solved them is, I think, a really useful thing to do.

Michael: I asked David if we could include that comment in the episode, and obviously, he said “yes.” And now, we’ll jump to the “official” start of the conversation…

Michael: My guest today is David Stone, the Senior Managing Partner of Stone & Magnanini, a firm that handles complex litigation in high stakes cases. Thank you for joining me, David.

David: You’re welcome. It’s a pleasure to be here.

Michael: Tell us a little bit about the firm. What are some of the different aspects of litigation that you’re handling for clients?

David: We are a boutique law firm. Generally, depending on what day it is, we have between 8 and 11 lawyers. We also have a number of other counselors that we bring in for particular cases who have particular expertise. We also work a lot with larger law firms. We work a lot with Boies, Schiller. I used to be a partner at Boies, Schiller, which is David Boies’ law firm.

But basically we do complex litigation. We are a litigation law firm only. We do not do corporate law, unless a client needs something, we do it as an accommodation. But basically we do complex litigation. I would say probably 70% of what we do falls into either financial fraud, intellectual property or healthcare. Financial fraud is a very broad portfolio. It extends all the way to we just recently represented the Virgin Islands and a failed tax bond issue.

We’ve represented clients in both civil and criminal investigations by the IRS. We had a number of clients who were involved in the Madoff mess in various ways. We co-counseled with David Boies’ law firm in the case that we had against the federal government that arose from the AIG bailout, which you may have read about.

We have a pretty broad portfolio. We do a lot of antitrust cases right now. We’re doing an antitrust case involving health insurance and hospitals in Pittsburgh, which we’re doing with a group of other lawyers. We also have an antitrust case against Widener Law School. It’s really not an antitrust case. It’s a class action case against Widener Law School which relates to their failure to properly report placement statistics, including people that get employed by Starbucks as a successful placement. So we’ve got that going on.

We really have a wide range, and we do a lot in the healthcare area. We advise pharmaceutical companies and hospitals and physicians on compliance issues because I have a fairly large significant background in healthcare. I was the outside counsel to the Medical Site of New Jersey on antitrust and I was also their public counsel for a number of years. So I have a fairly extensive experience with healthcare and particularly with antitrust and Medicare issues.

Michael: Okay. It’s really interesting to me the concept of only handling litigation on a couple levels. One is I just sort of wonder what that’s like on managing resources of the firm. If everything’s sort of all happening at the same time, that can create stress. Has that been an issue where you’ve had to be more flexible about how you are able to respond to things in the litigation calendar?

David: That’s a good question. Let me step back for a second because I think that a lot of firms, because this is one of the things that you’re looking for is why do we choose to structure a firm in a certain way with challenges. A lot of firms believe that if you have a general practice law firm, you’re going to have cross-referrals from clients. Corporate clients will have litigation. Litigation clients will have corporate.

I think to some extent that’s true. However, I’m a big believer doing what you do best and not trying to do things that you’re not an expert at. I know we do litigation really well so my view was I want to do what I do best. I knew that that was going to create some challenges for us, which it has, because we don’t have that inter-firm cross-referral other firms have.

But other firms also have the problem that certain departments in a particular year will be down, while other years, other departments will be up. That’s good if what you want is to sort of be at a low base level that you never get too high and you never get low. But if you want to get high and you want to continue to really grow a practice and a firm and be really profitable, I think that actually can hurt the firm. So I made that choice.

Now, in terms of what you asked me, I hate to always be quoting Herb Stern, who was my former partner, but he was a very loquacious and had a lot of very clever sayings. One of his sayings was they can only come at you one at a time. In reality, in court proceedings, they really can only come at you one at a time. I’ve run a number of smaller law firms before I started this one, before I joined Boies, Schiller, and I have learned very effectively how to litigate in what I call the surgical strike strategy, which is more about the psychology of the lawsuit and about tactics than it is about the particular substance at issue.

My view is everything you do is to influence the judge. Everything you do is to influence the ultimate fact-finder and it’s all got to relate to your ultimate goal, which is to win and get a practical result for your client. I emphasize the practical part because if you hid in your client fees $20 million in legal fees and you get a $5 million recovery, I haven’t really won.

Most of the issues that arise in terms of dealing with litigation, I think, can be handled in that way, just doing it efficiently, not wasting discovery where it’s unnecessary. But to the extent that we need larger trial teams, I have relationships with both smaller law firms and larger law firms that provide me with very skilled lawyers that will come in and co-counsel with me. I don’t hesitate to do that if I think a case needs it. For the most part we manage to handle all the cases without having to do that.

Michael: Yeah, that’s great. Yeah, I was also thinking of it just in terms of I know some firms like to have sort of that steady hourly business to kind of keep things… smooth out the highs and lows of big cases.

David: Yes. Okay, let me tell you. Somewhere in your questions that you gave me before, you asked about the structure of the law firm and what my goal was for this law firm. My goal for this law firm is fairly unique in the sense that I’m taking on a difficult project, which is to blend high-level contingent plaintiffs work with billable work at a fairly high level as well. Most law firms don’t do that. Most law firms spend, if they’re a billable law firm, 80% of what they do is billable and maybe 20% at all is contingent. And if they’re a contingent law firm, usually all of what they do is contingent and they structure their law firm in that way.

So it has been a challenge for me and I do think we’ve gone through some growing pains but I think I’m getting the hang of it. I’m learning how to do it in an effective way and I think the great thing about it is that you have your fixed costs paid by the billable work and you get to do the… for the lawyers in my firm, they get to do really interesting, exciting work that they’re actually getting paid to do, which allows us to compensate them at decent levels. But we also have this very cutting edge contingent work, which makes you happy to go home at night and sleep at night. I think it’s the perfect combination but you constantly have to be tinkering with the system to make sure it works, and it changes every year, and it changes depending on the economic environment in which you operate.

Michael: I wonder if you can identify any of the things that you discovered through the experimentation process that make you… you said you’ve kind of gotten more effective at managing that, so I’m curious what are some of the insights around that?

David: Well, one thing that I learned is that it’s kind of like steering a ship. If you change one aspect of your business model, so for example you change the compensation in some way, that changes the incentives and now the ship moves… You may want to move the ship two inches to the right but you change something and all of the sudden it moves eight feet to the right and now it’s heading this way. So you’ve got to realize that that can have significant impact. It can have significant impact on the type of lawyers that you can track, types of lawyers that stay, the type of lawyers, their general perception of the firm, their perception of the cases they’re working on.

So you always have to be thinking when you’re thinking about your business plan, what is going to be the impact of this on my lawyers that work for me and on the firm as a whole and on how people perceive the firm. So I think I learned those lessons maybe the hard way in the sense that I hadn’t done that before so much. I’d had smaller law firms where I had two or three lawyers so those kind of problems weren’t as significant but it’s a learning process.

Michael: Another thing that I found kind of interesting is you were managing the New Jersey office of Boies, Schiller & Flexner. Is that correct?

David: Yes.

Michael: Obviously now you’re running your own firm, and yet you’re still working with them on cases. So I wondered how that transition took place. Obviously it went down pretty well.

David: Yes. Let me step back for a second. I was the General Counsel of the YankeeNets, which was the company that owned the Yankees, the Nets and the Devils. For three years, I was their General Counsel and I brought a major case against Madison Square Garden to get back the Yankee television rights because Madison Square Garden had those rights. In order to form the corporation and entity which became the YES Network, which you may know of, we needed the Yankee television rights.

I was doing that and I had worked previously with David Boies on a few cases. I had represented some of the interested parties in the Doris Duke estate case, and when he was at Cravath, Swaine & Moore, he represented the bank that was the trustee in the case so we worked together and knew each other a little bit. And I worked with him in some other cases. So when the time came, we’ve got to bring in somebody who’s got major name recognition. I thought him and I brought him in to be co-counsel when this case actually went to trial, so we got to know each other really well. I got to know some of his senior partners that worked with me 24-7 on this case, which was successful from our perspective.

David at that point actually offered me to become partner in his firm. I had my own firm and I was the General Counsel of the Yankee Nets and I said no because I was like, I’ve already been a partner in these big firms and I’m not particularly fond of it, but then a number of years later he came back to me and said, “I’m thinking of starting a New Jersey firm and you live in New Jersey. I think you’d be the perfect person to do it. You can hire all the people. It’ll be kind of like a little firm within a firm. You’ll hire all the people. You’ll run it so it won’t be like you’re in this big huge cog of a machine.”

I said, “David, I really have a lot of respect for you and I love working with you so yes, I’ll do this.” So I did that and it was great, actually. I was there for six years. But what happened was that, first of all, Boies, Schiller grew substantially during that time and it started becoming more of an institutional law firm, which meant that they had institutional clients and meant that they had corporate clients. They actually had a significant corporate department that was very good and was growing.

I was getting a lot of cases that were plaintiff-oriented cases against major Fortune 100, 500 companies that were less popular, let’s say, among the partnership given the way the firm was moving. My view of it was I want to be able to take these cases because I think they’re exciting, they’re fun. They can be very lucrative.

Staying at Boies, Schiller, while I loved it and I loved working with these super-smart people, it’s kind of limiting what I can do. Had a conversation with David about it and we agreed that for everybody’s interest it would be better to spin off the firm essentially, the office. We still work on many, many matters together and I consider him a really good friend, and he’s been a great mentor to me, but this way we don’t have conflicts. We have a lot of flexibility about what clients we can take and in the right case, we can partner with a Boies, Schiller or a Quinn Emanuel or Skadden, Arps but yet we can also take on smaller clients.

So it just gave me a lot more flexibility and it just seemed like the right thing to do at the time.

Michael: Yeah, that makes a lot of sense. I think knowing more of the background also makes sense. I wondered if you had possibly come up entirely through that firm. In that sort of setting it would be harder to see how you’d kind of go off in another direction.

David: Right. I’ve actually never been particularly fond of big corporate style Wall Street law firms because I don’t feel in a lot of those law firms that the cases are handled as efficiently as I think they should be. That’s natural because there’s a lot more employees that they have to employ and there’s a lot more levels between the client and responsibility and the lower level associates and paralegals and everything.

I like knowing everything about the case I’m working on and being able to walk in to any conference with a judge and say, “Look, I know this cold, judge. You want to know what this case is about?” I don’t want to have to turn to two junior partners and say, “So tell me what this case is about?” or, “What about this question the judge asked me because I haven’t read this?” You know what I mean?

I think for a certain type of no holds barred, covering every avenue, these firms are necessary and they’re very good at it. I think most of the senior partners in those firms think they would prefer to handle those cases, most cases, in a more strategic way and not have the overhead and all the other things that are required in a major law firm to handle a lawsuit.

Michael: Right. I also wonder about being in sort of the setting that you’re in, does that enable you perhaps also more creative control as it were? I know that’s kind of a weird way to express it but to just have a vision for where you’re trying to go with a case and go make that happen.

David: Yes. It definitely does. The cases that I handle, I can make every call with them. When you’re in a bigger law firm, you have co-partners that you have to run everything by, you have executive committees that have to agree. So if I want to go out and hire the best expert in the world for a case, which some people would see as I have a 20% chance of winning. In a large firm, you’re not going to get that. They’re just going to be dollars and cents and they’re going to say, “We can put those resources elsewhere.”

But in my own firm I have the flexibility to say, “You know what? I really believe in this case. I want to get the best.” So definitely true and definitely also true in terms of dropping clients. If there’s a client that I don’t want to deal with because I don’t like the way they are behaving ethically or otherwise, I can make that decision, and a larger firm can’t do that.

Michael: Yes. Right. Okay, it definitely sounds like you’re pretty hands-on with the cases so what implications does that have for your role at the managing attorney? What are some of the ways that you enable yourself to be effective in that role?

David: Very good question. I’m probably being way too honest here, but I would say that probably the first two and a half years, we had so much work and so many cases, a lot of which came with from Boies, Schiller, a lot of which we were working on with Boies, Schiller, including a major trial against AIG, which we later then represented, so we have nothing against AIG.

I wasn’t thinking a lot about managing the firm and it was only when we started completing those cases and things became a little more regular and normalized that I started strategically doing a lot of thinking about that. I’ve been thinking a lot about it for the last two or three years and put a lot of effort into it. Basically you just have to take yourself out and go somewhere and get away from the office. I’ve done a number of retreats and just going somewhere with key people and talking about the issues that we need to talk about and finding solutions to them. But it’s critical to get yourself out of the office environment because you’re constantly going to be interrupted and even if you’re not, your head is not in it.

Michael: Yeah, I’ve definitely seen that where, you’re right, just being in that environment makes it hard to focus on philosophical issues because you can just look across your desk and see something that’s sitting there, waiting to be done.

David: I actually think probably the worst development in the history of the legal profession is email because it’s so easy to have your day just hijacked by email. So if I’m sitting in my office, I have a screen that’s about 40 inches because I can’t see that well. So I have a screen that’s about 40 inches that has my email and every time that I look over there and I see a new email, I think, “Uh-oh. What do I do now? Do I now stop what I’m doing, respond to this email? Am I going to forget to respond to this email?” But that’s just an example of things in your office that will distract you and make it impossible for you to really think strategically, which is why you don’t get out.

Michael: Right. You also talked about handling both different sort of types of… the key types at work—contingency versus hourly—and that seems to also imply being both representing plaintiffs and defense. Does that create… do prospective clients bring that up to you as an issue, like, “Man, we’re concerned that… ” Where do you stand ideologically?

David: Yes. It clearly is something that will come up. I think what we try to do is kind of pick our industry and say in this industry, we’ll be defense. In this industry, we’re going to go after this type of client. We know we’re going to have a challenge.

I think industries think that way too. They don’t really care if you’re suing some other industry. If you’re a plaintiffs lawyer, like a Susman Godfrey or something like that, they’re aren’t going to care. They say, “Hey, we don’t want to hire a plaintiffs law firm.” But if what you are is sort of an all purpose law firm—we do plaintiffs work, we do defense work—I think what they care is you don’t see them.

For example, if you’re doing medical malpractice, there’s very few insurance companies or companies that are going to hire you to defend medical malpractice where you’re suing people for medical malpractice. So it’s that kind of a thing. But if I’m suing people for financial fraud, medical malpractice defense clients don’t care.

Michael: Right. You know what I find interesting too is I think kind of being on both sides of the aisle enables you to have a better perspective as well. So I actually see it as a strength but I know a lot of clients don’t feel that way.

David: Right. You’re absolutely right about that. I’m always trying to sell that point. A lot of clients don’t feel that way but I think they should feel that way. I’ll tell you why I think they should feel that way, because plaintiffs’ lawyers, in a lot of ways, have very different mindsets than defense lawyers. Defense lawyers have such strongly developed mindsets about being defense lawyers that they find it hard to put themselves into the head of plaintiffs’ lawyers.

An example, if I know a certain plaintiffs’ lawyer is egotistical or something like that and that it’s very important to him that he be associated with this case or whatever. I’m going to handle the defense of that in a way not to make it more and more difficult to settle with him. You know what I mean? I’ll handle it in a way that he feels his ego is being fed but we get the result we want.

Defense firms don’t really think like that. They don’t understand that mentality very well. I think it makes a huge difference. Also the other point is that I know these lawyers. So when I sit down across the table from them, often they know me, they respect me, they know I’m not going to lie to them. So I’m in a much better position to negotiate a deal with them and somebody who they think of as a dark side and Darth Vader and all that who shares this view that plaintiffs’ lawyers feel that way about the defense firms.

Michael: Yeah, I could see how that would be really effective. Is that something that you’re able to help the other attorneys in your firm to have that perspective? Is that part of the culture or how… I’m curious from a leadership perspective.

David: I’m very big on training the lawyers in my firm and I think the lawyers in my firm get exceptional experience than they would get if they go to a big Wall Street law firm, and I’m big on trying to imbue in them not only the values of integrity first, integrity in the way you handle the case, but also there is a defense side and there is a plaintiff side and don’t drink your own bathwater on either side. I never do. I never get completely consumed, or I certain try never to get consumed with the idea that my side is the only right side in there. There’s no valid position on the other side, because there’s always some valid position on the other side.

I said this earlier but I’m all about psychology. I think the practice of law is about psychology. It’s about how people perceive things and how to persuade people to believe in your view of things versus the other person’s view of things. In order to do that, you’ve got to understand the people involved. It’s not just facts. You’ve got to understand the people and then you’ve got to communicate the facts and the law in a way which they are going to find persuasive.

I just argued a case in the United States Supreme Court and it was a case against Halliburton. There were certain judges there that I knew I could be speaking Swahili and it didn’t matter what I said, they weren’t going to care. They had already decided before we showed up that Halliburton was going to win. So if I didn’t understand that, I would have approached that argument very differently. You’ve got to know who you’re talking to.

I’ll give you one other…

Michael: Yeah, this is great.

David: …example. I had a case in Minnesota I was trying and we had a very proper female judge. I was arguing a summary judgment motion. It was a case involving anesthesia fraud and I was very emotional. I felt like these patients are getting screwed and the government’s getting screwed and this is terrible stuff. I am a relatively emotional person. I think I try to use that in the courtroom in an effective way.

So I was making this argument and I had a PowerPoint and I was making this very impassioned argument. I got to a point where I think there were 12 lawyers on the other side. So literally they had all 12 got up and argued their motion to dismiss or whatever it was, summary judgment motion, and then I got up and it was like the judge said, “Okay, you have an hour and a half.” I said, “I have an hour and a half? They just got four hours? Why do I get an hour and a half?”

So I got to the end of my hour and a half and I said, “I’m not done.” It was like four and a half hours of argument. So I said to the judge, “Judge, please, can you just give me another half hour to just let me finish this argument?” She goes, “I’ll tell you what, Mr. Stone, if you go back and sit down quietly behind counsel table and finish your argument sitting down in a more restrained voice, I’ll give you another half hour.”

What I learned from that, unfortunately too late, what I learned from that was this was a judge that was, as we refer in the psychological profession, as an auditory judge, which means they care about your tone of voice, they care about your demeanor. They don’t hear you if you’re emotional and talking in high tones and doing all this stuff with your hands, they are so distracted by all that, they can’t even focus and hear what you’re saying.

My point is that if you don’t know the type of judge or the type of person that you’re talking to, you can be going west and the sun’s setting somewhere else, it’s not going to help you. So I’m hoping that I’ve learned that.

One of the things that I do and one of the things that I tell all my lawyers, if you’re going to appear in front of a judge and you’ve never been in front of that judge, go at least that morning and listen to all the motions because you’re going to see the type of judge he is. You’re going to see whether he asks questions. You’re going to see how long he allows you argue before he interrupts you. You’re going to see whether he’s prejudging things, and you’re going to see is he auditory or is he visual. Does he respond well to emotional argument?

These are all things that they don’t teach you in law school that I think are critical.

Michael: Yeah, that’s fantastic, just doing that intel on the judge before you’re in front of them. Are there other things that you’ve done to cultivate your awareness of those elements of human psychology that enable you to be more effective as an attorney?

David: Yes. Everything I do is about psychology. I never make a motion that I don’t think is necessary in order to persuade the judge of some key theme of our case. A lot of big law firms don’t submit… they’ll serve 300 interrogatories. I personally think interrogatories are almost useless. But putting that aside, they’ll serve 300 interrogatories and then you try to respond to 300 but who can actually respond to 300 interrogatories?

So you try to respond and usually what you end up doing is answering five of them and then saying, “See interrogatory #5,” or whatever. Then what happens is in a lot of these corporate law firms, they say, “We’ve got to make a motion to compel answers to these interrogatories.” They don’t say, “Are we going to get anything worthwhile if we do that?” They don’t say, “Is this going to help us with the judge? Is the judge going to believe we’re the ones that are overreaching or is the judge going to believe the plaintiffs are the ones that are overreaching or the defendants, whoever I’m representing?”

They don’t do that. At least in a lot of law firms they don’t. They just think, okay, it’s time to make the motion. Compel. I don’t do that. I never do a motion unless I think I need it for the case. I never file a motion unless I need it for the case or I want to educate the judge about something.

It’s all about psychology. I want the judge to believe that I’m the one who has the integrity in the case. I am the one that’s going to tell him the truth. I’m not going to file documents with misleading statements about the facts because I don’t want the judge to think I’m that type of person.

Again, I have to refer to Herb Stern and everybody should go read his books on trying cases to win, which are amazing. But one of the things he says is one of the primary things that matters in the case is what the jury and the judge think of you, the lawyer, your integrity. So if you do something to injure that either before a trial in pre-motion practice or whatever or during a trial, that’s injuring your client, that’s injuring your case. It matters very much what they think of you.

The secondary thing is it matters pretty much what they think of your clients. You don’t want the judge or the jury to think this is a client who hires a lawyer who will lie to me or mislead me. I’m actually amazed at how often defense or plaintiff cases do that. I wouldn’t say they’re lying but they’re saying things that are extremely misleading and they’re kind of hoping the judge will fall down that rabbit hole. I would never do that. I think that if the judge catches on to that, you’re dead in the water for the rest of the case.

Michael: Yeah. Those comments make a lot of sense. I was also curious about let’s say I’m an attorney who’s pretty good at my mastery of my domain, but I’m not so great at understanding the psychology. What do I do to get better at that? Are there things other than just sort of scanning the literature that’s out there? Was there sort of a pursuit that you engaged in earlier in your career that enabled you to become tuned into that?

David: I majored in psychology at the university, at Harvard.

Michael: Okay.

David: I don’t think there’s any, “Go read this book,” or it’s sort of the sum total of my entire life where I’ve made observations. I have a saying and, again, I’m probably not the first one to say this but I have a saying about you’ve got to make all the stops along the way. I think that really applies to being a good lawyer.

My dad has a saying which I think is a very apt saying which he says in order to be a really great artist, you have to first be a great craftsman. You can’t be a great craftsman without putting in the time. You know what I mean? It’s not like you spring out of the head of Zeus and you can be… Maybe there can be 1% of 1% of the world is like that but everybody else, you really need to develop the tools.

One of the things that’s critical for lawyers is judgment. In order to develop judgment, you need to go into situations and see how those situations pan out and then learn what works and what doesn’t work.

Another favorite anecdote I have is somebody was interviewing Larry Bird and he was a very famous basketball player for the Boston Celtics. He made a shot in a game where he was behind the basket. He was falling out of bounds and he was behind the basket and the threw the ball up over the top of the basket, over the backboard and it swished in the basket.

They were interviewing him after the game and they said, “How did you do that?” He said, “When I was a boy growing up in Indiana, I had an apple basket or something on my farm.” He grew up on a farm. “And I took every shot I could possibly take from anywhere on the basketball court 1,000 times. And because of that, I knew I could make it. I knew I had made it before and I knew I could make it.”

I think that’s true with the law too. If you’ve been through it, you’ve tried a case and you know you can win a case, you’re going to feel differently. When you come to some critical point in a case when you’re trying a case and you make a decision, you’re going to have a certain confidence level and you’re going to know, hey, if I do this, they’re likely to do that.

But if you haven’t had that experience, then you may not have that. I do think there’s no substitute for experience but in terms of the psychology, I just think… think about what the objectives are of the other side. What is the personality of the other side? What’s the personality of the judge? Observe them and try to think about how you can benefit from that, how your understanding of that can help you. It’s as simple as that.

Michael: Yeah, that makes sense. I also wanted to ask you about is this something that happens in the firm where the younger attorneys, it’s harder to get them that first chair trial experience? Is there a strategy that you have in place to get them in those positions where they’re able to have that experience?

David: I think the answer to that is yes. First of all, I will take on more larger clients. If they some dispute which is a minor dispute, we’ll take that on as an accommodation to them and then have an associate try the case. If somebody doesn’t like the flooring that was installed in their house or something and they want to sue the flooring company, we’ll do that as a training exercise for the associates. Even though it costs us some money, we view it as a training tool.

We also have a lot of contingent cases where we have a lot more flexibility about… So if you’re in a contingent case, you have a lot more flexibility about which lawyer you use and the way the clients get care and how much it means to the case. So we do give them experience there. I wouldn’t say they first try contingent cases if they’re significant, but if they’re not that significant they can.

Michael: That’s great.

David: So I would say that’s the way we do it.

Michael: Okay. Is there anything else that comes to mind around this topic of building a firm on of foundation of excellence? Any sort of key lessons that you’ve learned over the years that would be helpful to share?

David: I think the key lesson is research the area that you’re going to go into. Think through not just the legal issues about what kind of law am I going to practice and who do I think my clients are going to be, but think through the business issues. How am I going to fund my firm? How am I going to compensate the attorneys? What’s my five-year plan? What’s my 10-year plan?

Have a plan and have it thought through but also make sure that you have a plan B so that if plan A doesn’t work, you have the flexibility to go with plan B. I think a lot of lawyers just kind of hang out a shingle and say, “Come hire me.” I think that can be a recipe for disaster. You have to think it through and really know what you’re going to do and how you’re going to do it and what your resources are.

I’m a big believer in the yellow or the white papers where you take it out and write down what are my resources—money, people I know, smart lawyers that I could hire, technical resources, technology, all that, and make sure you know what your resources are and that you can exploit them in the best possible way.

Michael: Yeah. The other thing too, you were talking about sort of thinking long term. How important is a goal around growth for the day-to-day viability or health of a firm? Do you think that that’s an important goal? Or can a firm have a goal to kind of just stay where we’re at?

David: I personally have no desire to be bigger than 20 lawyers. I don’t need to build some mega-firm. I think mega-firms are kind of out of style right now. But I think you’ve got to go where the business takes you. To some extent. You could always make choices but it’s funny, if you go read some of the interviews with David Boies and John Schiller when they started Boies, Schiller, it was like, “We’re never going to be more than 20 lawyers.” “We’ll never be more than 50 lawyers.” “We’re never going to be more than 100 lawyers.”

But if the business takes you there and you need those lawyers to get the work done, then you’ve got to at least think about growing. I’m a big believer in not growing before the business.

Michael: So, David, what’s a good way for folks to get in touch with you?

David: The best way to get in touch with me would be to email me because I read my email every 30 seconds as I just told you before, at dstone@stonemagnalaw.com. But we also have a website: www.stonemagnalaw.com, which you could go to and it has emails on there and it has our contact information, our phone numbers, etc.

Generally if you want to have a substantive communication, email is generally the best way to contact me.

Michael: Great, and I’ll put that information in the show notes as well.

David: Great.

Michael: Well, David, thank you so much. Really wonderful conversation. I really enjoyed it.

David: Thank you.

Key Links

Show Notes

  • A guiding principal for David: find good mentors [0:25]
  • The value of speaking regularly with managing partners of other law firms [1:55]
  • Stone & Magnanini is a boutique firm, focusing exclusively on complex litigation [4:08]
  • Deploying a “surgical strike” approach to litigation means only taking actions to influence the ultimate fact-finder, not for any other reason [10:22]
  • The overarching goal for the firm is to blend high-level contingent plaintiff’s work with high-level billable work [12:10]
  • Becoming stronger at managing the firm through the process of experimentation [13:55]
  • Transitioning from managing an office for Boies, Schiller & Flexner to co-founding Stone & Magnanini, while still maintaining a strong relationship with the prior firm [16:05]
  • David’s critique of big corporate style Wall Street firms [21:20]
  • The benefits of “creative control” a smaller firm offers [22:55]
  • Being an effective leader while also being on-point for litigation [24:30]
  • Winning clients when the firm handles both plaintiff and defense work; the benefits of being on both side of the aisle [27:48]
  • There is great value in understanding the psychology and mentality of a firm that practices from an “ideological” perspective (i.e., typically only representing one type of client) [29:35]
  • Key values David communicates to associates: integrity in communication with other parties and respecting their points of view [31:40]
  • Psychology is at the heart of the way David practices; the importance of understanding the other’s person’s point of view [32:53]
  • The value of spending time in a judge’s courtroom, even as an observer, if you are going to be appearing in front of that judge [36:52]
  • In order to be a great artist, you need to first be a great craftsman [42:30]
  • Judgement is a key skill for attorneys, but one which can only be learned through doing [43:05]
  • Enabling associate attorneys to begin gaining first-chair trial experience [45:37]
  • Advice for newer attorneys at the start of building a firm [47:00]
  • No interest in growing a bigger firm for its own sake; growth is only appropriate if the needs of the clients require it [48:55]