Triangle Arrangements

Reflecting on my experiences, no situations come to mind that seem to fit within the triangle like arrangement Professor Arvan’s prompt is after. Perhaps this is something I have to look forward to in my future career. Rather than sharing a personal example, I will dig deeper into the law firm example given in the prompt to explore the possible costs and benefits of this arrangement, as well as their probable causes and potential remedies.

The costs are what initially jump out at me in the triangle arrangement of an attorney who is both an agent of the firm and their client, so this is where I will begin. In any case where the responsibilities are split, there is a possibility for conflict of interests to arise. While I’m not at all familiar with the payment structure at a law firm, I will assume for my analysis that the client makes their payments to the firm, who then pays the associate. This assumption is formed by a comparison to most other business models I am familiar with.

Under this assumed payment structure, it seems that the associate’s loyalty would be unequally split between the firm and the client. Assuming the associate is salaried, as I believe most lawyers are, then their first priority would be pleasing their boss. A part of the boss’s satisfaction might stem from good performance, likely measured by the outcome of the associate’s cases and client retention. These performance measures are where the client’s interest come into play, and in this case their interests seem to be reconciled so that potential for conflict would be low. However, it is possible that an associate may be juggling multiple client’s at once. The firm would expect that the attorney delegates their time between these clients to produce greater total returns. Considering the client, their greatest benefit would be if they had the associate’s full attention. This is one example of potentially conflicting interests.

The prompt brings up the issue of principals that may not see eye to eye on what counts for good performance. Going back to the law firm example, the firm is ultimately motivated by profits. Clients may be motivated by profits as well, but legal battles can also be fought over reputations, personal freedom, and even life itself. In this way, the strategy that may obtain the greatest profits for the firm may not be the same as the client’s goal, or their best-case outcome. Perhaps a client who loses a circuit court case would prefer to appeal the decision to the next level, but the expense that another round of court would bring to the firm is greater than their expected return. If the firm believes their client has no chance of a better decision being made in the appellate court, then encouraging this decision and continuing to represent the client may damage their personal reputation as well as that of their employer's. In this case, how does the associate reconcile these interests?

We can use the Excel homework this past week, which dealt with the standard principal-agent model, to understand this in a more concrete way. The probable utility from helping the client minus the effort necessary to reach that higher outcome would need to exceed the probable utility from not helping them. If the firm believes that the odds of reaching the higher outcome is very low, then the associate will likely not help them as there would too much risk involved.

With so much potential for dispute, it leads one to wonder why these triangle arrangements are a common feature not only in the workplace, but also in society. A few benefits I can see to this arrangement are the different avenues of power and resources each member of the triangle may have access to. Referring back to the example above, the law firm could not exist without these seemingly fragile triangle relationships. Without clients to serve and associates to represent them, law firms would cease to exist. Without a firm or associates, clients would have no one to fight for justice. Without a firm to represent them or clients to serve, an associate would need to find a new job.

We see that despite their flaws, these relationships work out of a necessity, a co-dependence. When tensions arise, the solutions are either problem-solve and potentially reach a compromise, or else the relationship crumbles as one or more members choose to disengage. If a client doesn’t like the way they are being represented, they may try to find a new attorney at the same firm to meet their needs, or they may simply leave the firm and find new representation altogether. Similarly, if a firm is unhappy with an associate’s performance, they may try to modify their actions through performance reviews, monitoring, and careful direction, or they may simply cut ties. In any case, ignoring one member of the triangle is not a viable solution, as the structure is in a careful balance which relies on each member’s continued support.