Tuesday, November 3, 2015
Peter Diamond Econ 490: Triangle Arrangement
I personally have never experienced being in a triangle like arrangement, but I have seen it from far away. I watch a TV show called "Suits", and the main characters are a senior name partner, and an associate. And it seems like in many episodes they participate in a triangle like arrangement. But there is one particular case that I remember very well.
Mike, the associate, decides to take on a humanitarian case helping the families of victims from a deadly train derailment. Mike meets with the client, Joe Henderson, the factory worker. Henderson tells him the derailment was caused by inferior heat sensors that the company brass knew were faulty. Harvey, Mike's boss and senior partner, tells him to drop the case, as their corporate clients don't like to work with firms that also handle whistle blower cases. Mike decides not to because his parents also died in an accident, and insists this is personal.
This is an example of where both principals want something else from the agent, and they don't see eye to eye. On one side, Harvey wants Mike to think about the long term and care about the clients who actually make the firm money. On the other hand, Joe Henderson wants Mike to think about those who lost loved ones and not do what the typical hot shot lawyers do.
I only see one way to resolve this tension. If Mike can get a huge settlement from the train company, he can make Joe Henderson and a bunch of the families who lost loved ones happy, as well as showing the other clients of the firm that no matter what case they handle, they can win, and win big. Mike took the risk of pleasing one principal over the other, because he pursued the case when Harvey told him not to. But I think he was confident that he wasn't going to lose, and that he's too valuable to the firm where Harvey wouldn't fire him even if he disobeyed. Mike ends up winning and both sides are happy.
Being in a triangle arrangement is tough because you want to make everyone happy. But all you can do is prioritize, try your best to please everyone, and if you can't do that, minimize the damages.
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TV shows, as distinct from reality, are biased in favor of the underdog. (BTW, if you like stories like this you might enjoy the novels of John Grisham, who was once a practicing lawyer but now writes fiction about lawyers.) The issue for you is whether Mike's decision is fundamentally ethical in nature or if at root it is profit maximizing. In this case, it seems the same course of action achieves both ends. What would happen if taking Joe's case was a long shot? That might not make for good TV, but it seems to me the right question to consider.
ReplyDeleteIf taking Joe's case was a long shot, it could have been very bad news for the firm. If the firm lost the case, that means the resources they used were a waste. But even worse, a loss ruins the reputation of a firm that always wins, and clients pay very close attention to that. So they could potentially lose out on future clients. Regarding their current clients, because they don't like the firm taking whistle blower cases, the current clients might see going against their wishes as a break in trust, and could drop them. And unlike whistle blower clients, losing corporate clients means losing tens of millions of dollars. If Joe's case was a long shot, it all comes back to money. And if Joe's case lead to a waterfall effect of clients leaving the firm, then they lose millions, lose the position of top firm, and lawyers start leaving. So potentially, if Joe's case was a long shot and turned out for the worst, things could have gone down hill fast for Harvey and his firm.
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