Like a modern-day Molotov cocktail, the lawsuit filed by Bill Gross against his former employer and colleagues at Pimco burst into flame on the internet, just as intended.
It’s an example of how lawyers are starting to realize that telling a sizzling story is at least as important as making a strong legal argument.
The lawsuit is a tale of greed and intrigue at one of the world’s largest financial firms. It’s written to grab attention and produce easy headlines. This tabloid-ready writing style doesn’t come naturally to most lawyers. They have a hard time setting aside the dispassionate prose and elegant legal reasoning they’ve honed over a lifetime. But they’ve started to realize that if they don’t tell the story in an understandable, compelling way in about a page and a half, the media will lose interest.
Whether Mr. Gross will prevail in court is another matter, and we won’t know the outcome of the case for months or even years from now.
But that’s not the point. Mr. Gross is trying to inflict damage on his former colleagues to make it more difficult for them to attract assets and keep talented managers. Enlisting the media in that effort is part of his strategy.
After all, the fund-management business abhors uncertainty. It causes clients to pull back and makes industry consultants poke and prod in unhelpful ways. Anything Mr. Gross can do to sow doubt about Pimco and its leadership undermines their business.
For Mr. Gross, the lawsuit also deflects attention from his own troubles at Janus, where his fund has posted a dim performance and amassed assets of just $700 million since his arrival. A distracting lawsuit won’t be good news to Janus clients, either.
Big lawsuits rarely change minds. More often, they simply confirm what everyone already believes. Some cash might ultimately change hands, but the case will do little to change perceptions about Mr. Gross’s personal style or the conflicts over strategy at Pimco.
Of course, these high-profile lawsuits also have a nasty way of turning on their protagonists. Hewlett-Packard struck first in its battle with former Autonomy CEO Michael Lynch, alleging that he and other executives overstated Autonomy’s profits ahead of its purchase by HP. But the suit is also revealing how poorly the deal was reviewed by the HP Board, and a countersuit by Mr. Lynch just a few weeks ago promises to prolong the matter for months to come.
So give the first round to Bill Gross and his lawyers, whose media blitzkrieg inflicted damage on Pimco. But forceful though it was, a long battle lies ahead. Mr. Gross will need more than lively storytelling to prevail.