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Approaching this from a cold math perspective, like a McK consultant would.. $573M settlement for approx 450k deaths, is a a little over $1200 per death if that

Approaching this from a cold math perspective, like a McK consultant would.. $573M settlement for approx 450k deaths, is a a little over $1200 per death if that is given away as compensation at all. Not bad for McK I'd say. The consultants really managed this well.

leafmeal 6y ago
From the New York Times article, "The amount McKinsey is paying is substantially more than it earned from opioid-related work with Purdue or Johnson & Johnson, Endo International and Mallinckrodt Pharmaceuticals, its other opioid-maker clients, a person involved in the settlement negotiations said" https://www.nytimes.com/2021/02/03/business/mckinsey-opioids-settlement.html https://www.nytimes.com/2021/02/03/business/mckinsey-opioids...
- RhodoGSA 6y ago
  Yeah, but liquidated damages can far exceed the cost of the project. In most CapEx you can see clauses that include 3-10X the cost of the project in potential liquidated damages if your robot goes down and damages things, or causes the line to go down. I have no idea how this is handled from the Service side but i imagine it's similiar. IANAL.
- glaucon 6y ago
  And if I killed someone to get their wallet no one suggests that because I didn't get much out of the wallet it's OK for met to have a lenient sentence ? If McKinsey knowingly offered advice that led to thousand of deaths then the penalty should be more than $1200/body regardless of what their fees were.
  - leafmeal 6y ago
    What do you think an appropriate penalty is? When I first read this headline I was worried the fine would be just a slap on the wrist. I was glad to see it was more substantial. Personally, I think a fine like this is just if it causes consulting firms to think about the consequences of their actions and do the right thing in the future. Making firms responsible for damages they cause would be best. Making it it clearly unprofitable is a good step.
    - bcrosby95 6y ago
      For basic fraud/bad behavior, off the top of my head, at least 5-6x what they made from it might be good. Anything involving direct, long term physical harm (such as death) needs a secondary penalty on top of this unrelated to profits made. You have to account for not all of these schemes being uncovered. Then you have to add an actual penalty on top of it.
      - glaucon 6y ago
        Generally, for just plain old fraud or similar, this gets close to it for me. In this particular case however, where the wrong doing resulted in many deaths I think some other approach is appropriate. I would really like to see more argument over why jail time is not an appropriate response for senior leaders within organisations that currently suffer nothing more than a fine. Where an organisation has shareholders if the fine is really big then the persons perceived as responsible will, presumably/hopefully, see their career prospects suffer but really to provide an incentive where the benefits can be supremely high I think seeing a few of your peers spending time in jug would help. I appreciate the problem is knowing who to jail and I appreciate that's a hard problem and I don't have a ready answer for it.
      - klmadfejno 6y ago
        This is closer to 600x what they would have made on a study like this.
- robertlagrant 6y ago
  Oh no, they didn't break even.
- deleted 6y ago
  [deleted]
mrosett 6y ago
Your assumption is that without McK’s involvement nobody would have died of opioid overdoses during that window. That seems very questionable.
StormyWeather 6y ago
I am not defending what the firm did but we are talking about a study that took place in 2017, it has nothing to do with what happened before and certainly doesn't account for all deaths after 2017 either.

leafmeal 6y ago

From the New York Times article, "The amount McKinsey is paying is substantially more than it earned from opioid-related work with Purdue or Johnson & Johnson, Endo International and Mallinckrodt Pharmaceuticals, its other opioid-maker clients, a person involved in the settlement negotiations said" https://www.nytimes.com/2021/02/03/business/mckinsey-opioids-settlement.html https://www.nytimes.com/2021/02/03/business/mckinsey-opioids...

RhodoGSA 6y ago
Yeah, but liquidated damages can far exceed the cost of the project. In most CapEx you can see clauses that include 3-10X the cost of the project in potential liquidated damages if your robot goes down and damages things, or causes the line to go down. I have no idea how this is handled from the Service side but i imagine it's similiar. IANAL.
glaucon 6y ago
And if I killed someone to get their wallet no one suggests that because I didn't get much out of the wallet it's OK for met to have a lenient sentence ? If McKinsey knowingly offered advice that led to thousand of deaths then the penalty should be more than $1200/body regardless of what their fees were.
- leafmeal 6y ago
  What do you think an appropriate penalty is? When I first read this headline I was worried the fine would be just a slap on the wrist. I was glad to see it was more substantial. Personally, I think a fine like this is just if it causes consulting firms to think about the consequences of their actions and do the right thing in the future. Making firms responsible for damages they cause would be best. Making it it clearly unprofitable is a good step.
  - bcrosby95 6y ago
    For basic fraud/bad behavior, off the top of my head, at least 5-6x what they made from it might be good. Anything involving direct, long term physical harm (such as death) needs a secondary penalty on top of this unrelated to profits made. You have to account for not all of these schemes being uncovered. Then you have to add an actual penalty on top of it.
    - glaucon 6y ago
      Generally, for just plain old fraud or similar, this gets close to it for me. In this particular case however, where the wrong doing resulted in many deaths I think some other approach is appropriate. I would really like to see more argument over why jail time is not an appropriate response for senior leaders within organisations that currently suffer nothing more than a fine. Where an organisation has shareholders if the fine is really big then the persons perceived as responsible will, presumably/hopefully, see their career prospects suffer but really to provide an incentive where the benefits can be supremely high I think seeing a few of your peers spending time in jug would help. I appreciate the problem is knowing who to jail and I appreciate that's a hard problem and I don't have a ready answer for it.
    - klmadfejno 6y ago
      This is closer to 600x what they would have made on a study like this.
robertlagrant 6y ago
Oh no, they didn't break even.
deleted 6y ago
[deleted]

mrosett 6y ago

Your assumption is that without McK’s involvement nobody would have died of opioid overdoses during that window. That seems very questionable.

StormyWeather 6y ago

I am not defending what the firm did but we are talking about a study that took place in 2017, it has nothing to do with what happened before and certainly doesn't account for all deaths after 2017 either.