In a December issue of the Wall Street Journal, the headline implies that lawyers are making far too much money in a Delaware case. This, despite the unheralded reduction in their fee request. But, it’s easy too trash lawyers, and good headline writers (a special art in writing) are brilliant in getting readers to pick up the paper and keep reading …
But, let’s look at the facts:
First, the judge in the case said that the plaintiffs lawyers did an outstanding job, not just good, and such work should be rewarded. This is the same judge who historically penalizes lawyers when they fail to get results.
Second, the agreement between plaintiffs’ lawyers and plaintiffs permitted counsel to ask the court for 30% and they applied for less, only 15%, not a normally outrageous percentage.
Third, the risk reward element of contingency cases should be evaluated as of the beginning of a matter. And in this case, the risk of no recovery was substantial. Victory was, by no means, assured. Monday morning quarter-backing is always performed by those who have a corporate bias, have no interest in the matter and just want to carp, are jealous or, worse, feelthat lawyers should be heard, not seen. Reminds me of the criticism against lawyers who sued Ronald Reagan, as governor of California. Despite the fact that the lawyers won most, if not all, the lawsuits brought against the abuse by the State, neither the facts nor the victories was much discussed by those with a political agenda.
Last, these arguments that the lawyers’ hourly billing rates were too high fly in the face of value billing, the new wave for corporate America. In other words, the results in this case were based on the value to the clients resulting from the effort and skill of the lawyers. In most cases, hourly billing results in higher legal fees … fees unrelated to the value received by the client … and fees that created certainty in the cost of the legal proceeding, an important factor to clients in most matters.It’s important to know what the legal cost will be before embarking on a matter. Value billing provides this.
Thus, the criticism offered by the writer in the WSJ is off target, to say the least.Most criticisms against legal billings involve the hourly billings … here, value billing was requested by the lawyers and their clients and approved by the court. Hoorays should have been the proffered by the writer, not whining.
Jane’s comments about holiday cards vs email cards is are worth noting. It is a tough time of year for many with cards and gifts decisions to make … But, as my mother used to say, "… if you don’t remember me364 days of the year, forget me on my birthday!" In other words, the one day a year remembrance doesn’t do much, especially for busy people.
From Lawyers USA, we learn that the American Bar’s Ethics Commission has recommended that states rules be changed to allow non-lawyers to own up to 25% of law firms.
Rules against lawyers sharing fees with non-lawyers might need to be loosened to allow U.S. firms to compete globally. The proposal says that any firm with non-lawyer owners must have “as its sole purpose providing legal services to clients.”
This is the foot in the door.The next thing you’ll see is Latham & Watkins, or other billion dollar law firm opening offices in Wal-Mart or Target stores for curbside service. This is not necessarily a bad thing. It will certainly bring the law to the people … And it will certainly change the perception of the law.
I’ve always maintained that the rules of professional conduct are controlled by the large firms, AmLaw 100 and 250. When their economic needs change, the rules get changed and the sole and small firm practitioners have to adapt accordingly. In other words, the rules are not made in a vacuum, not made because of their inherent righteousness or goodness. They change and are made to serve the economic interests of the few … oh, if the public is served, so much the better.
But if you’re a solo, watch out … your interests may not matter. Such has been the case in recent times when solos’ interests were not protected, in fact hurt, by changes in the rules .. But, here, to allow the larger firms to complete on a global scale, we see the rules begin to change and allow allied professions to join in the ownership of law firms, not merely as allied professionals independently serving the same client.
Economics control .. as always … even here in the rules of professional conduct.
Large firms, more than we care to know, have made news in the last couple of years by "going under," i.e., defunct! Firms such as Howrey and Heller Erhman became the targets of personnel raids. Very good lawyers from these, and similar, law firms departed and joined other major, national law firms. Today’s WSJ comments on the current state of affairs for some of AmLaw 100 law firms.
Some folks are asking whether your new lateral partner have any unwanted baggage? In some instances, the new firm accepted partners from the old firm with the understanding that the lawyer would bring over clients from the old firm as well as his "unfinished business." This provides for immediate billing .. and therefore an opportunity to acquire great talent at a very low or zero cost.
These firms, and others, have gone into bankruptcy to collect funds to pay the firms’ creditors. In a law firm, the major assets "walk out the door every evening. Computers, furniture and real estate are of minimum value, if any, in a law firm. Accounts receivable are a major asset, though often difficult to collect from clients when they know there will be little serious effort to collect.
But, when the partners from the old, now defunct, law firm went, they generally took "their" book of business with them … and the "unfinished business" of the clients that went with them. One argument is that clients have a right to seek their own choice of lawyer. And the other argument is that the partner and new law firm benefited, resulting in a profit to the new firm that truly belongs to the old firm.
This battle will be fought for years, I suspect. But, the reality of our world is that anyone can sue anyone else, even if wrong. In the meantime, the largest pool of cash available to the trustee in bankruptcy for the defunct firms is the new firm and, perhaps, the lawyers, individually, from the old firm. Whether legitimate or not, new firms have been economically compelled to settle many of such claims in order to go on with the new firm business.
The new firms thought they were getting a steal! Maybe. But, I’m reminded of the old say that "…if it looks too good to be true, it probably is too good to be true." There is a cost to everything, even a very attractive, new lateral partner with great talent and a great book of business.
From time to time, we will have a guest on our blog.
This week, Erik M. Pelton with Erik M. Pelton & Associates, PLLC is our guest blogger.
One of the keys to a successful law practice of any size is communication. Not only communication with staff and colleagues but communication with clients.
Smaller law firms have the advantage of being more transparent and having less bureaucracy. Clients of smaller firms expect to receive more personal service, and rightly so. Here are some simple tips for maximizing the benefits of client communications:
From time to time, we will have a guest on our blog. This is something new for LawBiz Blog and we hope you find value in the expertise of those who will join us on occasion.
This week, Erik M. Pelton with Erik M. Pelton & Associates, PLLC is our guest blogger.
A steady stream of new clients and new business is critical to the success of any small law firm. Key marketing decisions such as to whom, about what, and in what manner will marketing be done should be well planned to be targeted, measured, and efficient. When developing a marketing plan, it is key to consider and include the following factors:
If you haven’t already, I suggest reading “Personal Best” by Atul Gawande on newyorker.com. Dr. Gawande examines the need for and nature of coaching for professionals of all walks of life.
Musicians and singers, he points out, think of their coaches as “outside eyes and ears”. They hear and see things that even the best performers can’t detect about their own performances. In endurance coaching, anyone can design hard workouts. Anyone can make you tired and push you into the darkness. In coaching lawyers, anyone can tell you what to do even if it is beyond your comfort zone.
But a good coach will help you understand where you want to go, devise a plan that is within your comfort zone and that will get you there, and then be your mentor and accountability partner to assure your success.
Who is your coach? Is it your colleague, your spouse or significant other or a professional whose career is devoted to helping others like you to succeed? Whomever it may be, we all succeed sooner and stay on top longer when we have a coach, our "outside eyes and ears."
Our travels have taken us over 8,000 miles thus far. We finally turned the corner in Cleveland and have begun our trek back west. Today, we left Chicago for Madison and will go to Minneapolis and Omaha before boogeying back home. We will likely have traveled more than 11,000 by the time of our return.
Despite the diversity of our geography and of our people, I have found that lawyers are facing the same issues irrespective of whether they are in small communities or larger cities, in solo practice or in major law firms, in general practice or in a specialty boutique. Are there differences? Yes, but I like to view it in terms of nuances rather than differences. In other words, the "differences" are smaller in nature than many contend.
Oh, I know, we all think we’re different. We all think we’re special and face special circumstances. My experiences in both industry and in law tells me different, that all commercial enterprises, whether professional or trade, have the same basic characteristics. In other words, we all have to get the business (marketing), do the work (production) and get paid (finance). Each of us excel in certain areas and need guidance and support in others.
My travels has renewed my energy to coach and to produce more material (audio and electronic) that will guide lawyers to improve their connection with their clients. Though our trip has not yet concluded, it’s never to early to thank those many lawyers who’ve attended our programs and been generous with their comments of support. I look forward to continuing our work together.
Yesterday, one of the attendees at the Kansas City Metropolitan Bar Association suggested that increased competition was the largest challenge facing lawyers. He said that more lawyers are using television as a major promotional venue … and it’s very difficult to compete against. These are not just the lawyers on late night, early morning spot ads. But, rather, lawyers throughout the day and in a variety of practice areas.
Television advertising is an important marketing tool for many lawyers. It has become more important for some, despite the increasing importance of the internet.
One way to address these competitors is to focus on existing clients. Bond with existing clients, serve them in ways that creates loyalty, and have these very same clients be your advocates with others.
In such a case, you don’t need television. You won’t have competitors! You will be in your own bubble, growing your revenue and growing your profitability with clients who continue to return and who refer others to you.