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Do you need a little inspiration to keep going?

Last night, I saw the film, Life of Pi. It was a uniquely inspirational story of survival, a boy on a stranded raft in the Pacific Ocean. There are parallels in today’s legal world where sole and small firm practitioners are struggling in the waves of our economy.

Today, I received a question from a reader, asking the meaning of "specialize or die." I responded that this is a catchy phrase used by those who believe that one can succeed only if they specialize. While it is true that the specialist generally earns more money than does the generalist, there still remains an important place for the generalist … and in a changing economy, the generalist will, again, generally, be more nimble and flexible to provide services in a changing marketplace of ideas.  In both instances, however, there is a struggle to survive … and to thrive. In all cases, however, the lawyer is providing loving and caring help to those in need. Money is merely the by-product.

Today, I also received an email about a cowboy and his dog, named Skidboot, in Texas. It is an incredible story and one of great inspiration. I hope you take the time, about 8 minutes, and enjoy and marvel at the dog as much as I did. This cowboy knows how to do more than survive with the blessings bestowed on him by his dog. I suspect we can all do more to appreciate what we have.

 

 


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Virtual lawyers in trouble?

Virtual veterinarian faces a legal test in Texas. He moved his practice online and talked to distressed pet owners by email and telephone. He charged a flat fee, generally, and recommended treatment options. The Texas State Board of Veterinary Medical Examiners suspended his license for violating the state law that prevents veterinarians from setting up a medical relationship solely by telephone or electronic means.

The AVMA claims that it is protecting the public’s interest. The vet claims that the regulation is intended to protect the brick-and-mortar veterinarian practices.

Does this sound familiar? Every Bar regulation that I’ve ever reviewed (or testified against) has been sustained on the basis of protecting the public. Where are the interests of the membership, the very professionals who pay dues to keep staff employed? These interests seem to be relegated to the back of the bus, if not ignored completely. In the legal community, this "ship" has sailed. I don’t think anyone would claim that a "virtual" law practice is illegal. It will be interesting to see how the Texas court rules in this matter.


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Pricing contract lawyers

Are contract lawyers an expense or a fee item?  This issue has been litigated before and, according to my reading, has been resolved in favor of the law firm. The law firm is entitled to engage contract or temporary lawyers for one price and charge the client a higher price. One rationale for this is that the firm can engage lawyers on a short term basis, without a long term commitment, to provide the work for the client that is necessary. When that job or assignment is completed, the law firm can sever the tie with the contract lawyer and retain a lower overhead. Everyone benefits: the lawyer who otherwise would not have been employed; the law firm that can take on additional work and its resulting benefits; and the client whose goals can be met more efficiently and timely.

The issue usually arises from a complaint by an insurance carrier who is responsible for payment of legal fees under a policy of insurance or a creditors’ committee that wants a larger share of available funds and finds the law firm(s) an easy target. Currently, the Citigroup class action legal fees are being challenged by a group called the Center for Class Action Fairness.

The allegations in this case go beyond the assertion that a law firm cannot charge more than it pays for legal talent.  If this were the only issue, the challengers would have no standing; this issue has been resolved and it would be a major reversal of thought for the court to rule otherwise. But, the real issues are whether the engagement agreement mentioned anything about contract lawyers and, if so, what were the terms; what risk did the law firm accept when its fee was based on a contingency (was this a novel area of law or one in which plaintiffs had not been successful before); what was the expertise needed in the matter for which contract lawyers were engaged, and what was the expertise actually engaged; and were the fees charged “reasonable” under all the circumstances.

In this case, the total fees amount to less than 17% of the class action settlement. The court will have to decide whether this was a reasonable fee overall and/or whether each component of the fee requested reasonable. The added risk for any law firm taking on this type of case is that its fee is always reviewed on Monday morning … the Monday morning quarterback always has a better perspective than does the game-day quarterback. While the large company client can protect itself by hiring the contract lawyers directly, though they could then hardly expect the law firm to oversee that portion of the work product. The client can further protect itself by objecting to paying the legal fee and litigating the fee. But, how does a law firm protect itself against the client (usually someone else speaking in the shoes of the client) so as to avoid an after-the-fact conflict?


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Newsflash: McDonald’s focuses on “value”

McDonald’s advertising is changing, according to one report. Last year, Big M promoted higher-priced menu items. While more healthy food is important, Big M couldn’t show the value of its new menu items to the consumer. Today, the company’s emphasis is on “value,” the lower priced items that its customer base is accustomed to receiving.

If your market is the commodity-type legal services, then you will have less flexibility in setting legal fees. If your market is more toward the unique, the special or the bet-the-company type practice, then you will have greater flexibility and can charge more for your services. The key element is to understand the nature of your customer and then communicate effectively with the client.


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Collecting Your Fee is still the key

Georgetown Law School’s Center for the Study of the Legal Profession recently suggested that earlier realization rates of 92% have gone down to a historic low of 85%. That means for every dollar billed, the law firm is collecting only 85 cents.

My suspicion is that these numbers are reflective of "Big Law," and not the profession as a whole, certainly not the sole practitioner who comprises the bulk of the profession. That is why I wrote: Collecting Your Fee: Getting Paid from Intake to Invoice, published by the American Bar Association. Few lawyers understand the difference and fewer can cite the numbers from their own law practice. This is an area where additional revenue can be obtained easily, merely by paying attention to your clients payment records and understanding who doesn’t pay your full bill and why … and then dealing with this issue. This is one of the most challenging issues in my coaching/consulting practice…helping lawyers be more effective with their clients and receive a higher percentage of their billings from satisfied clients.


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So you thought you had malpractice insurance coverage?

In a recent case, the 7th Circuit appellate court said that the law firm failed to comply with its contractual notice requirement to the carrier. The law firm was required, as is true in most such contracts, to notify the carrier of a possible claim of negligence. The law firm said that notifying the carrier of every possible claim would delve it into minutiae and was unreasonable. The Court said the facts of this case suggest that any reasonable attorney should have known that a claim was likely … and therefore the firm owed a duty to the carrier to notify the carrier.

If you take the time and expend the funds to purchase insurance, you must review your contractual obligations of notice … otherwise you’re wasting your money and leaving yourself exposed to massive claims.


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