In August 2009, the California legislature enacted a law requiring the State Bar to examine how it governs itself. I don’t think any other state in the Union has a legislature overseeing the bar. This is usually a function for the State Supreme Court. However, in California, since the 1920s, the Bar must get permission for it to send out dues bills to members; thus, the legislature has the power to impact the legal system through the back door.
Does this remind you of law firms whose compensation structures govern what its lawyers find to be important? If the firm emphasizes and rewards new client acquisition more than work performed, that is what lawyers will spend their energy doing ("eat what you kill"). If, on the other hand, the firm compensates more for hours expended, then focus on new client generation will go down and billable hours will go up.
The same is true in the relationship between the bar and the legislature. Today, with less than 30% of the members in the legislature having a law school degree, there surfaces an animosity between lawyers (the bar) and those (the legislature) who approve the dues to be paid by lawyers to retain their license. Oh, did I forget to say? California is a mandatory license state, meaning that you must be a member of the State Bar in order to practice law. Voluntary bars exist at the county and local levels, not at the state level. The state is mandatory. Voluntary bars exist, but only at the local (county and city) levels.
So, what’s the big deal? The fear by legislators is that a self-regulating body (more than half of the Board of Governors are elected by lawyers; others are appointed by the Governor and others) will serve the interests of their constituencies, not the public interests. I thought that was the whole point of public members being part of the Board; they are, they participate and they have a significant influence from the Board. The legislature wants the Bar to "protect the public" only; the well-being of lawyers is unimportant.
More than 50% of lawyers earn less than $100,000, a relatively paltry sum when considering the number of years of education required and the good that lawyers provide. (Yes, I know there are a few bad apples, but that is true in every profession … hmmmm, even with law makers.
If lawyers were helped by the bar and did earn more money, there would be far less temptation to invade clients’ trust accounts. This would be real public protection.
I have yet to find a set of rules of professional conduct that favor lawyers over the public. And what the rules of professional conduct does not "catch," the penal code does. And sometimes rules are made that hurt the public. For example, in the loan modification fracas, the legislature enacted a new penal code provision that made it a felony to take money from clients for loan mod work before the work is done … can’t even take money for the clients’ trust account! The rules of professional conduct were similarly altered. But, no intelligent, business savvy, lawyer would now represent such clients unless pro bono. If the client has insufficient funds to keep the mortgage current, what makes legislators believe such clients will pay their lawyers after the modification is completed? The clients didn’t suddenly get flush with money! So, lawyers will not now help the people who need help the most, those about to be kicked out of their homes …
A new wrinkle to this, however, is that the law seems not to apply when a lawsuit is filed. So, the lawyer might take the client into bankruptcy or sue the lender on some pretense, all with the ultimate objective of merely getting a loan modification. This is more costly and adversarial than needs to be … if the law makers kept their hands off! There were already rules on the books sufficient to punish the "bad apples" in the profession who were guilty of fraud on the clients.
Back to the main point: If the legislature removes governance from lawyers, the resulting agency will be merely a licensing and disciplinary agency … and lawyers who volunteered their time and expertise to the bar for the benefit of many in the public and produced much good work will go elsewhere. That would be a grave loss that will hurt the public.
The Bar should push back and fight the legislature … All the more reason for the separation of powers! Let the legislature do its job … and this does not include determining how lawyers govern themselves.
When I was in Washington, D.C., I saw two views of the White House, one of which was normal and one of which exhibited a far different personality. If we have to live behind wire, if we have to be strip searched everytime we go into court houses, public buildings and transportation centers, and if we have to watch one civil liberty after another disappear, then we’ve already “lost the war” with only one transgression. September 11th has changed our lives more because of the politicians than because of the actual dangers we face.
I find the same mentality being exhibited by state bar associations who see danger in almost every new idea expressed by lawyers in their effort to communicate with clients and prospective clients. There are already enough rules on the books to protect the public. We have penal codes that make stealing from clients (theft) illegal and we have rules of professional conduct that prevent lawyers from doing “bad” (however you want to define lawyers’ conduct) things (moral turpitude. So why do we need new rules that effectively prevent lawyers from helping economically fatigued clients in their effort to renegotiate their home mortgages? And why is it that using technology (social media) to communicate with prospective clients is subject to rules that are different from the existing rules on advertising and client communications? Why is it that truth in advertising is no longer sufficient despite a new mode of delivering the communication? Oh, and I guess a more basic question: Why is it that the single goal of bar associations is to “protect” the public? Why is this not just one of two goals, the other to protect and promote the interests of its members, lawyers?
This seems to br a novel concept. When the president of the State Bar of California said the Bar had two co-equal goals, to protect the public and advance the interests of its lawyer-members, people (staff) almost went into convulsions. Well, that novel idea didn’t last very long … and with new presidents, has gone right out the window.
No different in other states … except the latter goal never even made it onto the table. Tell me if you see this differently.
Insurance companies hire lawyers as in-house counsel at reduced (wholesale) rates, pay lawyers in accordance with insurance policies for their insureds, and otherwise have a dramatic influence over the billing practices in the legal community. Wasn’t it insurance companies in or about the 1960s that demanded lawyers submit bills that showed the time expended in matters for which they pay? And then, as a consequence, lawyers began using time increments as a basis for pricing, not just as a management tool. Before then, lawyers based their fees on the value received by the client.
Perhaps the insurance industry will, once again, have a dramatic impact on the legal profession, but indirectly this time. In Rhode Island, it’s reported that the Lifespan hospital group and Blue Cross have reached an agreement intended to overturn the way hospital care is financed. The goal is to promote and pay for health (value) rather than episodes (hourly) of treatment. Currently, when you go to a hospital, you pay (and the insurance company reimburses or pays directly) for your stay in the hospital, for tests performed and surgeries and related care. Does this remind you of the hourly bill that lawyers produce monthly (hopefully no less frequently?.
The agreement is the first to meet Rhode Island’s unique rules concerning health insurance policies and their premiums. Blue Cross, the largest health plan in the state, and Lifespan, the largest provider in the state, have agreed in principle (details yet to be worked out). The program will provide for fixed fees (alternative, or value, billing) for given procedures, thus discouraging tests and procedures that might not be needed – but usually performed because of insurance payments or attempts to make sure “no stone is unturned” in the treatment. Does this sound familiar? Performing more discovery than needed just to make sure “no stone is unturned” and to avoid an accusation of malpractice for failure to uncover the hidden evidence.
The hospital will be eligible for bonus payments when they meet as yet to be determined quality standards. Again, does this sound familiar? Bonus payments for faster resolution of the litigation, payment for results below the insurance company’s reserve or other standards determined by the parties. Almost sounds like a sport’s figure’s bonus payments when playing more games or hitting more home runs, etc. than set forth as minimums in the contract.
Increased and more effective communications and streamlining payment processes to increase the hospitals cash flow are also part of the agreement. Again, does this sound familiar? When lawyers have effective communications in place, it is seldom that the client is upset with the lawyer and it is seldom the client refuses to pay in accord with the engagement agreement, thus increasing realization rates for the lawyer.
Tying payment to quality care is available elsewhere, but to a modest extent and never before to an entire state. The insurance commissioner in Rhode Island is mandating change in connection with premium rate reviews. As they say elsewhere, “follow the money.” In this case, when customers demand change, suppliers change. Here, the review process for payment of insurance premiums and health care will change, not overnight, but quite assuredly … only because the customer (or regulator) demands the change. When will clients of lawyers finally say “enough is enough” and demand change? Until then, lawyers are not likely to alter current billing practices
In today’s WSJ, a lead article talks about the courts in New York requiring the lenders in foreclosure suits to be honest in the filing of their documents. This follows the Florida cases with "robo signers." Affidavits claiming full knowledge of the facts of each matter were signed by employees of the lenders and the mortgage servicing companies as well as improperly notarized. Lawyers are being blamed for filing defective documents.
Lenders made the loans, their servicing agents prepared the information and signed the affidavits under penalty of perjury. Yet, the focus of attention seems to be falling on the attorneys. Somehow, attorneys are expected to verify that their clients are telling the truth. I thought that was the function of the trier of fact, either the jury or the judge. What am I missing here? Or, is this just one more case of seeking to toss the blame anywhere but where it belongs.
Lawyers in our system of justice are the messenger. Lawyers present the evidence in the light best suited to tell the client’s story … but it is the client’s story … and the only obligation on the part of the attorney is not to allow known perjury to be placed before the trier of fact. How and why is that now being altered?
The mortgage companies are now saying that the cost of foreclosures and loan modifications will increase, hurting consumers! Wow, it is an affront to human intelligence to suggest that the cleanup of their corruption (filing false documents with the court) will cause consumers to pay more!
The current political mood of the country seems to be that "less is more," at least when it comes to government intervention. A student of American history will note the changes and mood swings between federal/national involvement and states’ action. On reflection, we may be going through one of those swings now.
A similar reaction is being generated by the mere mention of the American Bar Association reviewing the Model Rules of Professional Conduct to determine whether new rules should be created or old rules modified in reaction to the new technology. The problem is that new technology such as social media is merely a distribution method of ideas. Rules already exist that deal with statements to the public, advertising, self-promotion and the creation of attorney-client relationships, just to mention a few.
There is nothing inherently wrong with the ABA reviewing the rules. But, sole and small firm practitioners are fearful that the ABA will not stop at merely a "review." And, as Carolyn Elefant so eloquently pointed out, the members of the task force/commission that are reviewing the impact of the social media are, themselves, devoid of any personal experience with the media. That would be like someone with no newspaper experience at all seeking to create rules of procedure for the newspaper industry. Or someone with no automotive experience trying to design a car.
Here, the case can be made that there are now rules on the books; more are not needed.
Strange how this discussion takes me back to the conversation about the Bar preventing lawyers from taking retainers to do loan modification and loan foreclosure prevention work. Who does the Bar represent anyway? Ah, but that’s another question for another day.
I’m seeking to connect with lawyer(s) who either did or are currently doing loan refinance work for homeowners. In some states, the bar and/or legislature has created regulations preventing lawyers from taking money from clients for this work in advance of completing the work.
I’ve written about this and now have a major newspaper interested in talking with such lawyers to inquire whether such work is still available and how the lawyer is handling the fee.
Are you a thought leader? Does a lawyer need to be a thought leader? Only if you want more revenue, only if you want people to recognize your name and seek you out. Lawyers, since the beginnings of our country, have been thought leaders. People like John Adams, Thomas Jefferson, Abraham Lincoln and many other of our founding fathers, were trained in the law.
Until recently, more than 50% of our Congress were trained in the law. Today, less than 25% have such training. Where have all our thought leaders gone? Is it that lawyers no longer see public service as a calling? Is it that lawyers who might otherwise serve earn a disproportionately higher income in the practice than they could in public service and therefore the lure to politics is diminished? Is it that the legal profession no longer focuses on pro bono and community service as a differentiator between practicing law and engaging in other professions? Is it that lawyers have stooped to being ill-tempered and without civility, therefore just not commanding or deserving the respect of the community as in years past?
Far more questions than answers. But, we used to produce statesmen with a legal education and no longer seem to be able to do this.
This famous quote from Shakespeare is used by politicians seeking to divert attention from any issue of controversy. Of course, what they fail to quote is the balance of that sentence, “… if we want to control the society.”
Ronald Reagan, while governor of California, used this tactic quite effectively. And, of course, he failed to finish the comment with the fact that many of the lawsuits brought against him in his capacity as governor of the state were successful. Lawyers, both for fee and for free (pro bono), were seeking to redress social wrongs.
Fast forward to 2010. Politicians, mortgage holders and bankers are once again lambasting lawyers. This time, the targets are those lawyers who have the temerity to question foreclosure procedures. In particular, lawyers are finding that mortgage/bank representatives are signing declarations (under penalty of perjury) that they have reviewed the file and know the contents of the loan default to be true. This unexpected discovery of “robo-signers” by an attorney in Florida has thrown the entire foreclosure business (23 states require such signing) into turmoil.
The net result for the plaintiffs is that they get additional time to remain in their homes and, in some cases, the opportunity to renegotiate the terms of their loan or to remove the foreclosure from a credit report in order to refinance the house and start over.
One lawyer, representing the mortgage lending industry, said that people don’t have the right to a “fee house.” This is true. But what is the difference between this and a business filing an answer and using other dilatory tactics in order to delay ultimate payment of a legitimate debt? Using the legal system for personal advantage is common. And, in the case of the housing industry, where bankruptcy proceedings have no authority to discharge the debt, let alone even modify the payment schedule to permit the debtor to retain the house while making “affordable” payments, there may be no other alternative.
Again, the legal profession has come to the aid of those in need. And, what is also common is for monied-interests to seek to limit the effectiveness of the legal profession to help the disadvantaged amongst us.
As a follow up to the success of the Florida lawyer who devised this new tactic for his clients, some states attorneys general are seeking new laws to void “technical problems” as a defense where the foreclosure is “substantially appropriate.” In California, for example, both a new penal code and rule of professional conduct, prevent a lawyer from taking a retainer in a mortgage refinance case. In other words, a lawyer cannot take a retainer from a client if the gravamen of the service will be to negotiate with a lender for the refinance of the house mortgage. Even when the retainer will be placed into the client’s trust account and not removed until the service is delivered. How will a lawyer be able to represent such a person?
A person with admitted financial problems, whose problems will not go away merely by refinancing. This lawyer will then be working pro bono in most cases. California, in effect, has prevented lawyers from helping an endangered class of troubled Americans … the home owner suffering from the current woes of our economy. The claim was that there were some lawyers who “stole” from this unsophisticated group of people and took advantage of their fears. However, theft is already a crime and moral turpitude violates the rules of professional conduct and subjects a lawyer to disbarment. This new law/rule, adopted “to protect the public,” actually hurts the very people it’s intended to protect by denying them access to counsel.
The battle goes on … between those lawyers seeking to help needy clients and those monied-interests seeking to control the society.
When I was in Washington, D.C., I saw two views of the White House, one of which was normal and one of which exhibited a far different personality. If we have to live behind wire, if we have to be strip searched everytime we go into court houses, public buildings and transportation centers, and if we have to watch one civil liberty after another disappear, then we’ve already “lost the war” with only one transgression. September 11th has changed our lives more because of the politicians than because of the actual dangers we face.
This seems to br a novel concept. When the president of the State Bar of California said the Bar had two co-equal goals, to protect the public and advance the interests of its lawyer-members, people (staff) almost went into convulsions. Well, that novel idea didn’t last very long … and with new presidents, has gone right out the window.