I like the thinking of Patrick J. Lamb who, in August 2008, said that a lawyer can negotiate a fixed fee even in litigation. In other words, he contests the old rubric that since one doesn’t know what the “other side” will do in litigation, fixing a fee is not possible. He also suggests that creating a budget for litigation doesn’t guarantee a profit, just that the lawyer will not bill more than the budget.
But, the point that Mr. Lamb raises is that no business is guaranteed a profit. Yet, …
Lawyers who have client trust (IOLTA) accounts were exposed to personal liability for a bank’s failure. The argument went something like this: The lawyer selects the bank into which the funds of a client are deposited. The funds could come from advanced fee payments, settlement amounts or trial victories. If the amounts for the benefit of a client, coupled with the funds of a client in the same bank, exceed $100,000, the balance above that amount is not FDIC protected. If not protected and lost because the bank fails, the lawyer as the principal in selecting the bank is strictly and personally liable to the client for the loss.
Many companies are going bankrupt. This is a growing practice area of the law. What will be the impact on the pension plans through bankruptcy? A number of large law firms are closing their doors … what will be the impact on their 401(k) plans? Have they become 101(k)’s, or gone away altogether?
Chapter 7’s usually terminates the 401(k) enabling the participant to roll it over into another appropriate plan. Chapter 11 may or may not impact the fund.
Staff should review the plans where there funds are placed . Unfunded employer contributions are at risk. There may be a full vesting if the firm discontinues contributions … but unfunded is still unfunded!
While I claim no specific expertise in this area, there has been an entire generation of employees/staff/associates, et al., who have counted on the growth of their pension plans for retirement, early or otherwise. Now, for the first time in years, there is a feeling among many that they may not be able to retire at all … or at least many years later than anticipated.
In the recent past, we talked about multiple generations working together in the same firm, with all of the consequent challenges of communication. While many thought the Baby Boomers (400,000 of them) would retire in the next 10 years, it is conceivable that they may not be able to leave because of the decreased value of their pensions and other savings.
Listen to Patrick Lamb, a prominent attorney and leader in the discussion of value billing and alternative fees. In our podcast, I asked Patrick to discuss the impact of today’s crises on both legal fees and attorney compensation.
Patrick Lamb, partner in the Valorem Law Group of Chicago, IL, is a leader in the national discussion concerning value billing. In today’s conversation, Patrick talks about short-term and long-term pressures on legal fees resulting from the financial crisis facing our country. Patrick and Ed also discuss the impact that those pressures will have on lawyers’ compensation.
When handling money or things for clients, a clients’ trust account is required. What must you do to set up such an account? Hos is this account managed? What is the difference between this account and an attorney’s general account? How might a lawyer run afould of the Rules of Professional Conduct? What is the liabiltiy of the laweyr for staff mistakes and bank failures?
I will teach at a new school, an on line school that will teach law school members and lawyers …
There is no organization so focused on the sole practitioner as is the Solo Practice University. I am thrilled to participate with Susan Cartier Liebel in implementing her concept and offer guidance to those who represent more than 70% of private practitioners in the legal profession.
Law schools do not teach law students to be sole practitioners; they will get the sense of the arena in which most lawyers operate today and will increasingly practice in the future. As larger firms begin to refine their needs, and to release more attorneys than in past years, more lawyers will move toward solo practice. They will need the skills that Solo Practice University will offer. My hope is that our law practice management offerings will advance both the economics and the satisfaction with the practice that these lawyers will experience.
Not only will we talk about the principles of successful law practice, we will offer coaching service to address specific challenges facing individual enrollees. Check it out and come join us.
Complete your daily timesheets by day’s end. The best practice is to keep a running log of time (software-based or otherwise) of everything you do as you do it. Or, certainly before leaving the office that day. Even if your memory rivals that of the elephant, you will miss things if you don’t do this every single day.
One missed 10th of an hour each day translates to 23 lost hours a year. At $100 per hour, computing this time, without doing more work at all, will result in $2,300 additional revenue. That isn’t much, but it’s more than a good dinner. Increase these numbers by your actual billable rate … and the time you actually don’t bill, you will increase revenue by a very significant number!
"Schadenfreude is the delight one finds in the misfortune of others. (Yes, from a German word, and pronounced: SHA-den-froy-duh.) But don’t let this emotion linger. Focusing too long on another’s failure — or even their success — means you’ve lost sight of your own business." (From Carolyn Elefant)
Never heard this word, and now in the same day, I’ve seen it twice … must be evidence of the depth of our economic depression …
Law firms are not immune from the economic woes and financial crises being experienced by the rest of the economy. Other than a few law firms that have dissolved, though, the pain being felt by law firms as institutions is just not that bad. Laying off a few associates, or delaying the start date of recently hired graduates, may be novel for law firms, but is not huge in the grand scope of law firm economics.
Individual partners in Big Law may be feeling some pain, that is if you call "pain" taking home a few dollars less. A 20% decline in equity partners’ compensation when already earning $1,000,000 just doesn’t get much sympathy from many.
The real "hurt" is being felt by lawyers other than "Big Law," the small firms and sole practitioners. These lawyers can ill-afford a large reduction in compensation. They’re not at the top of the pack to begin with … and they generally represent clients in "personal," not "corporate," matters. Personal injury, family disputes, criminal defense and personal debtor claims, among others, tend to pay less to begin with. Couple this with reduction in number of clients and number of matters and slower payments, then you can begin to feel the real pain being felt in the profession.
While few can predict with any real accuracy the change in the economic winds, the demise of law firms is caused more, in my opinion, by poor business judgment of lawyers rather than the change in the winds. Expanding without a safety net, relying on only a few big clients while making capital expenditures relying on the continuity of that revenue, and failing to address assertively a declining realization rate are real reasons, among others, for law firm troubles.
It’s just too easy in our world to blame someone or something else! As Pogo said, "We have met the enemy and he is us." The reasons for law firm problems are generally as a result of poor business practices, plain and simple. Yes, there may be extenuating circumstances, but not such as to tear the firm apart or cause its demise. There is no entitlement … and there is only ourselves to blame. Given these premises, we can move forward to greater success.
