Tag Archive: Finance
The business cycle of practicing law includes getting the client, doing the work and, finally, getting paid.
David Leffler, in GPSolo Magazine (Oct/Nov 2007) suggests that there are five stages to paying a lawyer’s bill:
1. Denial – Client says this couldn’t be my bill, the charges are too high.
2. Anger – Client says lawyers are way too expensive for what they achieve.
3. Bargaining – Client seeks to negotiate a reduced fee with the lawyer.
4. Depression – Client doesn’t contact you and is unavailble for your calls.
5. Acceptance – When Client sends you a check that clears the bank.
David talks about the importance of the beginning of the lawyer-client relationship. I agree. The intake process is what essentially sets the tone of the relationship. In my opinion, your success in the intake process at the beginning will determine your success in collecting your fee at the end.
For more about suggestions about lawyers’ collections efforts, see my book.
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The President said that “the State Bar shouldn’t base policies upon what will or won’t be popular … Ultimately, our responsibility is to do the right thing." With this remark, the President of the State Bar of California justifies requiring 30,000 mostly small firm and sole practitioners to disclose to clients when they do not have malpractice insurance.
I find this remark of particular interest because it is usually said by one who wants to justify an act that is opposed by the vast majority of his very own organization. It is also offensive because it fails to address the very issue at hand. This statement is like Mom’s or Dad’s "…just because …" response to a kid’s inquiry as to why he should or shouldn’t do something.
In this case, the statement is used to justify an action that will prejudice an isolated group of lawyers who practice in the small firm environment. They need assistance from the Bar … and they don’t get it. Instead, they get slapped in the face. We might just as well place yellow arm bands around these folks and say they are "bad" people. There is no empirical evidence that this group of lawyers is subject to more malpractice claims than others. There is no empirical evidence yet set forth that suggests any reason to isolate this group of lawyers and identify or punish them in this fashion.
Yet, this very same organization has not, to date, honored its earlier (2005 Board of Governors Retreat) stated commitment to its members to provide them with help in their businesses (The Business of Law®) because it might antagonize a few legislators or other special interest groups or cost a few dollars or place additional demands on the staff. Where is the Board when they’re needed?
This attitude explains why members of the legal community, generally, have lost confidence in its governing body. Why the Board of Governors would anticipate that lawyers in this State would support it in any future disagreement with the State Legislature or with the Governor is beyond understanding. One can “turn one’s cheek” only so many times before the resentment rises to the point of action.
The perception amongst small firm attorneys that the State Bar is the enemy and not the friend clearly gains traction with actions such as taken now by this Board. John Dutton of the Board of Governors perhaps said it best. “Dutton argued that some county bar associations, a few State Bar committees and most of the members of the Conference of Delegates of California Bar Associations have joined critics in opposing disclosure. ‘And here we are,’ he said, ‘saying, ‘We’re going to jam it down your throat. We don’t care what you think.’”
Of course, the very Governors voting on this issue also fail to disclose any personal financial interest they may have in this issue, and several do. They also fail to address more important issues for disclosure if we were truly interested in client protection. And, most importantly, they fail to create an affordable insurance program that would allow economically marginal (but very good) lawyers to buy the very product the Board is promoting! (Dare we remember that the State Bar obtains several million dollars each year from the insurance program it promotes?)
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Q: Ed, can Outsourcing really make a firm more productive and profitable?
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Where courts have refused to uphold a covenant not to compete given by one lawyer to another in the sale of a law practice, one of the primary arguments against validating the covenant is that clients have a right to counsel of their own choosing. And, the argument continues, saying that a lawyer cannot practice law in a given area for a reasonable period of time restricts that right.
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“J. A. Barnes in the 1950s defined a social network as ‘an association of people drawn together by family, work or hobby.’ In the digital age, social networking websites amplify opportunities to associate and grow our social (personal and/or professional) capital.” (more…)
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Did you see the Tuesday edition of Wall Street Journal, Health section? David Armstrong discusses the business interests of doctors — and their ethical responsibility to disclose their personal financial interests in any business that benefits from their prescribed medical treatment, whether that treatment be medicine, equipment or otherwise.
The bottom line is that it is the patient’s responsibility to ask the doctor if he/she has any financial connection to the recommended treatment. The suggestion is that if the answer is "yes," the patient should get a second opinion. Not bad advice, but still a matter of personal trust and interaction between the doctor and the patient.
If the doctor has a financial interest in a treatment modality, this may influence the doctor’s prescribed treatment. Note that there is no movement here to demand that doctors disclose whether they have malpractice insurance. Perhaps because the existence of insurance is not likely to influence the treatment modality to be prescribed.
Why is it that some lawyers misguidedly believe it is important for lawyers? It’s existence or absence does not affect the legal strategy advised or vigor or competence of legal representation. As a side note, however, it is interesting to note that most of the lawyers advocating that other lawyers make disclosure DO have a personal financial stake in the outcome of this discussion. Most represent insurance carriers who whose premium income might increase. Yet, there is no disclosure required by them in their discussions of this topic. Interesting, eh?
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There are benchmarks in life … and in our law practices. Benchmarks might be as significant as a marriage, a birth or a death. In law, it might be graduating from law school, opening one’s own practice, winning a significant case, or in today’s world of Baby Boomers, moving into our "second season."
The Airstream trailer (see my earlier posts on this subject) has taught me and confirmed many lessons I’ve learned over the years. Here are just a few that our current trip has triggered:
Change is part of life, and we must learn how to manage change to be successful
Change requires that we be flexible
Life involves continuous improvement
Luck is the intersection of preparation and opportunity
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In an article written by Richard Gary (Firm, Inc., March/April 2006), he says that "… the principal message that compensation decisions affecting the managing partners should send is: ‘The qualities that will make our firm successful over the long term are superior lawyering, client service, teamwork, and fairness.’ In practice, that means that the (full time) managing partner should not be the firm’s highest paid partner …"
Agreed that the compensation system must appear to be fair. If not, the whole infrastructure of the firm will collapse. But, one must realize the importance of the position. As Gary concurs, managing partners preside over businesses whose revenues are in the millions, even hundreds of millions, of dollars. This is not a position to be taken lightly or to be appointed to just because "you were out of the room at the time of the vote." This is a demanding position, requiring the trust of everyone (lawyers, staff, etc.) in the firm to be successful. This is the CEO of the firm and should be compensated accordingly.
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USA Today said in a recent column that Fridays are going from casual to e-mail-free. That may be the only way to cut down on the excesses of email. Use email at business only for important tasks that cannot be done otherwise, especially communications in the same office. Address important emails first. And don’t procrastinate responding … This may help some.
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While making a presentation about recovering from disasters to the Association of Legal Administrators national conference for financial issues, (see my latest book, Disaster Preparedness & Recovery Planning) I listened to another presenter talking about the insurance aspects of disaster. She noted some frightening statistics: More than 40% of all businesses never reopen after they experience a disaster; of those that do open, more than 30% fail after two more years of operation.
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