Tag Archive: Legal

9-11-01 A Remembrance

On this date, 11 years ago, many of our readers suffered losses, both personal and physical. From these losses, a number of my clients gathered with me over the following two years to create Disaster Preparedness & Recovery Planning for Law Firms,  intended to deal in the future with catastrophes such as this to become and stay prepared for the future. 

This note is just a moment to pause to give remembrance for those losses, to express the solidarity of our readers and to provide mutual support in time of need.

 


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Remembering a major event – and training for a repeat!

Today, I realized that it is the 10 year anniversary of my riding up one of the most famous mountains in the world, Alpe d’Huez!

I rode a major mountain here in California earlier in the year, Mt. Figueroa about 1/2 hour north of Santa Barbara. It is the same mountain climb that many professional cyclists ride in the early months of the year to train for the Tour d’France and other major races. When I reached the top, the coaches at CTS Training (Chris Carmichael, then the coach of Lance Armstrong) assured me that this climb confirmed that I could climb any mountain in France. Well, in some disbelief, I made reservations the following week to go to France in July 2002.  And I did climb several of the other major climbs in that year’s Tour, as well.

It’s now 10 years later; time has taken its toll. But, I did start training to climb Mt. Fig. again this year. Wish me luck, though I’ll need more than that …

What’s in your bucket list? What are you doing to achieve your goals?


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The Problem with Bankruptcy Isn’t Attorneys’ Fees, It’s Executive Incompetence – As Posted in Alan Weiss’s Contrarian Consulting Blog.

Recently my article about Who Sets The Lawyer Fees was used as a guest blog by Alan Weiss.  The blog discusses the recent Wall Street Journal article about the Justice Department’s attempt to control fees that the bankruptcy lawyers seek, and the possibility that the U.S. Trustee Program may now be entering the fray.

In case you missed it, here’s the link to Alan’s blog: bit.ly/KoDDLx


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The Problem with Bankruptcy Isn’t Attorneys’ Fees – It’s Executive Incompetence

In the Wall Street Journal, staff writer, Jacqueline Palank discusses the Justice Department’s attempt to control fees that bankruptcy lawyers seek. Creditors and employees may, at times, be a bit disgruntled by such fees. So, now, the U.S. Trustee Program appears to be entering the fray.

Before going further, it should be noted that i) any fee sought by an attorney must first be approved by the client going into bankruptcy; ii) the fee cannot be paid before a Bankruptcy Court Judge approves the fee request; iii) the legal fees most often are a pittance compared to the debts of the company and thus have little or no impact on either the creditors or the employees. In fact, the current proposal is limited to companies whose assets and debts exceed $50 million, hardly your “normal” bankruptcy.

The only reason for focusing on the legal fees is that this is a topic that makes good reading in the tabloids, including the WSJ. While the quoted hourly rate received by some attorneys seems high, it is insignificant in comparison to the compensation received by incompetent CEOs and others in the C-suite offices. Why don’t the tabloids focus on the cause of the bankruptcy? Why not focus on the compensation of the management team, which often is at astronomically higher multiples compared the lowest paid employees of the company? Why not seek redress against the management that is responsible for bringing the company to its knees? Although this focus may have more positive economic impact, it clearly is not sexy enough to sell many papers.

The U.S. Trustee is proposing, according to the writer, several new approaches to control lawyers’ fees, including:

    Though the lawyer applicant must disclose his/her hourly rate now, the Justice Department wants the lawyer to disclose the lowest, highest and average hourly rates the law firm charges in all its matters.

    The Department wants the lawyer applicant to create and disclose to the Court a budget for legal expenses. This budget would, necessarily, disclose to all involved, including the creditors who are adversaries of the bankrupt, the client’s planned legal strategy.

In the 1960s, the Supreme Court ruled that it was anti-competitive for bar associations to maintain a listing of suggested fees for different types of work. Such a listing, in particular, helped younger and newer lawyers set their fees at rates that were more in line with more senior lawyers. Not having such a list would compel lawyers to set their own fees, the theory being that lawyers would then be more competitive with one another to the consumers’ benefit.  The Trustee by its first proposal ignores this. The existing disclosure already provides information that tends to be anti-competitive. Law firms can see what others are charging and price their own services accordingly, causing rates to slowly increase in lockstep over the years.

Intruding into the fees charged for practice areas, such as general business matters, estate planning, tax work, and other areas of work performed by the firms who also do bankruptcy work has no bearing on the special expertise of large company bankruptcy lawyers. No area of law other than bankruptcy requires such disclosure for court approval. Fees are left to be negotiated between attorney and client. Other than precedent, there is no reason disclosure should be made here either and the process should not be extended. “Transparency” is a bogus issue. There is no backroom conspiracy on how bankruptcy fees are charged. All the proceedings are public and must be approved by the Court before attorneys are paid anything.

Budgets are good. I recommend them to my attorney-clients with whom I consult. Budgeting is a process, however, between the client and the attorney. By requiring that bankruptcy budgets, which reveal legal strategy, be made public, the U.S. Trustee is saying that bankrupt companies have no rights. They have no right to advocacy; they have no right to develop a strategy that might affect creditors’ claims; and they have no right of confidentiality. This is clearly contrary to the U.S. Constitution and our entire judicial system. While the bankrupts, and their inept management, may have proceeded down an economically unwise path, they still have rights to seek the best windup of affairs in their economic environment.

Don’t worry about the lawyers’ hourly rates once the bankruptcy petition is filed. They are regulated first, by the client, and second, by the Court. Who is watching the compensation of the management team before the company entered bankruptcy? Why are inept executives not punished with fines, or worse, for malfeasance and negligent management tactics? Why are they allowed to benefit so expansively at the expense of their workers? Why don’t the tabloids focus their sharp light there? Oh, I forgot, the tabloids need to sell papers, they are part of the industrial complex that both Presidents Washington and Eisenhower warned us about as they left office.  Perhaps the fact that quite a few newspapers and newspaper chains (Tribune Co. and papers in Detroit, Denver, Minneapolis, Philadelphia and many other cities) have been mismanaged and had to file for bankruptcy has something to do with it, too.


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Lawyers fees are capped

Wisconsin is in the news again. A lawyer, who promoted himself as the "king of lemon law," won a judgment for $12,500 against an auto dealership for unauthorized repairs and an award of attorney’s fees of $150,000.  The Republican-controlled legislature was so incensed that they adopted a law (and signed by the governor) limiting attorney’s fees at three times the judgment.  With such limitations, lawyers will be less likely to tackle consumer abuses, the obvious intent of the legislature.

Wisconsin, the historical bastion of progressive legislation and politicians, has certainly served up a strange mixture of bedfellows in the last couple of years. It makes for interesting reading … unless it’s your ax that is being gored. The real question is whether this is limited to the state of Wisconsin or a harbinger of things to come on the national level.

 


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Controlling Clients’ Legal Costs

Ed discusses how to estimate future costs by listing your assumptions.
Most clients don’t complain about hourly rates; they complain about the totality of their legal costs. In order to control legal costs, one help is budgets. 
How to estimate future costs: List your assumptions and make sure the client understands these and also provide for change-orders if any of these assumptions prove to be erroneous. That’s how you keep the costs down and that’s how you keep the client satisfied.


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Law School Education

Join us on LawBiz Forum in the discussion about legal education and the current reexamination of its efficacy for teaching management skills for success.  Will the law school tumble into the morass of being a trade school (heaven forbib!) by including such skills in its curriculum? Let us know what you think …


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