Most people will agree that there are too many lawyers, an oversupply. (Parenthetically, I disagree; it seems to me that there is a dislocation between the supply and the demand for legal services, a situation that the organized bar has never been able to reconcile with successfully.) But I digress.
Assuming, for the moment, that there is an oversupply of lawyers, why should we care? Would that not mean the fees for legal services would come down? Would it not be best to let the marketplace handle supply and demand?
But, If the Bar wants to reign in the supply, how could they? Of course, get rid of some of the lawyers. (Making admission to the organized bar is another way, longer term. Economics seem to be handling this quite nicely, thank you. Law school admissions are down by 10 to 15%. Applications hit a 30 year low. Potential law students understand that spending many thousands of dollars to take the gamble that they will not be able to get a well-paying job at the end of three years is a fool’s gamble.)
Economics, once again, helps us answer the question of how to reduce the supply. There are more than 1 million lawyers in the United States. Of this group, it has been estimated that at least one half of this group are sole practitioners. Another statistic suggests that at least 400,000 lawyers will retire by the year 2020.
If we look at this latter group, and suggest that we treat it any differently than any other group in the organized bar, we would be accused of ageism, and prohibited discrimination. However, if we come up with a metric that is applicable to all lawyers, such as “competence,” then we are safe. Of course, if this metric also achieves our basic goal of reducing the number of lawyers available to serve clients, so much the better.
But, this metric is never applied uniformly. If we look at new lawyers, those who have been admitted to practice for three years or less, I am sure we will find many who are not “competent,” despite the fact that they have passed the bar exam. How many times have "mature" lawyers said, mostly to themselves, that they were happy that they were not the client "back then," that they didn’t know enough to be really competent to handle the matter they did …. that they learned "on the job."
What is the metric for “older” lawyers? Do they have to pass another bar exam? If yes why should age be the factor that determines whether they have to take a new examination? If not, what might it be? Nowhere in the time spectrum of a lawyer’s career is there a requirement for such an examination.
How many times have you, as an adversary, said to yourself my opponent is not very good? In fact, how many times have you said my opponent is not “competent?” Until the appropriate metric can be accepted and applied throughout the entire career life cycle, it seems to this writer that the real focus should be on meeting the needs of our clients who are not served or who are under-served, making sure that all lawyers, young and old alike, are “competent” and move away from even the appearance of ageism.
The following note is prompted by the comments of Susan Cartier Liebel of Solo Practice University® and her post about Kimberly, a young mother who just gave birth to her third child and was a 3L law student at Stetson. She became ill but failed to go to a doctor to address her own health. She was busy with her family and "stuff."
This is for all of you out there whether lawyer or law student, mother or father, who puts
themselves last. You put off going to the doctor for that chronic cough while you rush your child to the pediatrician for a hang nail. You eat your cold dinner out of a jar standing up and talking on the phone while you make sure your child’s meal is hot and she’s seated lest she choke on her food. You do so because ‘you can handle it’. Well, here’s the truth. You can’t.
You can’t care for your kids or your spouse if you break down physically. You can’t care for your clients if you don’t take time to reinvigorate and refresh. Remember the airline admonition: Put your air mask on first and then help your child and others around you. None of us are superhuman or immortal. There is nothing more important than your health, no final, no brief, no exam, no trial, no event. Remember this the next time you get no sleep or ignore that persistent cough or inexplicable pain in your side because ‘you don’t have time’ to slow down. Remember you can break down, too. No machine and certainly no human can work without stop and without repair from time to time.
Most of us can notice when something “isn’t right” with our bodies, and we often are quick to jump to a conclusion about the cause.Yet what we perceive to be the problem, and the reality behind it, may be much different.
A urologist recently shared an example with me, saying that many people come to him to “fix the problem” of an over-active bladder at night.They typically attribute it to a “plumbing” issue that a pill or even surgery can cure.Yet this doctor suggested that, as people age, they sleep less and they’re likely to be awakened more easily by sounds that didn’t disturb them in earlier years – a dog barking, the house creaking.Once they’re awake, they decide to honor the bladder urge so they can go back to sleep. The perception is that there is a physical medical problem.The real cause is the natural aging process and the best “cure” is to accept it.
Transfer this lesson to a law practice.Most lawyers are quick to perceive a problem when there is less money coming in the door.They immediately jump to a conclusion about “the cure” – do more marketing, or raise rates.The reality is that declining revenue typically began long before as a problem with receivables.Generating new work to cover declining revenue simply isn’t the answer.The strategy is to make sure clients know they must pay their bills within 30 days.And the way to do that is specify clear collection terms in the engagement agreement. Lawyers perceive every client as valuable and hate to cut them loose; the reality is that continuing to do work for overdue clients who don’t pay shows those clients are not worth keeping.
A new study by George Washington Law School showed that realization rates (the amount of money billed that is collected) average 83.6 percent for all law firms, a figure that is a historic low.If you perceive your revenue is down, and the reality is that you only collect 80 cents on the dollar, you’re like the urologist’s patients – you won’t get many good nights of sleep.
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.
At the end of the day, the value of our law practice is based on our success and the many people we have touched over the years. This is a significant legacy we will leave on retiring from the practice.
Most lawyers all around the country with whom I’ve spoken don’t understand this and can’t comprehend even the possibility that their many years of effort may actually have produced a monetizeable value of some significance. This value can enhance their retirement. It is a challenge to overcome such deep-seeded beliefs among many Baby-Boomers as they get ready to move on to their second season. This is the difference between personal goodwill and organizational goodwill. There is more of the latter than most people believe.
My conversations have convinced me that the most feared word in the English language is “retirement.” That may contribute to the refusal to consider an alternative to closing the office; we will maintain our office and work until our last breath. It is possible, however, to do both! The sale or merger of your law practice, rather than the closing of the office, should be an alternative that is kept open for your consideration.
In today’s 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, by comparing this to the compensation received by incompetent CEOs and others in the C-suite offices, it is insignificant. Why don’t the tabloids focus on the cause of the bankruptcy? Why not focus on the compensation of the management team, oftentimes earning historically 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 be more important for us to understand how our economic system works, 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 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 legal strategy to be engaged in by the client.
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. This 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 services accordingly, causing rates to slowly increase over the years.
Intruding into 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. But, the process should not be extended. “Transparency” is a bogus issue. This is not some backroom conspiracy. 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. This is a process, however, between the client and the attorney. By requiring that these 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 privacy. 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 of what is left to them 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 they enter bankruptcy? Why are they 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.
