We have all heard the jokes and negative comments surrounding lawyers but have you ever wondered how it all got started. Just as with any profession, there is bad and good. Are there unethical, incompetent attorneys? Of course! Just as there are unethical, incompetent plumbers, physicians, and restaurant workers. However, for some inexplicable reason, it seems lawyers have had more than their fair share of “bad”. The complexity of the law and the demand for legal services from the boardroom to the coat room validate that the profession does have value, so why the bad press?
Well let’s begin with fees. The hourly bill may just have been the beginning of the end for the legal profession. No one is in a good mood when an hourly meter is running, particularly when you can’t control the number of hours that you purchase! Traditionally, Lawyers have relied on the hourly rate, as their standard for billing. With this billing arrangement, the law firm would maintain a record of everything done for you to include phone calls, written letters, court appearances, consultations, etc. You are then billed an agreed upon hourly fee for all of the time that was spent working on your behalf. In addition, you could also incur additional expenses such as transportation, document fees, even phone calls. While this practice is standard in many professions, many consumers believe that attorneys inflate expenses in an effort to make additional profit.
In truth, most service providers use an hourly rate to calculate a fee. In example, an accountant might quote you a fee of $250.00 to review your taxes. The fee is not out of line with your geographic area and the accountant comes highly recommended so you opt to hire him/her at this rate. What you may not realize is that the $250 flat fee may be based on the accountant’s knowledge that the review will take 2.5 hours of time at $100 per hour.
Many attorneys have become a bit more market savvy and offer alternative billing arrangements. Rather than hourly bills and separate expense charges, they may offer case rates, retainer agreements and other solutions. The key is in providing value for the dollar charged, and creating long term relationships.
Another area that has eroded the reputation of lawyers is the unfortunate lapses in ethical behavior. While most attorneys do in fact adhere to the standards of law, the few bad apples have made it difficult for the public to trust lawyers. For example, in the state of South Carolina a young man was on trial for a murder that most believe he never committed. His family sold their home, cars, and gathered all the cash possible to hire a good defense lawyer. Believing their son was in the best hands possible, they discovered that the prosecuting attorney was married to their lawyer’s sister and that pertinent information had been shared, resulting in a mistrial. As you can imagine, this put a black mark against those attorneys, as well as others who were innocent but within the same community.
Personal injury law has been another source of questionable ethics. Billboard and commercial advertisements abound with the promise of high dollar settlements for your case. This marketing tactic only adds to the negative perception of the legal profession, as it makes them appear as ethical as snake oil salesmen.
Additionally, most of us have heard the horror stories about attorneys collaborating back room deals with physicians. In this instance, an attorney wanting to win a case involving a car accident or injury on the job might send his client to a “special” doctor that will validate and even overemphasize the level of injury. The doctor testifies in court in support of the plaintiff, giving the attorney and case strong credibility. Again, these practices are not standard for all personal injury lawyers but unfortunately the actions of a minority have significantly impacted the majority.
The attorneys that engage in unethical practices deserve to be drummed right out of the profession. Sadly, it is unlikely to happen because just as there is a market for competent, ethical law practitioners there is also a market for the legal underbelly. People that desire to bring forward fraudulent lawsuits, illegal adoptions or even illegal immigrations will turn to attorneys who are willing to work around the established rules of law.
Most attorneys are honest, hard-working individuals who take their work very seriously. Because of this, we see a number of law firms working to change public opinion. There are dishonest “professionals” in any field. We can look to education for current examples. There seems to be a spate of sex scandals involving schoolteachers, yet, the four cases that have been highlighted in the news within the past year does not mean all schoolteachers are sex offenders.
The same is true with lawyers. Yes, we have seen cases in which some are not honest and sadly, those are the cases exploited through the media. What you do not hear much of are stories about the reputable attorneys that solve cases and help improve or even change lives. While the public may not be quite ready to elevate lawyers to hero status maybe, just maybe we can start a kinder, gentler trend of being a little nicer.
Over the years, the public has been fascinated by the legal process. One can hardly remember a time when there was not a spate of television shows that did not feature some aspect of the legal process. With the proliferation of “reality” programming, we now have the opportunity to go behind the scenes and see justice at work. Television programming both fiction and non-fiction would lead one to believe that true justice comes at a very steep price. In the race for justice, the one with the deepest pockets wins, or do they?
The media spotlight on cases that involve the rich and famous have furthered the notion that guilty or not, if you can afford a high profile law firm, you have a better chance of winning your case. O.J. Simpson, Michael Jackson and Robert Blake were all convicted by the public at large but each was found “not guilty” in a court of law. Were they able to escape the justice due them because they had the means to pay for the best defense?
The American Bar Association published a study by noted legal consultant William C. Cobb in which he discussed the value of legal services to the client. Cobb segmented legal work into four classifications – commodity, unique, experiential and brand name.
Unique legal work constitutes a “nuclear event” for the client. These are events in which life or business hangs in the balance and the client is willing to pay whatever it takes. Unique legal work constitutes less than four percent of the work in the market. Would former Enron CEO, Kenneth Lay have searched the yellow pages for an attorney for his case? Of course not, his business and freedom were at stake. Even those who may not have the money to hire the best will often find a way to either raise the funds or gain the interest of these firms. In example, Amber Frey, a witness in the Scott Peterson murder trial retained Gloria Allred as her legal representative. Gloria Allred has established herself as a defender of women’s rights. While it is certain that her firm handles many lower profile cases, she is definitely a recognizable brand. Amber Frey would not have had the financial means to retain such a high priced attorney but the case was high profile and Amber stood to gain from penning her experiences.
Experiential work is legal work that the client deems high impact or high risk. It accounts for 16% of all legal work. In this type of legal work, clients are looking for specific experience and an attorney uniquely qualified who will handle the case personally. In example, a physician that is being sued for malpractice would seek out attorneys with experience in malpractice cases. The physician would have a very narrow list of candidates based on the firm’s experience, success ratio and likely recommendations from colleagues who had successful outcomes.
Brand name legal work accounts for 20% of the market. This type of legal work is routine work but still important to the client. The client chooses a firm that has a reputation in a niche market or has established their brand. In every state there is at least one firm that everyone has heard of and typically can associate with their area of practice. The firm does not necessarily have to be high profile but simply have name or brand recognition. In example, a law firm may have established a reputation as “the firm” for civil litigation.
Finally there is Commodity work. Commodity legal work accounts for 60% of the market. It is legal work that clients feel can be handled by any good attorney. As such it is extremely price sensitive. Of course no one at any price wants to hire a bad attorney! This sector of the market is the largest. Clients are seeking good representation but for matters that are not nuclear events. Commodity work would include things like family law, minor criminal offenses, business incorporation, auto accidents and any non-complex litigation. Although attorneys may have a different view, consumers view this as “routine” legal work.
So, what does justice cost? Well, if we look at the value curve, price is determined by the market and 60% of the market will hire based on price. Consumers are not at the mercy of law firms, rather like all professional services, if prices are too high, consumers will not purchase. There is a segment of the market willing to pay a little more for good service but when there is an abundance of suppliers, most consumers will price shop.
In recent years, as large corporations have faced mounting pressure to control costs, in house legal departments have sought to decrease outside legal expenses. Corporations have instituted bidding processes, legal expense reviews and are becoming more vigilant about their legal spend. General Electric, often a trendsetter undertook a bidding process for their legal work. Microsoft has taken an active role in ensuring efficiency and effectiveness in legal work. Organizations of all sizes are using independent 3rd party bill review to force law firms to become efficient project managers, as they are not willing or able to pay “whatever it takes.”
Individual consumers too have become savvier in how they choose legal services. Many choose to forego attorneys in favor of do-it-yourself techniques. Self-representation or pro se representation in matters such as divorce is on the rise. Interestingly enough people do not simply choose pro se because they cannot afford another option. While cost may be a factor for some who don’t see the value in hiring someone when they can do it themselves, retaining control is often the bigger issue. Many simply want to direct their own legal process. Access to legal information and documents has facilitated self-representation. As such, consumers who hire professionals will also demand service at a reasonable price.
What does justice cost? Well, the answer may very well be it costs what you are willing to pay for it. Obviously, those celebrities who were on trial certainly considered their legal situation to be a “nuclear event.” When your life, livelihood and reputation are at stake and the stakes are high, undoubtedly you will not wrangle over legal costs. You will hire “high powered” attorneys with a reputation for getting the job done. However, if this work only constitutes 4% of the overall legal market, we can theorize that justice is available in all price ranges.
Mention the word attorney in a crowd of people and you are likely to get a wide range of reactions. Let’s face it most of us associate attorneys with law suits, trouble with the law and court dates. All things that can cost us money! However, there are many situations in which an attorney can be proactive in preventing legal problems. There are times when everyone can benefit from legal expertise whether you are a large corporation, a self employed business owner or an individual. If you are buying property, starting a business, or even entering into an employment contract having legal counsel can ensure that your rights are protected and that you do not make missteps that can cause you problems in the future. For corporations that have in-house counsel, there are many reasons why outside counsel is retained including the need for representation in a particular jurisdiction or the need for specialized legal knowledge.
Whether you are an Association, a global corporation or a small business owner, there are general tips which will assist you in choosing the right legal counsel for your unique needs. Choosing legal counsel is not unlike choosing any other professional service organization. It is important to first clearly understand your needs and then to carefully screen the professionals that meet your pre-defined qualifications to find the right fit.
1. Determine the area of legal expertise that you need. Are you in need of general legal counsel that will advise you in your business? Do you need an attorney to manage your fundraising campaign? There are law firms that specialize in representing certain types of businesses, in example one firm may represent several homeowner associations and have an expertise in this area, another may represent technology firms and understand this niche business. In addition to the practice specialty (i.e. intellectual property, real estate, trust) you may also require a firm that has experience with similar clients.
a. Can you use a mediator? Structured payments, apology, retraction, letters of recommendation, confidentiality agreements, barter and agreements for future business are some of the workable options in mediation that may not be available in litigation. Mediation is less expensive and takes less time than litigation.
2. Identify potential candidates. You can ask colleagues, friends, and others for referrals. State bar associations have legal referral services or you can visit the American Bar Association’s website, www.abanet.org for a list of attorneys in your area. A reference like Martindale Hubbel or West’s law directory online can be useful in identifying lawyers with the expertise you need and the type of clients they represent.
3. Screen the potential candidates. Contact the potential candidates and ask them to send you basic information on their firm and the services they provide. You may also screen by phone. Have they handled clients/cases similar to yours? How recently? What were the results? Are they willing to provide references?
4. Meet face to face. Narrow down your list from the preliminary screening and meet face to face with the top three or four candidates. Ensure that you will not be charged for the initial consultation. For corporations engaging counsel the face to face will be a briefing of your needs.
5. Request a proposal from each of the candidates that you have met face to face. The proposal should outline services, fees and a preliminary timeline.
6. Check references. Verify credentials with the State Bar Association. Call the references provided. Would they use the firm again? Were they satisfied with the results? Were there problems, and if so were they satisfactorily resolved?
7. Determine if there is chemistry. In addition to legal expertise and a track record in your area of need, you will need to form a good working relationship with your counsel. While you should certainly not select an attorney based on the color of their suit or style of dress, you do need to select someone with whom you can have a collaborative working relationship. The attorney client relationship is one of mutual trust and collaboration.
8. Define the relationship. Once you have selected counsel and notified the other firms of your choice and reasons for that choice (this is a common courtesy) it’s time to get to work with counsel. The relationship should be clearly defined in a contract. The contract should very specifically address services, fees, schedule, personnel, location, and process for termination. Make sure your attorney agrees to abide by the American Bar Association’s Model Rules of Professional Conduct, portions of which govern attorney fees. What services will be provided and by whom? Will paralegals, investigators or junior counsel do some of the work on your case? Where will the services be provided – onsite or offsite? What are the fees and how often will you be billed? What other expenses will you have to pay, i.e. document copy services, transportation? Who will make contractual decisions? Who will be responsible for billing (in an hourly arrangement is there a designated timekeeper)? What is the process for termination? How often will you communicate and how? Specify that all work product belongs to you, the client. This is especially important if you find it necessary to terminate the attorney. This is the time to clearly work through your expectations of counsel as well as their expectations of you. Make no assumptions. If you do not understand something, seek clarification.
9. Provide counsel with the information they need. Your counsel is your advisor, your advocate. In order to adequately represent your interests they will need all pertinent information. Do not withhold information. It is akin to going to a physician for a problem but failing to provide him or her with a medical history.
10. Communicate. All good relationships require open communication. If you have questions or concerns, bring them to counsel’s attention. Remember you are the client and counsel does want to meet your needs.
MoneyNews is reporting (5/14) a truly scary story: Billionaires are dumping stocks whose value depends on consumer spending.Robert Wiedemer, an esteemed economist and author of the New York Times best-selling book Aftershock cites specific research that points toward a massive market correction, as much as 90%. Are Buffet, Paulson and Soros wrong? Read the article, watch the interview and decide for yourself.
Many people cringe at the mere thought of being “forced” to hire an attorney. Hiring legal expertise is an expense that most people would live without and unfortunately there is the pervasive myth that all attorneys are out to gleefully take the shirt off your back! While the average consumer may only have to occasionally hire legal expertise, businesses must include legal as a line item expense in their budget. Fortunately, as with every service there are things that you can do to keep your legal costs from spiraling out of control.
Hire an attorney. One of the best ways to control legal costs is to seek legal expertise before there is a problem! Attorneys will help you to manage risk so that you avoid pitfalls that could cost you money. If you are setting up a corporation, or negotiating a large contract, it is worth it to involve an attorney experienced in that area. Your attorney will ensure that the terms minimize your exposure to risk. Even if you have contracted with a firm, or have in-house counsel it is important to communicate with them to avoid costly legal mistakes. Having a firm on retainer will mean nothing if you do not stay in communication with them about your business.
Hire the right attorney. This may seem counter-intuitive but many businesses believe that one firm can handle all of their legal needs. The most productive and cost efficient path is to hire the specific expertise you need. A firm that specializes in a particular area of the law will handle a much higher volume of those types of cases as opposed to a firm that handles those same cases on an occasional basis. In example, you have contracted with a large law firm for your business. You have a copyright issue that occurs and the firm has their in-house Corporate specialist handle the matter. This attorney has handled 6 copyright cases in the past 12 months. As such, it takes him 30 hours to research your case. Another firm that specializes in copyright issues handles 10 cases per day. This firm would be able to research and resolve your issue in 10 hours. In hiring the right attorney you have saved money and time. In another example, let’s assume that you have a neighbor that is an attorney who specializes in trademarks. You are planning to invest in a real estate deal and seek her advice. Although your neighbor is an attorney and as such has legal expertise this is not her area of practice. She could certainly research the issue and in the end would do a competent job. (This is for illustrative purposes only. In the real world your neighbor would explain to you that it is not her expertise and would offer to refer you to someone else.) However, it would be much more time and cost efficient to deal with an attorney whose area of expertise is real estate. Hiring the right attorney is much like choosing the right physician. If you have a heart problem you would see a cardiologist and not a podiatrist. While both are trained medical professionals they each have a specific area of expertise.
Negotiate the right fee structure. Law firms offer many types of billing arrangements beyond the traditional hourly billing schedule. You should explore the options with your attorney and decide on the best fee structure for your legal needs. Hourly billing is not to be avoided at all costs, it may be the best option for you, but it is important to have the discussion. You may decide upon a fixed fee agreement. This is similar to a project fee in that you and your attorney agree to a scope of work and agree on a flat fee for that work. This is helpful in that it enables you to budget your legal expense in advance. Contingent fees are another fee structure. In this arrangement, the legal fees are contingent upon the results. In most contingent fee structures there is also some type of fee, typically a limited number of hours at a reduced hourly rate. In example you would pay 10 hours at $200.00 per hour, but if you won your case, there would be an additional 10% of the settlement. Similar to a contingency fee, you and your attorney may agree upon a reduced hourly rate plus a bonus structure. The most important thing is to have the discussion and work with your attorney to define the fee structure that meets your needs.
In addition to negotiating the fee structure, you should also clearly define what is included in the fees and what would be considered an additional expense. In example, if your attorney has to meet you on location, will you pay for the transportation expense? Will you be charged for document services, such as process serving, title searches, or photocopying? If the firm outsources a portion of the work, how is that billing handled? You can avoid surprises and control your costs by clarifying these issues up front and negotiating how they will be handled.
Review your bills. We all know that we should carefully review every bill we receive and clarify any questionable item, but too often we perform a cursory review and write a check. In reviewing your legal bills, you will be analyzing two broad areas, accounting and performance. In reviewing the accounting you want to ensure that the bills accurately reflect the negotiated terms. Are there other expenses included on the bill? Are you being billed for supervisory, clerical or administrative tasks? Your bill can also help you to analyze your firm’s performance. How many hours are being spent on tasks? How does this compare to other firms? What is the cost per activity? Is time being spent and billed appropriately, i.e. is a senior partner doing the work of a paralegal? You are in control of your legal spend and it is important to identify the firm that meets your policies and has the best practices. The firm with the lowest billable hour may not be the most efficient, thus costing you more money in the long term. Without reviewing your bill and comparing you will not have the needed information to control your legal costs.
Communicate with your attorney. You should clearly identify your goals to your attorney. It is not enough to simply present your attorney with a legal task but ensure that the attorney clearly understands your goal for the end result. In example, if you are in a partnership with another party and you hire a firm to sue the partner over a specific dispute, but never tell the firm that you want to dissolve the partnership you will spend money on litigation that will not net your desired outcome. Just as important as stating your goal is to maintain close communication. Monitor your attorney’s activities, stay in close contact either through phone calls, emails or regular meetings. You will keep the firm up to date on your business activities as well as ensure that your legal dollars are being wisely spent.
It is impossible for businesses to avoid legal expenses, but it is quite feasible to manage those expenses. The best practices outlined along with a clear legal strategy will help you to have a better relationship with your law firm as well as feel a lot better when you receive their bill!
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