Flat Fees Are Fine, But Lawyers Can't Have It Both Ways
Like Chris Marston of Inside the Future of the Law Firm who raves about the benefits of fixed pricing, I'm also a fan of the flat fee or fixed price. Chris focuses on how fixed pricing provides certainty to clients, but from my perspective, it makes my life much easier when I don't have to send out piddly monthly invoices for 2.55 hours of work.
Chris notes that most lawyers' opposition to fixed billing comes from concerns that they'll underestimate costs and lose money on the case. In response, Chris argues that lawyers ought to think about a budget before signing clients on and if they do that, the fixed price model should work. And, as John Toothman, a lawyer and legal fee management consultant writes, it's not any more difficult for lawyers to estimate fees than construction contractors:
Compared with this array of uncertainties [that contractors face], the cost of most legal projects is much easier to estimate ever hear of a will being rained out? In litigation or negotiation, where adversaries or judges can disrupt one side's plans, there are still plenty of ways to estimate the likelihood of such disruptions and to plan with their likely impact in mind. Lawyers' excuses that they have no way to predict what will happen indicate that they are either inexperienced or evasive. If all else fails, the lawyer can at least disclose how much similar cases have cost. This creates a dilemma for the law firm: Do they disclose just how expensive all those cases were or do they try to distinguish all of them as being different, thereby proving that they have no relevant experience?
Where I do take issue with Chris and other proponents of fixed billing is on the question of who bears the burden when a lawyer underestimates the fee, or where a case takes longer than expected. Chris and many other proponents of flat fees seem to think that the client ought to pay the overage. But I disagree. When I give a flat fee estimate, I will eat the cost unless the extra work is caused by the client (e.g., client lies about material issues in the case) or created by unforseen events (e.g., change in a 50 year precedent that leads to multiple appeals). My feeling is that as the attorney, I am the expert on estimating fees, so I should bear the risk of an inaccurate estimate. Giving flat fee estimates and then charging clients for extra work puts all of the risk of the inaccurate estimate on clients. Maybe that's what's considered good business for lawyers, but I just don't think it's fair.
Can Small Fry Catch Big Clients? That's My Shingle's Raison d'Etre
Over at What About Clients?, Dan Hull wonders whether a how to marketing seminar on how small firms can snag big clients would catch on? Of course, Hull knows the answer to that. He writes:
GCs are now smarter and bolder. Smaller firms can and do land and serve top clients. At top rates, too. It's about service, not price. No point not getting rich just because you start a new, smaller and more client-centric firm. Keep your high rate; savor your lower overhead, if you can achieve one. You deserve it. So a serious course on getting (okay, stealing) and keeping high-end clients (Fortune 500 companies and large Asian and European companies) might actually fly.
The one place where I take issue with Dan's idea is his proposed title - "Stealing and Keeping Biglaw Clients." I don't think solos need to antagonize large firms, because there are situations where large firms may refer solos and small firms lucrative clients.
I was particularly gratified to see Dan's post because making solos realize that we can compete with the big boys has been one of the driving forces behind MyShingle. As I wrote here over three years ago, I hoped that MyShingle would address a huge gap in the "starting a law firm" genre of books and articles:
Moreover, much of the information available on-line about solo and small firm practice is geared primarily towards starting, operating and marketing a traditional general practice law firm. Few resources exist for lawyers who start non-conventional small firm or boutique or corporate practices which directly compete with large firms.
In fact, the more I blog about solo practice, the more I come to realize that it's the preference of the ABA, and to a lesser extent the legal trade media, to keep solo practice "small time." Yet there are solos and small firms who are competing with biglaw everyday, whom we never hear about - and that the biglaw dominated ABA would prefer to keep under wraps.
MyShingle Reviews Blachman's Anonymous Lawyer
Let me start this book review with a confession: when I first heard that Jeremy Blachman nabbed a contract to bring his Anonymous Lawyer (AL) blog to the printed page, I didn't have high hopes. While I read the AL Blog before Jeremy outed himself, I can't say that I was a huge fan; as an egomaniacal blogger myself, I had mixed feelings about my blogging colleagues who didn't have the nerve to back up their thoughts with their identity (though I was wrong that anonymous bloggers don't get book deals!). And I wasn't all that impressed with the idea of an expose on biglaw. Seemed to me that it had been done before, in books like Cameron's Stracher's mediocre Double Billing and a bunch of different short stories I'd seen in bar magazines over the years, where the protaganists realize they're wasting their life at biglaw and and decide to leave the law entirely or to seek employment in some public service oriented position like government or a legal aid group (never solo practice, but that's just my own personal gripe).
So I was hugely surprised that Blachman's novel, Anonymous Lawyer, was a far better book than I ever expected, one that in my view will endure as a classic in the law profession genre of novels, along with books like The Paper Chase (with its iconic Professor Kingsfield) and to a lesser extent, Scott Turow's One-L. As my many blogging colleagues have pointed out, Blachman offers a scathing and hilarious inside view of partnership and taps into today's blogging zeitgeist by using the blog and emails as narrative devices, all of which make for an enjoyable read in a format now familiar to many of us. But what gives the novel its staying power is its commentary on the modern day law firm. Just as existentialists like Albert Camus used their writings to probe the absurdity of the human condition during the 1930s and 1940s, Blachman's Anonymous Lawyer conveys the utter absurdity of biglaw practice.
There's not much to the plot; the book revolves around life at an anonymous biglaw firm during its summer associate program and AL's campaign to ascend to the Top Dog position at his firm. AL's blog entries paint a picture of the absurdity of biglaw life - the fifty dollar expense accounts for 22 year olds in law school, the lavish parties and picnics that no one really wants to attend, the stingy time off policies for holidays, the ruse of the "part time family balance programs." AL's matter of fact and unreflective tone evokes the flat voice of Mersault, who narrates Camus' The Stranger. But AL's not without opinions; in particular, he disdains his sad, overweight daughter (and fat people, generally) and his wife, who fritters his money on interior decoration and breast enhancement. (as an aside, someone ought to write a book about the plight of the law firm partner's wife, addressing why so many competent women, many of them formerly attorneys themselves willingly sacrifice their careers to hitch themselves to their husband's rising star as partner at a law firm and content themselves with being "a partner's wife.")
For me, where Anonymous Lawyer shines isn't in the day to day description of the rat race of law firm life or the nasty cracks that AL makes about his partners and the ingratiating summer associates. The book moved me most at those rare times when AL lets down his guard with himself-- in the pleasurable moments he shares catching snakes with his son, or during his realization at his high school class reunion that no one's ever heard of his firm or impressed by where he works. For it's there we see that AL hasn't completely lost his soul, just repressed it almost irretrievably in the trappings of a fancy lifestyle and a pile of timesheets - and therein lies the tragedy.
As Camus writes in the Myth of Sisyphus:
The workman of today works everyday in his life at the same tasks, and his fate is no less absurd. But it is tragic only at the rare moments when it becomes conscious.
Substitute "biglaw attorney" for workman and you encapsulate the dynamic of the modern day law firm and the anonymous lawyers who inhabit that world.
Some thoughts on solo practice
This short piece, The not so lonely lawyer (WV Record 7/20/06) offers a couple of quick thoughts on solo practice. Some of the views are positive; for instance, the article takes the time to dispell the myth that solo practice is a greater risk than staying at biglaw:
However, for law firm marketing guru Mark Merenda, remaining with a mega-firm is the risky decision. "As an employee, you can be fired at any time for almost any reason," Merenda began. "In your own practice, one or two clients might fire you, but they're not all going to fire you at once. "There is actually greater security in having your own practice."
At the same time, it's obvious that the author hasn't been reading MyShingle or noticed the changes that have evolved in the profession over the past few years. The article notes:
Small firms are often characterized as "minor league law." Often, solo practitioners have to work harder than lawyers in larger firms to make sure that their firm image matches those in the "majors."
Honestly, I think much of that has changed. Sure, there's "bet the company" litigation where corporations want a bigname firm (not just for the name, but to handle the size of the litigation), but many other companies are choosing smaller firms with more personalized service and lower costs. The change is evolving slowly of course, and perhaps, but it's a real phenomenon just the same.
More Biglaw Attorneys Downsize to Solo Practice
This article, Starting Over in the Big Pond (Richmond Business Journal, 6/28/06) reports on "the joys and tribulations of starting a small law firm" as told by former biglaw attorneys Greg Holland and Steven Setliff. The pair describe some of the differences between biglaw practice and starting your own firm, from having to make decisions like whether to have a coffee pot and what kind of insurance to purchase to whether you lose clout when your own name, rather than that of a top tier law firm appears on your pleadings. Still, Holland and Setcliff, who combined have forty years of practice experience between them, can't stop smiling about the possibilities that solo practice will bring.
They may have left a big firm practice, but as I see it, Holland and Setcliff are finally hitting the big time by starting their own firm.
Cool marketing lessons from an Ivy League drug lawyer and an offbeat U-tube commercial
From brainy Professor Bainbridge's blog, of all places, I learned about the coolest, most expertly executed marketing idea I've seen in a while: a You Tube video by California criminal attorney Allison Margolin. Why does the video work? Several reasons. First, the video gives Ms. Margolin's potential clients an opportunity to see what's she's like - at the office and also in front of the court house. Second, Ms. Margolin discusses her philosophical objections to criminalizing drugs, particularly for therapeutic uses. So clients can see that Margolin believes in what they're doing and isn't just interested in defending clients charged with drug crimes for the money or because of the constitutional issues potentially raised. Third, even though Margolin is young, putting her at a disadvantage against more seasoned practitioners, she's got something many of them don't: an Ivy league education and a Harvard Law degree, which she displays prominently in the video and apparently, in her other marketing materials. As I've often said, anyone from any school can succeed as a solo, but if you've got a unique credential like a law degree from a top school, why not flaunt it?
Is anyone out there getting ready to pull out the video camera yet?
In praise of the late bloomer
If like me, you sometimes feel a little down that you haven't yet hit your breakout career stride or left your mark on the law, then check out this article, What Kind of Genius Are You?, David Galenson, Wired (7/06) (hat tip to Arnie Herz at Legal Sanity). As Herz summarizes, Galenson describes two types of geniuses:
The first type he calls conceptual innovators. These people “make bold, dramatic leaps in their disciplines. They do their breakthrough work when they are young.” On the other end of the creative genius continuum are experimental innovators who, “like Auguste Rodin, Mark Twain, and Alfred Hitchcock proceed by a lifetime of trial and error and thus do their important work much later in their careers.”
I know that solo practice has lots of late bloomers, lawyers who never found a niche at biglaw or other permanent employment or lawyers for whom biglaw simply wasn't big enough to accomodate big ideas on how law ought to be practiced. And after spending years wasting away, they now blossom at solo practice. For you lawyers who think it's too late to make something of your career, remember the geniuses who took a long time to figure out their way - and remember that solo practice is always an option where you can bloom, no matter how late in the season.
Help, I forgot my business cards....
Whenever I meet lawyers without business cards, I wonder about their professionalism. Well, yesterday I joined that club when I came out to Oregon to speak at a conference full of prospects and I discovered that I forgot my business cards. How embarrassing...what to do? It was a short trip, so not enough time to have anyone ship them to me, even if I had someone to ask. I asked people for their cards, but that's not the same, because they won't have mine. And suprisingly, lots of people don't bring business cards. I have the conference list and I guess this means that I have alot of business cards to send...
So here's my question for you: what would you do if you forgot your business cards?
How to politely decline...and avoid a lawsuit
Recently, Allison Shields posted here on the benefits that lawyers can gain from hospitality, which is what excellent client service is all about. But this article Thou Shalt Not... by Steven Lubet (American Lawyer, 7/2006) got me to thinking that hospitality and just plain courtesy have other benefits as well: they can spare you from a lawsuit or ethics complaint.
At first blush, Lubet's article, about a lawsuit alleging First Amendment violations by a disgruntled client spurned by a law school clinic seems to hold little advice for private lawyers running a practice. Here's what happened. The North Dakota law school runs a state funded legal clinic that handles civil rights matters. In 2003, the clinic challenged a public display of the Ten Commandments. In 2003 the legal clinic's Civil Rights Project represented five members of the Red River Freethinkers in a challenge to the placement of a Ten Commandments monument standing outside the city hall in Fargo, North Dakota. When Martin Wishnatsky, an anti-abortion activist learned about the litigation, he wrote a letter to the editor, criticizing the litigation as attacking the faith of millions and an inappropriate use of state funds.
To get back at the clinic, in 2005, Wishnatsky wrote to Professor Rover, seeking help in developing a lawsuit against "Grand Forks County and other relevant parties for having a statue of the Greek goddess Themis on top of the Grand Forks County Courthouse." Themis is the well-known figure of a blindfolded, toga-clad woman holding the scales of justice. Wishnatsky explained: "as a Christian, I find such representations of pagan religious figures in public places very disturbing," and indeed, "I feel like a second-class citizen when subject to such governmental displays." He requested the clinic's assistance "on the same basis as that granted to the [plaintiffs] to bring suit against the city of Fargo over the Ten Commandments monument."
As Lubet describes, there are legitimate questions regarding Wishatsky's claims, such that Rovner would have been fully justified in declining his case. But rather than simply decline politely, Rover did the following:
She sent Wishnatsky a letter informing him that due to limited resources, the Civil Rights Project was "unable to accept any new cases at this time." That probably would have ended the ironic pas de deux, but Rovner evidently could not resist going further. Even if they had sufficient resources, she continued, "our independent professional judgment is that your persistent and antagonistic actions . . . would adversely affect our ability to establish an effective attorney-client relationship with you and would consequently impair our ability to [represent] you." Thus, she concluded, "our ethical obligations . . . prohibit us" from accepting the case.
At that point, Wishnatsky sued arguing that she had declined his case based on his public criticism of the clinic and its role in the Ten Commandments case. The lower court dismissed it, but Wishnatsky, with the aid of prevailed at the Eighth Circuit:
According to the appellate court, the clinic's argument amounted to a claim "that it may exclude persons from the program solely on the basis of their viewpoint [emphasis in original]." Taken to its logical conclusion, the court observed, that position would allow the publicly funded program to "accept as clients only persons who belong to one political party." (the case has since been remanded and is pending in District Court)
Whether you agree with the Eighth Circuit or not, none of this would have happened if Rovner had acted courteously. Instead of calling Wishnatsky on his "antagonistic conduct," she should have simply declined to take the case but advised Wishnatsky to seek other counsel if he remained interested in bringing the case. She could even have provided a number for the bar referral office.
When you go to someone's home and you're served something you don't enjoy, you don't criticize the food to the host. Instead, you politely make excuse, that you're too full to eat any more. And when you turn down a client, you do so with the same courtesy. The client may have been a jerk when he came to your office, he may have unreasonable expectations of the case or seem like a cheapskate. Don't put that in the letter. Simply say that you do not believe that you can be of assistance and direct the client to seek out another attorney.
Lubet says that Rovner should have had her students investigate Wishnatsky's case; then she could legitimately reject the case because of lack of merit rather than distaste for the client. That solution may be appropriate for a law school where students can research matters for free, but it does not always work in a law practice. Lawyers have the right to turn down clients for any reason, ranging from lack of confidence in the strength of the case to vibes about whether the client will prove difficult. But when you turn down clients, treat them with respect and courtesy. If you can't act courteously because it's the right thing to do, then at least do it to avoid facing a spurned client's wrath - and possible grievance or lawsuit - if you don't.
Legal Research & Writing Pro Sponsors FREE Webinar With Ed Poll
FREE Webinar on Business Competency for Lawyers
I’ve mentioned Ed Poll, one of today's preeminent law practice management experts and coaches, a number of times on MyShingle (most recently in a post about New York’s new proposed attorney advertising rules), and a number of his articles are included in our Online Guide to Creating a Law Practice. So I’m particularly pleased to help spread the word about a free webinar Ed will be presenting based on his recent book, Business Competency for Lawyers: A LawBiz Management Special Report. The webinar, An Introduction to Business Competency for Lawyers will help you understand the essential ways in which your practice is a business as well as a profession.
In the webinar, Ed will cover the importance of business planning and the components of a business plan, including a marketing plan and a financial plan. He’ll talk about how to evaluate your firm’s business performance and the crucial element of cash flow management. He’ll discuss billing rates and cycles, and will explain some of the pricing options available to lawyers (including hourly, fixed fee and value billing). Since billing is only part of the equation, he’ll also address collections. Finally, he’ll take attendees through some case studies in understanding business competency, analyzing the real costs of e-mail and capital investment.
The webinar, which will take place on Tuesday, July 18 at 2 p.m. EST (11 a.m. Pacific), is sponsored by Legal Research & Writing Pro, a new venture from my friend Lisa Solomon. Ed will present for the first 45-60 minutes of the webinar; after that, all participants are invited to stay in the online conference room for a mini "coaching summit," during which Ed will open the floor for questions about any aspect of law practice management. To register for the webinar, go to www.LegalResearchandWritingPro.com (it's important to register for this webinar even if you attended the last free webinar LRWP sponsored, since there is a new conference room password). Tell your friends and colleagues about the webinar, too.
Lisa has advised me that the webinar interface is not Mac compatible. However, this is a great opportunity to get together with a colleague who has a Windows machine, or you can purchase a program like VirtualPC. Whether you are participating from your office or a colleague's, you can have as many people in the room with you at the time of the webinar as you would like.
If you’ve ever considered hanging out your own shingle, this webinar is a great opportunity to learn some of the business skills you’ll need to make your practice a success. If you’re already a shingler, it’s a great opportunity to brush up on your business skills, and it may reveal some areas in which you could use some additional guidance.
Legal Research & Writing Pro will be sponsoring additional free webinars in the future, and I'll announce them here.