$42 Million Fee - Inherently Unreasonable? That Depends, But Here, It Was
Over at Legal Blog Watch, I've posted my view on the $42 million fee collected by a law firm in a multi-million dollar estate matter. Basically, the lawyers originally had a fee agreement with the client; when she found her legal fees mounting (to the tune of $1 million per quarter), she asked her lawyers what they could do. The proposal? The client would pay an additional $1.2 million after which the lawyers would take 40 percent of the total proceeds recovered in the matter. At the time the fee agreement was renegotiated, the lawyers had already collected $18 million (not clear how much related to this precise matter) and there was a $60 million offer on the table. Five months later, the lawyers settled the case for $100 million and with their 40 percent, the client took...$60 million, the same amount she'd been offered earlier.
There are more details in my other post, particularly about some of the facts that make this case particularly egregious. The court didn't approve the fee, just said it wasn't inherently unconscionable and set the case for trial. And if you're wondering what I'd consider fair in this case, let's just say that had the lawyers' renegotiated fee agreement allowed them 40 percent of the difference between $60 million and the amount eventually recovered, I'd not be writing this post.
There's one more important issue here. Some believe that when lawyers negotiate a fee agreement with a potential client, they have not ethical or fiduciary duty to ensure that the agreement is fair, beyond the bare minimum that ethics rules require. Fair enough. But that argument doesn't apply here. When theses lawyers renegotiated the fee, they already represented the client; and they had a duty to look out for her best interest and ensure that the new fee agreement was fair. These lawyers certainly looked out for someone; let's just say that it wasn't their client.
MyShingle Named in ABA's Blawg 100
MyShingle has been named as one of the ABA Journal's Top 100 Blawgs. I've placed my badge of honor in the sidebar to the left. My blog is included the in the category of Lawyer's Toolkit, whatever that means, and if you're so inclined, you can click on this link to vote for my blog.
While I'm honored at my inclusion on this list, it's difficult to fully celebrate when so many excellent blogs didn't make the cut. Moreover, as I posted earlier on a listserve, with 3000 blogs, I'm not so sure it's even feasible to have a "best of." My own preference would be to have an award for best blog reporting or blog article or series, which was my response here when I contributed to a Blawg Review meme on "simply the best blogs."
By the way, if you're interested in some of my own personal favorites from MyShingle, consider these:
- Pick Up the Phone and Make Yourself a Better Lawyer (April 2003);
- The Bar's Dirty Little Not So Secret Secret: Disciplinary System Discriminates Against Small Firms (May 2003);
- Maryland Rule Banning NonLawyer/Lawyer Referral Groups Discriminates Against Solo and Small Firms (May 2005);
- Saying Nay to the Naysayers (May 2005);
- I Have Been Crazy Busy (February 2006);
- And Where Were the Women Solo Lawyers...probably too busy blogging, running businesses and practicing law to complain(February 2006);
- Hey Biglaw, Where Were You When It Mattered? (May 2006);
- The Smallest Things Have the Biggest Impact (December 2006)
- The Florida Bar Won't Let Lawyer Promise to Help You Get Rid of That "Vermin Who Is Your Spouse(March 2007);
- A Tale of Two Lawyer Rating Systems (June 2007)
If you feel like taking a trip down memory lane and revisiting some of your "oldies but goodies," send me a link to your "Top Ten Blogging Hits" and I'll compile them for a post.
What With Biglaw Layoffs and Rate Hikes, 2008 Will Be A Banner Year for Solos
Two factors are conspiring to make 2008 a break out year for starting a law firm. Factor 1: rapidly weakening credit and financial markets are causing law firms like McKee Nelson to offer voluntary severance packages to associates and leading other firms Thacher Profitt to give notice of impending layoffs. Factor 2: rapidly increasing hourly rates at large firms - now up to one thousand dollars an hour are spurring some lawyers to start their own practices to attract clients who can't afford big firm rates.
So, if you're affected by one of these factors - if your job is in jeopardy because you practice in an area that's going under, or if you can't find clients with sufficiently deep pockets to pay your current overhead, why not consider starting your own firm? Sure, there are other options - you could move to a smaller firm, switch practice areas, move to another firm or consider employment in academia or in house. Just be sure to that as you consider these options, think about solo practice right along with them.
And stay tuned for my upcoming book, Solo by Choice which contains a specific section on "Biglaw to Yourlaw," as well as several examples of lawyers who've taken that route, and found financial success and personal satisfaction.
UPDATE - CONF. CALL # NOW AVAILABLE: - Come Celebrate With Me...Join My Business Building Accountability Club
As 2007 draws to a close, I'm anticipating my 5th Anniversary of blogging at MyShingle and the long awaited release of my book, Solo by Choice: How to Be the Lawyer You Always Wanted to Be. Yet, while I'm in the mood to celebrate, at the same time, I find that I still have a list of marketing initiatives and law-firm related projects a mile long. I'd like to finish many of these tasks to lay the foundation for making 2008 great. So to get myself on track and to celebrate my impending milestones, I'm forming a Business Building Accountability Club.
Are you trying to get a blog up and running? Interested in putting video up on your website? Finish up an article? Can't get your nerve up to make those cold calls? Have a marketing idea that you're not sure how to implement. I've got those items plus dozens more on my list! So why don't we work together to keep ourselves on track to finish up what we need to before the year ends? I'll admit that I have another ulterior motive in starting up this group: it's allowed me to cross one item off my list - figuring out how to use registration software and set up a teleconference.
So...if you're interested in joining my group, follow this link to the event registration. The kick off call is scheduled for December 5, 2007 and there's NO CHARGE! I hope you can join the call. [NOTE: For those who signed up anytime before today, Nov. 27 at 2:45 pm, you can revisit the link to obtain the call in phone number. I will also be emailing the call in number along with the agenda].
What Does A Sample Invoice Look Like?
I realize that these days, alternative billing is all the rage - and I too am a proponent of alternatives to the billable hour. Still, there are times when you have to resort to the billable hour, either at the insistence of a client, or under some of the guidelines for submitting a fee petition to the court.
So if you're billing by the hour, what should your invoice look like? When I started my own practice, I had the benefit of knowing what a sample invoice looked like, having reviewed many of the outgoing bills at my former firm. Since then, I've seen many other invoices: as a contract attorney for a federal agency (a part time position that I held in the early years of my practice), my responsibilities included evauating and ruling on fee petitions submitted by lawyers on behalf of clients who prevailed in litigation against the agency. And I've come across other fee petitions in researching caselaw for fee petitions that I've submitted on behalf of my own clients (which favorable results, I'm happy to report).
So while invoices are second nature to me, I realized that some lawyers, either those starting a practice from government, or those straight out of law school may not know what an invoice looks like. And because I believe that the best examples are those straight from real life, rather than create a "pretend invoice," I'm presenting a copy of this Fee Petition, one of several submitted by the attorney representing the defendant in Capitol Records v. Foster, who was sued for allegedly downloading copyrighted materials. Ultimately, in this decision, the court granted $68,685.23 of the $105,680.7 total amount sought. While recovering only sixty percent of a bill doesn't seem like much of a victory, chances are that the individual defendant in this matter could not have afforded more than a fraction of that bill. Plus, the court noted in its decision that once it had decided preliminarily to grant attorneys' fees, the defendants' activity stepped up considerably, thereby suggesting that some of the work may have been performed to run up the bill since the record company would be paying.
As a general matter, the attorney's invoice offers the level of detail necessary to convey to the client - and a reviewing court (if your bills are ever disputed) the amount of work done. That aside, the invoice has some problems as well. Personally, I would not include the same level of detail regarding my conversations with my client, if only to preserve attorney-client confidentiality. And for a bill of that magnitude, I wouldn't charge for the cost of Westlaw or a six minute phone call.
The court's decision is useful as well, because it offers insight into how clients might scrutinize the bill. For example, the court refused to reimburse the attorney for duplicative items, such as the unnecessary presence of two attorneys at a settlement conference. More importantly, the court did not award fees for supplemental filings to correct pleadings that should have been filed correctly from the outset. Think about it: if a judge reviewing a bill does not believe it appropriate to compensate for mistakes or duplicative effort, how will your client feel?
I'll try to locate and periodically post other fee requests. If you're interested in finding this information yourself, you can do some research on attorney fee awards either on Google or with your preferred research service, and then plug the docket number (assuming it's a federal case) into PACER to pull the fee request. [BTW, if you don't have a PACER account, you ought to; it's free with an .8 cents a page download charge - and there's no better place to find sample complaints, briefs and other pleadings than PACER].
The Rich Choose Solo and Small Firm Lawyers
Worth Magazine just published a list of the top hundred lawyers who serve some of the nation's wealthiest individuals, with net worths ranging from $2 million to $200 million. (H/T ABA Journal News). The wealth of these lawyers' clients ranges from In particular, the editors sought out "lawyers with great tact, discretion and stellar interpersonal skills, enabling them to explain a client’s options in the face of incredibly complicated legal and psychosocial issues.
Solo and small firm lawyers comprise at least half of the list. Of course, give the characteristics that Worth was looking for, does that really come as a surprise?
Blogging for the Long Haul
My buddy Kevin O'Keefe is raising a toast to America's blogging lawyers and their "dedication to learn, exchange information, and market themselves in an upbeat and professional way." But there's another part of Kevin's post that caught my eye - the line where he adds that "Blogging lawyers, age 35, are going to be blogging for the next 25 years."
I started my blog when I was 38 and I'm fast approaching the five year blogging mark. While I can't imagine abandoning blogging, I also can't fathom the thought of blogging twenty more years, churning out content two or three times a week. Would I find enough new inspiration to keep my writing fresh? Or turn into some kind of blogging-egomaniac, forever citing my own self-created body of work, or harking back to the "good old days" when bloggers had to walk ten miles through knee deep snow to post...(oops, that's the speech I give my daughters when they balk about the three block walk home from the bus stop). And worst of all, will changes in technology render my old posts inaccessible?
Right now, the blogging phenomenon lives so vibrantly in the present that it's hard to contemplate the future. And like everything else with the Internet, some next big thing will come along in another ten years that will displace blogging entirely. The challenge that I see for lawyers isn't so much committing to blogging for the long haul, but having the ability to embrace blogging for now, while keeping our eyes and mind open for the next big thing on the horizon.
Where do you think blogging is going? And will you be blogging 25 years from now? Post your thoughts below or at your blog.
Using Law Students to Power Your Blog: Win-Win for Everyone
When it comes to ghostwriting law blogs, the majority view within the blawgosphere is "don't." (For the precedent on this, see these selected opinions at Death and Taxes;
Georgia Bankruptcy Blog; Home Office Lawyer and Simple Justice). At the same time, we all recognize that content makes a blog valuable to readers. So what can busy lawyers do to improve the quality of their blogs if they can't spare the time to create original content themselves?
Here's one possible solution that I discovered at Pennsylvania attorney, Neil Hendershot's blog, Pennsylvania Elder, Estate & Fiduciary Blog: have a law student research and draft an articles for your blog, just as Hendershot did with Joshua Prince, a third year student in a class that Hendershot teaches on elder law. In the most recent of his three articles, Prince wrote a piece on the fascinating topic of Estate Planning Under the National Firearms Act. And Hendershot doubled the exposure of his article by soliciting input from firearms estate planning expert David Goldman, of Florida Estate Planning Blog, who cross referenced the article in his blog as well.
Hiring a law student to write an article for your blog presents a win-win situation for all involved. The lawyer obtains quality content at reasonable rates (or perhaps at no charge, if the student can use the research for a class). The student gains valuable feedback from the lawyer as well as an opportunity to publish his or her article on the national scene. And because the student receives credit for the article, the concerns underlying ghostwriting aren't implicated.
Related post: Make A Positive Contact, Write Away.
Hey, McKee Nelson Associates - There'll Never Be A Better Opportunity Than Now to Start Your Own Law Firm
Thanks to a lemon of a credit market, associates at McKee Nelsonhave the opportunity to make a huge vat of life-changing lemonade. Above the Law's David Lat is reporting here that NY/DC based McKee Nelson, in an effort to avoid economically-induced, forced associate layoffs, is offering associates two options: (1) a full bonus, plus four months pay to anyone willing to leave the firm voluntarily or (2) a full bonus plus a year's sabbatical at 40 percent of the $160,000 salary. Option 2 carries two caveats; first, the firm cannot guarantee employment at the end of the year and second, the firm wants associates to use the sabbatical to "make the world a better place."
Lat suggests that associates use the time to fulfill their dreams of finishing a novel, or studying painting. But I've got a better idea: what about starting your own law firm and becoming the lawyer you always wanted to be?
With a $25,000 bonus and a $60,000 salary, MN associates who decide to go solo would have the luxury of building a practice the right way, without ever having to spend a minute specializing in "threshhold law" (i.e., taking any client who crosses the thresshold). They could develop an interesting specialty, devote time to starting a blog, handle court appointed cases to get courtroom experience, devote time to building the kinds of relationships that generate referrals and invest in the infrastructure, such as adequate malpractice insurance, computerized legal research and quality laptops and mobile work equipment (notice that I don't mention Class A office space here, because to me, it's not integral) that would help insure success. And they'd have the time and resources to spend on CLEs and marketing classes to help ensure success.
Would starting a law firm qualify for McKee Nelson's requirement of "making the world a better place?" Absolutely. Because these new solos might find the kind of autonomy and happiness that may have eluded them at a larger firm, plus, they'd set an example for other disatisfied lawyers to follow. And liberated from the overhead of requirements of large firms, these new solos could offer top service at lower rates to more clients, thus improving the quality of legal representation and expanding access to law. Finally, if...and when these MN solos decided to return to their former firm (assuming it's still around), they could apply their newly found marketing skills and hands on experience that would fuel the firm's growth. In fact, maybe this concept of funding associates to start their own firms and gain experience on their own time may serve as a potential business model for biglaw.
To my fellow solo bloggers, I offer this fantasy question: how would you advise a lawyer with a $25,000 bonus and $60k income to spend that money if they decided to start a firm? If you post a response at your site, please send the link in the comments below. MN associates, check back here or drop me an email at email@example.com you think that starting a firm may be an option for you.
Score By Using SCORE For Your Practice
This week, Duct Tape Marketing features a post about SCORE, a non-profit association dedicated to entrepreneur formation, growth and education. Among its many services, SCORE can match you up with a counselor who can help with your business plan or advise on other issues related to getting a business off the ground.
What most lawyers don't realize, however, is that they too can use SCORE as a resource for their practices. Two years ago, I posted on how solos can use SCORE, after receiving a tip from a reader who'd had a successful experience using the group. Though SCORE may not suit your specific needs, since it's a free service, you have nothing to lose by trying it out. And don't forget other resources, such as law practice management advisors (if your bar has one) who can also provide advice on starting a firm at no cost. After all, you've been paying bar dues long enough; might as well get your money's worth by using an LPM Advisor's services.