Does Your Law Suit Make Economic Sense
A law suit is a tool, not an end in and of itself. Thus, don't sue someone because you are angry. Do it if filing a law suit helps accomplish an important personal or business objective.
That sounds like common sense advice or even something that you can expect your lawyer to tell you. Too often, however, that's not the case. Lawyers can get caught up in the litigation process. They focus on upcoming deadlines and what needs to happen in the next 30 to 60 days. Thus, it's critical that you, as the client or potential client, emphasize what goals are most important to you. Moreover, it helps lawyers if you regularly ask them how the specific steps they are taking during the law suit are designed to serve your goals.
One of the most common problems that arise relates to whether the law suit is actually reasonably calculated to bring you money. Good lawyers think of this at the beginning of the process. It's not enough to show that someone or some entity broke a law; you also need to make sure they have money. Sometimes the difficulty in collecting or tracking down money makes pursuing a law suit a dicey strategy, regardless of how clear cut the legal issues are. Fortunately, there is a concrete step you can take to determine whether the law suit is likely to make sense financially. Consider retaining an investigator who specializes in tracking down assets before you file a law suit or before the law suit has progressed too far. I can't tell you how many people have told me that they paid their lawyer tens of thousands of dollars or more only to find out that "winning" their law suit wasn't worth the money it cost.
Posted by Gideon on 02/17 at 02:10 PM
Categories: Hiring A Lawyer |
Permalink
Lawyers Earn Less Than You Think
A quarter of lawyers earn less than $50,000 a year.
I'm attending a conference in San Francisco that is being organized by the State Bar of California. Several hundred attorneys, consultants, and others who work in the legal services industry are in attendance. Quite naturally, there has been lots of talk about how lawyers are doing this economy.
That's where I heard the $50k figure. Does that seem plausible to you? Perhaps in rural Arkansas or in some other part of the country where the cost of living is lower. But in California? Really?
Yes, really! Admittedly, $50,000 isn't the most scientific result I've across. It is, however, an educated assessment that seemed to be chaired by folks who are in some position to know.
Even in large states with large cities, a vast majority of lawyers work in small businesses. Many of them are small business owners. The faster you understand that about attorneys, the easier it will be for you to understand how to work with them more effectively.
Posted by Gideon on 01/23 at 10:11 AM
Categories: Hiring A Lawyer |
Permalink
The $25 Per Hour Corporate Lawyer
Outsourcing legal services has been around for more than ten years. In the 1990s several companies sprung up that offered outsourced services for legal research. Rather than pay hundreds of dollars an hour for junior lawyers to conduct legal research, companies such as Los Angeles-based LRN charged a flat fee for research conducted by more experienced lawyers. The research services were marketed to other lawyers, especially those working for large corporations. Outsourcing has always seemed like a promising low-cost alternative to certain aspects of legal work, but it hasn't really taken hold.
On New Year's Day, the Los Angeles Times published the most recent article that touts the possible future of legal outsourcing: "Growth of legal outsourcing may herald era of cheaper lawyering."
Thomson Reuters, a media and information-services company, acquired Pangea3, a legal-process outsourcing firm with most of its lawyers in India, in November. A month earlier, Axiom Global Inc., which provides lawyers-for-hire to big corporations, bought another legal staffing company, LawyerLink.
Just how cheap are lawyers in India? "$25 to $35 an hour for routine corporate work such as drafting contracts and complying with regulation. This, according to Ganesh Natarajan, president and CEO of Mindcrest, a Chicago-based rival of Pangea3.
It appears that much of these services are still being directed to large companies. But at these rates, it makes you wonder why small and medium sized businesses, and the trade associations that represent them, haven't reached out to see if they can make legal outsourcing work for them.
Would you consider having your contract be drafted by an outsourced lawyer?
What Divorce Lawyers Can and Can Not Do
Imagine that you made lots of money selling a service that most of your best customers didn’t need or were better off not purchasing. That’s the situation facing many divorce attorneys.
Divorce lawyers are generally prohibited from taking a case on a contingency or percentage basis. Thus, they either charge flat fees for simple uncontested divorces or charge by the hour. This means that their most lucrative and profitable cases are the ones in which they bill the most time. Those are the cases where the spouses fight tooth and nail over every detail. Divorce lawyers can be helpful if not essential. For example, if you have good reason to suspect that your spouse is hiding assets or your marriage was physically or emotionally abusive, an experienced lawyer can help even the playing field and deter the other side from playing games. But what most divorce lawyers don’t tell you is that the divorce process is fairly straightforward. The forms for most people are detailed but not that complicated. Compute programs have so simplified the divorce process that in some states a majority of people handle the divorce themselves without the involvement of lawyers. Divorce isn’t technically hard. In fact, it may be too easy in one respect. Once the divorce lawsuit
gets started, it tends to take on a life and momentum of its own. One step leads to another; one spouse’s deadline triggers a deadline for the other spouse. T
he hard part about divorce is the emotional aspect. It’s easy to allocate who, for example, gets a prized wedding gift. It requires a box on a form to be checked or an item to be added to a list. But untangling your emotions and focusing on what’s important? That’s the hard part. And however hard it is to divide or allocate possessions, they are just things. Decisions about children are emotionally much more difficult.
Lawyers have taken some steps to make divorce less emotionally damaging. The last decade has seen the growth of collaborative divorce and divorce mediation services. These approaches can be extremely useful, especially if you and your spouse are getting along well enough to communicate and exchange information.
But even these innovative and helpful services don’t fully prepare you for the emotional aspects of divorce. The most important decisions and issues often take place before you contact a divorce lawyer. Are you absolutely sure you want to get divorced? If you are, what kind of person are you going to be during and after the divorce? Are you going to be petty or vengeful or supportive and cooperative? Paying your lawyer a large flat fee or hundreds of dollars won’t make you feel better in the long run. It won’t satisfy your desire for retribution or to get back at the person you chose to marry. When thinking about divorce or what kind of divorce lawyer you may need, focus in establishing your emotional support system. Friends and family can help you focus on what is truly hard and important about divorce. A lawyer may be part of your support system, but recognize that many lawyers and the divorce process aren't well suited to address the all-important emotional issues.
Finding A Lawyer On Your iPhone
A new iPhone app allows you to find lawyers worldwide. More precisely, the app allows you to find lawyers and accountants who are part of the consortium that released the app.
Here's how the app is described on Robert Ambrogi's Lawsites Blog:
The MSI Global Alliance, an international association of 250 independent law and accounting firms in 105 countries, yesterday released Advisors2Go, an iPhone app that provides a directory of its member firms and of key contacts within each firm.
It allows users to search for a firm by location and type of service. For each firm, it provides key contacts and links to directly phone or e-mail the firm. It also provides a brief profile of each firm.
This app raises an interesting question: Are lawyers who are proficient at marketing on iphones (and other emerging technologies) better lawyers? Should you prefer to work with a law firm that follows the latest tech trends?
Maybe.
I hate to give a lawyer-like answer, but that's the right answer. Most of the skills that are important for lawyers to have are unrelated to the skills that make cutting-edge marketing effective. Thus, on one hand, I applaud the innovative efforts of organizations such as the MSI Global Alliance. More lawyers need to make their services acessible, and there is something appealing about being able to find a lawyer in Rome in the same way you would order a pizza or find a roving food truck. On the other hand, just because you can find a lawyer on your iPhone doesn't mean that you should. Convenience is an important factor when working with a lawyer. But it's hardly the only one or even the most important one. It's more important to find an attorney with the precise experience you need, even if that lawyer doesn't have an iPhone app.
Remember: Just because a lawyer is good at marketing doesn't make them a good lawyer, or the right choice for you.
(Hat Tip: Gordon Firemark)
Avoid Beginning Lawyers
Large corporations are increasingly refusing to allow their outside law firms to use first-year attorneys on their cases.
The American Bar Association recently convened a panel to discuss this phenomenon. The podcast of their discussion entitled, "Where to Start & What to Charge for Lawyers-in-Training" is available here
The most notable aspect of the conversation is the matter-of-fact way in which everyone discusses how it's a given that first, second, and even third year attorneys may not know enough to justify the rates that large law firms charge for their work. This is not a new trend; it's been going on for five to ten years, although the current economic downturn has made the situation worse for what the ABA calls "lawyers-in-training. Interesting phrase; makes me think of a lawyer on training wheels.
The unspoken assumption of the discussion between large corporations and large outside law firms is that working with new lawyers would be less problematic if large law firms charged less for the work performed by new lawyers. This in turn suggests that it may not be problematic for most people to use new lawyers because most firms charge less than their largest multinational counterparts.
I don't buy that argument. The fundamental problem is that law school graduates often don't know what they are doing because law is largely learned on the job. Thus, whether you are paying $150 or $300 an hour or whether your case is being handled on a contingency basis, there is a good chance that beginning lawyers aren't up to the task. Moreover, given the number of available attorneys with more experience, why risk it? Sure, the rare first-year lawyer is a superstar, but on average a lawyer with five years of relevant experience will blow a first year out of the water.
Whether and to what extent large corporations should subsidize the training of lawyers who one day may work for those corporations is an interesting discussion. I can see why the ABA convened a panel to discuss this issue.
But for most clients the key take-away is this: if even the largest corporations in the world feel they can't afford to work with new lawyers, you should avoid them like the plague.
Posted by Gideon on 08/04 at 09:03 AM
Categories: Hiring A Lawyer |
Permalink
Hiring A Trial Lawyer
When most people think about lawyers, they think about trial lawyers. Those are the lawyers that we consistently see on TV. There is a world of difference between the reality of a trial and the way it's depicted on television. For starters, the issues raised by trials are not resolved in 44 minutes. You also never see a television lawyer filling out forms or reviewing boxes and boxes of documents.
There is, however, one attribute of TV lawyers that you may want to replicate when you hire your own trial lawyer—likeability. Juries feel their way to a decision more than they think their way there. Moreover, they reach conclusions and make decisions based on what they understand. And one of the things they intuitively grasp is personality. Specifically, they pick up on subtle nuances of your lawyer's personality, and don't want to be lectured to or feel that the lawyer is talking down to them.
So if you interview a lawyer and feel they are a pompous ass, don't be surprised if a jury will reach the same conclusion.
An experienced and accomplished trial lawyer I know recently put it this way: "If you are hiring a trial lawyer, it's important that they take a Dale Carnegie class." Carnegie is best known for his book, "How to Win Friends and Influence People." It's one of the all-time classics about interpersonal relationships and communication strategies.
Carnegie is also pictured above.
I'm not saying that a Dale Carnegie course is absolutely required for trial lawyers. But I wouldn't hire a trial lawyer if I felt they needed to take the Dale Carnegie course on effective communications.
Beware of Lawyers with Old Computers
I have repeatedly advised potential clients to find lawyers who have the experience and resources that are needed to accomplish the client's goals.
While different kinds of lawyers require different kinds of resources to be effective, for many lawyers those resources include fairly modern computer hardware and software.
A lawyer doesn't have to be a computer geek; in fact, many of the best lawyers I know aren't very tech savvy. Thus, it can be misleading to evaluate individual lawyers by how techie they are. But it does make sense to evaluate a law firm's computer hardware and software resources. Often the most tech-savvy people in law firms are non-attorneys such as secretaries and paralegals. And larger law firms generally have an in-house IT department. Most law firms don't require cutting-edge hardware or software. When you are evaluating law firms, don't automatically select the one with the newest machines.
You should, however, beware of firms with the oldest computers and very old versions of software. Thus, you should ask what software your prospective lawyer uses to send email and generate documents. Make sure that they are compatible wiith your computers. Too often, the failure to update computer hardware and software is a red flag. It may be a symptom of poor cash flow.
Most importantly, keeping up with technology doesn't come naturally for many lawyers. It requires decent management practices for small law firms to maintain reasonably up-to-date IT systems. Ancient machines may be a sign that a lawyer has poor management skills. And that's something you want to avoid when you hire and work with a lawyer.
Why Law School Grades Don’t Matter
There's a famous scene in the 1984 mocumentary "Spinal Tap," in which one of the members of the fictional rock band explains that their sound projects were louder than other bands because the the dials on their amplifiers go up to the number 11, rather than the more traditional 10.
The most recent game that law schools are playing reminded me of this scene. As reported in the New Tork Times, some law schools are arbitrarily and retroactively increasing the grade point averages of their students to make them more attractive to potential employers.
[Loyola Law School Los Angeles] is retroactively inflating its grades, tacking on 0.333 to every grade recorded in the last few years. The goal is to make its students look more attractive in a competitive job market.
In the last two years, at least 10 law schools have deliberately changed their grading systems to make them more lenient.
I've previously commented on the deficiencies in law school education. Even without this game-playing, and regardless of their grades, there is little reason to hire attorneys fresh out of law school. A vast majority of what lawyers know is learned on the job. Experience matters.
Apparently, law school administrators believe that the people who hire lawyers, including their own alumni, are a bunch of chumps. Do they really think that lawyers won't notice that grades have been inflated retroactively? This is just another sign that law school education is fundamentally flawed.
It's just one more reason to avoid hiring recent law school graduates altogther.
When Lawyers Claim To Win 98% Of The Time
I recently heard a law firm advertise that it had won 98% of its cases. The firm primarily handles personal injury cases and its advertising is aimed at members of the general public.
So how do you you evaluate this seemingly impressive success rate?
The conclusion I reached is slightly counter-intuitive—this firm likely handles lots of small-potatoes cases, which it may settle on the cheap.
The primary value in a personal injury case is the extent of the injury. Thus, a firm that "wins" 98 percent of the time clearly represents people who have been injured in some capacity.
But they are unlikley to represent many cases in which the injuries are severe or where the potential damages are measured in millions of dollars. These kinds of cases generally involve insurance cases, and the greater the potential liability the more it makes sense for the insurance company to invest in better, more experienced attorneys. Likewise, when millions of dollars are at stake, the defendant has a greater incentive to take a case to trial.
I am fairly confident that, in the context of a personal injury case, "winning" means that the law firm's client received some compensation. What's not disclosed and what matters more is how much.
You shouldn't be surprised that, for example, if you are injured in a car accident, you are likley to get some money. But unless you have a sense of whether this firm is liklely to get you more money than another firm, you don't know much. It's not cost-effective to take a case to trial if it can be settled for $10,000. Thus, even people who have bordelrine or weak cases tend to get a small payment.
You should therefore keep in mind that firms that advertise their "winning" percentage may have an incentive to avoid losing. Unfortunately for you, that may mean that they are inclined to push you to accept a lower-than-average settlement. That is a good way for them to continue "winning" cases, but that's not a good result for you. So you shouldn't read too much into overall percentage.
It's more important to know how firms have handled cases where the lost wages and injuries are similar to yours. That's the kind of experience you need to evaluate.
The Fancy Pen Fallacy
"Don't judge a book by its cover." You've probably heard this advice. but I've spoken to more than a dozen people who are involved in book publishing and all of them say that books are in fact judged by their covers.
The right cover can make an enormous deifference in a book's sales. You've probably also noticed how important it is to dress for success, and researchers have found that how you dress at an interview can impact your starting salary. In many aspects of life we have no choice but to make decisions based on appearance. Buying a book based on its cover doesn't have a huge downside. At worst, you waste some money and end up with a lousy book.
But choosing a lawyer based on his or her appearance can be a much more serious mistake. For a sizable percentage of lawyers, the ability to write persuasively is an impoprtant skill. Likewise, an increasing percentage of negotiations take place over the phone. There are, of course, lawyers for whom appearance is a crucial element of how they serve their clients. Most notably, the small percentage of lawyers who handle jury trials fall into this category. Juries are often relatively unsophisticated and they are swayed by what your lawyer looks and sound like.
It is only natural to judge lawyers by their appearance. Seeing someone in an expensive-looking suit does suggest that the person wearing the suit is successful. But don't read too much into this. Remember, when your lawyer pulls out a fancy pen during your initial meeting, how the pen looks is much less important than how well the lawyer writes with that pen.
How To Do A Background Check On Your Arizona Lawyer
Arizona's attorney disciplinary system appears to be more transparent than the sytem used in many states. It is, for example, possible to obtain online judicial opinions that detail what specific lawyers have done to warrant being disciplined. But, as is explained below, if you are considering hiring an attorney in Arizona, it isn't easy to determine online whether your lawyer has ever been disciplined.
The Attorney Discipline Unit of the Arizona Supreme Court handles formal disciplinary charges against lawyers. The Court's website identifies lawyers who are currentlly facing disciplinary charges. For each of these attorneys, it possible to review the report submitted by the Hearing Officer who heard the evidence in the case against the lawyer as well as the decision of the Disciplinary Commission, which in effect acts as an appealate body and reviews the Hearing Officer's decision. Both the Hearing Officer's report and the Disiciplinary Commission's review are accessible online in pdf format. In addition, the Attorney Disiciplie Unit publishes a Matrix that identies all disiciplinary decisions made by the Arizona Supreme Court since 1986. The Matrix also identifies disbarments and suspensions, the most serious violations, between 1981 and 1985. Beginning in 2003, the Matrix includes a link to the actual decisions made by the Hearing Officer, the Disciplinary Commission, and ultimately by the Arizona Supreme Court. For cases decided between 1981 and 2002, only the summaries of these decisions are available online. It appears that if you want to receive the actual disiciplinary reports for cases decided before 2003, you need to call the Supreme Court and pay for copies of the disciplinary record to be mailed to you.
The authorities in Arizona ahould be commended for including the full-text versions of the disciplinary decisions. Too often, summaries of disiciplinary proceedings are written in such a dry style—and contain so little information—that it is difficult to get a full picture of what the lawyer did and why they received the punsihment they did. The disciplinary decisions often reveal what arguments were made in defense of the accused attorney as well as the judge's conclusion as to whether the accused lawyer acted defiantly or was contrite. These can be important details to know if you are considering hiring a lawyer who has previoulsy been disciplined.
Arizona's online reporting system does, however, suffer from a serious flaw; its search feature doesn't work very well. In theory, it should be possible to conduct an online search to determine whether a particular lawyer has previously been disciplined. But when I entered the names of specific lawyers into the search engine, the results were essentailly useless. The results linked to the Matrix for certain years but the names of the specific lawyers I searched for were nowhere to be found.
Thus, Arizona's online system is helpful when you want to find out information about a lawyer who you know has already been disciplined. It is particularly user friendly when you know the specific year in which the lawyer was disiciplined. But if you don't know this information and you want to find out whether a particular lawyer has been disciplined, the Supreme Court's website isn't very helpful.
In a future post, I'll report on what to expect when you call the Arizona Supreme Court to determine whether a particular lawyer has been disciiplined. But even if it is possible to find out this information by phone, the fact that this information isn't online means that far fewer clients will be able to make an informed decision about one of the more important decisons they make in their lives—which attorney to hire.
How To Find Out If Your Lawyer Has Been Sanctioned
I have previosuly written about how you can conduct a background search to determine whether your lawyer has been disciplined by either the Supreme Court or the Bar Association of the state or states in which the lawyer is licensed. If you are hiring a lawyer to represent you either as the plaintiff or defendant in a lawsuit, you should also find out whether the lawyer has been penalized by a court for filing a frivolous lawsuit or otherwise acting undreasonably in connection with the lawsuit.
The most well known court-ordered penalty or sanction is Rule 11 of the Federal Rules of Civil Procedure. It provides that, by signing a document filed with the court, the lawyer is pledging that the document is not being used for an proper purpose, is based on existing law or a good faith argument for a change in existing law, and is not frivolous. In addition, Rule 11 empowers federal courts to fine and otherwise punish lawyers who violate the Rule.
A sanction imposed under this rule must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated. The sanction may include nonmonetary directives; an order to pay a penalty into court; or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of part or all of the reasonable attorney's fees and other expenses directly resulting from the violation.
Many states require lawyers who have been sanctioned more than a particular amount, often $1000, to notify the applicable disciplinary authority of the penalty. This requirement has had an unfortunate unintended consequence. Too many courts are hesitant to impose a sanction that will trigger the disclosure requirement. As a result, judges impose financial sanctions just below the disclosure limit. The lawyer's conduct therefore doesn't come to the attention of the disciplinary authority, and the amount of the fine is so low that it doesn't have much a deterent effect on the lawyer.
Many states have established court-ordered penalities that are comparable to those found in Rule 11. Most states also have passed laws that provide specific penalties and fines for lawyers who have been found to violate the rules relating to discovery—the process by which the parties to a lawsuit request and exchnage information from each other.
There isn't a sure fire way to determine whether your lawyer has been sanctioned by a court. Most lawyers don't handle lawsuits in federal court. Thus, Rule 11 doesn't directly apply. And even when a state has enacted a similar rule, it's often called something other than Rule 11. It can be worthwhile to enter your lawyers name in Google or some other search engine and see whether anything comes up when you look for discovery or litigation sanctions. Sometimes your best bet is to ask the lawyer during the interview whether they have ever been sanctioned and if so how much and for what.
Avoid This Contingency Fee Trap
One word in your fee agreement with your lawyer can cost you thousands of dollars. The word comes up in the context of contingency fee arrangements. This is where the lawyer get paid on a commission basis—as a percentage of the amount you get. This is how most personal injury cases, such as automobile accident, medical malpractice, and slip and falls, are structured. In this or any kind of commission-based arrangement, you need to pay close attention to how the commission is calculated.
Most advertsing by lawyers who work on a commission basis emphasize that you don't pay them unless you get paid. What they don't emphasize is how their share is calcuated when your case is settled or when you win at trial.
This is where one word—gross—can cost you a bundle. Specifically, there is a huge difference between whether the lawyer receives a commission based on your gross receovery or your net recovery.
The following example illustrates the difference: you are injured in a car accident and sign an agreement with a lawyer that pays the lawyer one third of what you get. The lawyer spends $20,000 to handle your case. Most of that money is paid to expert witnesses such as doctors. If you settle this case for $150,000, how much will you cactually receive? Under most fee agreements, you will be responsible for reimbursing the lawyer for the amounts paid to expert witneses and for other costs, such as court filing fees. Here that amount is $20,000. If your contract says the lawyer gets a gross recovery, the lawyer will be entitled to a third of the $150,000 in addition to the costs. In this case, the lawyer would receive a total of $70,000 and you would get the remaining $80,000. But if the lawyer is contractually entitled to a net receovery, the lawyer will get paid a third of what's left over after the costs have been subtracted out. In this case that would be a third of $130,00 or $43,333. Thus, in this example, under a gross recovery the lawyer gets $70,000 and in a net recovery only $63,333.
The lesson should be clear—make sure that your fee agreement provides that the lawyer receives a percentage of what you get after costs are subtracted out. Go for the net recovery. When a lawyer earns a gross recovery in a contingency cases the result for the client can be gross.
What Elena Kagan Tells Us About Judicial Experience
President Obama this morning nominated Elena Kagan to replace Justice John Paul Stevens on the United States Supreme Court. The announcement was hardly a surprise, as Kagan, formerly the Dean of the Harvard Law School, was the odds-on favorite to receive the nomination. Equally predictable is one of the criticisms that will be leveled at Kagan—she would be the only member of the Court without prior judicial experience.
As a client, you are extremely unlikley to have your case heard by the Supreme Court. So you aren't likley to have Kagan resolve your specific dispute. But Kagan's nomination does reveal something important for clients to understand about what judges do. Kagan is likley to be sworn in as our next Supreme Court Justice. But she isn't qualified to serve as a trial court judge—the kind of judge that often generates the cases that the appeallate courts and the Supreme Court decide. Saying that Kagan isn't qualified to be a trial judge isn't a knock on her. My guess is that she would agree with that assessment. After all, she hasn't been in the courtroom. She hasn't represented clients during criminal or civil trials. Many of those who have been appointed either on the state or federal level as trial judges spent years in the courtroom, usually as a prosecutor in criminal trials. Kagan clearly lacks that experience. Moreover, many of the people who are trial judges lack experience in civil disputes; most of their trial experience came in the context of criminal cases.
This fact leads to an ironic situation. I have repeatedly advised that you hire lawyers who have the specific relevant experience that's need to help you reach your primary business or legal objective. If that objective includes prevailing in a civil lawsuit, such as dispute over a contract, that means hiring a lawyer who has a track record of successfully representing clients like you before the judge or judges who will decide your case. The chances are good, however, that the judge in that dispute handled few if any non-criminal cases beore they became a judge. Moreover, if your case were ever appealed, it would be heard by judges who may not have any experience working as a trial judge. Appeallate judges, including those on the Supreme Court level, are often nominated because of their knowledge of the law. Thus, the more pretigous a judge's position tends to be, the higher the chances that they haven't actually been in the courtroom either as a judge or as a trial lawyer. That is an important lesson for clients to understand when they are involved in a lawsuit.
