Boutique Law Firms, Legal Ethics, Money, Small Law Firms

From Biglaw to Boutique: Just Say No

When is it appropriate to turn down a client who is willing and able to pay your fees?

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If you’re trying to grow a solo or small firm practice, you generally shouldn’t work for free unless you have a deliberate business development objective in mind. Conversely, if you have a client willing to pay, you generally should prefer to scale up your headcount instead of turning down work due to lack of bandwidth.

Does this mean you should never turn down a client who is willing and able to pay your fees?

No. There are lots of reasons it might make sense to turn down a paying client….

One obvious reason would be if you’re not able to handle the matter competently. Malpractice insurance notwithstanding, it’s easy to imagine quite a few reasons why it’s not a good idea to take on matters you might screw up.

Even if you have a handy Rutter Guide and are otherwise confident you can handle the matter, you also might want to turn down work outside your bailiwick so you can maintain a more specialized practice. For example, the attorneys at my firm could certainly handle certain business formation, dissolution, and other transactional issues. Nonetheless, we refer that work out to other firms and focus entirely on litigation, which is what we do best.

Other clients you might be wary of taking on are those who believe their case can’t lose. Truly undisputed cases don’t often end up in litigation. If you get a good result for a client who expected to win from the start, he will undervalue your efforts and credit your victory to justice having prevailed. If you get a bad result for that client, he will assume the bad result was your fault. Unrealistic expectations are a red flag that signals a client that you might be better off turning down.

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Other paying clients are difficult because they refuse to respect reasonable boundaries. Precisely because they pay you so handsomely, they believe you are literally at their command 24/7. It’s important to disabuse them of that notion as soon as possible. Despite your best efforts, however, some clients will insist on pushing past any limit you set, even if you’re the kind of lawyer who’s working weekends or customarily slow weeks. At some point, clients’ willingness to pay might be outweighed by the intrusion they pose on your life.

An obvious client to refuse is one who pressures you to act unethically. But a more challenging scenario, and more common, is the client who risks making you complicit in their own unethical behavior, such as testifying falsely or declining to produce a damaging document you believe exists. Even if a client pays you, you still have your oaths and you still have to sleep at night. And for me, a client’s unethical behavior is unacceptable for a more pedestrian reason: it’s like cheating at solitaire. One of the reasons I enjoy litigation is because I like trying to win within the defined rules. I can’t imagine that winning by cheating would be nearly as appealing.

Legal conflicts of interest are another obvious reason a lawyer might turn down a client. But even beyond actual conflicts, you might want to turn down work that would hinder your ability to represent a potential client in the future. For example, my firm was approached to handle a plaintiff’s case against a semiconductor manufacturer in Silicon Valley. The plaintiff was willing to pay our hourly rate, and even sweetened the deal by offering us some potential success-based upside. We struggled to resist the temptation because the defendant was a potential client we had been pitching and with whom we had begun to develop a promising relationship. We ended up referring the matter to another litigation boutique which, in turn, has subsequently referred conflict work to us.

The opportunity cost of any particular engagement also might make you inclined to turn down a matter. If you have the luxury of having more potential work than you have bandwidth, you can turn down matter X so you can work on matter Y.

But opportunity cost goes beyond that. I’ve known a fair number of lawyers running solo or small firm practices who fail to consider business development opportunities as an alternative to a particular engagement. For example, a lawyer might take a high risk / low reward contingency case because he does not have any better alternative work available. But his time spent working on the case might be better spent on trying to generate other business, perhaps including finding lesser risk or higher reward contingency matters. When the lost business development time is considered, sometimes working on certain matters or for certain clients becomes a poor business decision even if they are paying clients and the work is otherwise profitable in its own right.

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Anyone who starts a solo or small firm practice quickly figures out that generating business is the overriding essential challenge. A less obvious lesson, however, is that not all business is equal. If you’re selling cupcakes, I imagine you don’t really care who buys them. But when you’re selling your time, you have to care who your clients are. Even if a client is willing and able to pay, sometimes you should let her pass by without a look behind. Sometimes, you should just say no.

Tom Wallerstein lives in San Francisco and is a partner with Colt Wallerstein LLP, a Silicon Valley litigation boutique. The firm’s practice focuses on high tech trade secret, employment, and general complex-commercial litigation. He can be reached at tomwallerstein@coltwallerstein.com.

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