A few months back at my home blog, MyShingle, I wrote about a small Michigan law firm that sued a legal marketing company for fraud and RICO violations, alleging that the company created a “bogus Internet marketing program, supposedly designed for small law firms and sole practitioners” and duped firms into participating in the program through a series of misrepresentations about the company’s ability to boost law firms’ Google rankings. The lawsuit is still pending in federal district court in Arizona (Docket No. 2:13-cv-01502).
Though few expressed sympathy for the firm, suggesting that it was greedy or foolish to fall for the marketing company’s “infomercial-like” sales pitch, in my view the lawsuit raised a valid question: Should law firm marketers, practice management advisers, and other vendors pitching services to improve law firm performance remain accountable, at least to some degree, for the results?
I was reminded of the performance-based accountability issue in — of all places — an article about concierge medical practices. Because a concierge medical practice represents a change in the traditional business model (essentially, an assembly-line, volume-based practice), many doctors retain concierge consultants — for whom performance-based fees are a standard practice. From the article:
The fees charged by [concierge] consultants vary widely and depend on how extensive the concierge services are, as well as a consultant’s reputation, longevity, and clients. However, taking a percentage of the annual fees that patients pay is standard. This is why consultants are selective in the practices they take on as clients. If membership targets aren’t reached, both practice and consultant lose money.
Specialdocs clients, for example, sign a 3-year contract and pay a one-time retainer fee of $17,000. A transition usually takes about 6 months, during which patient recruitment and physician and staff training occur.
After the transition is complete, a fee structure kicks in. The fee for the first year (which is actually a year and a half into the contract) is 19% of all collections (for the concierge part of the practice only), and thereafter the fees work on a sliding scale: 15% of all concierge fee collections for the second year, and then 12% of all fee collections for the remaining 7 months of the contract….
Of course, this particular pricing model, where the consultant takes a cut of patient fees as payment, wouldn’t work for law firms, since it runs afoul of the ethics prohibition on fee-splitting with non-lawyers. (See, e.g.,ABA Model Rule 5.4.) However, this type of model forces the consultant to remain accountable instead of simply taking the money and then blaming any lack of success on the client’s failure to follow through or properly implement the program.
Still, though the concierge pricing scheme may not be appropriate, vendor accountability is particularly important for solo and small firm lawyers. Though you’d think that lawyers, trained as analytical thinkers, would be immune to vendor sales pitches, anxiety and desperation unfortunately make even lawyers vulnerable to poor advice. Sadly, the bar associations don’t help the situation much either. Cash-strapped themselves, many bars accept sponsorship fees from vendors whose services haven’t been vetted, thus allowing these vendors to convey to solos an imprimatur of official approval that hasn’t been earned and isn’t deserved.
The lack of vendor accountability isn’t merely a problem for lawyers, but for clients. A lawyer locked into a three-year, $2000-a-month SEO and blogging package that doesn’t work might decide to forgo malpractice insurance, a commercial legal research package, or a vital CLE or training program in order to make the monthly payments. And those decisions will adversely impact the quality of service that the lawyer can provide to clients.
So how to make legal marketing vendors accountable? First, there may be ethically-compliant ways to set performance-based fees — for example, consultants and lawyers could agree to a base fee and allow the attorney to choose what to pay, based on his assessment of the success of the service. Bar associations accepting sponsorships from vendors could also require them to provide additional details on the cost and successes based on their clients’ results, or perhaps even adopt systems to rate or certify marketing programs. (In fact, this doesn’t even have to be done by a bar association; a private group could develop a ranking or certification system as well.) Moreover, when a vendor sponsors a bar or speaks at a bar conference, the bar should disclose the pay-for-play arrangement.
Don’t get me wrong — at the end of the day, caveat emptor still governs — and solos and small law firms bear the ultimate responsibility for their decisions. But given that ethics rules deprive lawyers of one potential safeguard available in other fields — i.e., performance-based consulting fees — to keep legal vendors in check, perhaps other options are worth exploring. Not to protect lawyers, but to protect clients.
What has your experience been with legal vendors? Should they be accountable for the effectiveness of the programs they pitch? Please share your comments.
Calling Out the Rainmakers [MyShingle]
Carolyn Elefant has been blogging about solo and small firm practice at MyShingle.com since 2002 and operated her firm, the Law Offices of Carolyn Elefant PLLC, even longer than that. She’s also authored a bunch of books on topics like starting a law practice, social media, and 21st century lawyer representation agreements (affiliate links). If you’re really that interested in learning more about Carolyn, just Google her. The Internet never lies, right? You can contact Carolyn by email at [email protected] or follow her on Twitter at @carolynelefant.