Small Law Firms, Solo Practitioners

Lawyers Not Getting Paid? There Oughta Be A Law… But At Least, There's A Nifty Risk Assessment Test

Smalls and solos don't have many friends when it comes to getting paid.

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Carolyn ElefantSolo lawyers and gig economy workers have much in common: both operate as independents, are highly susceptible to cash flow crises and are often stiffed by clients who either can’t or won’t pay — a problem that can set in motion a ripple effect of horribles.

That’s where the similarities between lawyers and freelancers — at least those located in New York — end. New York freelancers may soon get relief from mooching clients, but lawyers won’t. Currently pending before the New York City Council is the Freelance Isn’t Free Act, according to the Next City website. As the article summarizes:

The bill would establish protections for freelance workers against non-payment or late payment. It would require any person or company who hires a freelance worker to execute a written contract that describes what work is to be performed, the rate and method of payment and when the payment is due. It would require payment in full within 30 days of completion of services or of the payment due date under the contract.

[Further], the bill would grant city regulators the authority to collect nonpayment complaints from NYC-based freelancers against companies located anywhere…and pursue appropriate action…[including]penalties of up to $5000.

Great news for freelancers — but New York solos shouldn’t get too excited about this legislation — because it expressly excludes “any person engaged in the practice of law pursuant to the contract at issue” from the scope of the Act.

Still — what a contrast between the support that freelancers receive from their professional organizations like Freelancers’ Union and others that supported the legislation. By contrast, rather than make it easier for lawyers to get paid, bar associations and the courts make it harder.

How so? For starters, regulations on trust accounting are so onerous that some lawyers don’t even bother to set one up, preferring instead to take a chance on payment. Many regulators also dragged their feet so much on allowing lawyers to accept credit card payments that many lawyers still don’t realize that they can and should allow clients to use credit cards.

Recent bar regulations also take away the main benefit of flat fees, which is upfront payment that a service provider can access immediately. Instead, most bars require lawyers to deposit flat fees into a trust account instead of treating them as earned on receipt. As a result, unless lawyers include certain provisions in their trust account, they can’t spend a flat fee payment until the work is done.

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Meanwhile, courts don’t always have sympathy for lawyers who aren’t paid. If a lawyer does not seek to withdraw for non-payment until late in a case, the court may not allow it. And I’ve heard anecdotal stories of a judge not only denying a motion to withdraw but chiding the lawyer for not collecting sufficient fees up front.

So when it comes to getting paid, lawyers are pretty much on their own. Still, there’s much that lawyers can do to avoid getting stiffed by a client. Do you have those kinds of best practices in place for getting paid? Take the What’s My Risk For Getting Stiffed Assessment Test at this link (you’ll need to include a name but no email or registration required) and compare your score to this key:

KEY:

19 points or more: Low risk of getting stiffed

16-18: You’ve taken some precautions to avoid getting stiffed, but could stand to tighten up your practices.

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15 and below: You’re at high risk of being stiffed and should re-evaluate your practices.

Carolyn Elefant has been blogging about solo and small firm practice at MyShingle.comsince 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 elefant@myshingle.comor follow her on Twitter at @carolynelefant.

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