Alternative Fees

The Practice: Setting, Earning, and Keeping Fees in Small Law Firms

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Ah, nothing brings around the lawyers of today like the talk of money. One of the most popular Google searches by law students and lawyers is “how to make money as a lawyer.” I rarely see searches for “how to cross examine the expert witness,” or “building a reputation, one case at a time.”

It’s all about the cash.

So here it is, here’s your red meat:

Charging “what everyone else charges” is for losers.

Good clients know you get what you pay for. Cheap, annoying, time-sucking, Bar-complaint-filing clients try to own someone for nothing. If you want the same clients everyone else has, charge the same legal fees. You can be Wal-Mart, or you can be Saks. More people shop at Wal-Mart, but people looking for quality shop at Saks, and they know the difference. They go in, they see something they want, and pay for it (without a payment plan). (And don’t tell me “credit cards are payment plans.” The seller gets the full amount, the buyer makes payments to the bank.) Saks doesn’t have “low prices,” and customers aren’t going there for low prices. They’re looking for quality. Price is secondary….

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Inside Straight: Creating The Wrong Incentives

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I won’t say whether I actually heard these conversations or I just dreamt them.

First: The head of the business unit confronted with a new litigation matter:

“This is an outrage! How could they have accused us of this? We want to fight! Fight! Fight!”

“The defense costs will be charged to your business unit, which will reduce your bonus pool.”

“Settle!”

Second: One partner at a law firm — who wants to visit a client, make a presentation, and take the client to dinner — to a second partner — who is the relationship lawyer for the client:

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Morning Docket: 01.24.12

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* First the Jones verdict, then the Fourth Circuit affirmed the dismissal of Jose Padilla’s torture lawsuit. It’s enough to make ACLUers develop bipolar disorder. [Washington Post]

* Release the Kagan! The Supreme Court rejected Freedom Watch’s motion for time to argue that Justice Elena Kagan should recuse herself from the Obamacare case. [CNN]

* Biglaw problems: here’s a great round-up of 2012′s law firm lawsuits, starring Akin Gump, Crowell & Moring, Dechert, and Greenberg Traurig, to name a few. [Am Law Daily]

* After dropping a lawsuit challenging their forcible eviction from Zuccotti Park, supporters of Occupy Wall Street will go back to occupying the couches in their parents’ basements. [Bloomberg]

* Not interested in being a lawyer? Check out these suggestions for “unique” career paths (i.e., ones that you could have pursued after college, with half the debt load). [U.S. News]

* Not such a great alternative fee arrangement. A prosecutor turned solo practitioner is going to jail after accepting oxycodone pills as payment from a police informant. [Tampa Bay Times]

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From Biglaw to Boutique: Working for Free

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Tom Wallerstein

When I started my firm, several mentors gave me the same advice: Don’t work for free. It’s easy to see the problem with working for free. Giving away what you’re trying to sell isn’t exactly in the business plan. Unfortunately, this sage advice can only really be learned the hard way, through experience.

Working for free can arise in many different ways. The most obvious example is a client who wants you to represent him but can only promise to pay you later.

Even if your gut tells you that taking on that client is a bad idea, this can be surprisingly tempting to a new firm or solo practice. For starters, there is such a thrill with getting your first client, or your first “real” client, or your first big client, or your first whatever client, that the excitement can cloud your better judgment. You will be tempted to overlook the red flags that you will not be paid for your work….

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An Afternoon With Ed Hayes, Celebrated Litigator and Memoirist

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Edward Hayes (on The Charlie Rose Show)

What draws people to the practice of law? Some do it for the paycheck, some do it for the prestige, and some do it for the excitement and fun of it all.

Veteran New York litigator Edward Hayes belongs firmly in the final camp. Although he has amassed fame and fortune over almost four decades of practicing law, his legal career reflects a quest for adventure.

And what adventures Hayes has had. After graduating from the University of Virginia and Columbia Law School, he joined the Bronx District Attorney’s office, where he prosecuted homicides (which there was no shortage of in the Bronx in the 1970s). He then launched his own practice, handling civil and criminal matters for such clients as the estate of Andy Warhol, notorious “Mafia cop” Stephen Caracappa, acclaimed architect Daniel Libeskind, actor Robert De Niro, celebrity editrices Anna Wintour and Tina Brown, billionaire publisher Si Newhouse, and then-paramours Sean Combs and Jennifer Lopez (after they were arrested together back in 1999).

Eddie Hayes has even found his way into literature. He served as the basis for Tommy Killian, Sherman McCoy’s defense lawyer in Tom Wolfe’s great novel, Bonfire of the Vanities. Wolfe dedicated the book to Hayes, a close friend of his for many years.

This past summer, I enjoyed the privilege of spending a day with Ed Hayes. We met up at Penn Station and took the train out to his vacation home in Bellport, Long Island, where we enjoyed a leisurely lunch, dining outdoors and overlooking the water. (There are Lawyerly Lairs-style photos of his house, after the jump.)

During our time together, Hayes reminisced about his extraordinary life in the law, offered career advice for fellow lawyers, and showed me how to properly prepare a caprese salad….

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Reema Bajaj Is Going All the Way

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Reema N. Bajaj

Next week, Reema Bajaj, the comely Illinois attorney who has been accused of prostitution, will celebrate her 26th birthday. (You can look up her date of birth on the DeKalb County criminal docket.)

But how happy will that birthday be? There’s a cloud looming over this lovely lawyer….

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Inside Straight: Packaging Flotsam and Jetsam

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Admit it: Your corporation has a lot of legal flotsam and jetsam.

This is probably true no matter what business you’re in. On the corporate side, you have routine business transactions, and you may well handle those in-house. On the litigation side, you have a bunch of routine cases that pose little risk to the company but represent a recurring, and predictable, expense.

I propose that you package up that flotsam and jetsam and sell it off.

What am I thinking?

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Size Matters: Small Firms Growing In This Economy

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I have a friend who is looking for a job at a small law firm. (No, this is not one of those instances in which a person refers to herself as a “friend.” Do you see any quotation marks?) Not surprisingly, she is finding it difficult to land said job. As reported on Vault’s Law Blog, June was a particularly bad month when it came to legal unemployment.

My friend’s situation is not great. Of course, I did not say this to her. Indeed, like most conversations with my good friends, I say this behind her back instead. I am, after all, a good friend.

While things may not be looking so rosy for my friend as an aspiring small-firm lawyer, they are looking pretty sweet for some employed small-firm lawyers….

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Small Firms, Big Lawyers: Pricing Legal Services in Eight Easy(ish) Steps

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So Lat calls me up all excited about some Biglaw Midsummer Bonus or something, which I totally ignore, and also about some hysterical dicta that Judge Kozinski wrote, which I also ignore (although it probably was pretty funny), and then he starts asking me about my law career. Which, you know, ended. And he points out that I failed to get ATL approval of my decision to close my small firm, which means technically, my column should just be called “Big Lawyers,” which is a whole other kettle of fish.

Then Lat says he knows how we can fix it. “Go on,” I say. Lat says that I can tell our readers exactly how to start pricing their legal services instead of just billing their time. “But Lat,” I plead, “I can’t give away my secrets. I have a whole new consulting firm to tell people these secrets in exchange for scads of dollars.”

Lat is quick to admonish me. “We don’t keep secrets from our readers, Jay. That’s why our readers know all about my obsession with all things Sophia Chua-Rubenfeld and why they all know that Elie is as jovial as an Ewok in real life.” Then his tone sharpened: “Plus we can always get Staci to write your column in a tenth of the time it takes you. And we can even have her use your name as a pseudonym.”

Well played, Mr. Lat, well played. So here then are the secrets to pricing your legal wares in eight easy(ish) steps.…

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Small Firms, Big Lawyers: The Real Reason for Timesheets

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What did you do yesterday? I’m assuming you went to work. Did you put in a full day? Great. Let’s assume you got started around 9:00, took about an hour for lunch, and signed off at 7:00. Maybe for you that’s a light day, or maybe that’s a long day. Doesn’t matter. So that means you worked nine hours. OK.

Let’s further assume that you frittered away an hour, mostly spent reading Above the Law or wondering why they’re still playing hockey in the summertime (I’d make a Bruins reference here, but it would be strictly from the bandwagon). So that leaves eight hours of bona fide work. Eighty point-ones. Four hundred eighty minutes.

Now look over your timesheet from yesterday, and think about how you spent those 480 minutes. Were they all the same? Were they all of equal value to solving your clients’ problems?

Of course not. But if your minutes aren’t all the same, why are you counting them as being the same? What are the real reasons that lawyers track their time?

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