Clients

A plumber once told me, “There’s price, quality, and service — I can only give two. Pick which ones you want.”

In the service business there are those that focus on beating the competition the easy way — price. Quality and service are often assumed by unknowing clients who believe that a $500 lawyer is going to offer the quality and service of the $5,000 lawyer (sometimes that’s true). You find out your “competition” quoted a flat fee of $10,000 for the representation, so you’ll do it for $7,500.00. You’ve determined the client is only hiring on price, and you’re good at price. You would never think to tell the client that your fee is $15,000.00. You don’t feel confident in your quality or service, nor that the client cares. You’re just trying to compete at the lowest common denominator.

Focusing on the competition is a waste of time. I see it over and over again. A group of lawyers start a niche and there is a standard fee no matter who you hire. Then some young broke stud jumps in and charges $20 less. A few years later, everyone is charging 60 percent less. No one is making money, except those that aren’t focused on the competition….

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Ed. note: This is the fourth installment in a new series of posts from the ATL Career Center’s team of expert contributors. Today, we have some great advice for newly minted attorneys from Joshua Stein, the principal of Joshua Stein PLLC, a prominent commercial real estate law practice in Manhattan.

It’s your first year as a new lawyer. What do you need to know? How can you not screw it up? Here are some suggestions, based on more than 30 years of experience — as an associate at two firms, then a brief time as an associate at a third firm, followed by 20+ years as a partner at that third firm. These suggestions reflect my own experiences, lessons learned along the way, and what I’ve seen and heard from others. Nothing here applies specifically or uniquely to any firm where I worked.

It’s a Business. As much as we might all want law firms to be kind and gentle, remember that client demands are not kind and gentle. Also remember that a firm’s profitability — the ultimate main event — depends on buying a lot of legal expertise wholesale, converting it into as many hours of billable legal work as possible, then selling those hours at retail. That isn’t going to go away. Get used to it. That’s the business you’re in. If you don’t want to be in it, go find some other business to be in.

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Landing a corporate client is usually a happy time for any law firm, big or small. Now, the representation may not be a day in the park — after all, there are many, many ways for general counsel to drive outside counsel absolutely nuts. But even so, this kind of a client is another notch in your firm’s belt, no matter how difficult the relationship. Especially given today’s economy, this is a client that your firm will want to keep for as long as possible.

But regardless of everyone’s efforts, your firm just couldn’t seem to get it right. Your firm’s lawyers tried to placate the legal department’s every whim, to apparently no avail. Perhaps the proposed budget was a little too high. Perhaps an attorney from your firm was just a bit too snippy with in-house counsel. Whatever the case may have been, your firm got fired.

Why does this keep happening, and how can you make it stop?

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As lawyers, we often look past obvious signals when we’re about to get a new client. The client comes in, decides to hire “me” (yes, me!), and pays. What could be bad?

That the client showed up an hour late with no excuse or apology, or spent the hour with you talking about how his friend’s case worked out, or the opinion of his cousin who is a lawyer in another state is of no matter. We have a new client, a new check, and that’s all that we need.

I believe in the philosophy that sometimes the best client is the one you turn down. I’ll end a meeting after 10 minutes because the client’s expectations are only met through unethical behavior or by going to see the wizard. Or after meeting with the client, I’ll decline representation because even though the client can pay, I believe I’m not a good fit in terms of the client’s needs as far as time outside of the representation. Of course, then there’s the high fee you quote a client you just don’t want to represent who says (oops) “OK.”

Then there’s the client where everything seems great, until the day after you are retained….

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How to drive partners nuts. How to drive associates nuts. How to drive your boss nuts. How to drive clients nuts.

What’s left? Today’s topic: How to drive outside counsel nuts.

I’d say that I’ve been thinking long and hard about this subject to permit me to draft this column, but that wouldn’t be true. I’m a natural at this!

How do you drive outside counsel nuts?

First: Insist that outside counsel prepare a budget for every matter. Then complain that the budget is too high; tell counsel to reduce it. Complain that your business will never accept even the revised budget, and tell counsel to cut the estimate further. When you get the second revision, gin up some reason why even that’s too high, and have counsel cut the budget again.

Six months later, when counsel has blown through the budget, refuse to pay the bill! “You told me you could handle this case for damn near nothing. And now you want all this money? This is far more than what you budgeted. There’s no way we’re paying this!”

See? I told you that I was a natural. And I’m just getting warmed up . . . .

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Tom Wallerstein

I’ve heard that a hungry dog hunts best. I don’t know if that’s actually true because my pugs were always hungry, and yet they could not have caught a three-legged turtle. But the saying makes sense, and I do know that staying hungry — but not desperate — is an important concept for law firms.

One way a young firm should stay hungry is to always search for new business. There are good reasons that I constantly harp on the importance of business development. Even if you are fortunate enough to be busy, you never know when your current workload may dry up. This is particularly true in litigation because any case can always settle or otherwise resolve unexpectedly. No matter how busy you are, you should constantly seek out new work and new clients.

But seeking out new work comes at a potential cost to your current cases and clients. You can’t be so desperate to grow that you spend so much time on business development that you ignore your current clients or let your current caseload suffer. Some lawyers take a churn and burn approach, trying to maximize their short-term return from every engagement, with no concern for the longer-term client relationship. To form a practice that’s built to last, you need to work hard to maintain those relationships, and that means you can’t neglect your current clients while constantly fishing for newer ones….

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* Will consultation with victims’ families determine whether James Holmes deserves the death penalty? You could probably consult with a wall to make that determination and get the same result. [PrawfsBlawg]

* Just like that, with incredible ninja-like speed, someone has already filed a negligence suit against the Aurora Century 16 Theater where the shootings took place. [Gawker]

* And no, sorry to disappoint you, but notwithstanding his self-admitted teeny peeny, we don’t think that James Holmes decided to go on a shooting spree because he got rejected by a few women on Adult Friend Finder. [Jezebel]

* While we’re talking about gun violence, Mike Bloomberg has got a great idea: all police officers should go on strike until legislators push through stricter gun laws. How is a nanny state supposed to work properly when all the governesses are off duty? [Gothamist]

* Knowledge is power in the hands of a client, especially when the knowledge you’ve given them is just another tool to piss off opposing counsel during a deposition. [Popehat]

* Personal responsibility fail: allowing your 13-year-old to drive you home because you’re wasted. Fathering fail: believing that was a good idea in the first place. [Legal Juice]

* A fake TV show starring a wheelchair-bound paraplegic paralegal? You know you’d watch this. [The Onion]

One of the main differences between small law firms and Biglaw is who hires the lawyer. While both receive calls from the actual individual (person) client, general counsel, or corporate representative, the consumer-type disciplines (personal injury, criminal, divorce, employment (plaintiff), and immigration) are usually smaller shops, and usually get the call from the actual person needing representation.

Most of the time this person has never hired a lawyer. So the conversation will be much different than the call from a general counsel who understands typical billing formats, or an insurance company agent, who tells you what you’re going to bill and not bill.

I’m writing today for those who’ve been in small law firms for less than five years. The rest of you know the drill, you’ve heard the buzzwords and phrases, and (hopefully) you’ve taken control of your time in a way that shortcuts the worthless conversations from potential clients. From a business perspective, small law firm practice is an exercise in cash flow. While lines of credit are available, many small law firms don’t like to go that route. So every potential client is important, especially when you haven’t reached that stride where you can claim a “book of business.”

Saying “no” before the client makes it clear that it’s “no,” is tough. Did you just give up money? Was there another way to get the client “signed up?”

I draw lines. I am criticized for that, but it’s my practice and it’s worked for me. Normally when I don’t get the case these days, I hear about who got the case, which vindicates my choice to shortcut the conversation.

A recurring theme here is that what works for me may not work for you. OK. Did I ever indicate I give a crap?

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I rarely follow up on potential clients anymore. You want to hire me — you’ll let me know. I’m not playing your game of calling you back after the initial interview so you can tell me you’re “thinking about it,” but “the fee is really big.” Yeah, the fee is really big; so is your problem. You want to take your big problem to a bargain basement lawyer — knock yourself out. I don’t run a booth at the Straw Market in the Bahamas. If I’m going to negotiate, it’s going to be with opposing counsel, not you.

It’s killing you, though. You spoke with the client, they seemed interested, they asked all the right questions, and you gave all the right answers. They told you “money is no issue” (first clue they have no money.) It’s been a day or two, and nothing. No call, no email, and no questions about the retainer agreement you gave them.

What to do?

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There is nothing more important to lawyers than time. Time spent on cases (especially if you’re in trying to win the “most billable hours” contest award at your funeral), time in the day to “do everything,” time to enjoy the fruits of your labor. Everything comes down to time. The reason you don’t do certain things is because you claim to “have no time.”

Lawyers base their entire lives on time. Many try to figure out the latest time when they can roll out of bed to be on time to the office or court. We live on deadlines. We appear in court when told, file documents on certain dates (or fax them on certain dates at 4:59), and we set appointments for things. There are other things we want to do -– other things we need to do, but we use the excuse of “no time” as a crutch.

Truth is, we have plenty of time, we just don’t use it well. We let our practices control us, instead of trying to control our practices. Clients and cases will run lives, if you let them. Some lawyers believe the essence of being a lawyer is letting clients run their lives, we must let clients know we are available 24/7.

You can call me 24/7, but I’m no longer answering the phone when I’m doing something I consider more important than making money…

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