But, then the firm announces that "... the downturn in patent litigation persists, with fewer cases being filed and more settling earlier.... (C)ases coming in are smaller with tighter budgets and leaner staffing expectations...."  And this results in firings/terminations/layoffs (say it anyway you want, the people are gone) of lawyers and staff.  In other words, the troubled economy is still having its impact on law firms.

So far, so good. But, then the firm also announces that it sees an increase in patent prosecution, counseling and reexamination work, particularly in the electronics and software practice and the firm will hire first-year associates. Again, from the outside, it looks like the firm is firing experienced lawyers who get paid 3X and will hire first year associates who will get paid 1X. You fill in the numbers. When industry does this, it's called "age discrimination." It may also be called "stupid" because it negatively impacts the morale of the organization ... and you don't build a loyal, cohesive and capable workforce by seeking the least expensive team members. Why couldn't the firm offer the presumably lower paying jobs to the experienced folks? In this economy, they might not like it, but they'd rather stay employed and working with colleagues they know and like and trust. And, the organization will look like a caring place to work, making needed economic changes but also sensitive to the needs of its current work force.

Just seems to me to be a better way to do things.  And, at the very least, the PR ineptness of these announcements coming on the heels of one another is just astounding.

There are finance companies, in addition to other resources, that lend money on such cases. That is what my client was seeking.  Tell us how you handle your cash flow and financing of large cases. Perhaps you can identify the names of lending companies. I look forward to hearing from you.

Join us at the Forum for further discussion on this and other topics that are challenging and stressing you.

The term for bogus charges in a phone bill is cramming! The current issue of AARP's magazine discusses the history of the activity and suggests that there is only way to prevent unauthorized third-party charges on your phone bill:

• Call the phone company (AT&T: 800-288-2747; Verizon: 800-837-4966; Comcast: 800-266-2278; Qwest: 800-491-0118)
• Or send an email to the writer of the article, Ron Burley.

My question now is:  How many more students/former students will be pushed into bankruptcy just to reorganize these normally very large debts?

Todd suggests that at least one in five timekeepers are guilty of failing to contemporaneously record their time.  That's 20% of the profession. Actually, I thought it would be much higher. But, perhaps our discussions over the years on this topic have sensitized a growing number of attorneys about the need to pay attention to their billing practices. He also suggests that almost 80% record their time days or even weeks later! This is just short of criminal negligence!

Attorneys defend their actions (or lack thereof) on a number of grounds:  Too busy doing the work for the client; not in the office to input time into the firm's system; forgot to do it now, but will catch up later in the day or week. While these are all good reasons for not making a time entry, they are not good excuses.

The real question, then, becomes what is the impact of failing to record time contemporaneously with the work? What is lost, if anything, by failing to record one's work effort? The simple answer: Revenue!

Todd mentioned a new survey that I found interesting.

If you fail to record your time while you're in the office, the loss is 12 to 30 minutes per day. If you fail to record time while you're out of the office, the loss is 30 to 60 minutes per day. Let's use the latter number, 60 minutes per day, for ease of calculation, times $200 per hour billing rate. Using a 50 week year, you're now looking at $50,000 revenue that is lost ... that is, never billed!  Forget about the issue of realization rate and collection. You never can realize what you don't bill. Your client will never pay what is not billed.

You've "cheated" yourself out of a very significant amount of revenue by not adhering to good operating procedures in accounting for the time you spend on clients' matters.

Listen to Todd's podcast for more.

As though the bad economy hasn't hurt the sole and small firm practitioners enough this year, the Bar throws more oil on the fire by either causing this group's expenses to increase (to the obvious delight of the insurance industry) or its revenue to decrease. Either way makes this generally economically marginal group's life more precarious ...

I wonder what kind of representation their clients are receiving ... and how does one interpret or define "competence?''  What do you think?

There is a movement afoot to create an apprenticeship program for lawyers.  Georgia and Utah both require first year associates to enter a mentor program; of course, there is no requirement that senior lawyers be mentors, so I'm not sure how their programs work in actual practice.

And Howery has recently announced an apprentice program that is getting a lot of attention. Their new hires will split their time between shadowing senior partners, taking classes and working on "low-grade" client matters, being billed out at very low rates.

The recession/depression ("The Great Reset") has provided the excuse for a recalibration of the economics of law practice by many, both clients and law firms.

What makes this case more interesting is that a resolution of the fee dispute was achieved. And later, the client refused to honor the settlement agreement. The client ostensibly believes it can harrass the law firm and then settle again for a lesser amount.

Questions for the law firm:

1.  Why did you allow fees to get so high in the first place? Collections should have been more aggressive.

2.  Did you have a budget for the litigation for the client that the client accepted ... or was nothing said about the extent of the legal services to be delivered?

3.  Was the size of the legal fee a surprise to the client?

4.  Why didn't you fire the client before $2 mil?

5.  Why didn't you get security for payment of the settlement amount, such as a stipulated judgment in the event of a default or other guarantee such as a letter of credit?

Someone was asleep at the switch...both during intake and during the representation ... and seemingly also at the negotiation for settlement of the fee dispute.

Not sure, but do you know any other state that equals this amount.

See earlier blog posts for the arguments against this new rule.

How can these recent graduates, and even some experienced lawyers laid off from their large firms, survive or even thrive? One way might be to lower one's income expectations. Where is it written that lawyers are entitled to earn $X?

Helping others deal with the intricacies of our society with its many complexities can be rewarding. Will we earn $1,000,000 by doing so? Perhaps not. Can we earn a very good income? Yes.

One suggestion is to go where the competition ain't. Go to the smaller communities, to the "second tier" communities. They are still large enough to have prospective clients with sophisticated challenges. But, many of these communities have been ignored by Big Law and even large regional law firms.

In the interim, until there is a new balancing of economics, quality law school graduates and lawyers who have left larger law firms might set up shop in these smaller areas; they might join smaller law firms even in the large cities. Here, smaller law firms have a unique opportunity to engage outstanding talent at substantially lower cost .. and expand the services they provide to their existing client base, as well as expand their client base.

What will be the impact on law schools? That is an interesting question. Big law firms have postponed and even canceled many of their recruiting efforts. That will provide a glut of talented graduates looking for a diminishing number of positions in law firms. And the anticipated assurance, guarantee if you will, of gainful employment on graduation from their school may be passing. If so, will law schools still be able to charge high tuition as they have? Will students be willing to take on huge student loans when employment is no longer assured?

Economics will continue to control the legal profession as in the past. Those economics today include greater supply of talent (lawyers), clients with greater power of the purse (reduced demand) and lawyers who are becoming more attuned to improving their efficiencies ... and thereby lower cost to clients ... and thereby again impacting the relationships between lawyers and clients.

But, when you turn to the Personal Journal section of the paper, the article talks about hospitals' negligence and the fact that many deaths and serious injuries/illnesses are caused by the hospitals and their staffs after the patients enter for other maladies than that which resulted in death.

The writer states that some hospitals are admitting their negligence and approaching the patients and their families with apologies and financial offerings that make sense. Under such circumstances, of course, the patients don't need to work with lawyers ... and that's one way of keeping lawyers out of the discussion. (There are other issues here from the perspective of the patient's protection; that's a subject for another time.)

The real reason for the lawyer is that the institution denies culpability and seeks to stonewall the injured party. What a novel idea -- actually talk to the injured party, admit responsibility and seek to negotiate/mediate a solution acceptable to all parties.

That, however, is not the tone of the headline, nor the attitude of the newspaper. Too bad. Truth should be the standard, not paper sales. I should admit that the headline is not false, just conveys the wrong impression of the article's content.

I'm not yet convinced.

The flat fee provides the client with the ability to better budget the cost of legal services. This is important for the client. It also allows the law firm with the ability to be more efficient (better staffing and use of technology) in the delivery of legal services ... and therefore more profitable.  Lower costs to the client will come when there is a competitive environment and another law firm underbids the flat fee of the first law firm.

Of course, we have the same issues. Listening to the client; collaboration with the client; and loyalty from the client. Changing the pricing model does not automatically change the need for these items to create a successful, long-term attorney-client relationship.

When clients impose strict guidelines on the law firm in terms of staffing, for example, the law firm may not be able to adjust. The theory is that once the client, the major corporate client, gets a flat or fixed fee, that client should no longer care about anything but receiving a quality final product. The intricacies of get that final product should then be left to the law firm. If that happens, then the law firm can use less or more expensive staff, less or more technological improvements and younger or more experienced lawyers. The client should not care.

The undercurrent, I fear from listening to corporate counsel, is that their time has come. They want to reduce legal costs at the expense of the law firms. Partnering and collaborating, many law firms believe, are euphemisms, not reality-based. If so, the current change will be a fad, not a sea change.

They seemed to concur that the greatest impact on cost is not the hourly rate being charged; staffing has the greatest impact on the overall cost of legal services. The next element with the greatest impact is strategy.

Starting with strategy, if you have a "scorched earth" approach, this contentiousness will result in higher legal fees. Appropriate sometimes and not at other times. Pick your poison ... and then look at the cost involved.  Next is the staffing; who you have working on a matter is significant. Is this a partner with a higher rate but greater experience who can rip through the analysis and work? Is this a young associate who will take longer to get up to speed but whose rate is lower? And what is your fee arrangement, a blended rate, pure hourly or a variation alternative fee? These are factors that general counsel are reviewing.

Another tool used by Inside Counsel to control costs is to get a budget from their law firms. In litigation matters, almost 100% are budgeted. Quite a change from the time when lawyers were saying they couldn't predict what the other side was going to do and therefore couldn't project the cost of litigation. If you can build the Empire State building on a fixed fee contract, you can budget for litigation. And that is now happening with great frequency.

Clients are wanting to assure that the legal fee is justified in relation to the value of the matter. Thus, the budget is a tool not only for the client to decide whether to go forward, but also to make sure the law firm does not get out of control.

The answer, I believe, is to focus more on the intake process and to assure that the client has the principal to pursue his principle; then, it is a question of educating the client sufficiently that he understands he has received what he has asked for .... in other words, that the client has received the value he bargained for.

What do you think? Share your comments.

This should be the same for malpractice insurance. If bar associations want lawyers to have malpractice insurance, they should provide affordable opportunities for lawyers.

Why don't our bar leaders see this? Is it that they're not walking in the shoes of their members?

My wife made an interesting observation:  Pass an insurance health care bill that gives Americans the same health care that they receive. After all, don't they work for us? Why should they have better health care than they're willing to provide us? Hmmm. President Obama said as much yesterday in his news conference. Our leaders aren't listening.