Roundtable
Discussion Part 2
Jan.
15, 2003
| Last
week, the Wisconsin Law Journal presented the first of a two-part
series looking at the billing issues which lawyers face. WLJ
brought representatives of six law practices together to discuss
the topic of billing during a roundtable discussion on Dec.
11, 2002. The panelists ranged from solo practitioners to
the managing partner of a firm with more than 175 attorneys.
Editor Tony Anderson moderated the discussion, which covered
issues from the elements of effective bills, to screening
new clients to avoid billing problems. What follows is the
second part of that discussion. |
Wisconsin
Law Journal: You send out a 30-day billing, but it goes unpaid.
Who in your practice handles that? Does the lawyer involved in
the case follow up on it? Is there somebody designated in the
firm, or is it sent outside the firm to follow up on that?
Patrick
W. Brennan: We handle it administratively at first with a
simple reminder letter. If it goes beyond a certain time that
stretches our comfort level, the attorney will make a call.
WLJ:
And it's the attorney involved in the case?
Brennan:
Yes.
Thad
W. Jelinske: As opposed to...
Brennan:
The administrative support at the firm. They'll generate the reminder,
maybe more than one. But there comes a point when the attorney
who's responsible for the particular matter has to get involved
personally. It always is a very beneficial thing when that happens.
Jelinske:
I agree. That's essentially how we do it. However, we would use,
not only the individual working on the file, but the attorney
who brought the client in and somehow communicate so that one
person - the most effective person - goes and speaks to him. But
we never send outside the firm.
Erich
C. Straub: Generally, I handle it myself. My secretary or
receptionist will send out a reminder letter. But we're a smaller
firm and I'm usually the person who's having the communication
with the client.
It's
just more appropriate for me in that type of situation to talk
to them. Particularly in a criminal defense environment where
you have people who have a lot of things that are going wrong
in their lives. There are usually a lot of different problems
that have brought them to where they are in the criminal justice
system.
It's
very easy, if you don't stay on top of it, if you don't have a
sufficient retainer up front, if you're not paying attention to
the cash flow - of whether they're paying their bill and whether
the retainer is sufficient - to find that they will reprioritize
you to the lowest point.
I'm
hearing some laughs, so maybe this translates into the business
world too. But my experience is that I have to be very, very firm
up front that, other than the lives of your wife and your children,
that I come second after those. If I don't do that or if I show
any sign of weakness in terms of that firm line, I will be taken
advantage of very quickly just because of the situation they're
in.
Michael
J. Lund: Our practice is much like Pat's. It usually isn't
an issue. If it does go more than 30 days, a reminder statement
is billed out and the billing attorney is aware. Then usually
if it goes any longer than that, the billing attorney is in a
pretty good position to decide who in the firm - whether it's
the person who was responsible for the matter or the person responsible
for bringing the client into the firm - [contacts the client].
We usually can get things resolved with a phone call. It rarely
happens, but that seems to be the best way to handle it if and
when it does.
Richard
J. Bliss: It doesn't happen very often, but I'll toss a little
wrinkle into this. The group said this before ... lawyers really
don't like to have to deal with billing and collection. And there
are lawyers in firms who really don't want to have to do this.
They've got a very close personal relationship with the client.
You'd think that that would make it easy to discuss these things,
but it doesn't. It actually makes it very difficult for them to
discuss these things.
So
there are times - not frequently - but there are times when bringing
someone else, someone who is dispassionate, who is not involved
in the relationship into that discussion ... can be very helpful.
We have all sorts of alternative ways that those sorts of things
can be addressed. We have staff who can do that and are trained
... to talk a client through the payment process.
Sometimes,
although very rarely, it will end up on my desk and I'll talk
with the client. However, it's never done in a way that is without
the approval of the lawyer who's initially involved - the lawyer
doing the work. We're not trying to pull work away - or pull the
process away from that lawyer. And we don't send things outside.
It's always done inside the firm, but sometimes through other
channels.
WLJ:
What if it is a situation that continues? It does not appear that
it's going to resolve and if representation continues, there's
not going to be payment for that ongoing representation. Is there
a point when there's a time to say, the relationship is ended?
If so, how does that happen?
Pamela
Pepper: I wish I had a good answer for that because I don't.
And that's a problem. Where the problem arises for me is in the
litigation context. Criminal litigation moves so much more quickly.
Even in federal court it moves so much more quickly than civil
litigation does for the most part.
You
can literally find yourself upon a trial date or upon another
significant date … Three weeks ago the retainer was fine
and now … it isn't. The trial's in a month and now you've
got to deal with walking into a courtroom and saying, "You
know, judge, I understand that this person has an absolute right
to have their trial and to have it speedily and to have good representation.
But I now find myself in a quandary."
Some
judges say, "Okey-dokey. This isn't a indentured servitude."
and "Be on your way." And other judges say, "I'm
sorry, but you're an officer of the court. You should have planned
ahead. I can't help you."
So
I have been struggling, myself, with what a logical point is at
which to say to a client, "The retainer is low; there's still
plenty of work to be done. I think you need do some decision-making
here; because if you don't, as much as I would not like to do
this, I'm going to have to end our relationship."
And
I haven't found a good answer to that.
Jelinske:
What I try to do in litigation matters where we have engagement
letters, it's typically a scenario where I will obtain the sufficient
retainer, and that retainer is held. They pay the bill against
that retainer. Meaning that when the monthly bill goes out, you
pay that. If you don't pay that, there will come a point in time
very soon that if I see the receivable is out, approaching or
just in excess of what we have in retainer, it will be the last
phone call.
Litigation
is a different animal than anything else ... and if you're not
careful in litigation, you'll lose a lot of plays. Judges just
don't give you breaks.
Pepper:
Right.
Jelinske:
That is your responsibility. So you can't let it go too long.
If you let it go too long, you take the risk. So from that standpoint,
I have a client submit the retainer and I hold the retainer until
the last bill. Because in any decent commercial litigation case,
you can plan on somewhere between five and 25,000, depending upon
the complexity, just for the week of trial or the week leading
up. It's a lot of hours, a lot of time.
If
you have an institutional client, that's different. If you have
a client who's an established client within the firm, again, that's
different. But with the one-trick pony, so to speak, where I get
a call from New York and they want to retain us for this particular,
that's fine. Send a retainer in, and I'll work against it.
Brennan:
It sounds to me like in the scenario you present an ethical question
is implicated. One cannot generally withdraw from a case due to
a nonpayment at a time that will prejudice the client's rights.
I think that's true in the broad gamut of litigation.
Comments
have been made about what courts will approve and when they'll
let you go and so forth. It's certainly our obligation as attorneys
to find that logical point that was referred to earlier when you
really must fish or cut bait and tell that client, "I can't
go forward anymore." After a certain limited period of time
- 10 days or two weeks - if no answer is received, one must go
to the court and seek formal withdrawal as counsel of record.
I
can't think of a time when I've had to do that. In my practice,
it could come in under this type of situation. If our client that
we're representing is potentially covered by insurance and our
fee is being paid by the insurance carrier yet a coverage motion
is
successful
by the carrier, that makes the payment the obligation then of
the policyholder. A new relationship must be structured and if
it isn't, the withdrawal as counsel has to come in then right
away.
Bliss:
I'm glad you brought up the ethical side of it all because that
is a real concern and needs to be. Our reading of the rules of
professional conduct would seem to say that, if the client is
not meeting an obligation to you - for example, an obligation
to pay - you have a right to withdraw even when there is, perchance,
a material adverse effect on the client. That's one of those cases
where you read the rule and you think, it's interesting it says
that, but I know very well the judges aren't going to buy it.
 |
|
(L-R)
Patrick W. Brennan, Pamela Pepper, Thad W. Jelinske, Erich
C. Straub, Michael J. Lund, Richard J. Bliss
|
You
can't let yourself be governed by the literal words there. We
withdraw from representation of clients in any range of activities
when they don't pay. But we spend a lot of time talking about
it before those judgments are made. And it's actually pretty infrequent
that we actually pull out. Most of that does end up on my desk.
Pepper:
The other thing about that is that this idea of withdrawal sounds
like an easy fix. It sounds like you just sort of walk in and
say, "I'm not going to be able to represent you anymore,"
and that ends it. But we also have an ethical obligation, once
we are no longer representing a client, to ensure that the transition
from us to whatever new lawyer comes along is a smooth one. And
that can be no mean feat.
If
you're well into a case and you're up to it to your eyeballs and
you know it and now you've got an obligation to not just hand
a box of files over to somebody else, but to actually explain
what's happened thus far. ... At some point you start thinking,
"Jeez, it's as much work to withdraw as it is to finish what
I've got to finish." That's aside from the ethical implications
of knowing that I can't prejudice my client.
Bliss:
Even if it gets to the point where we're pretty comfortable about
the ethical side of it, if you have the sense that you're working
some unfairness on the client or you're putting the client in
an awkward spot, as angry as you may be with them for not paying,
you know you're buying trouble by doing anything other than making
your very best effort for them.
Pepper:
Right.
Jelinske:
Nonetheless, we've all heard the war stories where the attorney
is upset about the fact that he hasn't been paid or the relationship
has gone sour and then they hold the file.
Pepper:
Yeah.
Jelinske:
It's the worst mistake you can make.
Bliss:
Yeah. Dumb move.
Jelinske:
You just compound the serious problems.
Bliss:
That's true.
Jelinske:
We've all heard it, seen it. Regrettably, it still happens. ...
That's why society's taken the approach to lawyers. We're not
using our common sense in our practices. We're not thinking about
all of the ramifications like we would for the client. We start
representing ourselves, and then we become idiots.
Bliss:
That's my point exactly.
Pepper:
It's a difficult thing though. I think most attorneys - and I
would suspect most people in the room would agree - are ethical
and try hard ... to do this in an ethical manner.
But
you cannot help as a human being if you are sitting there at 7:30
at night when your kids are at home, your spouse is home and you're
sitting there working on this matter that you know you're not
going to get paid... As a human being, it's a hard thing to sit
there and not feel angry... Someone said it earlier, you want
me to do good work for you, client. As a human being, what that
means is I feel like my work has value.
WLJ:
Let's get back to the beginning of that relationship. Are there
things that could be done up front, screening issues that can
be considered when meeting clients and discussing the initial
relationship, to help keep from getting to this endpoint where
things have fallen apart?
Jelinske:
I'm the guilty one there. They've all said they do engagement
letters across the board, and that's how you stop it. That's the
way to do it. We just take that risk. Philosophically, it's something
that we're willing to do, but the way to stop it is with the engagement
letter.
WLJ:
Where does the knowledge of handling billing issues properly come
from? Where do you learn this?
Bliss:
This is it.
Brennan:
This is the first I've ever talked about it.
Straub:
I suspect if you go to the larger firm that you probably have
a system in place and there's some education going on. But I think
that it's a real challenge for the small and solo practitioner.
One
of the competing interests that I've found, as a small and solo
practitioner and watching other small and solo practitioners,
is that in addition to that "I could be on the beach"
or "I could be with my family," a lot of times you're
building a business… It is extremely tempting, when someone
comes in with a problem that you think you can handle and that
is going to be a very interesting problem to work on, to take
the chance ... even though you know they've got many other issues
that may be a distraction to them to pay you. There's a temptation
to not be firm and to not make a realistic assessment of the amount
of money that it's going to take to carry the representation through.
As
a small and solo practitioner, I have seen myself do that earlier
in my career and I have seen many of my colleagues continue to
make that mistake. I think that's one of the most difficult things
for the small and solo practitioner to do is to say, "No,"
to new business and to come up with a guideline - a set of rules
that you are going to stick by and simply not compromise on it.
Pam
and I were in a seminar with a motivational speaker for attorneys
and he preaches this. One of the things that he talked about is
that it's one of the most terrifying moments for the small or
solo practitioner to turn that business away and then to be sitting
in the office with nothing to do. But the reality is that usually,
if you stick to your guns, the next case is a week or two away.
There's
a terrifying principle that's at work for small and solo practitioners.
You really don't get the business skills in law school.
And
you really don't understand, except through practice, where you
know, you're going to make it. Somebody else is going to come
through the door who's going to pay your price.
Brennan:
In our area, it's not so much a matter of screening the clients.
Because if we don't know them, we'll know of them or we'll know
the industry from which the client comes. The problems with billing
more often come in with understanding ahead of time the budgetary
pressures our clients are under, the litigation guidelines, and
the cost-cutting that's endemic in many industries now. It affects
the way we bill and the way our bills are perceived. So that gets
back to the engagement discussion that we had earlier.
For
those who do get clients from many different sources, I've heard
it said that if that client has been to another attorney for the
same matter and been turned away, or even has not paid that prior
attorney, that is a major red flag in accepting that client.
Pepper:
I think there are some common sense things that perhaps you guys
don't necessarily do as much because a business is more of a known
entity than an individual.
If
somebody walks into your office and says, "You're the third
or fourth attorney I've talked to..." and they mean it as
a compliment. "All these other people are dumb, and you're
smart so now I'm here."
The
truth of the matter is we know that most of our colleagues aren't
completely witless. So if someone's been to three people, that's
a danger signal. The other danger signal to me is the person who
walks in just itching for a fight. You know, "The other side
is completely, totally wrong; there's absolutely nothing valid
in what they say; everything I say is right; I'm being framed;
I'm being set up; I'm being put upon; I'm being..." The litany
goes on and on.
Jelinske:
That's the bad one. The barracuda request is a request I always
put the sign against. They walk in my office, "I'm looking
for the bulldog; I'm looking for the barracuda."
You're
looking for the door.
You
can't make that client happy. You need to be aware of what type
of personality you've got and whether or not you can satisfy the
needs of that client, whether it be through the issues in the
case or whether it be through the personality of the player versus
whomever is on the other side. You have to make that read, and
you have to make it early. ... Because if you can't satisfy the
client, there's no point in taking them.
Straub:
Two red flags, without fail, that I hear are, "Money is no
object…"
Pepper:
Which means it's always an object.
Straub:
It always is when that's said. The other one is, "It's a
matter of principle."
Jelinske:
There you go. And the people who want principle are the ones who
want it on contingency.
Pepper:
The other thing is the outcome-determinative client. When I ask
them what they want out of this relationship, what they are expecting
out of me, if I hear, "I want you to win, I want to not be
charged, I want the investigation to stop..." Then I know
I've got a problem.
I've
given this speech 112 times: "A lawyer can't guarantee that
and if you're telling me you've seen someone else who can, maybe
that's where you ought to go. Because I can't sit here and tell
you that at the end of this you're going to be where you want
to be. I wish I could. I'd make a lot more money. But I can't
do that."
It's
always a danger signal to me when they say, "You need to
tell me right now that you're going to win this for me, you're
committed to win this for me." And I have to say, "I'm
committed to doing the very best for you that I can; but I can't
sit here and tell you I'm going to win it for you."
Jelinske:
In Pam's practice or Erich's practice, a win is somewhat definable.
In a commercial environment a win is widespread. If you've got
a liability case where you're dead on liability and their damage
claim against you is $3.5 million and you come in with a verdict
for $75 grand, you know what, guys? Post a "W" on the
board. That has to be communicated clearly with the client.
Bliss:
I do think that there's a lot of discussion that needs to occur
during the intake process and it doesn't always occur. But we
sure try to encourage it. There are times when a client comes
in and we'll just tell the client, "We're not going to be
very good at doing what you want done; I mean, we're really not
very efficient at that; that's not something we do well."
Can
I take one of my real estate people to do a residential home closing?
Sure, I can. If they can buy plants around the country, they probably
can do a residential home closing. But it doesn't get them very
excited and at our billing rates, it rarely makes sense for the
client.
When
a client comes from another firm and was unhappy at the other
firm, we spend a lot of time talking about what made them unhappy.
Like Pam, I tend to think that the bar is pretty good in Milwaukee.
There are good lawyers around here.
When
someone comes in and tells us that they really had lousy representation,
that is a big red flag. And we really need to understand what's
gone wrong. It's one thing if we've been trying to pry them away
from somebody else. But when they come to us and they come telling
us that they're unhappy, as often as not, they're not going to
be happy with us either.
None
of this is taught in law school. In our shop, I think people learn
it through the mentoring process. They watch the older, more experienced
attorneys. We try to bring younger people into those discussions
just so that they can sit there and observe and learn that that's
how you get to it.
Jelinske:
It's the same with the billing process. Erich's in a tough position
that way. Any solo practitioner is. In my firm I have taken each
one of my guys in other litigation divisions, and we sit down
and I go through any time that they've billed... And we'll go
through all the bills so that they can get a flavor of what's
to be included, the editing process. Sometimes you put stupid
things in bills. You're not thinking on that particular day. It
just happens. Then you edit accordingly so it reads right, it
just flows, and everything is correct.
If
you write down a bill, they've gotta know whose time is getting
written off and why. They have to know the philosophical side.
We're a really touchy-feely firm in many respects. So as a result,
you know, that philosophy has to be brought about. People have
to learn that, but it takes time.
Lund:
There's a key point a number of people have already expressed.
It's, when you first discuss a matter with a client, does he get
an understanding of what they want you to accomplish and to understand
it in their terms, not necessarily yours.
A
client may come in complaining of how a business partner is breaching
a contract that they were a party to. A lawyer may then say, "Well,
I can sue them for this and we can bring a suit and get this type
of damages." And they don't really want to sue for damages.
They just want the other party to comply with the terms of the
contract. Or you may find that you can add these people as parties
and say, well, if I add them as parties we'll be able to piece
a deal together, then they're going to be mad at me because I
named them as a party.
So
you need to understand what their objectives are as business owners
or as an insured business and then try and make sure you approach
the engagement in those terms, not necessarily the terms that
you would answer if this were a law school or something.
WLJ:
Any final thoughts?
Brennan:
Clients who come in to see lawyers truly do want us to work ourselves
out of a job. It's often a distasteful process for clients to
go through litigation, especially if they're unfamiliar with it.
Our task is to provide that value and good judgment and expertise
in the most expeditious way possible, bill for it fairly, and
put the matter to an end as quickly as we can.
Straub:
I think the emphasis on communication is important. I think I'm
competent at what I do. I think I'm a good attorney. But, honestly,
I don't think many of my clients know whether I'm a good attorney
or not in a lot of instances because they're relying on my expertise.
I
have found that returning phone calls, communicating what I'm
doing, communicating expectations of what's going to happen in
the case are some of the absolutely most valuable things to them.
I've had many clients, especially in the criminal defense area,
where there just is not going to be a good result. But they get
value and satisfaction out of the fact that they got good customer
service.
I
think that that's important to reflect, whether it's on your billing
statement or whether it's in the first client interview. If you
stay on top of that, I think a lot of these issues with people
complaining about bills or litigation about bills is going to
take care of itself.
Tony
Anderson can be reached by email.
