Tuesday, July 26, 2005

"I'm Sorry Dave, I'm Afraid I Can't Do That."

The movie, "2001: A Space Odyssey", Stanley Kubrick's film adaptation of Arthur C. Clarke's short story about a doomed human mission to Jupiter features as one of its central characters, the HAL 9000 computer. HAL was a machine like no other: it mimicked human consciousness; ran every aspect of the Jupiter mission; and in the end murdered the entire crew. Nonetheless, when "2001" arrived in theaters in 1969, it heralded an age in the not-so-distant future where computers would be so sophisticated that absolutely anybody would be able to use them, and they would integrate seamlessly into our lives - thereby making humanity more productive and able to fully enjoy life.

In 2005, computers are pretty much everywhere, just about anyone can use them with ease, and they sort've integrate seamlessly into our everyday lives. But do they make us more productive?

In the practice of law, technology is the great equalizer for small/solo practitioners: it allows them to access resources and research that before required expensive libraries that were time consuming to update and accumulate; it allows them to manage cases and schedules with a small or non-existent support staff; and it allows for the sharing of information and communication with clients on a scale nobody could have predicted. The bottom line: technology can make the small/solo practitioner more competitive and enable him to provide value-added services oftentimes comparable to his big firm counterparts.

Technology can also be a headache for small/solo attorneys. If you are like me, you didn't attend law school because you are good with numbers or engineering diagrams. Understanding what sort of technology the small/solo attorney needs and how software and hardware all integrate to grow a practice can be a daunting task. Lexis vs. Westlaw; Client Database Management; Case Management; Forms Database; Scheduling; Blackberries; PDAs; Wireless Internet and Conflict Checks. A quick scan on Google will reveal that there are as many solutions as you can probably conceive of problems.

How dependent is your practice on technology?

What types of techology products would you recommend?

Is all of the technology in your office integrated?

How well do you know your systems?

Are you convinced that your technology expenses are worth the time and money or could you be using your technology budget more efficiently?

Friday, July 22, 2005

Brand X

Branding: The Nike swoosh and the slogan "Just Do It" are among the most memorable icons in the Western mind. In the movie Supersize Me, host Morgan Spurlock showed pre-schoolers several illustrations of the Golden Arches and Ronald McDonald, both of which were immediately recognized by every child in the room. However, when Spurlock showed the children an illustration of Jesus Christ, they all sat quietly with blank looks on their faces. What can we draw from these examples of branding? a) It is essential; and b) the Church has a branding issue.

Attorneys - especially small/solo practitioners frequently overlook the issue of branding when formulating their marketing plans. Are they wrong to do so? Is branding really that important to the legal profession? The Morningstar Multimedia Agency (MMA) thinks so. In a recently published promotional document entitled A Lawyer's Guide to Marketing, MMA argues that Branding is not only necessary, it is essential for practitioners of every size. According to MMA:

"A brand is not the service it represents, but is the public's perception of what you offer. It is not your logo, but what images come to mind when your clients and colleagues see your logo. The emotional association a client has with a particular product or service. Through a carefully planned branding campaign, you can mold how the public views you."

In communities all over the United States the solo/small practitioner field is becoming increasingly crowded. As the market becomes more saturated, how do you distinguish your practice among not just locals, but also out-of-towners seeking local representation? Is branding a part of your marketing plan? If so, how has it changed your approach to business development and marketing?

For a full copy of the MMA report, click here.

Thursday, July 21, 2005

Give A Man A Fish - Teach A Man to Fish

As just about any lawyer will tell you, legal professionals don't advertise - they market. Within the last 7-10 years, the Internet has revolutionized the way attorneys market and attract clientele. However, comprehensive studies on new marketing methods using the Internet are sparse and generally reflect the mixed results legal professionals have experienced with Internet marketing.

Any solo/small practitioner that is a student of the Foonberg law practice bible will immediately notice that Foonberg's venerable guide is lacking with regard to Internet marketing. His recommendations regarding the use of telex machines and yellow-page advertisements almost seem quaint in 2005. So where should small/solo practitioners go to look for advice on Internet marketing?

A March 2004 article in the ABA Law Journal attempts to at least partially answer this question. Entitled, Casting for Clients, (90 ABAJ 34) the article written by Terry Carter, lists examples of past successes and failures small/solo attorneys have had with the Internet over the years. What seems to be clear is that lawyer referral web sites are becoming increasingly specialized, especially around some of the more unsavory aspects of the legal profession as evidenced by www.classaction.com. However, for the average general practitioner, Randolph James of Winston-Salem, North Carolina recommends:

"...[James] started getting some good cases when Martindale-Hubbell's www.lawyers.com, which handles his Web site, entered into agreements with MSN.com, America Online and others to boost rankings in search engines. Suddenly he was hearing from a lot more prospective clients by e-mail, which has the added value of being more efficient than fielding phone calls. Lawyers.com is one of several better-known lawyer-client matching services that either survived the dot-com bust of a few years ago or took advantage of its lessons."I'm staying pretty busy and getting my share of work," says James, who has a wide-ranging practice that includes personal injury, construction law and professional liability. "Work tends to find prominent, cutting-edge attorneys, but if you're like the rest of us, you've got to find the work yourself or make sure it finds you."

Does your practice still buy yellow-page advertisements? If so, why?

What percentage of your clients are generated by lawyer referral services? Are they from brick-and-mortar referrals or over the Internet?

What other electronic tools do you use to promote your practice? What is the reach?

Tuesday, July 19, 2005

That Dog Won't Hunt

The June 2005 issue of the ABA Journal features an interesting little piece which addresses the problems solo attorneys face when they become overwhelmed by cases they either don't like or don't understand. "Spotting the Losers" suggests that solo attorneys practice "legal triage"by dividing incoming cases and clients into three groups:

  • Genuine Losers
  • Misplaced Cases
  • Troubled or Difficult Cases
By organizing cases in this fashion, the author claims that solo attorneys can enhance their practice and quality of life while avoiding uncomfortable client encounters and even the possibility of malpractice claims down the road.

I cannot argue with the notion of triage or its usefulness and applicability to these situations. In particular, the author insightfully details how triage can assist solo attorneys to avoid the difficulties an attorney can face when he sits on a file for too long, thereby letting the statute run before giving the client a chance to get a second opinion.

However, I did feel a shivver as the author touched upon the issue of referral fees:

“Wait,” Bill said. “I’ve got a question: If you send a case like this to someone else, do you ask for a referral fee?”

“Some do,” said Angus, “but not me. I’m a lawyer, not a broker. I only take money for work I’ve actually done that benefits the client. That does not include finding another lawyer. Period.”

The rules in most states are pretty clear regarding the circumstances under which an attorney can charge a referral fee, and most will say that attorney has to provide some sort of "value added" benefit in order to do so. But the attitude: "I am not a broker" is a new one on me. Start-up small and solo practitioners are under enough pressure to make ends meet. Consequently, I can't imagine anyone hoping to stay in business past the first six-months being in a position of turning down the opportunity to take a referral fee merely on the grounds that it offends his legal/political sensibilities.

How do you handle referral fees?

Do you practice case/client triage? How well has it worked for you?

Sunday, July 17, 2005

New York's Long Arm Falls Short Over E-mail

Longtime TFM fan, Sean Selk of Palm Beach County, Florida, submits an interesting tale from New York regarding using e-mails to purchase legal services "site-unseen" and the requirements of "sufficient contacts" for New York courts to exercise jurisdiction under that state's long-arm statute.

Late last week, a Manhattan Supreme Court ruled that e-mails and telephone correspondence between a law firm and its South Korean client failed to rise to the level of "sufficient contacts" in the State of New York. The Manhattan firm of Chadbourne & Parke sued its client in New York court over its failure to pay fees to the firm. The South Korean client and the firm never actually met in person and conducted all business over the Internet and telephone. This fact seemed to impress the Court the most, as the client never even once travelled to New York to meet with its firm, despite copious legal services performed on its behalf in New York and elsewhere by the firm.

The track record of American companies trying to sue Chinese and Taiwanese defendants in Asian courts is dismal. Asian firms enjoy a tremendous advantage from bias over the "home field advantage". Furthermore, Chinese and Korean courts in particular, have long suffered from the perception that "rule of law" is more an entrepreneurial endeavor than the pursuit of justice. So, it is no wonder that Chadborne & Parke sought personal jurisdiction for the court in New York as purusing remedies abroad would be both tedious and a waste of time.

E-mail is also one of many electronic tools which have helped to make the legal profession more agile, effective and timely. Furthermore, it has empowered small and solo practitioners to proficiently serve clients in regions far outside of their own local, parochial neighborhoods. It goes without saying that the American Bar Association, among others, has spent great amounts of time and money promoting such tools in the practice of law as well as legitimizing electronic means of signature transmission in order to usher in a new era of transactions over the Internet.

Given that foreign clients are more likely to stiff U.S. lawyers and other professionals for their fees (as well as expenses), will the New York court's ruling make practitioners in New York and elsewhere think twice before taking foreign clients they will only meet over the Internet?

Have you or your firm ever worked for a client that you have never met?

Friday, July 15, 2005

Commercial Litigation: Who Pays? Maybe You...

A loyal TFM reader from Reno, Nevada, sent me an article yesterday dealing with the issue of client litigation insurance. Believe it or not - attorneys can be held liable for failing to explore a client's litigation coverage under relevant liability policies.

The article appeared in a recent issue of the Clark County Bar magazine - Communique and detailed the travails of law firms that failed to tender claims to a client's insurance carrier before incurring legal fees for litigation involving events covered by the client's policy.

In one case, a now defunct, prominent California law firm learned the hard way the importance of looking after its client’s insurance interests. See Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison, 958P.2d 1062 (Cal. 4th 1998). The firm represented a jean manufacturer in an intellectual property dispute against one of its major competitors. However, the firm failed to inquire about or otherwise investigate whether there existed any potential coverage that might be triggered by the lawsuit. Three years and $30 million (in defense costs) later, the firm’s negligence was discovered, and the lawsuit was finally tendered to the client’s liability carrier. Unfortunately, despite the fact that the claim was covered, the client was only able to recoup $12.5 million of its out-of-pocket expenditures because of the late tender. Undoubtedly, the law firm promptly tendered the subsequent malpractice lawsuit to its errors and omissions carrier.

The article goes on to say: "While this may seem like an extreme example of the harm that can result from an attorney’s failure to simply tender a claim to a client’s liability carrier, it nonetheless highlights the importance of addressing insurance issues early in a case. The reality is that procuring coverage can be as important, if not more important, than addressing the liability issues."

For the complete article, as well as a list of tips to avoid making the same mistake, click here.

Thursday, July 14, 2005

Clients & Cash Flow

When it comes to revenue & cash flow, most law firms follow what is known as the "80/20 rule": 80% of your revenue should come from 20% of your clients. Put another way, 80% of your clients are either paying you peanuts or just not paying their bills on time/at all.

It's a dirty, but not so little secret among small and solo practitioners that deadbeat clients are a growing problem and one that is a direct reflection of how the public perceives lawyers and the value of their services. A small firm can implement all the ambitious marketing and business development plans it wants to cultivate a client base that soars into orbit. However, it will still be bankrupt inside of six months unless the partners can effectively collect on fees and expenses.

Steven Chambers is an attorney in Utah that works for Zion Bank in Salt Lake City. In March 2001, he wrote an article for the Utah Bar Journal that was intended to serve as a financial primer for solo and small practitioners. In it he addresses the 80/20 rule, its application and how law firms can become more actively engaged in billing and collections by learning more about their clients. Some of the sage advice that Chambers shared was:

"Find unprofitable clients and get rid of them! Obviously, ethical considerations may prevent you from simply sending them a letter telling them you will no longer represent them, but as soon as the matter you've been retained to handle is completed, urge them to go elsewhere for their future needs. Not all of the 80% will be deadbeats. One of the tricks you must master is how to determine which of those 80% can be moved into the 20% category (and, similarly, which of the 20% might slip into the other group). Watch for signs of trouble, such as bills not being paid for longer periods of time. And, watch for signs of growth. Are they growing, stagnating or shrinking their business? Get to know your clients' business. Not only will you be able to see potential trouble or potential opportunities in time to do something about them, you will also build a relationship with your clients that can serve as the foundation for much more business in the future."

How well does your firm handle billing, collections and deadbeat clients?

Does your firm follow the 80/20 rule?

Have you ever worked for a firm that accrued fees, but failed to collect on them? What was the reason behind the failure? What would you have done to correct it?

Wednesday, July 13, 2005

Professionalism & The Business of Law

This month's Florida Bar Journal asks the question: "What Is Professionalism?" Within the last 2-3 decades, the idea of attorneys as professionals deserving the public's respect has suffered considerably. Polls conducted recently show that the average citizen regards attorneys as slightly more respectable than politicians but less than used car salesmen.

Throughout this time, the Florida Bar, Florida Supreme Court and the American Bar Association, among others have tried repeatedly to define professionalism with mixed results. As the author of the Florida Bar Journal's article on professionalism concludes, he knows professionalism "...when [he] see[s] it." The idea of further professional regulation comes naturally to attorneys who tend to view professionalism as more of a shortfall in ethics than in the business mentality governing the practice of law. Consequently attorneys across the United States are routinely subjected to CLE requirements "mandating professionalism".

This, of course, leads to the following questions:

How would you define "professionalism"?

Can a lack of professionalism be remedied by more rules governing professional ethics or is it more a symptom of the legal community's inability to function in the marketplace?

Are more successful attorneys really more professional? Are less successful attorneys less professional?

Could an attorney's high standards for professionalism be used as a marketing tool to attract clients? Would being able to do so encourage others to adopt higher standards?

Tuesday, July 12, 2005

Florida Bar Takes on Lawyer Web Advertising

The Florida Bar News for July 1, reports that the Board of Governors is reconsidering the regulation of attorney web sites following a June 3, meeting where a special committee, created to review attorney web site practices, presented its findings. Although the committee recommended that attorney web sites should continue to be exempted from advertising regulations, the Board of Governors rejected that notion in favor of creating a new committee to examine to study the issue. In the meantime, the Board approved a motion requiring web sites to be subject to the regulations, except the one requiring pre-approval by the Florida Bar.

The article stated, "Currently, Bar rules treat Web sites as information provided at the request of a potential client, and exempts the sites from the prohibition about discussing results of past cases or making statements characterizing the firm’s quality of legal services. Firms are also exempted from the requirement of filing the Web sites with the Bar for review."

"The task force had recommended exempting Web sites from all ad regulations, although they would still fall under rules requiring that communications not be false, misleading, or deceitful. Board members in April, however, rejected that, saying in an increasingly technological world Web sites are likely to be the Yellow Pages of the future."

The committee was formed by a special Advertising Task Force headed by Florida Bar Member, Manny Morales :“We decided that what we ought to do is maintain the status quo, which is Web sites are subject to the advertising rules with two exceptions, which allows . . . references to past results and statements that characterize the quality of a lawyer’s services."

Board member Mike Glazer, who also served on the special committee, agreed the effect of the April vote went further than anyone intended.“You can list the cases that you’ve won [under the current rule] which you wouldn’t be able to do under the vote we took last time,” he said. “You can say, ‘We’ll do a nice job for you,’ and you couldn’t do that under what we did last time."

The Florida Bar is probably not alone in its effort to increase the regulation of attorney web sites. If regulators in other states begin to restrict the types of statements that can be made on attorney web sites to the extent that the Florida Board of Governors suggests is its ultimate intent, how will that impact the small & solo practitioner community?

Are web sites that indispensible to small firms?

How would further restrictions placed on your ability to advertise on the web impact your marketing plan?

Monday, July 11, 2005

ABA Reports Big-Ticket Malpractice Suits on the Rise

In a twist, attorneys, and corporate firms in particular, are finding themselves the targets of increasinly costly malpractice litigation. A June ABA study concluded that between 2000 - 2004, malpractice claims worth $2 million or more rose by 60% over the preceding four-year period. Accordingly, many experts in the legal field foresee sizeable increases in liability premiums across the board or even an outright unwillingness to write policies by some insurers.

According to the NLJ: "While the overall volume of cases is still small, the numbers point to a costly, long-term problem for law firms. If claims continue to rise, firms may face much higher malpractice insurance premiums, higher deductibles and insurance carriers that are less willing to provide coverage. In other words, they'll face a big hit to the bottom line."

Worse yet, some firms seem to be using malpractice as a marketing tool:
"Even a few corporate firms are getting into the act, launching malpractice suits against their competitors."

"The growing severity of claims stems in part from the major corporate scandals of the past five years, which, insurers and law firm managers say, have opened law firms up to new liabilities. But the fallout goes beyond some of the biggest headlines. In recent months, three major law firms-Sidley Austin Brown & Wood; Pepper Hamilton of Philadelphia; and Gunster, Yoakley & Stewart-have each been hit by suits with claims that top $100 million. All three firms declined to comment.Other firms have seen eight-figure jury verdicts. In February, a Texas court ordered Baker Botts of Houston, along with co-defendant Wells Fargo & Co., which served as executor of an estate, to pay $71 million to the trust of a widow for breach of fiduciary duty while planning her husband's estate. Last month, Seyfarth Shaw of Chicago was slapped by a Los Angeles jury with more than $35 million in claims and punitive damages for mishandling a lawsuit for one-time client and Tae Bo creator Billy Blanks. Both firms have said publicly that the claims are baseless, and they are appealing."

Are doctors that different from their legal counterparts? Is it time for the states to nip a burgeoning trial-lawyer business niche in the bud? If not, will we see courthouses empty, like physicians and emergency rooms in Nevada - void of attorneys fearing the "m" word?

Final quote: "When Bennett Wasserman began practicing law 30 years ago, the New Jersey attorney never imagined that he would make his career out of suing other lawyers. Legal malpractice was considered a backwater specialty frowned on by other lawyers. These days, though, suing lawyers is exactly what pays Wasserman's bills as he shuttles between trying cases for his Newark-based firm, Stryker, Tams & Dill, and teaching legal malpractice courses at Hofstra University School of Law in Hempstead, N.Y. "Firms are beginning to realize that there is good money in legal malpractice," Wasserman said. Lawyers, most often working on contingency, can rake in up to 40% of verdicts and settlements. As Wasserman sees it, the cases are a way to help self-police the legal profession. "It really is the consumer rights movement arriving at the doorstep of the legal profession," he said.

Sunday, July 10, 2005

Inaugural Posting - The Force Majeure

Welcome to The Force Majeure. This blog is a forum for small and solo practicing attorneys throughout the United States to share information regarding the business of the practice of law. There won't be any discussion of the more mundane questions of law or our personal feelings on Hadley v. Baxendale. TFM's purpose in life is to take the otherwise limited resources of small/solo practitioners and combine them in the pursuit of answers to questions that are relevant to making money from the practice of law.
  • Just starting out and don't have a clue how much malpractice liability insurance costs or how to obtain it?
  • Wondering how you can enhance your professionalism?
  • Not sure what new technologies can help you compete with the larger firms?
  • Are you in the right market? Do you need to specialize?
  • Do you have clients that don't pay their bills? How do you get clients that pay on time and in full?

The answers to these types of questions are what TFM seeks to provide.