Juggling Is For Clowns and Lawyers – Drop the Billable Hour

What do a lawyer and a clown have in common?  No, this is not another lawyer joke.  The answer is “juggling.”

A lawyer almost always manages many files at the same time.  The practice of law is a juggling routine, where the attorney must keep many different matters “in the air” at the same time.  Some attorneys with volume practices juggle a high number of fairly uniform cases.  This is analogous to juggling 10 tennis balls.  Other attorneys process wildly distinct cases.  Juggle a ball, a bowling pin, and a chicken. 

What makes this a bit difficult is that the juggler must set down one object and pick up another (or two or three) and never drop any of them.  Further, the objects are usually covered in plain boxes and wrapping, but one of the objects may, at any time, turn out to be a chainsaw.

What does this have to do with the billable minute?  One doesn’t pay the juggler by the amount of time that a particular object is in his hand.  Likewise, the amount of time that a lawyer spends actually touching a file has little to do with the management of that file.  Often neither the client nor the attorney fully knows the contents of the problem that the client is asking the attorney to juggle. 

Managing a legal file involves knowing the characteristics of the matter and how it is likely to behave.  It involves anticipation of problems.  It involves keeping the file moving toward the eventual resolution. 

The amount of time spent keeping the file “in the air” has little to do with whether the file is managed effectively or efficiently.  To the contrary, an experienced attorney should be able to handle matters within his competency in a shorter amount of time.  What would be the sense in paying an attorney more because he has to spend more time on a matter than a more knowledgeable competitor?

The billable hour is the standard method for law firm charges because it is a proxy or estimate of the service rendered.  The billable hour method of billing assumes that the hourly rates of different attorneys are directly correlated to the value they offer.  It also assumes that attorney time is used as efficiently as possible.  I do not believe either of these assumptions to be correct.  I do not believe that the time spent on a matter is irrelevant to the fair charge, but the time spent is not the only relevant factor. 

My clients and I usually are able to arrive at a better estimate of the anticipated value of my services after taking into account the complexity of the matter and my experience.  For this reason, I prefer flat fee billing where possible.  If a flat fee is not possible, I would prefer to use a fee range which identifies the variables that might make the fee higher or lower.  My clients appreciate the greater certainty and I believe that such fees generally better approximate the value of my efforts.    I will leave the billable hours to the other clowns.

James N Graham is a real estate and business attorney with Accession.

REO Buyer = Huge Price Discount

As the foreclosure "crisis" has developed and lenders have ended up with large and growing portfolios of single family real estate owned (REO), the lenders have developed new systems for attempting to liquidate that REO without incurring additional liability.

One common approach that many professionals will recognize is that a financial institution will have a particular addendum that it requires to be included in any sale of REO.  These addenda have grown in length over the past 5 years, and they also have grown in the amount of liability which they shift onto the home purchaser.

For example, a buyer of REO might anticipate and be comfortable with the prospect of purchasing the property "as-is."  The buyer assumes the risk of inspecting and analyzing the condition of the property, and the lenders routinely ask the buyer to acknowledge and accept the risk of unknown defects.

This "as-is" concept now has been extended into the title.  Lenders are including in their addenda a provision indicating that the lender will not give the buyer a warranty deed.  Rather, the lender will provide what is effectively a quit claim deed.  The distinction is significant.  A quit claim deed merely transfers whatever interest the transferee has in the property, but it does not warrant that the transferee has any interest to transfer. 

In the case of REO, and depending upon the lender, the timing, and the state, there is a significant risk that the lender may not have completed the foreclosure process properly and that there may be other interests in the property.  Lenders are refusing to accept the liability in those cases.  Rather, they want the buyer to assume the risk that the lender may have screwed up.

Doesn't title insurance cover that risk?  It depends.  Look carefully at the title insurance commitment, its requirements and its exclusions.  In many cases, the title insurer requires a warranty deed (which the buyer won't get).  The insurer also has standard exceptions which are only removed if the seller provides a particular set of affidavits.  Lenders typically won't provide these, so the exceptions to coverage remain.

When I'm asked by a buyer whether they should sign one of these REO addenda, my advice, of course, depends upon the entirety of the facts.  However, in general, if one is asked to assume risks, one should be compensated.  In the case of a buyer buying a property from a seller who may not own it and who may not be able to transfer it free and clear, I'd recommend that the buyer receive a significant price discount.

James N. Graham of Accession Law LLC provides real estate and business legal services in Wisconsin.

CEB IDENTIFIES 9 EFFICIENCY TRENDS FOR IN-HOUSE LEGAL DEPTS

9 Efficiency Trends to Watch for in Legal 

5 February, 2013 by Sampriti Ganguli

 SUMMARY: 

1. Perform more legal work in-house, 2. Use Non-Lawyer Professionals More Often, 3. Invest in Legal Operations Capabilities, 4. Invest Selectively in Legal Technologies, 5. Unbundle Legal Services, 6. Focus on Litigation Matter Budgeting and Oversight, 7. Use Smaller Law Firms More Often , 8. Reduce the Number of Law Firms, 9. Be Judicious with Alternative Fee Arrangements.

LINK:

http://www.executiveboard.com/blogs/9-efficiency-trends-to-watch-for-in-legal/

Warning - Cashier's Check Scam Attempted

The following is a scam that was attempted against Accession Law recently.  A "client" contacted us seeking representation in a collection matter.  We were initially contacted by email and then by telephone.  The "client" sought to recover amounts owed under a promissory note.  So far, nothing unusual.

After sending terms of retainer and requesting a fee deposit, I received an email confirmation that I was being retained along with a copy of the promissory note.  I confirmed that I would undertake no action and did not represent the "client" until I received back the signed retainer agreement and fee deposit.  I was assured that a check was to be issued within 1 week.

A few days later, I received a call from the "debtor" who indicated that the "client" told him to contact me because I was handling the account.  "Call my lawyer."  I told the "debtor" that I could not confirm or deny whether I was representing "client" but that I was not in a position to undertake any action on the file.  "Debtor" told me that he just wanted to resolve the claim and was prepared to offer $120,000 in settlement of the $200,000 debt.

I reported the contact to "client."  He told me he would take the deal.  I again reminded him that I was not his attorney and had received neither the retainer agreement nor the retainer payment and that I would not undertake any action on his behalf .

Shortly thereafter, I received in the mail a cashier's check from "debtor" in the amount of $120,000 payable to me.  The check, of course, turned out to be a forgery.  Apparently the next step of the scam would have me deposit the check into my trust account, pay myself for my troubles, and then issue the remainder to "client."  If all of this happened before my bank learned of and reported to me the fraud, the "client" would have traded the fraudulent check for real money from our trust account.

We did not fall for the scam, but I do warn people that the cashier's check was well made, that the backstory seemed plausible, and that there apparently is some lag between when a forged check is deposited and when the merchant is advised of the forgery.

Facebooking Witnesses

Interesting article on mining social media for evidentiary purposes.

Social Media: From Computer To Courtroom

Monday, February 25, 2013 - 14:59

Loryn P. Riggiola

Litigators that seek to admit or challenge such information must be prepared to combat the cornerstone objections of authenticity and hearsay. Practitioners are encouraged to discover and present such evidence, thereby enabling the courts to address such issues with sufficient frequency to facilitate even clearer criteria for admission

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