Thursday, July 18, 2013
Tuesday, December 18, 2012
Friday, July 23, 2010
Any attorney can quote an hourly rate, but beyond that, the total is unknown at the beginning of the project. (A large law firm may be able to provide a corporate client with a flat rate using cost averaging over many transactions, but a small business using legal counsel on a less than full time basis doesn’t have the wherewithal to support an attorney on a flat fee basis.) As with the doctor or the plumber, an examination is necessary.
Beyond the hourly rate, the client must consider the experience and wisdom of the attorney. Typically, more experienced attorneys have higher rates (within reason) but in most situations, an experienced attorney will be able to complete a project at a lower total cost. Again, using the contract example, an experienced attorney will spot the issues and have language available while the less experienced attorney may need additional time.
There are alternatives you may wish to consider. If you need ongoing services, you may wish to explore “bulk pricing” with your attorney. If the hourly rate is $300, perhaps you could negotiate a full day of services on a periodic basis at $1500 a day. Or, if you would like to have an attorney on-site for a week of work, the rate may drop to $5,000 per week. A half day of mediation services may be $500 per party while a full day is $800 per party. Like any other business person, if an attorney can obtain a commitment of his time, he has less down time and can average his costs over a greater number of hours.
Rates quoted here are examples only. A major downtown law firm may charge $250 per hour for a junior associate while a senior partner may cost $800 or more per hour. Small rural solo practitioners with low overhead may be in the $150 per hour range or may charge flat fees because the work is more routine.
Now no doubt you are doing the math and comparing those fees to your hourly wages. Unfortunately, that comparison does not take into account the expenses of running the business. Remember, revenue minus expenses equals profits. Expenses in running a business include taxes, insurance, licensing fees, office expenses, continuing education, employees, etc. The margins in running a legal practice aren’t as bad as a grocery store or a warehouse club but attorneys don’t just multiply their hourly rate by 40 hours for 52 weeks to determine their take home pay.
If you have a question about fees, ask your attorney. But understand that the answer may be, “It depends.”
It may be legal, but is it right?
Thursday, January 7, 2010
When was the last time you went through all your contracts? If you are in business, you have contracts. Maybe you buy goods and services or sell them; probably both. But do you know the quality of your contracts?
If you tend to do business on a handshake, you have a contract, you just don’t know all the terms. You may know the price, the quantity, and the delivery terms, but do you know the warranty, the limitation on liabilities, the governing law, or the extent of extraneous documents that are considered “contractual”?
Maybe you are one who insists that all contracts be documented but have accepted the other party’s paper with terms and conditions even though your paper also has “fine print.” If a dispute arises and there is a conflict of terms, do you know which provisions will withstand the test?
Well written contacts may be evidenced in a single document signed by all parties or on multiple non-conflicting documents, each signed by a single party. Anything short, and you may find yourself having a third party constructing a contract for you based upon the Uniform Commercial Code.
One method of trying to get a handle on your situation is to audit a sample of contracts. Pull out 10 to 20% of your files from a specified period of time and determine the strength of the contracts. To keep it simple, divide them into four groups:
1) A single document containing all the terms and conditions, and signatures of both parties.
2) Two documents, each signed by a party, where offer and acceptance is obvious and there are no conflicting terms.
3) Two documents where the parties attempted to agree but where conflicting terms exist.
4) No documentation evidencing a contract is contained in the file – no signature, few if any terms, some or no supporting evidence of an attempt to agree to do something.
While reviewing the contract files, take notice of the processes used (or lacking), use of checklists by those touching the files, signature authorities, access to systems controlling and supporting the relationships, the language used by the other party, the formatting of your documents, etc.
Once you understand your exposure, you may take steps to tighten up language, processes, approvals, etc. while also taking steps to strengthen the relationships with the other parties. You may never achieve 100% “air-tight” documents and processes (or even care to), but the less you strive for excellence, the more risk you accept for your business.
Don’t believe that bad things don’t happen to good people (or good companies). As many found out in the recession beginning in 2008, the ripple effect of negative behavior by some has touched many families and businesses who thought they were secure.
Tuesday, November 10, 2009
The official unemployment rate in the US is now greater than 10% or, if one uses the same method of counting as we did during the great depression, we are now over 20% (officially 17+% but we know that number has been “politically corrected”).
In my practice, I have come in contact with many individuals who are hurting through no fault of their own.
One husband, and father of three, lost his job as an accountant after his company closed one day and emerged the next as a new entity. He had worked for the company for twelve months, the last three without pay due to their financial situation. As if that were not bad enough, six months later he started receiving bills from doctors, hospitals, and labs for services rendered to his family during his employment. Although he had paid the required co-payments, his former employer had failed to pay the premiums for the insurance policies covering the employees. As a result, this man is facing personal bankruptcy –a devastating situation for an accountant looking for a job.
In another situation, a husband and wife had no debt other than their mortgage. Both were laid off from their respective jobs in different industries. Subsequently, after COBRA benefits were exhausted and pre-existing conditions could not be covered by their person health insurance, the husband was hospitalized. In order to pay the medical bills, they sold everything, including their house. Both continue to seek employment.
There are many who have worked continuously for the past 20 or 30 years, have incurred little if any debt, and have faithfully supported their families. Some do not qualify for various programs because they fall outside the qualification time period or have just enough assets left to bump them over the minimum thresholds. Many others will never accept government assistance for moral, political, or other reasons.
If you are employed in a full time position for which you are fully qualified and fairly compensated, consider yourself very fortunate. However, don’t forget about the other 20% of the population. You are not an island. Your actions have both a direct and indirect impact on others. Remember the ripple effect in everything you do throughout your day. Consider taking those calls or responding to those e-mails from your unemployed friends – they are not contagious. Someday, you may find yourself on the outside looking in.
If you are not fully employed for your level of education and experience, continue to actively seek work on a daily basis and trust that this is a storm in your life through which you will emerge. This is not something that you can control, but you still have responsibilities. Seek true wisdom. Persevere. Help others less fortunate than you. (If you believe no one is having more trouble than you, give me a call for a list of people you can visit.) Hang in there.
Monday, October 26, 2009
Why are we, in the US, so quick to jump over all the other responses and move directly to Litigation? When you call your legal department or outside counsel, is the first, or only, suggested solution a trip to the courthouse? What about other ways of addressing conflict? Do you suppose there are better ways? Why do you suppose the other ways have survived for so many centuries while litigation is relatively new and has fallen out of favor in many cultures?
Perhaps the above list of questions will help you formulate your own list of questions for your legal staff. Better still, perhaps you could resolve your own conflicts with a bit of coaching or self instruction.
It may be legal, but is it right?
Tuesday, October 20, 2009
Business is good but it’s not that good. So says the business person struggling to keep the doors open, the employees working, and the customers satisfied during the economic downturn. If only I could afford an attorney to help me with my contracts, build my business, and respond to issues that seem to come up on a daily basis.
Perhaps it is time for the business person and the attorney to become creative. How can this problem be solved?
Facing a similar situation recently, I recently proposed three alternatives to the normal attorney-client billing and working relationship.
1) Traditionally, attorneys bill on an hourly basis for services performed. In this suburban town, based upon experience, overhead, type of work, etc., hourly rates range from $275 per hour to just over $400 per hour (large downtown firms are generally in the $600 per hour range for comparable services). Under this arrangement, compensation is fair but the client may be conscious of the “tick of the clock” during every conversation.
2) Contract work has always been an alternative and its use is now growing. Under this scenario, the business may hire the attorney for a particular project as they would any other subcontractor. However, a better arrangement would be to hire the attorney for a fixed number of days each week at a fixed price. For example, having ready access, in your building, to legal expertise two days a week at a reduced hourly rate (for example, eight hours times two days at a rate of 50% to 60% less than the normal hourly rate) would not only provide a consistent, fair return to the attorney on an on-going basis but it would also allow the client to focus on the issues rather than the clock.
3) Finally, there is the alternative of bringing the expertise in-house as a full time employee. Again, the hourly rate drops (perhaps 30% off the contract rate) but the attorney picks up employee benefits rather than just 1099 status. Now the businessman has a “partner” in the business with an interest in success.
But wait a minute, if my business is already struggling, how can I afford to hire a legal expert on a regular basis? That is where more creativity comes into play.
Who says the guy with the legal training can’t also be your Ops or Marketing guy? An attorney with a business background no doubt enjoys making decisions rather than just rendering opinions. Why not make him a part of the senior management team? In one major private company in Dallas, the General Counsel is also the VP of Human Resources. He is a one-man legal department but also manages the entire HR function. An attorney with experience supporting Sales, Marketing and Operations could step into the role of VP of Operations in addition to being the in-house legal counsel. This could even work on a contract basis where the attorney performs “business related duties” in addition to legal work. In a start-up, who says those with legal training can’t run a department or empty the trash cans? Yes, there are some ethical issues to be addressed, but they are not insurmountable.
In this economy, it is time for attorneys and business people to be creative in many areas, including the hiring of legal expertise and the billing for those services.