INSIDE THE FIRM

The Inside Storyon Choosingand Usinga Lawyer

byDonald W. Hudspeth

Esquire

~~(aHnPubllshlnq"

A dMsion ofAccents Marketing Group, Inc.

INSIDE THE FIRM

The Inside Story OnChoosin! And Usin! ALawyer

Copyright ©1997 by Donald W. Hudspeth

All rights reserved.No part of this publication may bereproduced, stored in a retrieval system,or transmitted in any form or by anymeans, electronic, mechanical,photocopying, recording, or otherwise,without the prior permission of thepublisher.

Accents PublishingA division ofAccents Marketing Group, Inc.Phoenix, Arizona1.877.777.4685E-mail: foraccents@aoLcom

Acknowled!ftlentsThe author would like to thank the

following persons for their outstandingcontributions to the success of this book:

Ms. Lupe Marie Jasso of AccentsPublishing for her exceptionally creative,methodical and painstaking review, editing,proofreading and overall supervision ofthis project from the original reviewof the drafts of notes and artisticdirection ofthe "LawTalk" radio program fromwhich this book arose, through the coverdesign and final publication.

KFNN Financial News Radio, which gavebirth to this project.

Ms. Linda Krecker-Schkred for thetypesetting and formatting.

Miss Jacqueline Crowe for herproofreading and ideas.

Professor John). Crowe J.D. for hisenlightened and humorous content editingand comments.

Ms. Rosanne Lyles Armijo for her ardent,painstaking, time-consuming content andformat editing. True to her nature, Rosannewent beyond the call of dUty.

And, most of all, to my clients withoutwhom this book would not have beenpossible.

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CONTENTSdaapterOne

lAl~tnr~ •••••.•.••••••••..•.•••..•••.. Iuse A Lawyer To Practice

Preventive legal Medicine 2

The Documents "look OK To Me" Fallacy 4

If You Represent Yourself,You May Have A Fool For AClient 7

Lawyers Are Now More AffordableAnd Cost-Effective 8

Possession Of AGood LawyerIs 9!loths Of The Law 9

Do What The Players Do:Use A lawyer To Help You Succeed 12

lawyers Add Credibility To Your Deal 12

Lawyers can Protect YouFrom The Bad Guys 13

Lawyers Maintain ObjectivityAnd Rationality 14

Take Advantage Of The "lawyer's Club" 15

A Lawyer can ConvertABad case Into A Good case 17

Expanding Businesses May NeedDifferent Kinds Of LawyersAt Different Times 18

Use A Lawyer To AssureCompliance With Applicable Law-­Not Just In What The Company DoesBut How It Does It 19

One Lump Or Two?Deciding Whether To UseOne Attorney or Multiple Attorneys 20

CbapterTwoWhen To call ALawyer 27Don't Wait Until The Last Minute 27

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Don't call The Lawyer AfterThe else Has Begun 28

Pro se lit. gants May Lose Their

case Before The Attorney Is Hired 30

Cbapter 11IreeHow To Find ALawyer......•...........•...... 33Using Media Advertisements

To Find A Lawyer 33

Sources Of lawyen...................... . 34

Referrals Are A Great WayTo Find A Lawyer 36

Bar Association Referrals 37

You Get What You Pay ForWith Free legal Advice 38

A Brief Guide To legal Practice Areas 39

Pre-screen The lawyer

With Questions And AChecklist 41

Cbapter FourWhat To Look For In ALawyer 47Choose A Lawyer, Not A Firm 47

Size Doesn't Matter: Rule Changes And Technology HaveEliminated Most Big Firm Advantages 49

look For An AttorneyWho can And Will listen 53

Decide Whether You Want"Rambo" Or "Indiana Jones" 54

look For A lawyer Who Is A ResponsiveAnd Effective Communicator 56

Look For A lawyer You like,Trust And Respect 57

Choose An Attorney Who Will Let YouBe A Part Of The Team 58

look For Business Or Other JudgmentRelated To Your Field 59

Check The Lawyer Or Firm's

Practice Areas And Experience 61

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.. ........ 74

................... 68

Chapter FiveThm,s To Avoid 65Don't "Hide The Ball"

From Your Own Attorney .

Avoid Seeking Free legal Advice;You May Get What You Pay For. 67

Choose An Attorney With Style - Your Style . 68

Beware Of InterpretingYour Own Projections As Reality

Avoid False ExpectationsOf Our Justice System AndThe Perfect Justness Of Your Cause

Avoid Constantly Changinglegal Relationships 70

Avoid Attempting To DominateYour Attorney 71

Avoid Being In An Adversary RelationshipWith Your Own Counsel ..

Avoid Haggling WithYour Attorney Over Work And Fees 74

Avoid Basing lawsuits On

AMatter Of Principle . 75

ChapterSixThe Consultation 81AGood lawyer/Client Relationship

Requires Teamwork 81

Do Your Homework....................... .. 82

See If The lawyer Has An ImmediatePractical Or Business Solution,Not Just A legal Solution 83

Your Consultation Objective

Is To Obtain An Evaluation 84

Chapter SevenThin,s To Do 87

Be a Favored Client. 89

Talk Early And Often About

The Job And What It Will Cost. 90

Keep Your Attorney Focused

On Practical Solutions 91

Work With Your Attorney

To Devise "Plan A" and "Plan B." 91

, Chapter Ei,tltUndemandiny Law 93The law As A System Of Facts 93

Types Of Courts 95

Chapter NineThe VWotit 99Work With Your Attorney

To Develop Your Goals, StrategyAnd Tactics For Achieving Them,And Options. .. .. . 100

Be A Team Player. . . 101

Expect Attention, But Not Constant

Or Instant Attention 102

Remember To Consider"Transaction Costs" In Evaluating

Your Course Of legal Action 102

Big Suit/little Suit: The Cost of litigation 104

Tailoring Representation

To Make It Cost-Effective. .. 106

Discretion Is The Better Part Of ValorWhen It Comes To litigation 108

The Trial As Theater 110

Remember An Attorney Is Not

An Analyst Or Guru. .. 112

Chapter TenThe Bills 115

Watch Out For PartiesWho Are Cheating The legal System

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...................... 87Ask About Money Early And Often.

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.. ........ 115

Ask About Fee AgreementsAnd Policy Statements. . 117

Expect To Be Shocked, But NotToo Surprised, At The Size Of The Bill. 117

Be Aware Of The law Firm's NeedTo Bill Hours 118

Games That law Firms PlayWith Billable Hours 119

Getting In The litigation RingAs APlaintiff, 121

Getting In The litigation RingAs ADefendant. 121

The Do-Nothing Defendant's Syllogism 122

The Syllogism Of Non-Payment Of lawyer 123

Where possible, Pay By The Job 125

Consolidation Of legal WorkTo AFew Firms 126

Pros And Cons Of Bill-Monitoring services 128

Ask For An Itemized And Detailed Bill. 129

eIIapter ElevenFinal Thou4Jlrts: 133ASummary of How Not to Choose

And use An Attorney......... 133

The Don Hudspeth-Ben FranklinWeighted-Average Technique 135

Glossary 140

ElIClllot~ ....••..•••..•.•.•...••.•...•.....•.•.. 143

BihU.,...aph, 144

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Dedicatioll

This book is dedicated to mybusiness mentor, Russ McGuire.

M£?Y he rest in peace.

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About The Author

Donald W. Hudspeth has been apromoter, business organizer and adviser fromthe age of nineteen. He helped found,solicited investors for and organized a pintobean processing plant before being oldenough to vote. Mr. Hudspeth also foundeda dynamic and successful disco-bar and realestate chain in the 1970's and a chain of mallstores in the 1980's.

In addition to founding and developingthese enterprises, the author providedmanagement consulting and financialadministration services to other companiesuntil he began attending law school at theage of36. While attending and after graduatingfrom law school, the author worked for aprominent and respected Phoenix, Arizonalaw firm, primarily representing well-knownand established corporate clients, beforeopening his law office in 1993.

Mr. Hudspeth's present firm is knownfor its representation of entrepreneurialcompanies, many of them owner-operatedand in the forefront of their respectiveindustries. The firm trademark is, "The businessof our firm is business." The mottocharacterizes the firm's focus and the highestand best use of the insight, knowledge andexperience of its principal.

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About This Book

This book began as a series ofnotes for"LawTalk, "a bi-weekly radio show, aired ona local financial news station. Until I did thisshow I did not realize howmuch could be saidin fifteen minutes and how much preparationwas required to put on a simple program.Because it was so much work to prepare forthe show, it seemed natural to rej'ormatmy work product into a collection of topics.This collection of topics became the chaptersofthis book.

~Donald W. Hudspeth, Esq.

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Chapter One

Why Use ALawyer?

SamllaryChapter One lists and discusses important

reasons for using an attorney in everyday lifeand business matters. These reasons includethe essential relationship of a good attorney tothe legal system, learning to practice preventivelegal medicine, avoiding having a fool for aclient, avoiding serious errors in documentreview and preparation, and taking advantageof the greater availability and affordability ofattorneys in today's dynamic business world.

Additional reasons for using an attorneydiscussed in this chapter are to help yousucceed, to add credibility toyour business deal,to protect yourself from sharp businesspractitioners, to maintain objectivity, to takeadvantage of the lawyer'S club, and to convert abad case into a good case.

IISIDE THE FIlM

Finally, this chapter discusses when morethan one attorney or different types ofattorneysmaybe used.

Use ALawyer '0 Practice Preventive Le,a( MedicineA good lawyer is not only an essential

element ofanybusiness problem-solving kit. Heis the business client's best shot in the preven­tion oflegal catastrophes. Quite often, an outlayof less than $1,000 in legal fees will save abusiness from losses that may very well reachinto the hundreds of thousands of dollars.

po!ent~al cl~ents frequently call to saysomething !Ike thIS: "I'm bUying a business. Theseller (or business broker) tells me that I don'tneed a lawyer. He says 99 percent ofthese dealsclose without a lawyer." The self-interest orsheer laziness behind this comment should beobvious. Perhaps, the obvious has "made a lightgo on" in the mind of the thinking person whocalls me. Too often, however, this "inner light"never clicks on. Consequently there are manytransactions, some involving substantial sums,where no lawyer or other professional looks atthe deal before it is consummated.

. Two "business war stories" should helpIllustrate how dangerous it can be to do dealswithout using your accountant and lawyer. Twoclients come to mind. Both became my clientsafter they had alreadydone the deal. One was anout-of-state buyer of an established business.The other was a local sellerofa business he builtfrom scratch.

In the first case, the buyer ("Mr. Buyer") wasa family man, coming from a job where heworked "for the other guy." He now wanted toown his own business. His wife was a schoolteacher. He was honest and bright, a goodtalker. But Mr. Buyer bought a business without

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Chapter One: Why Use Alawyer?

having the business documents reviewed orinvestigating the seller.

U~ortunately,. the sellers advertising andmarketmg materIals violated the state'sconsumer f:aud statutes. Not knowing this, Mr.Buyer continued to use these sales materialsuntil he was prosecuted by the AttorneyG~neral'sOffice. This caused Mr. Buyer severedI~tress, destroyed the business financially, andrumed what could have been a fulfilling life asa small business owner.

Before buying the business Mr. Buyercouldhave had the purchase documents and salesmaterials reviewed by a lawyer for less than athousand dollars. Instead, it cost Mr. Buyermore. than $15,000 to deal with the problem,and m many ways (to quote the client)"the whole thing ruined my life."

In the second case, my (after the fact) clientwas the seller ("Mr. Seller"). Mr. seller is and wasa ~rilliant immi.grant who came to this country,buIlt up a busmess from nothing and sold it(several years ago) for $750,000. A title andescrow company prepared the pertinentdoc.uments. No attorney represented Mr. Sellerdunng the negotiations and sale.

As part of this sale, Mr. seller discounted~nd partially assigned the buyer's note to anInsurance company along with all of his rightsunder. the ~les documents without reservingany nghts In the property, even in case ofnon-payment. Mr. seller did not have a properlycompleted trust (or mortgage) document underwhich he could foreclose and repossess the realestate and business ifthe buyer did not pay for it.Only the insurance company had the power toforeclose.

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INSIDE THE FIRM

This was a serious mistake and had someserious consequences:

11 Mr. Seller could only sue to collectpayments. This is less threatening andmore expensive and time consumingthan simply foreclosing. Thus, buyerwould sometimes not pay Mr. seller.

12 Evenworse, sometimes the buyerwouldnot pay either Mr. Seller or theinsurance company. The insurancecompany had the right to foreclose,but in foreclosing out buyer'S rights inthe property, it would foreclose outMr. Seller's rights. Thus, when thebuyer quit making any payments,Mr. Seller had to pay the insurancecompany to keep it from foreclosingout his interest.

"} Worst, the buyer could file bankruptcyand discharge Seller's portion of thenote as unsecured debt.

To prevent these catastrophes, and inreturn for modified documents to eliminate themistakes, Mr. seller wrote off$150,000 due onhis portion of the note. Again, this was avery expensive lesson that could have beenavoided for about $1 ,000 in attorneys fees,perhaps less.

Tile DoclmeRts 'look OK To Me" FallacyA common mistake clients make in

business or real estate transactions is to tell methat they have read the agreement and "it looksOK" to them. On its face, this statement has anair of plausibility. It means that the client hasread and apparently accepted the documents.

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Chapter One: Why lise ALawyer1

Unfortunately, there are at least twoproblems with this statement:

First: it assumes the client knows themeaning of the legal terms in thedocument, e.g. subordination,condemnation and indemnification.Many ofus do not know how to read anX-ray. The same is often true fora legaldocument. We can see and read thewords, but we mayor may notunderstand them. Thus, clients oftenwaive or surrender significant legalrights simply because they do notunderstand what they are reading.

Second: the statement assumes the clientknows enough about the document toknow what is not in it. Typically, thefirst draft of a document will beprepared in favor of the party whoprepared the documents. For thisreason many experienced negotiatorsprefer to have their attorney draft thedocuments, even though they have topay the primarycost ofpreparing them.They believe that the party whocontrols the drafting controls the deal.

When the other side drafts the documents,you are somewhat at a disadvantage because youare responding to their version of the documentand may spend considerable negotiation timeand energy undoing what the otherside has done.Letting the other side draft the documents is alittle bit like giving the other side a "home court"advantage: It is not decisive, but it is a factor in thedeal. On the other hand, letting the other side draftthe documents and paying your attorney only torespond to and revise them can save money. It is

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If YOI RepreseltYolrselfYOI Ma, Hive AFeol For ACUelt

We live in a world where we, increasingly,sell and are paid for what we know, not what wedo. The categories ofknowledge are becomingever more technical, sophisticated andcomplex. Even our cars are computerized.Because knowledge is becoming increasinglyspecialized, it is more and more difficult for anyof us to stay abreast in our own field, let aloneother fields of knowledge.

Because we live in an age of diverse andtechnical knowledge, we must now tum tospecialists to handle the problems of everydaylife. We relyon specialists to solve ourproblems.It is necessary and proper to do this. Otherwise,we may have a fool for a client.

If not careful, we may become like theprofessional who, being knowledgeable andbright in one area, falsely concludes therefore ofbeing an expert in investment matters orpsychology or _ (fill in the bank). We maybecome like the small business person who hasa great personality, or renders excellent service,or has outstanding mechanical skills andknOWledge to build a profitable business-but inthe process, carelessly expands beyondpersonal expertise.

If we sometimes outgrow our knowledgeand present ability in our own field, is it any

The moral here is that not only must oneknow what various provisions mean, one mustknow enough to know what is not in thedocument. Few non-lawyers will have that levelof expertise. This lesson applies not just tobusiness transactions but also to the purchaseor lease ofa car, the purchase or sale ofa house,and many other consumer transactions as well.

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Chapter One: Why Use Alawyer?

to respond than to draft.let the other side

split the cost of thebeware ofthe ethical dilemma

possible long-range consequences thatsharingan attorney cancause to the parties. SeeChapter below entitled: One Lump or Two?Deciding Whether To Use One Attorney orMultiple Attorneys In Forming Your NewBusiness And Other Business Transactions.

Often when the other side knows from thebeginning that you are represented by anattorney, it will not bother to put flagrantlyone-sided terms into the agreement, even in thefirst draft, because it knows your attorneywill not accept those terms. In that ease, adisproportionately one-sided agreementwill simply waste time and money.

Consider another war story. Client,another "Mr. Buyer" came to me because hewas purchasing a tavern. He had the proposedcontract in hand and had read it. It looked OKto him. He just wanted me "to look it over andgive it my blessing." ("Look it over for myblessing" is a short hand way of saying hewants to feel good about the purchase bybeing able to say a lawyer looked at it. But, hedoes not really want me to do too muchbecause he does not want to pay for it.)

However, for a designated fee, I agreed tolook over the contract and asked Mr. Buyer tocome back in two days. When Mr. Buyerreturned I gave him a list ofsix or eight clausesthat needed to be added to the document. Guesswhat they were? (Answer: All ofthe clauses thatprotect a buyer in the purchase of a business.)

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Chapter One: Why lise ALawyer?

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Now many firms such as mine focus onpractice niches. My niche is small business,including organization, routine contracts andother documentation and non-complexlitigation. Complex litigationinvolves issuessuchas antitrust or securities law. In contrast,non-complex litigation is usually based on arelatively simple contract, express or implied,which some p~rty has breached.

Focusing on practice areas, particularlyless complex areas, allows firms to developexpertise and to do the same work for lessmoney. Competitive pressures require it. As aresult, you are now likely to fmd an affordablefirm which can provide you with cost-effectiveservice.

Recommendation: Interview a number offirms on the phone. Ask them about minimumsize clients (e.g. some large firms will nothandle clients with less than $2,000,000 inannual sales), their billable hourly rates andminimum retainer requirements. Look for afirm that fits your budget and requirements.

Nevertheless, law is still costly. Because ofthe talent and education required, and theestablished, expensive infrastructure, itprobably always will be. However, law is nowmore accessible than ever before.

Possessio. of AGood Lawyer Is 9/10tks Of TIle LawThe saying above was emblazoned on a

coffee cup on a ledge in the student loungethroughout my years in law school. Shortlyafter I graduated, the cup disappeared whenthe lounge was being remodeled. You know,I sorely missed that old cup after it was gone.I was studying for the bar exam at the timeand could have dearly used the inspiration.

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special guidance whet: weOU1tsicle our chosen field of expertIse?

As we expand, grow and do new things inour lives, we cannot avoid turning to experts. Itdoes not matter how intelligent, hard-workingor persevering we are. We simply cannot avoidexhausting our areas of aptitude and expertise.It is not a matterofintelligenceordedication, butofknowledge. Therefore, ifwe want to succeed,if we want to avoid critical, ifnot fatal, mistakesin our health, home and business transactions­indeed, with our lives-we need to know whatwe are doing. In legal matters it almost alwaysmakes sense to use a lawyer.

Lawyers Are Now More AffordableAid (ost-Effedive

Before becoming a lawyer, I ownedseveral small businesses. At that time,whenever I needed a lawyer, I faced whatI now call "the $3,000 decision."

Actually, $3,000 is a hypothetical numberused merely to demonstrate the point thatdeciding to use a lawyer meant Ihad to commitprecious capital--time and money--to pay thelawyer and other possible costs of litigation.

Today, however, you no longer face the$3,000 decision. The practice of law is nowdifferent from what it was as recent asten years ago. Law has changed from amonopoly-collegial albatross to a business­competitive free-market reality. This changehas forced attorneys to become moreaffordable and cost-effective. Even those firmsthat are not absolutely cheaper now placeconsiderably more emphasis on client service.In short, law has changed from a "seller'smarket" (where the sellerhas ultimate power) toa buyer'S market (where the client is "top dog").

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previously, the law and use of moderncorporations did not really take off until theIndustrial Revolution. Why? Because societyneeded a legal concept that would allow thebusiness owner to acquire capital frominvestors but still protect the investors fromunlimited liability. Corporations and corporatelaw filled this need. As most business ownersknow, the corporate form of business gover­nance allows the separation of managementand ownership and limits the liability of theshareholders to theamount invested. Theirotherpersonal assets and income are not at risk.Nowadays, the Umited Uability Company (LLC)is a new form of corporate governance. It is ahybrid betweena corporationand a partnership.

Again, the point is that the law is everchanging to fit society'S needs. Contrary tountutored belief, it is definitely not static.Sometimes, it is difficult even for the lawyer tokeep up with the changes. These days, fewlawyers are "general practitioners." Mostlawyers specialize or focus their practice on onesmall area of the law in which they have themost interest, knowledge and experience.

This latter point is important. I haverepresented attorneys who formerly practicedcriminal law, then went into business but had afalse understanding of the law of businessagreements not to compete. This happenedbecause the attorney had little or no experiencein business and employment law. Ukewise,some clients have surrendered and failed toprotect their legal rights because they did notknow that they could not lawfully be fired forreporting Occupational Safety and HealthAdministration (OSHA) violations.

Hopefully, the reader understands, or isnow starting to understand, the need to check

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a good lawyer is socalJse la,/\, ~;ar'call1e, diverse, andme legal principles go back for

.iMtlch of the law of real estate anddestates goes back to the time ofHeruy

he wasn't marrying, beheading ordivorcing his wives, King Henry VIII wasinstrumental in devising or accepting newconcepts of property and property law.For example, the concept of equitable interest(i.e. an interest in property outside of or inaddition to ownership title.).

Much of thffi law is still in use today,sometimes used favorably, sometimes not.Consider, for example, the idea that a lease is aconveyance, where the tenant has the property"to have and to hold," with "rights against thewhole world except the true owner." This ideamade more sense in the days of leased-landestates than now, especially when applied tocondominiums, shopping centers andapartments. Few of us who have ever beentenants feel like we have considerable rightsand power. These days, the typical lease isso fullofprovisions under which the landlord controlsthe tenant, that the lease is more like a contractof indentured servitude than of "rights againstthe world."

In addition to being arcane and diverse,law is evolving into new areas, such as softwaretechnology. Is the sale ofsoftware a "good" (i.e.,is it something identifiable and moveable at thetime of the transaction?). Is it covered by theUniform Commercial Code (UCC)? It's not realproperty (Le. a building or land). So, what is it?Similarly, environmental law is a new andindependent area of law.

Law is evolving to meet the needs ofsociety. For example, although it had existed

INSIDE THE FIRM

out legal matters with an attorney. The law willnot do you much good ifyou do not know whatit is. Or worse, you think you know what the lawis but you are wrong.

That is the purpose of this book: to explainhow law is changing for your benefit and howyou can take maximum advantage of thosechanges.

Do Wbat De "Pla,ers" Do:Use ALawyer To Help YOI Sleeted

Lawyers, not you, Mr. Businessman, aretrained to do what you are asking them to do.Sometimes lawyers may seem like nay-sayersor ~eal-breakers, but whether the lawyer'SadvIce breaks the deal is your decision, not thelawyer'S.

A major business "Player," someone whohas much more knowledge and experiencethan we do, will invariably use a lawyer. Playersuse lawyers to discover sharp legal angles andreduce downside risk. Along with acost-effective accountant and advertisingagency, lawyers are a necessary and beneficialvalue-added service. If you want to be a"Player," make a lawyer part of your "team" assoon as possible.

Law,ers Add CrediJaility To YOIf DealLawyers provide security, prestige and

credibility t~ the deal. The client gains credibilityby assemblmg a respected professional team.This is particularly true for newcomers who aredealing with established players. The lawyercan handle the "Player" while the client learnshow the game is played.

Typically, it is the "big league player" whouses the established, prominent attorney in thepractice area. Ironically, it is probably the

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Chapter One: Yt1Iy Use Alawyer1

newcomer who most needs this level ofrepresentation. The "Player" knows the gamesthe rules, and the pitfalls. The newcomer doe~not. Thus, unless one is careful, one might findoneself the victim of the smart "Player" who isguided and protected by the knOWledgeableattorney. .

The best way for any of us to get hurt is to"play the other person's game," particularly,when the.other person is a "player." Playersusually Will not play it straight or fair with!1eophytes. Rather, they will attempt to "snowJob" the other side into a very bad deal. Lawyerscan help cli~nts make the players "cut the crap."The deal will go more smoothly and fairly. Ifit'sa bad deal, the client stands a better chance ofnot "losing his shirt."

You .will not usually need the attorney tose~d routine letters of inquiry or response. But,usmg an attorney to negotiate the deal orsett1e~ent adds professionalism to your side.":V0rking~ough an intermediaryalso givesyoutime t~ ~scuss and think about options beforecommIttmg to them.

Law,ers ca. Proted YOI From De Bad Ga,s. . ~ome con artists prey on unrepresentedmdividuals. Worse, they often surroundthemselves with popular or professionallawyers, accountants and other professionals.They do this for the reasons we haverecommended .t~~t you use a lawyer:knowledge, credIbIlIty and protection.

If possible, the con artist will attempt touse the law firm as a quasi-business office.Letters that would usually or often come fromthe busi!1ess are generated by the firm. Thepurpose IS to make the "con" and the "con artist"seem legitimate.

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Chapter One: Why Use Alawyer?

we need advice, we need it to be impartial.Lawyers provide impartiality and rationality.

Sometimes, the opposing lawyer'srationality can benefit you. This can occurwhen the other side is behaving irrationally, e.g.making exorbitant demands or acting toneedlessly expand the scope and expense ofthe matter. The best thing that can happen isfor your opponent to retain a lawyer. This isbecause lawyers introduce rationality. Becauselawyers think linearly and analytically, it isdifficult for them to behave or even appear tobehave irrationally. Yet, behaving irrationallycan be advantageous in negotiations. Many"players" do it Also, there are some people whobehave irrationally because they are comingfrom emotion rather than reason.

This is where the other side's attorney canbenefit you. An irate or irrational opponentprobably will not listen to you; but such aperson will probably listen to his or her lawyer(ifanybody). In this case, having a lawyer on theother side can help resolve matters byprovidingcalm and rational discourse between the partiesand sound advice on both sides. Rationality andsound advicepromote"win-win"solutions. Bothparties benefit by having attorneys involved.

Take AdvaDta,e Ofne -Lawyer's Cllb"Sometimes, it can be extremely discon­

certing to haveyourlawyerchattingblissfullywiththe attomey for the other side while you stand tolose or gain a fortune on the outcome of somelitigation or transaction. However, this apparentlack of sensitivity to your cause is not becausethe attorneydoes not care: your attorney merelywants to keep the communication lines open.

In some respects the practice of law,particularly for litigation attorneys, resemblesthe nature and life ofwild dogs. In the presence

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PracticePointer:

Beware wHa aeotketside IISeS its

law firm like noffice.

Law,ers Mai.tain ObjectiVity and RatiolllityWe all tend to fall in love with our own

ideas. When we handle our own affairs, wedevelop "blind spots." We tend to focus on ourinterpretation ofthe facts and arguments, whileignoring the strengths ofthe other side. We tendto come from our emotions and behaveirrationally. To maintain objectivity and avoid''blind spots" is one of the best reasons forusing a lawyer - in legal matters and forgeneral counseling. Even lawyers use otherlawyers not just for their knowledge andexpertise but also for their impartiality. When

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When in doubt, call your own attorneyand/or accountant. Check things out. Byworking through your own attorney ,you areless susceptible to "credibility tricks" andbeing conned into a bad deal.

iltea~thile fc)r tile attorneyor otherrealize his or her client is not on

that time, the •con artist·operaltes under the aura of credibility

t)f()vicied the professional team.

Routine letters,calisorfaxes thatwouldnot usually require alawyer'S input, but thatare generated from theattorney's office, areone indication ofa canartist at work. This isparticularly true if thedeal-maker has not yetperformed on the lastdeal and now wantsyou to invest in a newone (e.g. so that youcan get your moneyback).

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of each other, wild dogs may cower and seemsolicitous, but this apparent mutual respect isnot just a matter ofcourtesy; it avoids triggeringthe other side's "wildness," or killer instinct,which can be counterproductive.

It is important for the attorneys to sharefrankly their positions in the case. This narrowsthe issues for negotiation and trial or for closingthe transaction. Also, open and friendly, or atleast non-hostile, communication helps keepemotionout ofthe case. You do notwant the keydecisions ofa deal or case decided emotionally,at least not by your attorney.

Emotional decisions are best avoided. Ifthe parties become emotional and dig into theirpositions, then the clients may find themselvesin a war they can no longer afford to settlebecause they have too much invested inattorney fees and other costs. But ifthe decisionis to be made emotionally, then it is yourprerogative to make the decision on that basis,not your attorney's.

In law school, lawyers all receive the sameeducation and analytical framework. They aretaught to speak the same language and toapproach problems with a similar mind-set.You can use this common approach and style toyour advantage. Your lawyer is much morelikely to get your point across to another lawyerthanyou are. This is not because ofwhat he saysbut because ofhow he says it . Also understandthat counsel will be treated as a member of 'Itheclub," with the same privileges and duties asother fellow attorneys.

By understanding how lawyers think andthe reason for their behavior, you can use theLawyer's Club to your advantage. One lawyerwill not usuallyunduly play games with anotherlawyer. An attorney will not tolerate such

16

Chapter One: Why Use ALawyer?

behavior, and he will quicklyspot it and respondin kind, if necessary. Moreover, such conductmay violate the duties of truthfulness andreasonable candor required by the ethicalrules. Because so-called "Rambo litigation" isnow in great disfavor within the profession,unseemly conduct may also hurt theattorney's professional representation.

In litigation, as we shall discuss later, theRules of Civil Procedure and other applicablerules governing the profession no longer allowattorneys to play "hide and seek" with the factsand legal issues. Full and frank disclosure isrequired. This benefits all parties.

AlIwyer ca. COlVert ABad Clse lito A'ood ClseMost attorneys know that an intelligent

client and an intelligent lawyer, by workingtogether, can rationalize and defend just aboutanything. This has a great "narrowing effect" inlitigation. Cases that might have seemedself-evident and one-sided when the cliententered into the attorney's office may becomeclose calls when one receives the other side'sresponse. This "narrowing effect" occurs forat least two reasons:

~ Lawyers are experts at explainingaway bad facts and focusing on andturning a few good facts into powerfularguments; and

12 judges and juries can only know the"truth" as they hear and perceive it.Sometimes, the "real truth" gets lost inthe system because the judge or jurydoes not completely understand whathappened nor its consequences. Orthe judge or jury is overcome bya goodlawyer'S marshaling of the facts andprejudicesinto a persuasiveargument.

17

Lawyers know this. Transaction lawyers ina strong bargaining position and litigators witha strong case recognize that a good deal or casemay go downhill because someone did notgrasp the real truth of the situation.

For these reasons, with a little luck and agood attorney, even a bad deal maybe salvagedor improved and a bad case won or settled onfavorable terms.

In some cases, however, the evidence is sodearly against you (e.g. a collection suit on apromissorynote) thatyourattorney'sgoalshouldbe to get the best settlement terms possible.Beyond that, the attorney may just be "runningup the dock" to increase the size of the bill.

Expndil' Bummes Ma, NeedDiffemt lilds ef law,ers At Differelt nmes

Uke an amoeba that grows into a complexorganism, expanding businesses change, notjust in size (i.e. quantitatively), but also in thenature of their operations (i.e. qualitatively). Asa businessbecomes larger and more complex, itnot only adds more work but new types ofwork.Because the business naturally adds these newfunctions as it evolves, new skills are requiredfrom its employees and professionals.Eventually and inevitably these needed skillswill require a level ofmanagement, knOWledgeand expertise, (i.e. specialized knowledge) thatthe business owner does not possess.

Businesses grow by solving problemsrelated to service and production, among otherthings. Lawyers and other professionals havespecialized knowledge to help solve theseproblems. Thus, by providing specializedknowledge, lawyers and other professionalshelp businesses to survive and grow.

18

Chapter One: Why Use A14wyer?

Two levels of specialized knowledge areimportant to businesses. The first level is thelevel of the profession itself, e.g. accounting,law, and marketing. I recommend that allbusinesses have an accountant, a lawyerand an advertising agency from day one.

The next level of specialization is withinthe profession. AIl lawyers are not the same.Lawyers usually have specialties, just asphysicians do. As they grow, businesses mayneed different types of lawyers to answerquestions in specialized areas. This need arisesdue to the changing nature of expandingbusinesses. For example, the lawyer whoprepares your incorporation documents maynot be the best lawyer to handle a zoning issue.

Use ALaw,er Te Asslre to.plilICeWit. ApplicaJtle Law- Not JISt II Wbt~e Ce.p.., Dees Bit Ho. It Dees It

Most businesses consider applicable lawin deciding whether to build a building or launcha new product. However, many businesses aresomewhat careless about following the rulesthat govern corporate decision-making. Just asRoberts Rules ofOrderapplyto formal meetings,certain rules apply to corporate governance.

Under the laws that govern corporations,business decisions that involve a "fundamentalchange" (Le. changes of capital structure ormajor, atypical resource commitments) requireapproval by the board of directors and theshareholders. This two-step process is calledthe "standard resolution procedure."

As a rule ofthumb any matter requiring thestandard resolution procedure should haveattorney input. On such matters, and manyothers, the potentialgainordownside riskmakesusing an attorney cost-effective. In this ease,

I'

using an attorney is like insurance; it protectsagainst catastrophe.

Ole Lamp or Two? DecidiJ, ••et.erTo Use Ole Attorne, or Mattiple Attorneys

Small business attorneys face thefollowing scenario on a daily basis. Two ormore people will join together to form a newbusiness. The parties will use an attorney toprepare their incorporation or otherdocuments.They want to make the business formation ortransaction legallycorrect. But at the same time,they need to keep the transaction affordable.

SOmetimes, the parties on both sides of abusiness or real estate purchase/sale transac­ti.on, will request one.attorney to represent bothSIdes of the transactIon. In fact, sometimes, inthe purchase/sale transaction, the seller willuse, with the buyer'S blessing, the buyer'searnest money or down payment to pay thelegal expenses of preparing the documents.

These facts raise the issue of "dualrepresentation." Under the ethical rules of theirprofession, lawyers are prohibited fromrepresenting parties whose interests are or mayprove adverse, except with full disclosure ofth.e conflict and its consequences and theclIents' consent. Ironically, although designedfor the clients' protection, the attorney's propercourse of conduct under the ethical rules oftenaggravates the clients.

Many small clients have a hard enoughtime deciding whether to use a lawyer at all.(see the $3,000 decision on page 8). Now theattorney is telling them they may need two ormore attorneys to properly represent them.No wonder clients think lawyers are "deal­breakers." At fIrst blush, the clients may thinkthe lawyers are just "feathering their own nest."

20

Although sometimes aggravating, thereare sound r~asons for the attorneys' actionsunder the ethical rules. Marriage is not always ahoneymoon, and business transactions do notalways run smooth. In fact, a frequent result ofnew b~ines~ formations and purchase/saletr~nsactIons IS that one party is, or perceiveshimself to be, receiving less out of the businessor transaction than expected. In short,post-formation or post-transaction conflict iscommon, if not the norm.

Having one attorney represent both sidesofa transaction aggravates the problems for theparties if conflict develops. In that case thep~rties' confli~ means that the attorney ~ustWithdraw. This leaves both sides looking for anew attorney. This is a losing proposition foreveryone. Not only must the parties fInd a newadviser but they must educate their newadvisers to the facts ofthe case. Meanwhile, themost knowledgeable adviser, the originalattorney, is "conflicted out" and cannot adviseeither side.

. This problem is avoided where each partyhas Its own attorney going into the business ortransaction. Whe.re the attof!ley represents onlyone of the partIes, then, In case of conflict~etween the parties, the attorney may remainmvolved and ca~ bring his or her knowledgeand understandmg of the transaction to theproblem. SOmetimes, because the attorneysknow the parties and/or the deal, they canresolve the dispute before it gets out of hand.Thus, frequently the decision to use oneattorney or two is simply a question of when topay the second attorney (now or later).

By definition, a buyer and seller areadverse- one gains what the other loses. Incontrast, the "adversity" among new business

21

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owners is not so definite and worrisome. Newbusiness owners are in the "courtship" phase.They are "engaged" in opening a new business.

Nevertheless, in virtually everybusinesstransaction, including forming a new business,someone is unhappy. The unhappiness may bea matter of degree; but it exists. One reason forthis unhappiness is that "going into the deal"everyone tends to focus on his/her ideal result.This is similar to the "halo period" in personalrelationships. The halo period is that stagewhere everything the other party does is right.This period often immediately precedes the"hell period," where everything the other sidedoes is wrong.

Another reason for later conflict betweennew business partners is, what Icall, the "enoughin, enough out" fallacy. The fallacy is theassumption that if the "partners" have sufficientfunds to open the business, then the business willgenerate sufficient funds for each of the partnersto live on.

The error of this assumption can bedemonstrated by the following example.Assume that a new business requires $50,000 incash to open. Assume that two prospective newbusiness owners each have $25,000 tocontribute to the business. Often each newowner's unstated assumption is that, byinvesting $25,000 and working in the business,each ofthe owners will then be able to draw outa reasonable salary to live on, say $25,000. But,unless a miracle happens, this "enough in,enough out" assumption is almost never true.

The "enough in, enough out" assumptionis a fallacy because the amount necessary to"open the doors" may have no correlation to theamount ofsalary which maybe drawn. COnsider

Z2

Chapter One: Why lise Alawyer?

this change to the above example. Assumethere are five partners each of whom invests$10,000 to accumulate the $50,000 necessary toopen the business. can each of the investorsthen draw enough to live on, say $25,000? Thatis unlikely. To achieve that goal the business,which cost $50,000 to open, would need togenerate income to its owners of$125,OOO thefirst year. That kind of performance isextremely rare,' particularly early on.'

The common result of this fallacy is that,soon after the business is formed and beginsoperating, the business runs short of cash. Thismeans that not everyone who invested in thebusiness can work there and draw a salary. Thismeans that someone has to leave, someone hasto stay. This means that one ofthe founders willcontinue to use the assets of the business whilethe others do not. Facts like these create conflictand, frequently, litigation by the pa~' vvilU hasbeen "squeezed" or "sold out."

Mora~

UldmtaJdtile ptrpOSt beIIiJd the ethical ndes.While tile, III' SetIII tie a"make wort" proiect

for attoneps. tile IUles are based 01

C...I experielce.

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ClaecklistUse a lawyer to practice "preventi,:elegal medicine," that is, to aVOIdproblems before they happen. ~isis much, much cheaper than foongproblems later.

Do not assume the documents"lookOK" unless you are an expert inthe area. You may not know whatis missing.

Donot representyourselfunlessyouhave to; and even then, only withthe lawyer'S advice, if possible.

Possession of a good lawyer is9/10ths of the law. So, find and usea good lawyer.

Lawyers are now more affordableand cost-effective; so, there is lessreason not to use one.

..., Lawyers can add credibility toyour deal. especially if you are aneophyte or weak player.

Lawyers can protect you fromconfidence men and other badguys.

Chapter One: Why lise Alawyer?

A lawyer can help you succeed. Forthat reason, legal fees can be moneywell-spent.

Lawyers help maintain objectivityby pointing out your "blind spots."

Lawyers belong to the "Lawyer'sClub." They think and act alike.Take advantage of the club byusing a lawyer.

-R Remember: Lawyers are trained toturn bad cases into better ones. Sothe worseyour case is, the moreyouneed a lawyer.

W You win need different kinds oflawyers at different times; andsometimes you will need more thanone lawyer at one time.

Use a lawyer to be sure you areoperating legally, both in what youdo and why you do it.

ChapterTw.

Who To call Alawyer

S•••aryChapter Two discusses when to call an

attorney and typical mistakes which clientsmake in that regard. Those mistakes includewaiting until the last minute after they haveattempted to represent themselves, possiblyhurting their case.

D••'t Wait Oatil"e Last MillieGood lawyers, like good physicians, are

not like the "Maytag Repairman." They are notwaiting for your call, and they are not instantlyavailable. You will need to make anappointment and work yourself into theirschedule. Once you are one of the attorney'sclients, it will be easier to scheduleconferences according to your needs.

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Clients who wait until the last minute areperceived to be "flakes." Even if there is goodreason for the delay, such as a lack ofunderstanding or funds, delay can havesignificant negative consequences. A clientwho waits until Friday to call a lawyer for amatter that should have been dealt with onMonday will have a much smaller pool ofattorneys to choose from. Many good lawyerssimply are not available on short notice.

Another good reason to call an attorneybefore matters become critical is to avoidpaying higher retainers and fee billings. Youwill understand if you have ever hired anadvertising agency or printing company todo a job on short notice. Short notice triggers"rush charges." Rush charges result in amultiple expense, e.g. 1-112 or 2 times thebasic charge. The shorter the notice the higherthe multiple. Jobs requiring overtime maytrigger the 1-1/2 time rate. Weekend workmay trigger doubletime.

Lawyers do not typically charge rushcharges. However, a client who calls at the lastminute may receive a higher bill (or a bill thatseems higher) for several reasons: (1) morework needs to be done in less time, (2) a higherretainer is required to insure the money is thereto cover the additional billings for the period,and, (3) the lawyers may bill at their full rate tooffset the loss of other work that could havebeen billed during the period.

DOl't ClUTlle Lawyer After TIle case Has Bf!IllMy Dad sold and serviced appliances. He

wisely advised me not to call the service personto fix an appliance after the "parts were on thefloor." (Dad probably knew the limits of mymechanical ability.). The same principle appliesto law. It is more expensive, particularly

Chapter Two: When To call AlAwyer

cash-flow wise, to retain a lawyer after a casehas begun.

Often, a lawyer inherits a file in progresswhen the client changes counsel. Unlike theoriginal lawyerwho mayhave learned about thecase as it unfolded, the new lawyer must read,study and learn the significance of everydocument and the. role each person plays in thedrama. In a com19~cated case, this can require alot of work; thus, It can be very expensive.

1 would prefer not to receive files"midstream." Not only will I be a different"driver," I may be on a different "road" thanthe previous attorney. The prior attorney mayhave done things differently than I would orhave had a completely different strategy on thecase than I do. Taking over the case meansIeitheradopt a strategy Iwould not have used orI must redo the pleadings and discoveryresponses and give notice to alert the otherside. This notice ~o the other side is requiredby the rul.es; an~ If not agreed to by opposingc~unsel, It requrres a motion and a hearingWith the court. This adds another layer ofexpense to your bill.

Sometimes, if the cause for the change inlawyers is due, in part, to some fault of the firstlawyer, particularly where the lawyer has notdiligently and competently worked on the file,then .you should ask the original lawyer foran adjustment on the bill to help you pay thenew attorney to get acquainted with the case.This request is unusual, however, so ber~asonable. Naturally, if the reason the lawyerdid not do the work to your satisfaction isbecause you have not timely paid him or her,then you probably will not receive a verysYJ:1pathetic response to your request fora dISCOunt.

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If you have decided to hire a lawyermidstream after handling the case yourself fora while, please keep in mind that lawyers do notlike this. Clients who represent themselves(referred toas the plaintiffordefendant "proper'or "pro se', usually do not know what they aredoing and may have alr~ady lost or.severelyprejudiced the case. Do-I~-yourself clIents arediscussed in the next sectIon.

Pro Se Utiyalts May Lose~eir caseBefore~eAttoney Is Hired

It is obvious that a layman will not have theskill of a lawyer. In litigation, how pro. seclients may prejudice their case I: by making"conciliatory admissions." I am usmg the ter:rn"conciliatory admission" to refer to the pohteagreement, made not beca~ the pafo/ reallyagrees with what the other SIde has saId, butdoes so to appear reasonable and avoidconfrontation.

COnciliatory conduct is polite. It is alS?good business. However, ifone is not careful, Itcan produce bad "law:' The legal proble~ withconciliatory conduct in litigation is that It mayadmit some point at issue. Under the rules ofevidence, an "admission" is any word. orconduct that may be construed as an assertion,e.g. "pointing the finger' at a defendant. Underthe rules of evidence, even silence when a"reasonable" (read: ideal, non-existent in thisuniverse) person would object is an admissic;m.Thus, pro se litigants may find the other SIdearguing that theyhave admitte~a poi~twhen allthey did was to refrain from dIsagreemg.

Fortunately, not all admissionscanbe usedagainst you. Conciliatory ~drr:issions madeduring settlement negotIations are notadmissible. Because public policy favors frankand open negotiation of the facts, claims and

)0

Chapter Two: When To call It lawyer

damages at stake in a lawsuit, the rules ofevidence prevent (what I have called) concilia­tory admissions from being used againstyou at trial for purposes of proving liability.

Unfortunately, however, such commentsmay be admissible for some other purpose, say,to prove the existence ofan oral agreement. Forexample, an offer to pay $50,000 to settle alawsuit is not a<lrnissible to prove liability (thatis, that one owes something), but it maybe usedfor anotherpurpose, for example, thata contractexisted. (Never mind that no juror, or anyoneelse, excepts perhaps a lawyer, can use astatement for one purpose and ignore it foranother. Most ofus would conclude that an offerimplies one owes something. This type ofreasoning is just part ofthe legal system we loveand cherish.) Actually, sound pUblic policyunderlies the rule of admitting or excludingevidence based upon its intended purpose. Theproblem is that the policy works better as apolicy than it does in practice.

Checklist-;- Don't wait until the last minute to hire

an attorney. Attorneys are not like the"Maytag repairman," sitting therewaiting for your call.

J'iI Don't call the lawyer after the case hasbegun. It will cost you twice as muchtwice as fast and hurts your chances towin.

~ Don't represent yourselfunless you likelosing, or unless you must because youcannotafford representation. Bythe timeyou hire an attorney, it may be too late.

)1

eIIapterTllree

How To Find ALawyer

SIIIIII"Chapter Three describes various methods

offinding an attorneyand obtaining legal adviceand cites the advantages and disadvantages ofeach method.

Chapter Three also provides a briefdescription of various practice areas withinwhich attorneys specialize and a checklist foryou to use in evaluating and choosing amongvarious attorneys.

Usil' Media Aclvertisellelts To Find ALawyerLawyer advertising used to be illegaL A

United States Supreme Court decision changedthis rule in the 19705 and revolutionized thepractice of law. The rationale for allowinglawyer advertising was to make law moreopen and accessible to the general public andto create a more competitive environment. The

33

one local barassodatiOt

-.-

The Yellow Pages in your telephonedirectory will contain virtually every attorney intown. In the Yellow Pages attorneys are listedand categorized in two ways: in alphabeticalorder and by practice area.

The most valuable information to look foris the type of law practiced by the attorney andhis education and experience. This kind ofinformation is recpmmended and accepted bymost state bar associations. Claims such as "Nofee until recovery" appear meaningful, and are,but they may actually only state the standardpolicyofall lawyers in thatpractice area such as,auto accident or other personal injury cases.Other claims like 'We will fight for you" aresimply tacky and meaningless.

Lawyers now use all kinds of media, fromTV guides to billboards, to reach potentialclients. Many advertise in specialty businessnewspapers and magazines. Thus, it should notbe difficult to find a lawyer in about the sameway that you find any other product or service.

However, many lawyers do not advertise.Some lawyers do not advertise because they donot need to. Their practice is well-establishedand business comes in regularly withoutsignificant marketing. Some lawyers only takenew clients as their present cases end. Otherlawyers do not advertise because they do notconsider itproper, even though it is nowallowedunder the ethical rules. Still other lawyers do notadvertise because they do not know howand/or cannot afford it.

Many lawyers who do not advertise arevery good and well-respected. Whileadvertising can help you fmd a lawyer, it shouldnot be a pre-condition to your choice oflawyer.Ifyou hear about a lawyer or are referred to onethat you have never heard of, but who seemscompetent, do not be afraid to select that lawyer.

3S

o Referrals b, trie.dsor professillals

Soarees forfindin! ALawyer:

o Yellow ra!es i. ,olrtelep~OIe diredory

34

Supreme Court, as did many others in the bar,wanted lawyers to beable to tell the publicaboutthe services and the prices charged withoutviolating the ethical rules.

In some ways the decision has worked.More information is available to the publicabout lawyers, the law, and various costs.The public is more aware of its rights andthe right to compensation for injury. This is thegood news.

The bad news is that the rule went fromone extreme to another. Legal advertising isoften tacky and the media equivalent of"ambulance chasing." Advertising for businesshas hurt lawyers' reputation and made the

practice oflaw less likea profession and morelike a business. Overlysolicitous conduct bylawyers was and isstill in disrepute.Unseemly lawyers just

o Mediaco.merdals get away with itmore often now. For

and advertise.e.ts these reasons, the"pendulum" may beswinging back torestrict some forms oflawyer advertising.Some state barassociations alreadyrequire lawyeradvertisements tobe primarily informa­tional and prohibitthe use ofprofessionalactors or models toportray lawyers.

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Customersofall types sometimes choose aproduct or service because they have heard ofit,even though they cannot remember exactlywhat they heard or how they heard about it. Theclient may only have heard of the lawyer fromthe lawyer's own advertising. This is one reasonwhy advertising works.

But hearing about someone or somethingdoes not make it good. SOmetimeswhatwe hearabout an attorney or another professionalmay be bad, but we forget what we heard andremember only the fact that we recognize thename. Thus, "having heard ofan attorney' is noguarantee of expertise.

Conversely, not hearing about somethingdoes not make it bad. You can obtaininformation about the lawyer's competenceand experience in your area of need in otherways, as we will discuss in the followingsections of this chapter, and in Chapter Six,where we will discuss the consultation.

Referrals Are AGreat wa, To Fi.d ALaw,erThe best way to get, or at least talk to, a

good lawyer is to use the name of anotherlawyer. Be sure to "name-drop." Where possiblesay "Charlie Dynamic" sent me. A referral froma respected lawyer or firm tells the new attorneythatyou are important. Even ifthe new attorneydoes not know or recall the referring attorney,the referral is flattering, so usually it opens thedoor.

Ifyou are already using a lawyer, ask himor her for referrals in another area of law. Askyourneighbors or otherbusinesses inyour tradeassociation or building who they use andwhether they are satisfied. Newspapers andbusiness journals often mention the names ofattorneys who practice in given areas. Most bar

Chapter Three: How To Find Alawyer

associations have a referral service underwhichyou may consult with an attorney for a specialinitial price.

Ifyou "cold call" attorneys from advertise­ments or the yellow pages, you may first need toqualifY yourself to the firm as the kind of clientthe firm would like to have. Mention the type ofcase, then ask to talk to the appropriate lawyer'sassistant or secretary. Explain your willingnessto pay reasonable fees for reasonable service,the nature and importance of your case, yourtime needs and other pertinent information.Generally, ifyou do not call at the last minute, donot want something for nothing, and have thekind ofmatter the firm usually handles, the firmwill probably be happy to have you as a client.

Bar Associati•• lefmalsLawyers in virtually every state bar belong

to and are controlled bythe state bar association(the "bar'). The bar establishes the rules ofconduct and practice for lawyers in that state. Insome cases, as in Arizona, membership in thebar is mandatory. In other states it is voluntary.In addition to the state bar, there is also, thenational bar, The American Bar Association(ABA) and the county bar.

Whether voluntary or involuntary, moststate and or county bar associations havereferral services. These services take phonecalls from persons seeking a lawyer and referthem to the kind oflawyer they need. Typically,the caller gets a drastic discount in fee (to about$25 to $50) for the first hour or half-hour ofconsultation with the recommended attorney.In return, the attorney gets a new client referralsource.

Bar association referrals are excellent fornew clients who have "noclue" as to who to call

INSIDE THE FIlM

or what kind of law their matter entails. This isone weakness of the Yellow Pages. If the callerdoes not know the difference between "autoaccident injury law" and "corporate andbusiness law," then the Yellow Page categoriesare not likely to do the client much good. In thatcase, calling the bar referral service can be veryhelpful.

The bar referral service can also be veryhelpful where the caller just needs the answer toa "quick question." In the next section we willdiscuss the fallacies of this "quick question"idea, but many questions can be answered in orshortly after an hour of in-person consultation.In those cases also, the referral service can beverycost-effective. The advice is better than freeadvice and the price is right.

YOI Get What YOI Pa, For With Free a.e,al AdviceAttempting to get free legal advice,

especially on the phone, is almost never a goodidea. You will probably only get what you payfor, and you do both the lawyer and yourself adisservice. A good legal opinion, like a goodmedical opinion, requires an examination ofthe facts. In law, that usually requires a review ofthe pertinent documents and some legalresearch. Also, there are nuances ofconversationand cases that usually will not come out exceptin a face-to-face meeting, at least initially.

The attempt to get a "quick answer" isusually based on a profound misconception ofthe nature of law and the legal process. Aneophyte client may conceive of the law as asystem ofrules contained in a set ofrule-books.Under this view all the attorney has to do toprovide the answer to a legal question, is toquickly look up the rule ifcounsel doesn't knowit already (but the attorney "should know the

)8

Chapter Three: How To IflJd ALawyer

answer already otherwise he probably isn'tvery good.").

But this "man-on-the-street" concept ofl~w is profoundly mistaken. only non-lawyersVl~W the law as a system of rules. ExperiencedclIents know the law is what the court decisionssay it i~. Practicing law, particularly litigation, isa lot lIke more like scientific research. Thelawyer needs to rffiearch what the law is evenif counsel is very familiar with the practice' area.

~he law is constantly changing andevolvmg. Yesterday'S knowledge may beo~solete. Even the best lawyers may need, andWill probably want, to check recent decisions inthe area before giving advice you can rely on.

ABrief Glide To ...1Pr.dice AreasMedical doctors have their areas of

expe:tise. The.se areas range from generalpractice to bram surgery. The same is true oflawyers. Few lawyers still do all kinds of work.Most have developed their particular practiceareas and do not do general practice.

To begin with, there are civil lawyers andcriminal lawyers. This does not mean that onegroup is more pleasant and safer to be aroundthan the other. Rather, it refers to the type oflawthe attorney practices. Criminal lawyers, ofcourse, deal with persons charged with crimes.Criminal lawyers are either prosecutors or"defense attorneys." Legendary Perry Masonwas a criminal defense attorney. In criminallaw, the end is punishment, not money.

In contrast, legal representation in civilmatters typically relates to money, which thelaw calls compensation for damages. In civillitigation one side is suing the other (or bothsides may be suing each other) to recovermoney for legal wrongs.

)9

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SOme overlap exists between criminal andcivil law. Many crimes are also "torts," that is,civil wrongs for which one may recover moneydamages. Forexample, assault, batteryand theftare not only crimes, Le. punishable by fine orimprisonmentbygovernmentauthority, butalsolegal theories in civil actions for which one mayrecover money to compensate the loss.

Civil law, as opposed to criminal law, canbe divided into two general types of practice:transactions and litigation. During law schoolemployment interviews firms often ask thestudents which of these practice areas theyprefer. (In reality, because they have notpracticed in either area, most students haven't aclue. They just want a job.)

The difference between transactional lawand litigation is profound, not only in the type ofpractice but also in the temperament of thelawyer. Transaction attorneys "do deals." Theynegotiate and prepare shareholderagreements,the documents for real estate deals, mergersandacquisitions, andotherbusinessdocuments.This is the "courtship and marriage" side onaw.

Two sub-types of"transactions attorneys"are securities lawyers (who advise and work oninitial public offerings and other work involvingst~ks and bonds) and real estate attorneyswhich, as the name says, handle residential andcommercial real estate transactions.

Utigation attorneys, in contrast, work onthe dispute and "divorce" side ofbusiness wheretempers are flaring and deals are comingunglued. Utigators handle lawsuits in a varietyof sub-practice areas. These areas includecomplex litigation, Le. big document cases withhairy legal issues, bankruptcy, divorce, personalinjury, and medical malpractice cases.

Nowthatyou know the differencebetweena "transaction" attorney and a "litigation"attorney, you can seek and find the correcttype of attorney for your needs.

Pre-saen Ike lawyer Wit. 'RestioasAad A~etklist

If the lawyer-client relationship fails,usually both partie:; are to blame, not just thelawyer. This is especially true where the client"travels" from one lawyer to another.''Tr~v~li~g'' ~ually indicates a false or overlyoptinustiC VIew of the case and!or the justicesystem and an unduly pessimistic and probablyunfair opinion of the last attorney. One way toavoid ~raveling is a thorough and properevaluation of the attorney and the firm, beforeyou engage in the services provided.

. Ask the attorney, secretary or legalaSSIstant whether the firm practices the kind oflaw you have in mind (e.g. a real estatetransaction or a wrongful termination suit). Ifyou don't know how to descnbe the case thenbriefly, in a sentence or two, describe the facts.This "short version" of the facts will enable thefirm to analyze whether you have calledthe right kind of firm for your issue.

. Y,?u waste your time and the firm's bygomg mto a chronological history of yourwrongful termination case if it turns outthat the firm handles only personal injurycases. Thus, save the "whole story" for theinitial consultation.

Also, avoid venting your frustrations withthe lawyer or his staff. The attorney and his staffare not your mother, relative, friend, orpsychologist. They are not responsible for andcann?t solve your emotional problems.ConSIstently and seriously venting your

41

INSIDE THE FIRM

emotions with the firm will only tell the firm thatyou are an "amateur" and, worse, an "out ofcontrol" amateur. This will make the attorneyless willing to take your case because thelawyer knows that counsel is not qualified(and is not willing) to deal with that stuff.(Divorce is an exception, and Ido not know howdivorce lawyers do it. Theyoften deal with a highlevel of emotion and nastiness).

After it seems that the firm is interested inyou, it is time to see ifyou are interested in thefirm. If possible, pre-screen the firm on thephone by following the checklist discussed inthe paragraph below. Ifthat is not possible, thenaskfor a free initial interview, involving minimalor no consultation, to determine the "fit"between yourself and the firm.

Your "checklist" may include the followingquestions:

~ Years in practice. This should be morethan five, unless the matter is simple orthe attorneyispartofa firm and closelysupervised. But, when it comes toexperience, more is not necessarilybetter. Newer lawyers tend to be morefamiliar with new rules or recentdecisions. Older lawyers seem to getcomplacent, burned-out or sufferfrom a sense of entitlement and/or"delegationitis." Thus, for me, abalance of new knowledge andexperience is best. Other things beingequal, between seven and I5 yearsexperience seems ideal.

However, this is just a generalrecommendation. Nowadays, many attorneysare in second careers. In their "former lives,"they were engineers, physicians, nurses, and

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Chapter lhree: !low To Find Alawyer

business people. In an appropriate matter,these attorneys may be immediately andtremendously valuable to you. This leadsus to the next question on your checklist.

12 Background and experience. Ask theattorney about his or her educationand previous work experience. Askthe attorney about non-legal training,ifany. An attorneywhowaspreviouslya physician or registered nurse has asignificant advantage in personalinjury and medical malpractice cases.Former engineers may be good incontracting or zoning issues. Formerbusiness people may be good forbusiness clients. If the attorneyhas noknowledge and experience outside oflaw, then focus on what kind of lawthe attorney normally does and howlong the attorney has been doing it.

SJ Strongest practice areas. Seek anattorney who normally and regularlypractices that kind of law. Attorneyshave different areas of expertise. Forexample, an attorney may be good atwills and excellent in businessplanning, but know nothing abouttrademark, copyright and patent law.

Generally, it is not a good idea to pay for theattorney's education in a new practice. This istrue for at least two reasons: First, unless theattorney expressly agrees not to bill you for hiseducation process, you will "pay through thenose" for the education. second, the attorney ismuch more likely to make a mistake. If themistake is severe enough, the attorney couldcommit malpractice. These days most

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attorneys, unless they are really hungry,will stay with what they know, so beware ofanattorney to seems too willing to "stretch."

~ Hourly rate and retainer requirements.A more expensive attorney is notnecessarily a betterone. He or she mayjust have a higher overhead or nothave adjusted to today's morecompetitive business climate.

When I was in a different business,I operated on the theory that "I could impresssome of the people all of the time, all of thepeople some of the time, but not all of thepeople all of the time." "People" in this contextmeant customers. Iuse this principle to remindmyself to focus on customer service, not justphysical plant.

The same principle applies to law firms:Impressive offices are nice, but "look (twice)before you leap." You already know that anelegant office may mean higher prices due tohigher overhead. It may also indicate an air ofself-importance at the expense of customerservice. Good lawyers are busy, so makeallowances for that, but if the firm acts like it isdoing you a favor by letting you be its customer,move on.

~ Your comfort in the relationship.Evaluate the firm as it is evaluatingyou. Evaluate the fIrm in two ways:

fhst its ability to handle the merits ofyour legal problem, and...

...Seeo.d: your personal compatibilitywith the firm's personality and style.

. Buddhists say that how one does anythingIS how one does everything. This principle canhelp you evaluate the work styles andpersonalities of employees and friends. Howdoes the firm operate? Does it fit with yourvalues and beliefs? If so, then you have a goodmatch. Ifnot, move on. Don'tbe desperate. Lookfor a better relationship.

In personal injury cases, where the firm ispaid on a "contingency fee" basis, i.e. as apercentage of recovery, usually from anInsurance company, the initial phone calls orconsultations may quickly move into the meritsof your case. The attorney will be evaluatingthe strength and weaknesses of your case,you as a witness, and the anticipated recovery.

As we will discuss later, it is good for youto receive this evaluation ofyourcase. However,at this stage you need to evaluate the firm whileit evaluates your case. You still need to checksubject matter to determine whether this isthe kind of case the lawyer handles. Usephone calls and interviews to determine thelawyer's qualifications and experience in theSUbject area. You can take a good contingencyfee case to many firms, so do not "sign on"with a firm you are not sure about. It's alwaysbetter to "shop around."

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Checklist

-;t Advertisements and referrals assources of lawyers.

112 Advertisements help find lawyers inthe right practice area.

I&} Referrals are a great way to finda lawyer.

Itt Bar association referrals are aneffective and low cost means to fmda lawyer.

~ You get what you pay for with freelegal advice.

IrJ Use a guide to legal practice areas todetermine what kind of an attorneyyou need.

-r Pre-screen each lawyerwithquestionsand a checklist.

CIIapter FOlr

What To Look For II Alawyer

S.naryChapter Four discusses what to look for in

a lawyer - how to evaluate a lawyer or a firmand why a law firm IS size is not the prominentfactor it used to be. Systemic factors includerules changes and the effect of technology.Personal factors include the willingness andability to listen, preferred personality type,effective communication I trust andcompatibility, teamwork, business judgment,focus and experience.

(kOOH ALawyer, Not AFirm.Choosing a lawyer by the firm is a little like

choosing your spouse by your prospective/lin-laws." It wont work; at least, not on thatbasis alone.

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In many ways a professional relationshipis like any other relationship. Just as peoplehave weak points and strong points, firms haveareas of strength and areas of weakness.Most firms will have people you will like andrespect and some you will not.

Meet with and get to know the attorneywho is actually going to do the work. He or sheis your relationship person. If you do not like,respect or trust this person-even ifyou are notsure why-move on.

Big companies, such as Honeywell,probably do better with a large law firm.COrporate America and big firms think alike.They have the same structure, mind-set andoperating philosophy. Each feels secure withthe other.

Everybody else is probablybetter offwith asmall firm or an experienced sole practitioner.Few firms can match the speed andcost-effectiveness of a sole practitioner. Manyexcellent sole practitioners and small firmshave "spun off' from large firms to focus ontheir particular practice area. This promotesefficiency and effectiveness.

Small firm clients and sole practitionershave a "hands-on" approach and relationshipthat most business people will appreciate. Theywill get their hands dirty, and they tend to getvery involved as the "champion" of your case.

Although the small firm orsole practitionermay nominally charge the same hourly rate asthe big firm's junior partner or associate, thesmall firm or sole practitioner's overall bill maybe lower. Traditionally, small firms, includingsole practitioners, have been forced to bemarket-oriented and cost-effective to retaintheir clients. Small firm clients tend to be smaller

Chapter Four: WbatTo Look foJ In Alawyer

and have less money than large firm clients.Often the small firm client owns the companyand is spending his or her own money. Thisforces the small firm to be accountable for itsbill.

Large firms have sophisticated means oftracking every expenditure, and due to theiroverhead, they strive to recover as much of thesmaller everyday expenses as possible. Smallfirms tend to be less inclined and less able to billevery hour and recover every expenditure thana large firm.

Small firm clients tend to react negativelyto being "nickeled and dimed." Because thesmall fInn attorney is often the person who isactually doingyour work and who must accounttoyou directlyfor its qualityand cost, small firmshave been more likely to consider "value" whendetermining the fmal bill. As discussed above,smaller finns can also afford to charge less dueto lower overhead.

Traditionally, large firms had license to billtheir corporate clients astounding sums. Thisoccurred because the large client had plenty ofmoneythatdid notbelong tocorporate manage­ment. This is changing. Legal fees have becomeso exorbitant that even large clients are nowmonitoring their bills closely. Many large clientswho regularlyuse attorneys now require the lawfirm to use paralegals to save money on routinetasks and look at a "blended rate" ofall attorneysand staff to evaluate the fIrm's cost-effective­ness. Thus, today, both large and small law firmshave become more client conscious.

Sin Dom"t Matter: ble en.yes A.dTec•••I." Have Elilli'lted MostIi! fi1'lll Advalta!es

surprise, hidden information, and secretwitnesses or documents a la Perry Mason have

49

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not been allowed under the rules of legalprocedure since the 1940s. Since that time therules of procedure have required each side toobtain full information from the other. Thisprocess is called "discovery." Various discoverytools include: "interrogatories" (Le. writtenquestions which must be answered within acertain time), requests for production ofdocuments and subpoenas duces tecum (whichare commands for documents to the other sideand third parties), requests for admissions(which if not denied, are deemed admitted;and if improperly denied, result in sanctions),and depositions. Depositions are questions andanswers, taken under oath, in front of a courtreporter in the lawyer's office. Of these"discovery tools," depositions are the mostuseful and powerfUl, particularly under themodem rules.

During the 1970s and 80s, law firms,particularly large law firms, hired associates "bythe dozen" to draft discovery documents. Thelarger firm could bury the smaller firm under anavalanche ofdiscovery. This "avalanche" couldinclude 180-page interrogatories, requests for amountain of documents, and production of anocean ofdocuments that the smaller firm couldnot begin to wade through. Depositions went onfor days, with multiple experts retained. And theexperts and the attorneys were "all on the clock."

Now, under the Federal Rules of CivilProcedure used in federal courts, variations ofwhich have been adopted by many states,including Arizona, each party to a lawsuit must,within a given time after the Answer to theComplaint is filed, prepare and produce a"Disclosure Statement" to the other side. Thepurpose of the Disclosure Statement is toprovide full information of facts, documentsand witnesses.

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Chapter Four: What To Look For In Alawyer

In those states which have adopted the~e~eral Rules, recer:t changes in the rulesgreatlylImIt the number ofmterrogatories, the need fordocumer:t.requests, and the number and lengthof. depo~~tIOr:S. The goal is faster, cheaper andfaIrer lItIgatIon. One prime result of thesechanges has been to "level the playing field"between large and small clients and law firms.Strict limits on discovery prevent the large clientor law firm from overwhelming the smaller one.Thus, litigation has been become much morefair for the smaller firm.

Another factor which has dramaticallychanged the practice of law is technology.Before the advent ofthe personal computer andon-line legal services, the large firm had asignificant advantage over the small firm~ue to the quality and number of its staff,lIbrary and other resources.

. Now,. the large firm may havedIs-economIes of scale. Many establishedlaw firms have made huge financialcommitments to their law libraries. The majorcomponents of a law library are the statutecodes and case reporter volumes from variousjurisdictions. Most established law firmlibraries contain past volumes of the statutesand reporters, plus their updates.

. Statutes. are the law enacted by theleglSl~t~e, With annotations (or "write- ups")d~bmg how the statute has been applied inpartIcular cases. Reporters contain the actualcase decisions by the appellate courts on variouslegal issues. Reporters are issued periodically,usually one or two per year for each set.

. Becau~ of the average law firms' priormvestment m books, the rapid evolution of~echnologyhas placed the established large firmm somewhat of a "Catch-22" position. To

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preserve the value of its library, the finn mustcontinue to buy the new reporters and updates.Otherwise, the library will become obsolete andlose its value. The result is a sizeable wastedexpense and/or write off.

On the other hand, if the finn doesmaintain its investment in books, then it may besimply duplicating what is now available on"on-line" computer services. Virtually every lawfinn, large andsmall, alreadyhas access to theseon-line research networks. Thus, the finn doesnot really need the hard-bound books.

Many new firms no longer bother to investin law libraries, at least in the traditionalsense. The law of every state, statute orappellate decision, is now available on an"on-line" service, such as Lexis or Westlaw,within 24 hours. Because of this availability,not only are most law books unnecessary,but the tenant space needed for the books isnow unnecessary.

Because of this dramatic substitution ofcomputer technologyand data for books, newer,smaller fIrmS no longer suffer a disadvantage inresources. In fact, the reverse is true.Established, larger finns have "sunk costs" andoverhead that the new law finn need not carry.

Together, mandatory disclosure, computerresearch, smaller and specialized finns aredramatically changing the practice oflaw. Simplyput, while the large finn may continue to havegreat resources and excellent attorneys, it haslost many of its traditional practiceadvantages.

When we combine these dis-incentives tosize with the change in the legal paradigm itself,i.e. the change from law as a monopolisticcollegiate club to a competitive business with

Chapter four: What To Look For In Alawyer

free market advertising, the result is arevolution in the provision oflegal services. Lawis now a "brave new world," not in the Huxliensense of government omnipresence andcontrol, but of lawyers facing the trials andtribulations of market capitalism.

Look For Aa Attomey"0 CI. And Will Uste,Look for an attorney who will listen. Good

listening is part ofboth the best offense and thebest defense in any transaction or in litigation.One way to judge whether your attorney willcarefully listen to and analyze the other's side'sarguments is to note how well the attorneylistens to you and analyzes your facts. As theBuddhists say, "How we do one thing is how wedo everything."

The early part of a working initialconsultation should usually consist of theattorney listening and taking notes on yourcase. The lawyer mayor may not review thedocuments at that time. SOmetimes, the lawyerwill have a good idea what the document saysor will want to get a good overview of the case,particularly as you understand it. The lawyermay want to determine whether you or theother side has misconceptions about the facts,law or situation.

A lawyer who fills this critical time withrelating legal "warstories"without first listeningand analyzing the facts, is not working on yourcase. War stories are a waste of time unless,(l) the stories respond to your expressed orimplied question about past experience andexpertise or, (2) are used to demonstrate a point,e.g. necessary work, time, expense. Even then,after quickly telling the story to make thepoint, the attorney should "move on" and getdown to an analysis of your situation so youcan receive the "Evaluation," discussed below.

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In addition to making sure your attorneyhas listened to and understood the facts fromyour point ofview, it is also important that yourattorney listen to and understand the other side.The attorney who does not listen to youprobably will not listen to the other side either.This can be fatal.

carefully listening to the other side is notbetrayal, it is good lawyering. Good listeningleads to good questioning. Good questioningcan lead to meaningful discussion. Meaningfuldiscussion can expose the weaknesses andmisconceptions on both sides. This, in turn, canlead to settlement or, at least, clarify the issuesand arguments for negotiation or trial.

Some lawyers are full of"bluffand bluster."Some lawyers are much admired by their clientsfor their aggressiveness, toughness andtenacity. Most of the time these aggressiveattorneys do an excellent job for their clients.

Sometimes, however, an attorney canbecome so caught up in his client's version ofthe facts, that in his/her bulldozing style,fails to appreciate the other side of the story.This can lead to disaster. If an attorney andclient fail to listen and consider the opposingpoint of view, then they do not know the othersides' strengths and weaknesses. If they do notknow the other side's strengths and their ownweaknesses, they will not be adequatelyprepared to address the other side's argumentsin a motion or at trial. As in a prize fight, if oneside does not know the other's "best punch,"then he may get knocked out early.

Decide W.et.er YOI Waut "Rauo"Or "Iudiall JOles"

"Rambo-litigators"weretherageofthe 19805."Rambo" is used in this context to represent a

Chapter Four: What To Look For In Alawyer

tough, aggressive, sometimes"bulldOZing" style."Indiana Jones" is used to represent a quieter,more professorial style, but capable when thegoing gets rough. IndianaJones types tend to bequiet, polite, studious and methodical.2

"Rambos" are aggressive and "tough" withthe other side. They use and abuse the rules, ifnecessary, to beat the other side intoSUbmission. At least, this is what theywant theirclients to think.

In reality, although theymayirnpress someclients (usually clients who want everything­they have to be bigger and "badder" thananyone else), Rambo litigators have so irritatedother attorneys and judges that leaders of thebar and bar associations have drafted andpassed rules to "rein in" theiractions. In Arizona,the Professionalism Committee will sendrepresentatives to meet and counsel attorneyswho have been reported for breaches ofcourtesy and professionalism.

Not only are Rambo attorneys in disreputewithin the bar, their style may actually hurttheir own clients. The reason for this is theconsequent lack of communication betweenthe Rambo attorney and opposing counsel thatusually results from the Rambo attorney'saggressiveness. Rambo litigators may soirritate opposing counsel and client that theparties stop talking to each other directly andonly communicate through letters, pleadingsand arguments to the court.

Let me giveyou a briefexample. One ofthemost brilliant attorneys I know is a Rambolitigator. The good news is that he is bright,dedicated and aggreSSive. The bad news is thathe is so aggressive that virtually every attorney(and their clients) literally hates him. Everycase,then becomesa grudge match and a test ofwills.

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Result: His cases don't settle. Legal fees gothrough the roof because the parties base theirdecisions on emotion rather than soundjudgment. This attorney, by being soaggressive, hurts his client.

Ido not fear "Rambos." Theyoften rant andrave, but this does not move me or most otherattorneys. The main effect ofthis style is to lookgood to the client.

For my money, an "Indiana Jones" type isthe better attorney. I have seen such attorneyspolitely, courteously and meticulously tear anopposing witness to shreds. The witness did noteven feel the knife, but the guts of the casewere all over the floor.

Indiana Jones types also do well intransactions. In negotiation, the superiorattorney finds a way to give the other side whatit wants - as much as can be given - in a waythat does not take away from what the clientwants from the deal. The good, lasting deal isstruck, not to bully the other side intosubmission, if that's possible, but to give eachside as much as possible of what it wants fromthe transaction. As my business mentor, RussMcGuire, said: "It's not a good deal if it's not agood deal for evetybody." Russ meant that adeal will fall apart if there is not some lastingbenefit in it for the other side.:>

Whatever style you prefer your attorney tohave, open communication is important. Almostalways, open and relatively hostility-freecommunication between the parties' attorneysbenefits the parties. If good communicationdoes not result in quick dismissal or settlement ofthe suit, it can, at least, help clarify and focuson the real issues. Thus, open communicationavoids wasted fees on unnecessary matters.

Chapter Four: Wbat To look fer hi Alawyer

Look fer ALaWJf1'''O Is ARespolSiveAId Effective (.n.liCitor

Twosimple tests for responsive communi­cation are (I) the retum ofyour telephone callsand (2) the lawyer's ability to understand thefacts and to make the legal issues clear to you.

An attorney who does not return your callwithin a day or, two is probably too busy tohandleyourcase ordoesnotdo that typeofwork(assuming the staff screened your call). In thatcase the attorney's secretary, paralegal/legalassistant, orsomeone on the staff, should retumyour call to tell you of the firm's inability tohandle your case. Having an attorney who doesnot return your call is not much better thanhaving no attorney at all.

On the other hand, beware ofthe "MaytagRepairman" syndrome. No experiencedattorney with a decent practice is alwaysinstantly available. Ideally, the attorney shouldreturn the call on the samedayor, at least, within24 hours. But, sometimes, dUring trial orvacation, the return call make not come for afew days. In that case, the test is whethersomeone from the office calls to let you knowwhat is going on. Ifthe lawyer or firm leavesyouhanging more than a day or so, move on. Thatattorney is not ready for you at that time.

Look for an attorney who can tell you whatis important in simple English or who usesanalogies from common experience to illustratea point. Effective communicators do not makethings complex, they make them simple. Ifyoudo not understand what your attorney is tellingyou, it is probably notyour fault; more likely, it isyour attorney's fault. You may need anotherattorney who communicates in a style moresimilar to your own.

57

Cliapter ltor: What To look For In AIaw'fer

59

Aclient working closely with the attorneyhelps the attorney master the facts and achievethe client's objectives. One of the biggestchallenges a lawyer has is getting the facts fromthe client and learning them tharoughly. Onlythen can the attorney confidently decide uponand apply the appropriate law. When theattorney can fInish a clienrs sentence by usingone of the pertinent facts of the matter thenthe attorney can oecome truly effective. '

Being a team player means avoidinglawyers who want you to passively await theresults. Results in that case will seldom befavorable.

Being ~ team player also means avoidingthe temptation to dominate the attorney. Theclient needs to respect and trust the lawyer'sjudgment, or fInd another attorney. Otherwise,th.e client is limiting the expert bythe limits ofthechenrs knOWledge. This is just a version ofIIhaving a fool for a client." The results are notlikely to be favorable.

Look For Business Or ~er Jld,melltRelated To YOlr Field

All lawyers think they have superiorbusi~ess jUd~ent. Few actually do. Legalsolutions are Just one form of a business solu­tion. Lawyers often treat the two as the same.

Too often lawyers think like a hammer:~~y treat everything like a nail. For example, alItIgator's natural instinct is to evaluate the casein terms ofthe legal theories that apply, the harmdone, and the damages that may be recovered.The que.stion ~hether the client actually wantsto exerase all nghtsand claimsapplicableunderevery legal theory may never occur to thelitigator. Ifthe lawyer did consider this question,counsel would probably fmd it weak, odd or a

Look For ALaw,er YOI Uke, Tmt And RespedA legal relationship is a relationship. Why

hire a lawyer you would not have coffee or teawith? It is best to feel comfortable. A commonmind-set and style can improve communicationand understanding and make work easier.

I remember reading a book on corporatestaffeffectiveness. The book noted that a highlyeffective and praised corporate team did notappear to be composed ofthe corporation'sbestand brightestindividuals. The questionwas"whynot?" This seemed a waste ofvaluable corporateresources.

The answer was that the members of thisgroup worked well together and complementedeach other1s strengths and weaknesses. Thecommon understanding and good relationshipamong the team members fostered goodresults. In short, the team worked well becauseits members worked well together.

There are limits and exceptions to thisprinciple. You do not want your litigator to killthe other side with kindness I or yourtransactions attorney to be so "touchy-feely' orrelaxed that he cannot get the job done. It's aquestion of balance. Still, all other thingsbeing equal, I prefer to have businessrelationships with people that I like.

(bose An Aftomey -'0 Will Let YOIBe APart Of Tlte Team

Generally, anattorneyand client whoworktogether asa team will be more effective than anattorney working alone, with minimal inputfrom the client. Typically, the client is intelligentand brings his or her own knowledge andexperience to the case at hand. The old sayingthat 'two heads are better than one" isparticularly true in legal matters.

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dereliction of duty. But pursuing every claim ­wringing the last drop from every case - maynot always be in a client's best interest.

Forexample, divorcingcouples sometimeshave already worked out the details of theirseparation before they see their lawyers. Butafter one of them sees an attorney, the nextthing that happens is that one spouse stealsthe kids and all the money in the bankaccounts, and obtains a restraining orderbarring the other spouse from coming home.The other spouse is left with no home,money, or family, literally overnight.

The spouse does not necessarily evenwant this "hammering" to occur. The lawyermay just do it -out ofhabit, and because it canbe done. This is what I call the "hammermaking every thing look like a nail." The factthat such actions are legally permissible doesnot make it necessary, right or appropriate.Unless the situation is one of abuse or otherextreme circumstances, one spouse is notjustified in "hammering" the other in this way.

Business clients do not necessarily want towin a lawsuit. More often they want to solve abusiness problem, e.g., hypothetically, ABCCompany's refusal to perform on a contract. Along and expensive law suit with ABC Companymay not be in your best interest, even if youwin it. ABC Company may be important to theclient, ifnotasa customer, then, perhaps, throughinfluence in the community. For this and otherreasons, clients sometimes would like topreserve the relationship with ABC Company.But preserving the relationship, or at leastpreserving neutrality, will be impossible if thecase is not handled gingerly, with an eyetowards the broader business ramifications oflegal decisions.

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Chapter Four: What To Look For In Alawyer

More to the point, ifyou are looking for alegal counsel who can counsel, you maywant toseek a lawyer who has judgment. Alawyer withjudgment can and will focus on non-legalsolutions as well as legal ones. In business, thiskind of lawyer can wear a "business hat" and a"lawyer's hat" and knows the differencebetween the two.

,Manylawyershave strongbusinessorother

law-related skills due to their prior academicexperience, employment or other work history.There is no education like past experience. Wemay empathize with and learn from watchingothers, but the best way to learn something is tohave done it ourselves.

For example, the best way to know whatmotherhood is like is to have been a "Mom."Similarly, the best way for a lawyer tounderstand business is to have been a businessperson. The best way for a lawyer to understandengineering is to have been an engineer. Often,the best personal injury lawyers are formerdoctors ornurses. Lawyers with past experiencein business can probably provide the bestbusiness counseling, likewise for advice inother areas oflaw.

Often the ideal advice that you can receivefrom your lawyer is that you do not need alawyer on this matter because ofreason X. Thiskind of legal advice is rare, and is usually mostavailable from lawyers who can "wear the hat"of a business person, engineer, physician andso forth.

Ifyou find a lawyer willing to give you thiskind of practical advice, you have found a trueally. Recognize that this willingness to putyour needs first is rare. Work hard to develop agood relationship with this attorney.Reciprocate by considering the lawyer's needs.

6t

Checklist

~ Choose a lawyer, not a firm.

Chapter Four: WhatTo look For In Alawyer

63

~ Look for an attorney who will listen.

~ Look for a communicator.

~ Look for business judgment.

.., Look for an attorney you like, trustand respect.

-q Decide what personality-type youwant your attorney to have.

-r Look for an attorney who will let yoube part of a team.

12 Law firm size does not matteranymore.

If Check practice area and experience.

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62

If possible, become a "favored client," asdiscussed in Chapter seven.

Deck TIle Lawyer Or Firm'sPradice Areas And Experielce.

Be aware that some firms will oversell toget the business. Ask the lawyer about hisknowledge and experience. Ask aboutprevious cases, numbers and results. You mayalso want to inquire about publications andseminars conducted.

In particular, ask if counsel has done thiskind ofwork before. For example, ifthe attorneysuggests that a Temporary Restraining Order(i.e. a court order to stop doing something) maybe necessary to prevent a competitor fromusing or copying your logo or marketingmaterials, ask the attorney whether counselhas previously prepared these documents andappeared in this type of proceeding.

Checking expertise can be especiallyimportant during law firm "shake-outs" oreconomic downturns. During the last realestate crash, many real estate attorneysattempted to represent their best clients inlitigation matters, receivership proceedingsor bankruptcy. Typically, such attorneys werenot as effective as they could have beenbecause this was not their area of knowledgeand expertise.

Chapter Five

Thinp To AvoidS••mary

This chapter discusses practices to avoidin your relationship with an attorney.Not telling the whole story, attempting toget free legal advice, using an attorney thatyou do not like or trust, having false oridealized expectations of the attorney and/orjustice system, constantly changing legalrelationships, attempting to dominate orcontrol the attorney or becoming embroiledin an adverse relationship with your ownattorney. Other points discussed includehaggling over work and fees and basinglawsuits on "principle" rather than goodbusiness sense.

D..tt "Hide The 8all" From V••rOn Aftone,Not telling the whole truth toyour attorney

is a little like lying to your doctor about yoursymptoms. It is really a bone-headed play.

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Nevertheless, some clients are afraid totell their attorneys the whole truth. Sometimes,they are embarrassed or ashamed. Some thinkthey can make their case look better by nottelling the whole story. This is a serious blunder.Again, it is similar to thinking your doctor canmake you well faster if you don't tell him orher everything that is wrong with you.

Clients are often afraid of negative facts.Usually they do not realize that every case,negotiation or lawsuit, has negative facts.Attorneys deal with awful and outrageous factson a daily basis. Attorneys specialize in negativefacts. Attorneys do not often see blue skies. Theyoften see clouds and storms, real or potential,which can return to haunt the less thanforthright client.

Nothing a client can sayar do will shock orsurprise lawyers. Starting as students in lawschool, lawyers are exposed to the mostegregious facts, ranging from cannibalism andincest to "living vegetables" as plaintiffs.Sometimes, to lawyers, it seems like they hearmore confessions than a priest.

Virtually any fact can be dealt with-statedpositively, put in context-ifthe attorney knowsabout it. Generally, it takes more than one or twonegative facts to make or break a deal or lose acase. The attorney who has the full set of factsfrom the beginning will have more time to figureout how to handle the bad fact(s).

The only sure way to maximize the harmfrom negative facts is to not tell your attorneyand let him or her be surprised by them laterduring the case or negotiations.

This oath, is, of course, the same onewitnesses take before depositions and trial.Follow it, not just because you are required to

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Chapter Five: 1h~ To Avoid

by law, but because it is the best way to comeout ahead in your legal matter.

Avoid Steki., Free Le,al Advice;YOI Ma, Get ••at YOI Pa, For

It is tempting for clients to seek free legal~~vice at social gatherings or on the phone; but,~t IS not a good idea. The lawyer is probably notmten~sted, and may not be paying attention, ifhe thinks you want a "freebie." Why should hebe? All any lawyer has to sell is time andexpertise, and you are not offering to pay foreither one. Think about it. Lawyers do not sufferthrough the personal and familial trials of lawschool to work for you for free.

Even worse is the situation where peopleseek legal advice from close friends who areattorneys. A lawyer has ethical responsibilitiesand ~ill probably hold back even thoughwantmg to help out. The person gets justenough information to think he's been helpedwhe~ he is only getting started. The messagehere IS that only full legal advice comes to theclient who actually retains a lawyer.

No "beginners' standard" protects lawyerswho are new to the profession or practice area,or who are going out on their own. Uke doctors,lawyers are held to the highest level ofcompetence from the first day on the job.Moreover, unlike doctors who tend to becollegial, lawyers are paid and required to dealwith and fight against other members of thebar who are probably as educated, smart anddedicated as they are.

Alawyer's life is difficult in manyways. Thehours are long, and many lawyers have terriblework loads and time pressures. Everythingrelated to law is over-priced. Books that wouldotherwise cost $19.95 cost $105, plus yearly

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supplements, because the word "law" is in thetitle. Due to the outrageous overhead, cash flowis always a problem.

In short, lawyers often do live the life of"gunslingers," and are not willing or able to dotheir job for free.

Rather than seek free legal advice to a"quick question," a better idea is to retain theattorney for "advice only" at the normal hourlyrate. A small retainer goes a long way whenused for consultation only. You will get theattorney's full attention, and the attorney is fullyresponsible for the advice given.

C~oose A1I Attorney Wit~ Style - YOIr StyleAn attorney's style shouldmatchyourown,

or at least what you want the attorney to be inthat case. If the attorney is too formal orinformal, too aggressive or not aggressiveenough, too slick or not slick enough for yourtastes, then move on.

Ideally,your professional relationships canbe reasonable versions of your personalrelationships. Not that you need to becomeclose friends with your professional advisors,but it is pleasant and productive to have as anadvisor the kind of person you would enjoydrinking coffee with, Le, someone you like andrespect. This improves communication andunderstanding. In so doing, you will maximizethe final results.

Beware Of 11Iterpreti1l' YOlr Own Projectio1lsAs Reality

Although many clients think their case isperfectly clear and obviously just, few clientsactually wear "white hats." Most clients, like theissues in question, wear shades of gray. On theissues, this"gray" constitutes the middle ground.

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Chapter Five: l1Jin~ To Avoid

It is one reason why cases that seem soone-sided when viewed only from ourperspectiveseem less certain and become muchcloser on the issues when viewed from theother side's perspective. Often the truth of thematter lies somewhere between the positionsof opposing parties.

One reason for this disparity between ourperception of the facts and reality is ourfundamental makeup or "stuff," Le. the beliefsystem and conceptual framework throughwhich we fIlter ourobservations and experience(also known as our belief system or "BS"). Theeffect of interpreting events through our "BS" isthat we may notice, select and focus on acompletelydifferentsub-setofphenomena thansomeone else. Thus, before expecting fullaffirmation of our position from the court, it isimportant to listen to and consider the otherside's point of view-not necessarily to acceptit, but to understand it.

Another reason that cases become closeron the issues as they progress throughnegotiation to trial is that the parties and theirattorneys become creative and skillful in theirpresentation of the facts. These creativepresentations are not necessarily untruthful;they just have a self-serving "spin" on them andmay be selective in the facts considered.

Avoid False Expedatio1ls of O.r Ilstiee SystemA1Id ne Perfect Ilst1Iess Of Yo.r Clue

Many clients, usually those with no priorexperience with the legal system, are hell-benton their idea of"Truth,Justice and the AmericanWay." Regardless ofthe color oftheirhat and thejustice oftheir cause, such clients are blinded bytheir own perceived righteousness and are themost frequently and seriously disappointed.

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The legal system is a bureaucracy. Judgesare bureaucrats and, worse, lawyers turnedbureaucrats. They are overloaded with workand have scarce and often outdated resources.Ideally, they would care a lot aboutyour case. Intruth, they may not. They may not like a certainarea oflaw orbeas familiar with it as those areasthey practiced before becoming a jUdge.

Juries can be better or worse than judges,depending on the case. Juries may ignore thelaw and rule on the basis of grand themes,prejudice or sympathy. This tendency isaggravated bythe fact that the jurymembers arenot even told what law applies until alltestimony has been heard and the trial is almostover. By the time they have all the facts, the jurymembers may have already formed a tentativeconclusion about the right and wrong ofthings.This tentative conclusion mayormaynotsquarewith the actual truth and justice of the matter.

False expectations aboutyour relationshipwithyourattorneyand/or the legal system oftenlead to another mistake clients make: switchingfrom one attorney to another.

Avoid ColStalltl, dlan'1I! Le!al RelatioRS~ipsIndividuals who go from one attorney to

another, especially on the same matter, haveprobably "planted their own seeds ofdiscontent" and carried them from onerelationship to another. Often such clients havefalse expectations. They may have anunrealistic conception about what the lawyercan do for them. They may not realize theamount of time involved or how arduous andslow the system is under the rules ofprocedure.They almost certainly will have falseexpectations regarding money-little or no ideahow expensive legal services are, especiallylitigation. And finally, a clients' false

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Chapter five: Thin,s To Avoid

expectations may revolve aroundthemselves-undue confidence in the justnessof their cause or uncontrolled fear. Sometimesthe client cannot settle on and trust oneattorney for fear another attorney would dothings differently or better.

Anyone or more ofthese factors can causethe client to "bolt" at the slightest sign oftroublein a continuing queSt to find an ideal lawyer. Butlawyers, like everyone else, are a "mixed bag" ofpositives and negatives. The attorney who isexcellent in customer service and clientrelations may be less experienced. An attorneymay be brilliant but have the "desk-side"manner and personality ofa Gila monster. Thechances of finding the perfect attorney are onpar with finding a perfect spouse or having aperfect child. It is highlyunlikely. The client mustdecide what factors are most important in thesecircumstances and choose an attorneyaccordingly. How one chooses is the subject ofthis book. A sample checklist and weightingsystem is furnished at the end of the book.

The realistic client does one's homework,asks questions, evaluates the attorneyasbest aspossible, then turns over the matter to thechosen attorney's knowledge and experience.From that point on, unless the attorney ismissing deadlines or failing to do any work onyour case, you probably can rely on theattorney to do a good job.

Avoid Attempti1l! To Domillte YOlf AttorneySome books read by the author suggest

that the client should attempt to control anddominate the attorney to achieve the mostcost-effective and satisfactory results.This idea, ifcarried to an extreme, is not usuallypossible or advantageous.

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It is usually not possible to control anddominate an attorney because good attorneysare not that tractable. In many ways attorneysare paid to control and dominate others. In thisregard, an attorney, particularly the modemlitigator, plays much the same role as the hired"gunslinger" of the Old West. Counsel is paid todeal with others under adverse circumstances.For the same reasons that it was difficult tocontrol the gunslinger, it is difficult to control theattorney. In the realm oflaw, the power belongsto the attorney. Moreover, only a fool hires a"gunslinger" then expects to have total control.Ifcounsel is trulya "gunslinger," counsel will notbe that tractable. Even ifit is possible, the idea ofcontrol and domination may not beadvantageous to the client. The attorney whoyields to the client's daily instructions willseldom do a good job, since this amounts tosurrendering professional judgment to the client.

Most clients will have limited legalknowledge and experience. Due to theselimitations, most clients probably are notqualified to make all decisions in legal matters.Even attorneys hire other attorneys, when notworking in their field of expertise. Thus, if theclient makes legal decisions, then almostalways the quality of representation will suffer.

We live in an age oftechnology, technicali­ties, and specialization. Except when working inour own field, few of us can hope to know asmuch about anything as the expert in that field.We are forced to rely, and should rely, on theexpert to achieve best results. The principle is astrue for law as it is for auto mechanics andquantum mechanics. Thus, the wise client relieson the attorney.

This does not mean the client should be"shut out" from participating in the case or

Chapter five: Tbm,s To Avoid

sho~d give. the ~ttorney completely free rein.The Ideal SItuatIon lies somewhere betweenthese two extremes. The client should want tohave information and input along the way andto make the final decisions on the terms of thedeal or settlement.

The client should also "be involved." Acari~g, informed and involved client will usuallyobtam better results than an "absentee client."SOme clients can help the attorney brainstormthe case. Always, the client is most knowledge­able about the facts of the case. The client's jobis to make sure the attorney knows the facts ­so well, in fact, that the attorneycan tell the storyas well as the client.

However, not all facts are equally impor­tant. SOme facts have great legal significance.These are called the "material" facts. Other factshave little significance. These facts may be partof the story and add flavor and context, but donot p~oveanything relative to the legal theory inquestion. These facts arecalled "irrelevant" facts.

Because clients are not lawyers, it isusually very difficult for them to know thedifference between material and irrelevantfacts.For that reason clients tend to repeat andemphasize facts which trigger their emotionsbut ar:e not as material as other facts. One waythe clIent can avoid this problem is to ask theattorney what kinds offacts are most importantto the case and what legal theories these factsare material to.

In summary, select an attorney who willkeep you informed and makeyou feel like part ofa team. Then, be an active member ofthe team.Be responsible for the facts and final decisionsregarding the terms of the deal or settlement·but leave legal decisions and strategy to th~lawyer. If you are not confident in the attorney

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you have selected, then find another lawyer(keeping in mind the problems of idealizationdiscussed in the previous chapter).

Avoid Beil' 111 AI Advenary Relatiols~ip

Wit. YOlr On (ollSelSome clients haggle about money. Others

constantly nag for status and other informationwhen there is nothing more that needs to bedone at that time. These tactics createunnecessary stress and llturn off' the attorney.

Before complaining, ask questions aboutthe status or money and do so only atreasonable intervals. Most legal problems takeat least three times longer than you wouldexpect. That is the nature of the legal system.Get used to it. The only thing you accomplishby hounding your attorney is to make himwish you were not his client. By askingquestions, or periodically sharing yourthoughts on various matters, you can keep yourattorneyinvolved without making him feel likea henpecked spouse.

Avoid Hanlil' Wit~ Yoar Attome,Over Work AId Fees

Look for a lawyer whose price is fair andwhose work is reasonably good and completedwithin a reasonable time. When you need adoctor you want the best you can afford.Ukewise, in most cases you want a goodlawyer, not a cheap one. SO, haggling aboutfees is the wrong approach.

Asking about and discussing fees isperfectly acceptable and a good idea. Talk to avariety of firms. For example, talk to severallisted under the same heading in the yellowpages (business, accident, bankruptcy, divorce),then get a range of hourly rates and retainer

Chapter Rve: Thm,s To Avoid

requirements. (A retaiper is an amount paid inad~ance, placed into a trust account, againstwhich the attorney bills as the work is done.)

Some attorneys have high retainers, butlower hourly rates. SOme attorneys have theopposite. Choose what is more comfortable foryou. The important thing is to know what youare buying and why.

Avoid Basil! Lawslits 01 AMatter of PrincipleClients orprospective clients often tell me:

"I have been mistreated. II "What he did is justnotright. II III justwant to teach him a lesson. II lilt'snota matter of money; its a matter of principle.1I

These statements are reasonable, and probablytrue. Nevertheless, in most cases, I would notadvise that you pursue civil litigation (Le. suitsfor money damages) for these reasons alone.

. In general, the legal system is designed toachIeve four ends for its participants:

~ to compensate for injury or damagesdone;

~ to punish wrongdoers, so that theyreceive their "just desserts;"

rg to. r~habilitate-this applies most incnmmallaw, but applies somewhat incivil litigation, in that the defendantmay learn that what was done wasunlawful; and

, to deter-to prevent such conduct inthe future by llsending a message" tothe wrongdoer and others like him.

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As shown, suing as a "matter of principle"and "to punish the wrong-doer" arewell-recognized goals of our legal system. But,the "principle only" rationale ignores thehigh transaction costs of litigation. Litigationcan compare in cost to "emergency roomtreatment" or major surgery. However, unlikemedical treatment, often no insurancecarrier is "footing the bill."

Where an insurance carrier is paying thebill or the litigant is a sizeable corporation orwealthy individual, then the costs of attorneysfees, expenses and other costs are more easilyhandled. In that case, the rough order offactorsto consider are:

~ The merits of the claim (whetherplaintiff or defendant);

112 The end-reward (what may be gainedor lost); and

~ The transaction costs.

But where an insurance company is notdefending the claim, then for most businessesand "middle America," the most logical priorityof these criteria is as follows:

~ The transaction costs;

112 The end-reward (what maybe gainedor lost); and

~ The merits of the claim (whetherplaintiff or defendant).

Chapter rIVe:Th~ To Avoid

Putting transaction costs ahead of whatmay be gained or lost may be an exaggeration.But, unfortunately, many claims are forfeited orlost because the party, plaintiff or defendant,does not have the money to pursue the claimsor properly defend against them. One can havea great case and not have the money to pursuethe claim. Conversely, one may have a greatdefense and still settle to avoid the [mancial (andemotional) strains of going to trial.

This is the "bad news." The "good news" isthat, due to the new competitive nature of law,many attorneys are more affordable than everbefore; and most law firms are much moreclient-oriented than they were ten years ago.

More good news is that in collection cases,where one is suing to collect an unpaid invoiceor promissory note, or in personal injury cases,such as auto accident cases, the attorney oftenworks on a contingency fee basis. Under acontingency fee arrangement the law firm willcollect its fee from the recovery. Sometimes, thefIrm will even advance the costs that must bepaid to third parties to prosecute the litigation.Such costs include filing fees, process serviceand court reporters.

Collection cases are often done on acontingency fee basis because they tend to berelatively simple, both factually and legally.In most collection cases, the indisputableargument is: There was a contract. Defendantsigned the contract. So, defendant owes themoney. The problem with collection cases ishaving a defendant with assets or incometo pay the judgment.

Personal injury cases are contingency feecases. In personal injury cases, almost always,an insurance company is paying the claim forthe defendant. Thus, unlike collection cases,

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personal injury suit judgments are usuallycollectable. Personal injury cases often settlebecause both the insurance company and theplaintiff have a rough idea of what the claim isworth from the moment it is filed. ColIectabilityand relative certaintymake personal injurysuitsfertile grounds for lawyers to practice on acontingency fee.

Other examples of contingency fee casesare discrimination orwrongful termination suitswhere an employer has discriminated againstan employee on the basis of race, gender orhandicap. Wage and hourcasesare also handledon a contingency fee basis. Wage and hourcases are those where an employer owes anemployee a specific amount of money understate or federal law.

Most cases, however, particularlycommercial litigationcases, are not contingencyfee cases. In most cases, the client will be payinghis or her own way. Where the client is payingthe bills, cases based on "principle" usually"run out of steam" fairly quickly. Soon after theclient begins receiving the legal bills, a clientundergoes a change of mind. At that time theissue is the money (not just the principle). Forthese reasons, Ido not recommend a case basedsolely "on principle" unless one is wealthy orunusually determined.

Chapter Five:Th~ To Avoid

Checklist

Don't "hide the ball" from yourown attorney.

Avoid seeking free legal advice;you maJ get what you pay for.

Avoid attorneys you don't like, trustor feel good about.

Beware of interpreting your ownprojections as reality.

Avoid false expectations of ourjustice system and the perfect justiceofyour cause.

IrJ Avoid constantly changing legalrelationships.

Avoid attempting to dominate yourattorney.

~ Avoid being in an adversaryrelationship with your own counsel.

Avoid haggling with your attorneyover work and fees.

~ Avoid basing lawsuits solely on amatter of principle.

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II

I

tIIapterSix

The COlsultatiolSI.mary

Chapter Six talks about your initial andsubsequent consultations with the attorney,the importance of teamwork and homework,and your objective in those critical earlyconsultations.

AGood lawyer-Cliett RelatiolS~ipReqlires Teamwork

The fantasy is that the client can dump thelegal problem and psychological load on theattorney. The reality is that the client mustfurnish the facts in an organized manner andreview the attorney's work to make surecounsel understands those facts. Mostattorneys have an awesome ability to process,organize and analyze data. It is part of theirlaw school training ("brain-scrambling" wecalled it). However, almost always, clients willthink ofor need to remind the attorney ofsome

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significant fact as they review the work. For thisreason, it is important to have a client who keepsthe attorney involved. As long as the client givesthe attorney freedom to do what counsel istrained to do and the client is notover-controlling, then even the best attorneywill do a better job with the client's help thanwithout it.

Lawyers tend to be analytical. They go stepby step to a solution. But legal problems arereceptive to creative solutions. Some of thebest solutions are non-linear. Creative mindsoften see the big picture. Ironically, having the"big picture" in mind helps one get to the"heart of the matter." One does not need toclimb everytree ifthe object is to get to the centerof the forest. Thus, even non-analyticalclients can make significant contributions offact and insight.

Do YOlr HomewoRYou will not be able to just "dump" your

case on your attorney, anymore than you canjust dump your need to do taxes on anaccountant. The accountant will need yourreceipts, books and records. The lawyer willneed the complete facts of the case andpertinent documents.

The process of assembling andorganizing the facts starts before, or soonafter, the initial consultation. Impress yourattorney. Put copies (not the originals) ofmaterial documents in chronological order ina three ring binder. Summarize the facts ofyour transaction or suit on paper. Becauselawyers can quickly read and absorb massquantities of information, this will save youtime and money. Most importantly, it willexpedite the transfer of information from yourmind to the attorney's.

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Chapter Six: The Consultation

Some clients want to fax documents to theattorney for his review before the consultation.This idea tends to be better in theory thanpractice. The lawyer may feel uncomfortabledoing work for a client that counsel has not metand before being retained. Also, the practicesometimes raises "something for nothing"issues. Expect and offer to pay, then use the timeto go over your cas;e notebook.

As discussed earlier, use the consultationto question the lawyer about counsel'sbackground and experience. Ask theattorney whether counsel has handled thistype of case. If so, find out when, how often,with what results.

Do not expect the attorney to have always"won." All lawyers lose cases unless they areestablished enough to accept only the bestcases. Moreover, lawyers learn as muchfrom losses as victories. Rather than expectperfection, ask the attorney what counsel haslearned from experience, both positiveand negative.

see If The Lawyer Has An Inediate hadicalOr Basiaus Solltiol, Not Jast ALeyal Solltiol

A lawyer who can see and recommend anon-legal solution makes a greatcounselor. Usesuch a lawyer not just for legal advice (e.g. inbuying a house or hiring or fIring an employee)but also to "bounce ideas off of' on routinematters. Sometimes, a lawyer can think of asolution that takes away the need for a lawyerright now.

This is wonderful news and usually only alawyer can tell you that. Unfortunately, manylawyers won't. So, ifyou find a lawyer that will,grab on to him or her. Such an attorney is

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priceless and makes a great companion atyour table.

Yoar CODSlltatiol1 Oltjedive Is ToOlttail1 AI Evallatill

A transaction or lawsuit is like a journey.Any road will take you somewhere even if youdon't know where you are going. Before leavingyour initial consultation, or as soon as possiblethereafter, obtain an evaluation of your:

-;- Situation.

12 Strategy/Options (cost/benefit).

-g L~wy~r's past experience in theseSItuatIOns.

~ Cost ("ballpark" estimate based onstrategy, including what toinclude and what not).

These itemsconstitute the criteria bywhichyou should judge your transaction or case, itscost, and the attorney. As discussed above, it isimportant to have a framework to evaluate youroptions and success.

Chapter Six: lbe CollSllltation

Checklist

~ A good lawyer-client relationshiprequires teamwork.

Ii' Do your homework.,

rIP} See if the lawyer has an immediatepractical or business solution, notjust a legal solution.

-q Your consultation objective is toobtain an evaluation.

Chapter Seven

Thil,sTO Do

SammaryChapter Seven lists three ways some

clients misuse their lawyers and or the legalsystem. The chapter also discusses certainbeneficial things you can do in yourattorney-client relationship. These beneficialideas include how to be a favored client andwhy, the need to talk early and often aboutmoney, and what the legal services will cost.The latter point stresses staying focused onpractical solutions and working with yourattorney to develop alternative courses ofaction.

Wate. Oat For hrties ••0 Are~eati., The Leyal s,ste.

There are several ways for unscrupulousclients to abuse or cheat the legal system.

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~ Opposing Counsel Elimination:

Under this tactic the prospective clientcalls and discusses the facts of the case and!orhas consultations with all the best known ormost affordable attorneys in the legal practicearea. This tactic is based on the ethical rule that,even if not retained, an attorney must retain asconfidential all information disclosed by anactual orpotential client, and cannot act on thatinformation and certainly cannot use suchinformation to the detriment of the consultingclient. Because the consulted attorneys may notact on the confidential information, they cannotbe retained by the other side. The result is theother side may not be able to retain one ofthe more knowledgeable or affordableattorneys in that practice area.

Iri? Multiple Consultations:

This trick is most often used by criminaldefendants, actual or potential. Under this tacticthe client will discuss the facts and merits ofthecase withmore than one attorney. The clientwilluse the first attorney to get ideas and advice onthe merits ofthe defense. Ifthe defense the clientenvisions is not a proper legal defense, or doesnot seem like it would work, then the "facts" asto whathappened maychange on the way to thesecond attorney. Thesecondattorneymayneverknow the client's case has been "tailored" to fitthe law before the client ever walked in the(second) door.

-g Altered or Forged Documents:

This tactic is a variation of number (2). Inthis case the client changes the facts bychanging the documents. "Tell me what youneed, I'll get it for you" is not what the attorneylikes or wants to hear in response to his request

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Chapter seven: lhm,s To Do

for copies of the pertinent documents. Becausepertinent documents are almost always seen bymore than one party, document alterations canand will be exposed and the case lost because ofit. Nevertheless, desperate clients do desperatethings, and this is one of them.

These tactics are unethical. Ifyou catch anopposing party engaging in such tactics, youhave persuasiveeviaence offraud on the systemifnot perjury to the court. Ifyou can substantiatethe fact of this conduct, it should be reported toopposing counsel and/or the state bar.Unfortunately, to the detriment of the honestclient and the legal system ,such tactics often gounchallenged or undetected.

Be AFavored dieatCreate a good relationship by being

prepared, doing the work you need to do andpaying the attorney legal bills promptly.Attorneys love the client who comes to thefirst meeting, or a later one, with the pertinentdocuments organized with cover notes. Itdoesn't happen very often, but it is veryhelpful when it does. It will help the lawyer do abetter job on your case. The lawyer's maintask is to get the facts from your head into his, sothat he may apply the law to those facts.

Let the attorney know you are willing topay for the consultation, forward a retainer andpromptly pay a reasonable fee. This tells thelawyer you are a winner; the kind of clientcounsel wants to have. But, it does not meanyou accept all bills without question.

The ideal attorney/client relationship isone of mutual respect and honor. Be prepared,constructive and pay promptly. Lawyers willoften do favors for a respectful client. Forexample, recently a client asked me about

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Mora~

Lawyers are Ubmestpeople;tile, wiD care abeut these that care about them.

doing business in Mexico. That area oflaw is notwithin my expertise, but I bought a book at aContinuing Legal Education seminar and willshare that information for free with my client.

A good relationship requires commitmentin order for it to work. We develop relationshipswith our loved ones, out job, our boss, ourpossessions, even ourselves by working at it.Therefore, what you get out of a professionalrelationship will be proportionate to what youput into it.

Talk Earl, And Often AbORtTIle Job ADd What It Will Cost

Early on in the relationship, ifthe lawyerdoes not bring up the question ofmoney, raisethe topic yourself.

Many attorneys do not like to discuss feesin detail or even to provide a "ballpark" estimateof the work and fees required. But omitting totalk about fees is not to the client's advantage.One of the biggest problems clients have withtheir lawyer relationship involves surpriseswith the bill.

When I worked for a larger fIrm, clientswould often tell me that if they had known thecost would be that large, they would haveconsidered other options. But at the time the

,.

Cbapter seven:lh~ To Do

fIrm was hired, the client did not ask; andneither I nor the other attorneys told the clientwhat to expect.

SOmetimes, theattorneysdo notevenknowthe current amount due on the account becausethe accounting office generates the bills fromindividual time sheets. This causes additionaldifficulty in holdin~ the fIrm accountable.

SO, ask your attorney what he expects thefirst bill to be. Inquire how this bill relates to thesize and scope ofthe overall task at hand. Legalexpenses, like anybusiness expenditure, shouldbe as cost-effective as possible. Work with yourattorney to achieve that goal.

Keep Yoaf Attone, Focued o. Practical selltiolSSOme lawyers will climb every tree even

when the goal is to get to the clearing as soon aspossible. SOmetimes, this is "due diligence" oran "abundance of caution" (favorite lawyerphraseS); but, sometimes, it is because thelawyer does not have a "handle" on the case.Without a definite strategy, a transaction orlawsuit may flounder at your expense.

Evaluate whether the attorney seems tohave a defmite "handle" or understanding ofthesituation. Attorneys who know the game canlook for the "breakthrough play." Others justplay along, focusing on the common rules.

Work Yf~ YOlf Attome, To Devise"Pla. A" I.d "Pla. 8"

Most attorneys are good at Plan A; manyare not so good with Plan B, the backup plan.Know your options and help your attorneydevise them. This will help your use of thelawyer remain cost-effective.

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The significance of having a back-up planis that it demonstrates your attorney'sunderstanding ofthe facts, your goals, and whatevents must happen along the way to achieveyour goals. With a plan, you know when eventsdid not happen that you wanted to happen.This is important not only because a change ofcourse can positively or negatively affect theoutcome of your case or transaction but alsobecause it almost always dramatically changesthe costs (usuallyupwards). Knowingyourgoalsand plans helps keep costs under control.

Checklist

~ Watch out for parties who are cheatingthe system.

12 Be a favored client by working with,not against, your attorney.

.:; Talk early and often about money sothat you do not get into a financial"hole" you cannot get out of.

~ Keep yourself and your attorneyfocused on the practical.

~ Develop a strategy which includesPlan "A" and Plan "B."

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Chapter Ei!lrt

Uudersfaudiuy law

SllIImaryChapter Eight discusses the nature of law

and the court system. Contrary to popular opin­ion, the law is less like a set of rules than it is asystem of facts. Various courts serve differentneeds according to the size and type ofthe case.

1\e Law As ASystem Of Fads.Law is a system of facts, not of rules. This

is counter-intuitive. To the proverbial "man onthe street," the law isa system ofrules containedin ponderous legal tomes, suchas statute books.It is neatly organized and indexed for quickreference and understanding.

Underthisconception, toknow the answerto any legal question, the lawyersimplyneeds tolook it up "in the book." Once the lawyer has

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"looked up the answer," then counsel knows itand can easily pass the answer on to the nextperson with little or no work and for little money.

This common understanding is atremendous misconception. The law, asapplied to you and me, is closer to a set ofpolicies and facts.

Iremember myfirst class on the first day oflaw school. The class was on contracts. Theprofessor was talking about the law, not as asystem of rules, but of facts. I remember mymental response (which was something like"Yeah, right!"). But (guess what?) the professorwas fundamentally correct.

No rule of law has meaning unless weknow the factual situations in which it hasbeen applied and/or the underlying policyrationale for the rule. Without being able toextrapolate or infer from the policy and pastfacts, it is usually not clear how the rule wouldapply to this situation.

Every general rule has an exception.Nothing can be said without qualification.Because of this, in law, the only certainty ispredominant uncertainty.

Law, then, is a system of decisions bylegislators, judges, and bureaucrats. The lawis dynamic, ever-changing. Every yearCongress and individual state legislaturesmake new law. Every day, judges andbureaucrats make decisions about law, oldand new. The major decisions about the laware printed in statute books and case law"reporters," and then typed 24-hours a dayevery day onto computer data "on-lineservices." Attorneys then use the statutes,reporters and on-line services to find and tellyou "the law." Finding the law in this way is

94

called legal research. Good legal research istime-consuming, expensive and absolutelynecessary.

This explains why it is usuallyimpossible for the lawyer to answer a !'quickquestion" over the phone. The question onlyreveals a profound ignorance of the legalsystem. It tells the lawyer that the prospectiveclient (or freeloader) has no idea what thelawyerhas to do to be a good lawyer. This makesthe lawyer uncomfortable and less likely to takethe client.

A good lawyer will want to know everysingle fact (including a review of all thedocuments), then research and think about thedecisions and policies that apply to the factualsituation. Off the cuff advice is probably notgood advice.

Types Of C8IrtsIn litigation, where you are suing some

person or company (or some person orcompanyis suingyou) one needs to decide whatkind of attorney to hire. To do that you needto know a little bit about our court system.

In a nutshell, very small cases (e.g. under$1,500 in Arizona) are heard by Justices of thePeace in what is known as the Small ClaimsCourt. Lawyers are not allowed in theseproceedings, but you may have a lawyer ifyoucounter-sue and the matter exceeds $1,500.

The next level of cases (using Arizona asan example) is the "Civil Division" of the JusticeCourt. SameJustice ofthe Peace as jUdge, samecourtroom, but now the rules ofprocedure andevidence apply and attorneys may appear.Incidentally, in Arizona most Justices of thePeace are not lawyers, never were, so they may

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or may not know the rules of procedure andevidence.

The next level of case is fIled in the localcounty court (called the "Superior" or "District"COurtinmostplaces).Ifthecaseisunder$50,000and does not seek an injunction (i.e. an order todo or stop doing something, like tearing down ahistoric landmark), then, often, the case will beheard by an Arbitrator. An Arbitrator is a lawyersitting as a judge.

The purpose of arbitration is to expediterelatively small cases and to make them lessexpensive. However, as the Arbitrator'sdecisions in such cases usuallymaybe appealedde novo (i.e. as if they never happened) to theSuperior COurt, the policy behind the practice isoften not served.

The next level of case is the one youprobably most think ofwhen you think ofa triallawyer and a lawsuit. This is the case before thejudge only (called a "bench trial") or a judge anda jury (usually you get a jury ifyou ask for one).

At this same level are numerous specialtycourts. These courts function in specializedareas of law, like the probate of wills, taxes,police courts (usually "municipal" courts) andbankruptcy court. Most ofthese courts are statecourt. Bankruptcy courts are federal courts.

In a jury trial, the jury is the fact-fmder anddecision-maker. It determines what the factsare, and who is telling the truth. Taking the facts,the jury applies the law given to it by judge andreaches its decision (the "verdict").

Juries also have the authority to ignore thelaw and decide the case according to reason andjustice. This power is called "jury nullification,"so-called because of the jury's power to nullifYthe written law. This power is controversial, but

has existed for centuries. The rationale for thispower is to allow the jury to function as the"conscience of the community" based on anoverall view of the circumstances.

Jury nullification would typically occurwhere the defendant in a criminal trial would beguilty under a normal application of the law tothe facts, but for other reasons the "community"would not find the conduct to be criminal. Ahypothetical example might be a case of abuse,where a child or wifecommitsa crime againstanabuser.

In a jury trial, the judge serves as the"gatekeeper" ofevidence and states the law forthe jury to follow. (Whether the jurors actuallycan understand and follow the law and, or do, isan open question).

This verdict may then be appealed to thenext highest court, which is The Court ofAppeals. The Court of Appeals usually sits as athree judge panel. It does not hear thewitnesses or other evidence but reads thelengthy "briefs" filed by the attorneys. The briefsrefer to the facts in the record and argue pointsof law and procedure.

The appealing party (the "appellant") willargue that the trial judge messed up because helet in the wrong evidence or misstated the law.The other side, who won at the trial court level,is called the "appellee." The appellee willtypically argue that the judge had it exactlyright, or should have let even more evidenceand given more instruction on the law, so thatthe only question is whether the original winneris just right or even more right.

The next level is the Supreme Court of theState (except in New York ,where the SupremeCOurt is the trial court and its highest state

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court is called the Court of Appeals). Theprocess in the Supreme Court of the State islike that of the Court of Appeals. This is thehighest state court and the end of the line.

Although most cases do not even make itthis far, theoretically, one may attempt to appealto the U.S. Supreme Court. However, the U.S.Supreme Court has authority to refuse to hearthe case and usually does.

Checklist

~ Understand the law is less a system ofrules than offacts. This means there ishardly ever a clear obvious answer toany legal question; rather, legal ques­tions are decided on a case by casebasis.

Iri' Different courts satisfY different needsand come into play at different stagesofyour legal matter.

Chapter Nile

The Work

SinaryChapter Nine talks about goals, being a

team player, and not being a prima donna.

It also talks about the inflexible nature oflegal fees and the impact oftransaction costs onsmall cases.

It explains how to tailor representationto make it more cost-effective and theimportance of discretion is choosing and usinglegal services.

Finally, Chapter Nine explains how a trial islike theater and why one should not use theattorney as an analyst.

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Work Witb YOlr Attorney To Develop YOlr Goals,Strate" Aid Tadics For Achievil' Tllem,AId OptiolS

As a general rule, trust your attorney toknow what to do, and to get it done. Still, it isimportant to monitor progress periodically,especially if time goes by and it seems thatnothing is happening. Keep in mind whenchecking progress, that the amount of time thatpasses while the case is going through thesystem before may be a function of the statepractice rules. For example, in Arizona, whichoperates under a so-called "fast track" system, acomplete case should be over in less than a year.In California, in contrast, cases typically do not"heat up" for several years because it takes fourof five years to get a court date.

Ask at the outset to timely receive copies ofall significant letters, documents and pleadingswhen they are sent or filed. This will allow youto keep informed and to monitor progresswithout having to call your attorney for thecurrent status of the case.

Ask to proofread and review for accuracyletters, documents and pleadings before they goout. Often the drafts will contain an erroneousname or statement which should be corrected.More importantly, the draft will frequentlytrigger new facts and thoughts which you needto tell your attorney. Clients also recall newfacts after reading documents or pleadingsprepared by the other side.

It is common for clients to still be thinkingof additional facts or witnesses long after thematter or lawsuit has started. Simply put,people think of things when the subject comesup. Because of this propensity to rememberfacts well into the case, you may want to

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schedule periodic meetings with your attorneyto go over the facts and evidence.

. In new li?gation matters, Iaskmyclients townte out theIr version of the facts. If severalpeople are involved Iask each ofthem to do thisindividually, so I (and they) can see the "picture"~rom different angles. In many ways every caseIS a "story." Iwant to learn the different versionsof the story. '

Create your own "trial or transactionnotebo?k." Fill it with your notes and copies ofevery Important document. Then as youapproach a deposition or trial, review eachpage~o refresh your memory of the factual and legalISSUes and the arguments being made.

Be ATeam Player. Work ~th your attorney. It is not a goodIdea to dommate or force your ideas on the1~Y"Y~r. Most clients, at least early on inlI~g~tion, do not know which facts have legalSIgnIficance and which do not. Thus, they maypush and repeat points that are less significantthan others that they skim over.

When in doubt, ask what facts areimportant. The attorney should be able to give arough sketch of the important issues and thekinds of facts that are important. This will helpyou to determine which facts are material andwhich are not.

Often you will have good ideas which willcome to you at all hours ofthe day or night. Keepa pad handy in a secure place so you can recordthese ideas and discuss them with yourattorney. Betteryet, type the notes and give a copyto your attorney at your next appointment.

. Resist the urge to call your attorney everytime you feel stress or have a good idea. It will

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drive your attorneycrazy, cost a fortune and willbe counterproductive. Because not all of yourthoughts will be brilliant or crucial, it is better topresent them all at once, so that the wheat canbe quickly sorted from the chaff. Often, minorideas become supporting players for majorthemes, which may not be clear ifideas are onlytaken piecemeal.

Exped Attention, Bit Not ConstantOr Instant Attention

Naturally, your case is most important toyou. ltisalsoveryimportanttoyourattorney. Hislivelihood and reputation depend on it.Nevertheless, your attorney will have otherclients and other important matters. So, expectattention, but not immediate gratification.

It is not a good idea for the client to act likea "prima donna." Well-run firms have diverseclientele, not all oftheir "eggsare in one basket."No client is or should be so important to thelaw firm that the lawyer "jumps" when theclient calls.

On the otherhand,some lawyers coulduseinstruction on customerservice. Although this ischanging, lawyers are notorious for notreturning calls and only talking to their clientswhen they have to. This is not acceptable.

A reasonable goal for service issomewhere between the two extremes ofconstant service and being ignored. As alawsuit approaches trial or a transaction nearsclosing, contact between the attorney andclient should become more frequent. If thisdoes not occur, then "bells should ring" andyou may want to contact your attorney tosee if more contact is necessary.

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Remember To COlsider "TralSldiol Costs"In Evalutin, Yoar COlrse Of I.e!a1 Adill.

Clients often get so caught up with thejustness of their cause or defense that theyignore transaction costs in evaluating the bestcourse of legal action. By "transaction costs" Iam referring to the costs ofthe attorney, his staff,faxes, photocopies, process servers, messen­gers, filing fees-the total bundle oflegal costs.

Usually, a $100,000 case will cost morethan $10,000 to prosecute. If one is the plaintiffand has less than $10,000, then the case, even ifperfect on the merits, does not have a value to$1 00,000 to that client. In fact, ifthe clienthas nomoney, and the case is not a contingency feecase (where the lawyers fee is a percentage)then the presentvalue ofthe case maybe almostzero.

The situation here is a little like building abuilding. A building may be worth $100,000when finished. But to the contractorwho cannotfinish the job, it may have little or no value.Because ofcommitments, the project may havenegative value. In that case, the builder wouldbe better off without the project.

Clients who forget this analysis do so attheir peril. A plaintiff who cannot afford toprosecute a $100,000 case to the end shouldnot expect to get $100,000, but should evaluatelower settlement offers. I have had judges lookme in the eye and tell me this.

As my father used to say: "A bargain is nota bargain if we cannot afford it." Lawyers dotheir clients a disservice if they pursue a casepast the point of settlement, even a lowsettlement, if it is unlikely the client can affordto continue the case to the end. This can leadto tragedy.

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Usually, however, the tragedy is not theattorney's fault, at least not solely. Attorneyswill usually warn their clients not to overreach.Attorneys do this out of self-interest. If there isanything worse than not having a client, it ishaving a client who cannot pay for the time andout ofpocket costs the attorney is expending onthe case.

Justice, unfortunately, is a commodity. Youonly get the justiceyou can afford - which maybe completely different than what you deserve.

Mora~Awe, Uke I baildi.!, ••Iy bas full valle

if yl. cal afford tl co.plete it.

Ii! Slit/Uttle Slit: TIle Cost Of Uti4JItiolLegal costs are relatively inelastic.

"Inelastic" in this context is a term fromeconomic theory. It means not responsive tochanges in demand or price. For example,toothpicks are relatively inelastic. We will buyabout the same number of toothpicks whetherthey cost 15 cents a box or 20 cents a box, eventhough one price is a third higher than the other.

In law, prices tend to be inelastic in thesense that a smaller case does not costproportionately less than a big one. Rather, itcosts about as much to litigate a $60,000 casewell as it does to do a $600,000 case. Theamount of time necessary to investigate thecase will be about the same and the filingand third party fees, like depositions, maybe about the same.

Due to this price inelasticity, a small casehas a lower "return on investment" than a largerone. A lower return on investment does notmatter so much where one prevails on a casethat carries through to arbitration or trial andattorneys fees are awarded to the prevailingparty. But where the matter settles, then eachside will be typically "bear its own costs andattorneys fees." As most cases settle, the clientmay want to include the cost of the attorney,filing fees and other expenses in determiningacceptable offers of settlement.

Early on in small cases the parties maysoon have "too much invested to settle." Toomuch invested to settle means that afterattorneys fees are considered, then viewedstrictlyfrom a business pointofview, settlementis no longer a good deal for either side.

For example, assume a female plaintiff issuing another woman for $30,000 and willaccept $15,000 to $20,000. Defendant will offerto pay$1 0,000 to $15,000. Assume that the costsand attorneys fees have already reached $6,000for each side. (Remember legal costs and fees donot vary much according to the size of case.)

Were the case to settle on these facts,plaintiff would only recover $9,000 after herfees and costs are paid or defendant would haveto offer and pay $6,000 more so that plaintiffcould receive and keep the $15,000 she iswilling to accept in settlement. But defendant isunlikely to offer $6,000 more, particularly afterpaying her attorney $6,000. If defendant hadbeen willing to do that, she would have justpaid the $30,000 claim in the first place.

On these facts - which are not atypical­plaintiff and defendant are not likely to settlebecause neither party can rationally afford to.on the other hand, like tired, punch-drunk

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fighters staggering to the end of theirstruggle, litigants often settle simply becausethey get sick of the case and want to go on withtheir lives.

The moral here is to watch costs carefullyin small cases. $100,000 in fees for a $37,000case can happen. It is your job to prevent it.

TaUorill' Represe1ltatio1l To Make It (ost-EffediveAs explained in the previous section, legal

costs tend to be relatively inelastic, Le. inflexibleas to size of case or demand. Due to thisinelasticity, legal representation can berelatively expensive, especially on smallmatters. Using a lawyer is like paying yourdoctor. Getting involved in litigation is likepaying for surgery. This expense makesrepresentation difficult, especially on smallermatters. Thus, it may not be cost-effective tohave a lawyer completely handle very smalltransactions or lawsuits.

Fortunately, many lawyers will tailor theirrepresentation to fit your needs. Assume, forexample, that you are suing your neighbor forwrecking your fence. The amount in question is$5,000. In Arizona this would be a justice courtcase; that is, heard by a Justice of the Peace.Because legal costs are relatively "inelastic" inrelation to the size of the case, your attorney'sfees in this dispute could be almost as much asthe amount in question, perhaps more. This isparticular true in this case because casesbetween neighbors can be really nasty. This isone of those types of cases where the partieswant to "take it to the Supreme Court" no matterhow much it costs. Thus, unless one prevailsand is awarded and can collect fees from theother side, it is not cost-effective to hire anattorney in this case.

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But thatdoes notmean that legalrepresen­tation is not available or helpful. An alternativeto having the lawyer representyou in this kind ofcase is to have the lawyer advise you. Even iftheattorney does not represent you in court,counsel can tell you what to expect, explaincourt procedures, point out your best facts andarguments as well as the bad aspects of yourcase, and tell you ,what to stress to the judge.

Under this alternative you would prepareyour own pleadings and represent yourself inJustice Court before the Justice ofthe Peace. Thedisadvantage of this procedure is that you willnotdo aswell as anexperiencedattorneywould.The advantage is that you will do much betterwith this on-going advice than you would onyour own without the attorney's advice and atless than one/third of the cost.

Although this system works better in smallcases, theoretically, it will work in all types ofcases, before all types of courts. However,the larger the case, the more problems you willhave because in larger cases an attorneywill almost certainly be representing the otherside and it is difficult for a lay person to take oradequately defend depositions or to conductother discovery.

The same principle would hold true insmall business deals. If you cannotcost-effectively use an attorney to prepare thedocuments, then, at minimum, see if you canfind an attorney to read the documents andadvise you on changes that need to be made.Involving an attorney in your transaction or suitcan make a big difference in your performanceand the outcome. The secret is to find anattorney who is willing to tailor services to yourbudget and needs.

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In the "old days," before law changed fromthe collegial paradigm to business competition,it may have been difficult to find an attorneywilling to adjust the provided services.The unquestioned rule was that you can havewhatever level ofservice you want as long as itis full-price, full service. It was kind of likebeing able to have whatever car you want aslong as it was a Buick Regal. This led toproblems where people could not afford or didnot want the law practice equivalent of theBuick Regal. Many people were, in effect,"squeezed out" of the system.

Nowadays, however, because lawpracticehas become competitive and law firms are moreclient-service-and-market-oriented, you canprobably find a firm who will tailor its servicesto your need. This is good for you and the newtailored-service firm.

Disuetioa Is Th Better Part Of ValorW~ta It (omes To Utifatioa

Clients often tell lawyers something likethis: "I'll take this matter to the Supreme COurt."and/or "It's not a matter of money; its a matterofprinciple." This approach, though noble, canbe foolish. It often ends when the client begins toexperience the emotional and financial travailsof litigation.

Lawsuits are tough. Theywearus out. Theycan take over our lives. In Charles Dickens'book, Bleak House, the lawsuit over the estatecontinued for generations. "The suit" capturedand consumed the time and attention of allmembers of the family. It became the center oftheir lives, to the detriment of everything else.Because of their interest in and expectedbenefits from the estate, the children did notwork or learn vocations. They expected to live

on the moneyfrom the lawsuit when itended. Inessence the suit became their lives.

. In Bleak House, the attorneys were beingpaId from the estate (which was settled whenthere was no more money left in the estate afterthe at~orne~ were paid). In most matters, youthe che.nt, Will have to pay as you go. That isexpensIve.

.The story of Bleak House is exaggeratedand maccurate, but the basic point is sound.Because the emotional and financial costs oflitigation (which is institutionalized war) areenormous, we need to approach "the war"rationally and cautiously.

.. p: rational and cautious approach tolItIgation should be emotionally and financiallycost-effective. I know of cases where the legalfees exceeded $400,000 on each side whenat one point, the parties were less than $30 000apart in settlement. This is irrational 'anddestructive.

Normally, an attorney has no clear ethicalduty to advise his/her client of thecircumstances unless a formal offer has beenmade. But because of the tremendous costs tothe .client. of .this situation, attorneys shouldadVIse theIr chents of the situation, even wheren<? formal offerh~be~n made. Agood attorneywill PU!~ue wha.t IS rational, at least to the pointof adVIsmg a client when things have becomeor are becoming irrational.

Because things can get out of hand, usingone's head is a usually a better idea than tryingto prove a point or maintain stubborn nobility.An early, complete and thorough evaluation ofthe case is advisable. This evaluation shouldinclude, not just the merits, but a considerationof one's financial and emotional "budget."

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Following this evaluation one may thenwant to make an early one-time offer. This offerwould probably be substantially less than onemight win in the suit because it will bediscounted for the time, trouble and uncertaintyoflitigation. But it should be enough to give yousome sense of satisfaction.

Some cases are difficult to win. Any suitis "losable." Every attorney has won cases thatcould have been lost and lost cases that couldhave been won. Things go wrong. The judge orjury doesn't like you, or your business, or yourattorney, or vice versa. In short, two brightclients represented by bright counsel can makeeven the most one-sided case into a close call.Keep this in mind when determining your"one-time" offer."

Remember, you are asking the other sideto concede the game. That is tough to makehappen unless your offer seems to be a fair dealto opposing counsel, particularly where theopposing party is still hung up on the emotionalaspects of the case. In that case, the law firm isunlikely to commit "suicide" of its representa­tion, even where the offer is reasonable.

Even where the "one-time offer" isdemonstrably reasonable, and the opposingparty is rational, the offer often faces theadditional obstacle of opposing counsel. Mostlaw firms prefer to make money on cases ratherthan promptly settle them. They prefer tothoroughly investigate the facts and do somework on the fIle before closing it. Whetherthis is "due diligence" or "working the fIle"depends on the circumstances. Often it is acombination of both.

One big advantage ofthe one-time offer isthat it avoids what maybe the biggest tragedy oflitigation: the case where the client turns down

..0

an offer only to realize later that the offerwasagood offer because the client can no longerafford the cost oflitigation, or now realizes thatone may lose what formerly appeared to be aperfect case. As there are no "perfect cases," it isa good idea to do a cost-benefit analysis atdifferent stages of the litigation.

TIle Trial As DeaterAlawsuit reqUires tremendous financial and

emotional commitment. Even for the plaintiff,who by definition wants and has filed the suit,litigation is a little like living with a serious illness.As discussed earlier, it can preoccupy one'sattention to the point ofdominating one's life.

In spite of these great costs, however,litigation is important not only as a means tocompensate a wrong but also as a catharsis(i.e. emotional release). The ancient Greeksbelieved that theaterwas necessary to allow thecitizens to release and cleanse themselves ofpent-up, negative emotion. Lawsuits play muchthe same role in western society. In this respect,a trial is like theater, it recreates the passion anddrama of living. It helps the parties and othersaffected by events to "process" the events,intellectually and emotionally.

A trial is like theater in another importantrespect as well. Because of the full disclosurenow required under the modem rules of civilprocedure in law courts, each side is fullyinformed ofthe otherside's facts and argumentsbefore the trial begins. In fact, to the extent anyparty is surprised and prejudiced by unexpectedevidence at trial, that party is entitled to have amistrial declared and the parties will have tostart over.

Thus, as in theater, by the time the trialopens the parties (the "stars") and their

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witnesses (the "supporting cast") know theirlines. They need only recite them to recountthe play to the judge and/or jury and the rest ofthe audience. The hard work of preparing andstaging the "play" has been done before thetrial begins.

This fact becomes important when thecase "settles on the courthouse steps." Clientstend to think: "We didn't go to trial, so the billshould be substantially less." This reasoning isoften flawed because the hard work has beendone before trial. The trial is just like theopening-night performance, after months ofpreparation and rehearsal. The real work andcosts have already been incurred. This is not tosay that moneyis not saved by not going to trial;just that the savings probablywill not be as largeas the client expects.

Underlying this is a difference inperspective between the client and the lawyer.To the client "the trial's the thing." To the lawyer,the heart of the matter lies in the work beforetrial. One reason for this difference inperspective may be the absence of the"catharsis" referred to earlier. Even with afavorable settlement, clients often miss thevindication or at least the process ofattemptingvindication that trial represents. Withoutrelease of their pent-up energy, they may neverbe completely satisfied, even if "on thenumbers" the negotiated result has beenoutstanding.

Rellleuer Aa Attone, Is Not 'a 'aal,st Or GlraAvoid using your lawyer as a psychologist.

Many new clients, particularly thoseinexperienced in legal problems or the legalsystem, use their attorney to vent their anger orfrustration. Overdone, this is expensive andunwise. Emotions do not win lawsuits or foster

112

good business deals. usuallY~tI1Pti~~\~f'~counterproductive. The last thingyoU\\\i'at'ltis an attorney who is emotionally involved inyour affairs. He or she will lose perspectiveand develop "blind spots." That is a good wayto lose. It is certainly not in your interest. SO donot encourage your attorney to join you inranting and raving about your case.

Attorneys .are not psychologists orotherwise able to solve your emotional issues,but they will bill you for the time spent listeningto you emote as if they were. Ifyou over emote,they will also brand you as a "problem client"because you can not deal with your problemsin a rational manner.

It is natural to feel anger and frustration,but it is important to stay focused on the legalissues of your situation. Those issues are theonly thing the attorney can handleprofessionally. Counsel mayhandle emotionalissues quite badly, and it will be your fault forpresenting legal problems in the wrong format.

Use attorneys only for legal matters, andsome business matters. Beware of usingattorneys for non-legal matters. They areprobably no better qualified to solve yourpersonal problems than you are.

IIJ

The Bills

Also discussed in this chapter are thedifferences in bills and billing strategy betweenplaintiffs and defendants in litigation andvarious reasons clients give for not needing todefend their case or pay their attorneys.

Ask Alto.t "Ie, Earl, Aid Oft"When it comes to legal bills, denial will

bum you. If you do not mention money, theattorney may assume he has authority to do"whatever it takes." You may wind up owing abill you cannot afford or did not expect.

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CIIapter Tel

S.1I11aryChapter Ten talks about money and bills.

Topics included in this chapter are feeagreements, policy statements, what to expectin the bill, and factors that influence the sizeof the bill.

Checklist

IrJ Remember: Discretion is the betterpart of valor when it comes tolawsuits.

~ Trial is theater in that everyone knowsthe facts and issues before trial.

~ An attorney is not a psychologist, sodo not run up your bill by engagingin histrionics.

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~ Remember the lack of economies ofscale and high transaction costs oflegal representation in evaluatingyour options.

~Work withyour attorney on joint goals.

S} Expect reasonable attention, but avoida "prima donna" attitude.

112 Be a team player.

W1 See ifyour can tailor your representa­tion to make it cost-effective andaffordable.

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~owledge-based "print shop." We sell paper.WIth our thoughts, knOWledge andanalysisonit

Ask the charge for photocopies, faxes inand out. The charge for these expenses can varysignificantly from one firm to another. In a largecase, where travel is necessary, talk to the firmabout limits on airfares, hotel bills and mealexpenses. In the past, $300 meals charged towell-heeled clients were not unusual, so don'tjust talk about your case, talk about money.

Although not required in cases billed bythe hour, fee or retainer agreements are stilla good idea. Typically, such agreements shouldstate the hourly rate of the attorney and hisstaff, the cost for incidental expenses, and thecircumstances under which the attorney maywithdraw.

Fee agreements are not required for theattorney to collect his fee, but they make thecase stronger. Uke some large firms in the area,I include a "Policy Statement" along with my feeagreement. This Policy Statement sets forth inmore detail the manner in which the bill isdetermined and the applicable charges.

Expect To Be Shocked. Bit Not Too Slrprised.At The Sile Of The Bill

Legal work, like medical work, isexpenSive. Litigation, like surgery,is outrageously expensive. No matter how wellyou have discussed your situation and optionswith your attorney, you may still find the billto be expensive.

However, while the cost of legal servicesmay astound you, the size of the bill should notbe too surprising. Too much of a surpriseindicates that communication has brokendown. Something has not been made clear.

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Ask Abolt Fee A,"ements AId Policy StatementsIn contingency fee matters, that is, where

the attorney's fee is taken as a percentage ofrecovery, a written fee agreement is a must, bothas a matter ofgood business and under the legalprofession's ethical rules. The agreementshouldstate the manner in which the fee is determined,including the percentage to the lawyer. Youneed to know exactly what percentage the firmwill take. Sometimes this percentage variesaccording to whether the matter settles, goes totrial or appeal. The agreement should also statewhether the expenses will come off the top, Le.before the firm's percentage is calculated, orafter (before is more expensive).

Sometimes, the firm will consider amodified contingency fee relationship. Underthis arrangement, the client will pay a retainerand be billed hourly, but at a discounted hourlyrate. In return for the discounted hourly rate, thefirm will receive a contingency percentage.This percentage will be significantly lower thanthe typical 1/3 or higher fee charged by mostfirms in contingency fee cases. It may be as lowas five to ten per cent, depending upon thediscount the firm gives on its standard rates.

If you are paying the expenses (called"costs''), you need to know how much the firmanticipates they will be. Even if you are notpaying the lawyer on an hourlybasis, the "costs"canbe veryexpensive. "Costs" include filing feesand the court reporter for depositions. Filing feesare typically around $100 and depositiontranscripts can cost more than $1 ,000 each. So,beware. Even in a contingency fee case, youneed to know whatyou are gettingyourselfinto.

Alawyer'S time maybe his "stock in trade,"(Abraham Lincoln), but after that comespaper. The author conceives a law firm as a

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important about the document· or tells 'yousomething that you need to do.

Other "red flags" are office conferencesamong the firm's own attorneys where eachattorney bills you for the time spent in theconference. The result is to bill twice as much tothe file than would occur without theconference. lnter-office conferences are notbad per se (although I have had institutionalclients who just refuse to pay for them). Firmattorneys should discuss their cases amongthemselves. But because this "dual billing" isso subject to abuse, it is more suspect.

Another questionable practice is the useof multiple attorneys on the same file eventhough the case is relatively small. A primeexample ofthe violation ofthis rule is the use ofmultiple attorneys at hearings. (Larger trial maybe a different matter). The attendance of morethan one attorney at a hearing is almost alwaysunnecessary. As the judge will only allow oneattorney to speak, the presence of more thanone attorney is wasted.

Time billed for one attorney reviewing thework of another is appropriate as long as thetime looks like a review, for example by a seniorattorney, and not a duplication of effort.

Games 1'IIat Law Firms Pia, Witk Billable H.arsSOmetimes when a law firm, particularly a

large firm, is involved in a new litigation case,the first thing that happens is that the firm sendsout a letter or announces that the firm will"vigorously defend" (or prosecute) the matter.Next, the firm engages in "due diligence" with an"abundance ofcaution. II (A cynic would call this"working the file./l). This "due diligence" meansan extensive review of the documents,discovery requests and depositions, all ofwhichcost time and money for both sides.

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lfthe resulting work is cost-effective, thenyou have no problem. However, a smart clientwill review the time and item entries to see ifthey make sense. SOme attorneys bill for statuscalls even though the only reason you calledthem is that they were not keeping youinformed. Other attorneys put a "cover letter"on every document so they can bill you $40 tomail you a letter.

Ask the attorney not to draft cover lettersto documents unless the letter says something

Be Aware Of 1'IIe Law Firm's Need To Bill HOlrsDoes the firm look "rich?" Keep in mind

who made it look that way. Law firms are undermore pressure than ever before to cover costs,salaries and to satisfY lawyer egos. Law firmassociates are under pressure to make partnerand to pay for their considerable salaries. Thesepressures create a great need for the firm togenerate billable hours. SOme firms will bill youif they even think: about your case, regardless ofwhere or when.

This often happens in the course of litigation,where Plan A turns into Plan C and workpreviously considered only as an optionbecomes critical from new facts ordevelopments in the case.

Because new developments are commonand not within the sole discretion and control ofthe attorney, the client should not blame theattorney for an escalation in fees based on newdevelopments.

On the other hand, to reduce the possibilityor magnitude of such surprises in the future, asurprising bill should trigger a conversationbetween the attorney and client about"avoiding surprises. II

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To some extent such conduct is posturing,Le. sending a message (whether true or not) tothe opposing party that it is in for a fight. Onebook on litigation likens this pre- or earlylitigation conduct to the mating rituals of bullwalruses: lots of show and huffmg and puffing.

Ifposturing were all that was involved, theconduct would just be part of the game (yes,litigation is a game. Important, and potentiallylife-destroying, but still a game with rules,winners and losers). Unfortunately, theimmedi­ate effectof"due diligence" is to generate a flurryof work and activity and to run up the bills.

It does not take long for a large law firmto run up a bill of$l 0,000 or more. If the clientis large, it can probably pay the bills promptly.Unfortunately, average people may havedifficulty paying legal bills, even if their firmbills at a lower rate and its bills aresubstantially smaller.

In this respect the large firm still retainsthe large firm advantage (i.e. superior resources).It is not uncommon for small clients to run outofmoneyin litigation with large firms because thework created by the other side runs up the billsfaster than the small firm's cash flow canhandle it.

On the other hand, for those clients whocan afford to "hang in there," the large firmadvantage somewhat disappears over time.One reason for this is that the large firm clientmay "go into shock" when it sees the bill(s).Large firms send large bills.

A$20,000bill from a large firm on a $50,000matter is not unlikely. Because this billing ratiois not very cost-effective, the large firm clientmay object to it. After a few such monthlybillings the large firm client may ask its law firmto be more "cost-effective."

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Chapter Ten: The Bills

cases also tend to "wax and wane." Theyheat up, then after a few months of furiousactivity, they typically slow down somewhat.This natural lull in the action allows the client tocatch up on unpaid fees.

Gettil' II ne Utiyatiol iiI' As APlailtiffIf you are going to get "into the ring" in

litigation again~t a major firm (most suitsagainst landlords, real estate agents andbusiness brokers trigger insurance claims,which in tum are defended by large law firms),and it is not a contingency fees case (i.e. you arepaying the attorney by the hour, not as apercentage of settlement), then it is importantfor you to have the emotional and financialcommitment to "last more than five rounds."Otherwise, starting the fight may do more harmthan good.

Usually, if the parties settle before trial,then each side will bear its own costs andattorneys fees. However, unilateral surrender orearly defeat because you weren't up to it, mayallow or cause the other side to demandpayment of its attorneys fees as a condition ofsettlement. SO, if you are going to quit or getknocked out early, then you are better off notpUrsuing the matter at that time. Ifyou are notsure whether you are up to starting a lawsuitnow, ask your attorney for the statute oflimitations (i.e. filing) deadline for that kind ofcase, and come back when you are more ready,willing and able to pursue the matter.

This assumes, of course, that you are theplaintiff with a choice in the matter of when tostart the fight. If you are a defendant, then theimportant thing to do is to diligently work onyour case step by step.

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Geffin, In TIle Uti,ation Rin, As ADefendantThe plaintiff's job is to keep the case

moving to settlement or trial. The defendant'sjob is to defend, or if the plaintiffwill allow it, to"hide." Defendants do not have to push theaction. If the plaintiff doesn't push the matter,then the defendant can sit back and relax.

Defendants like this rule, but theyover-apply it. As long as the case is pending,some defense must be made or prepared. Someclients just want the case to go away withoutdoing anything. That stratagem won't work. Infact, if the matter is serious and reasonablydefensible (some cases like collection casesare difficult to defend because the money isclearly owed), the defendant's best course ofaction is to vigorously defend. This applies notonly to cases where plaintiffs claim is meritIess,but also to cases that are much stronger.

The risk is that by failing to diligentlypursue the evidence and law necessary todefend, the truth may get lost "in the system."Remember, the judge only knows the facts asthey are presented and as well as they areprepared.

TIle Do-Not~in, Defendant's SyUo!iSftlUnfortunately, out ofa sense of outrage or

denial, some clients want to do absolutelynothing. It is surprising how many clients startwith the conclusion (they want) and reasonbackwards to deny the reality of the need todefend. The syllogism in their mind must looksomething like this:

first Premise: This case is "BS." I didn't doanything wrong and I don't owe these

people (plaintiff) anything.

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CIIapter Ten: The Bilk

5ecoId Premise: One who hasn/t doneanything wrong, does not have to "doanything" (to prove it).

Conclusion: Therefore, I don't have todo anything to prove my non-liability. (Nevermind that client has been served with aSummons and Complaint and has 20 days to filean Answer or a Default Judgment may beentered against him.)

When this kind of reasoning occurs, it istime for a "Reality Check." The lawyer mustpoint out to such clients some obvious facts:Plaintiff disagrees with the First Premise orthere would not be a lawsuit. second, whetheror not plaintiffor the client is correct about theFirst Premise, the second Premise is alwaysfalse in litigation. One has to prove "innocence"in dvil suits by showing why plaintiffs factsare wrong or legal theories do not apply.

Because the First Premise may be false inthe eyes of the Court and the second Premise isalways false, then the Conclusion ("l don't haveto do anything") is always false. It may befrustrating to spend hard-earned dollars onlegal fees, but this is reality. So, if you are adefendant, dnch your belt and get involved inyour case.

11Ie S,Ut!iSftl Of Non-hJ1llelt Of lawyerA variation of the above "Syllogism of

Non-Action" is the "Syllogism of Non­Payment." This syllogism reads as follows:

fiat Premise: By a defendant; this caseis '~S." I didn't do anything wrongand I don't owe these people(plaintiff) anything.

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By a plaintiff; this case is obvious.I've been wronged. I'm entitled tosatisfaction.

5ecHd Premise: Bya defendant; onewho hasn't done anything wrong,should not have to pay anything to anattorney to defend.

By a plaintiff; one who has beenwronged is entitled to justice withouthaving to pay for it.

Conclusion: By plaintiff and defendant:Therefore, Idon't have to pay an attorney, evenifI hire one. (Never mind that a plaintiff's case isworth zero without an attorney to prosecute itand that judgment would be entered by defaultif defendant did not defend.)

Notice that, under this syllogism, the onlything the plaintiff and defendant h~ve incommon is their belief that they are entitled tojustice without paying their attorneys. Thisindicates that "blaming the attorneys and thelegal system" may be the ~t strata~em forachieving settlement. That IS, the partIes mayhate each other, but ifthey hate attorneys more,then that hate can be used to establish acommon basis for settlement.

If it does not appear early in the ease, theSyllogism of Non-Payment" may appear afterthe attorney has worked his tail off to come to ajust settlement or victory. About that timeclient may reason as follows: 'Well of course Iwon. Iwas right all along. Attorney did not haveto do anything but demonstrate the obvious(never mind 10 depositions and num~rous

other discovery requests and/or motIons).Therefore, why should I pay this attorney?

W,

The reason, of course, ifone isabout it, is that the client omy"Baltimore" because of the attomeyts help. BUtfor the attorney as "bus driver," client wottld bestill sitting at the station in Grand Rapids, orworse, in the homeless shelter. The fallacy,again, is that client's thought process isstarting with the "destination" and is forgettinghow he got ther~.

Where Pmittle h, By Tht I,ttFor transactional documents, (e.g. a will,

or contract or lease) ask the attorney to do thework by the job, Le. at a fixed price. Ifpossible,get bids from other attorneys, then ask .theattorneyyou like the bestto match thebestpnce.Be aware, however, that busy and experiencedattorneys are going to have their "bottom line,"so do not count on getting both the best priceand the best attorney. Again, it's a question ofbalancing your interests.

If you have multiple tasks, (~.g.

purchase /sale documents, a new corporation,non-disclosure and non-compete agreementsfor employees, and sales contra~) see if theattorney will give you a volume pnce. Attorneyshave more "mark up" in "relatively standard"contracts.4 Although no good contract is pureboilerplate, experienced attorneys can preparemost contracts fairly quickly once thenegotiations are complete and the terms areknown. Thus, they can afford to giveyou a breakon their pricing.

You can attempt to negotiate volume ratesin litigation also. However, it is more difficult.Virtually all litigation work is purely customwork. The facts, applicable law and legalresearch involved are almost alwaysnew. Thus,usually, there is no "standard" content theattorney can use. Still, the attorney may quote

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job or volume prices on more simple pleadings(Complaint, Answer, and perhaps, theDisclosure Statement), especially in lesscomplex cases.

If doing the work "by the job" does notmake sense, e.g. in a complex litigation case,and the case is notbeing done on a "contingencyfee" basis, you may want to negotiate a lowerhourly billable rate with a •contingency kicker.•By contingency kicker I mean a percentage offthe top, but much less than the standard25-percent to 33-percent contingency fee.The object here is to give the firm a stake in theaction in return for lower hourly rates billedby its attorneys and legal assistants.

In this case the contingency fee will beused as a bonus. Asample bonus would be fiveto seven percent. This option can be used byplaintiffs and defendants. Where used by theplaintiff, plaintiff's firm would receive a smallpercentage of the gross settlement or judgmentearned against defendants in addition to thehourly fees, which would be billed at a discountrate. Where used by a defendant, thendefendant's firm would receive a percentage ofthe difference between the "average"anticipated verdict and the actual verdict(Le. of money saved) in addition to a hourlyfees billed. For example, in defense work,insurance companies and insurance defensefirms may have a good idea what certain claimsare worth and base the incentive on an averagepay-out for that kind of injury or claim.

C01lS0lidatioi Of Le,al Work To AFew FirmsSome large clients, which previously used

a variety of firms, now consolidate their workinto one or two firms. This idea stemmed in partfrom bill monitoring services. We will discussmonitoring services in the next section. The

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ChapterTeD: The Bills

theory is that the large useroflegalset'vi~es:~better manage its use oflegal service$iandg~~9better rate by negotiating a volurnecli§cotn1twith one or two firms, than byusing aVariety()ffirms.

COnsolidation is most often employed bymajor users of legal services, e.g. majorcorporations. It means that the corporation willuse just one, twaor three law firms, instead ofavariety of firms and will negotiate a volume orbulk rate for the work. Often, these bills will bereviewed by the monitoring service, supposedlyto insure accuracy and fairness.

Consolidation is somewhat ofa fad. It maybe an idea that works better on paper than inpractice. Usually the firm pitching consolidationis the large law firm or an accounting firm thatprovides bill monitoring services. Thus, the ideais coming from a self-interested party.

In my experience the consolidated­volume discount bill is still higher than thesmall firm bill. Sometimes the difference is dueto increased expertise, and this can be animportant factor. Where special expertise isnecessary, then a volume rate for specialiZedservices can be a good idea. But, for manyroutine services, and even in specialized areas,many sole practitioners and small firms canprovide the same level ofservice and expertiseas the large firm, but at the same or lower rate.Indeed, in these days of high firm overhead,many small firms are "spin-offs" of large firms.

It is true thatusing a numberoflaw firms canmake managing legal services more difficult, but itallows the client to tailor itsuse oflega! services tothe matter at hand. Routine matters, that do notinvolve specialized areas oflaw, can be delegatedto firms that are strong and cost-effective in such

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matters. Due to its overhead, typically, this will notbe the larger firm.

Some firms are good at getting rid ofproblems. They are strong in business judgmentand focus on closing the fIle rather thanexpanding it.

Collection firms tend to be specialized.Many have a staff of paralegals to preparevoluminous documents cost-effectively. Oftenthese firms work on a contingency fee basis.

For volume users of legal services, thechoice is between consolidating legal servicesinto a few firms in return for a volume rate orusing a variety of firms for different purposes.There is no clear right or wrong answer on thischoice. Which works best for you is a function ofwhat is lost and gained.

Giving up a flrm than has done good,cost-effective work for you can be a big mistake.The author worked for a flrm doing bankruptcywork for a major bank in the area. During itsacquisition by a large interstate bank chain, theclient consolidated its business away from ourmedium-size flrm to an excellent larger firm.Based on the quality of legal work by theprominent flrm, our former client made anexcellent choice, but as a matter of cost, theconsolidation theory proved disastrous. Thenew law flrm's billing, even after the allegedvolume discount, were more than three timesthe size as our flrm's rate on similar matters andfor similar results. (I heard this from our formerclient's employees who were against theconsolidation because they were satisfledwith our work and lost some of their autonomyon the files.)

The good news about the new firm was

118

CllapfetlelJ;'111that it hired nothing.but theb~t~t1~~~t~The bad news was thatthe<att()rn.~~>~~for the flrm were treatedlikePrinla~()tu1~iSince our flrm had been verysuccessfti.liiIlitscases for the client, the client simply wounduppayingsubstantially higher fees in the nameofafalse or overstated theory ofefficiency.

Pros AId eolS Of Bill MelitOrtl'servicesOften largerorporations will get the idea of

consolidating law flrms and monitoring billsfrom one of the national accounting or otherlarge consulting flrms. One of the flrm's"consultants" will recommend the idea as a wayto improve manageability, lower costs andimprove supervision. The idea has greattheoretical appeal.

In truth, however, the monitoring serviceand the law flrm(S) are often in a symbioticrelationship with one another. The consultingfirm is "feathering its own nest" by selling theidea oflowerand supervised costs. Often, it doesthis by recommending prestigious high-pricedlaw firms whose bills may merit, and canprobably stand, some reduction. The consultingflrm gains by being paid to monitor the bills andcosts of the law flrms. The law flrm whoseservices are ostensibly being monitored gainsby being recommended by the consulting firm.

Both the new law flrm and the newconsulting firm benefit from the arrangement.The consulting flrm looks good to the client byeliminating waste; the law flrm has a major newclient under an arrangement that, by design,restricts competition and raises barriers to entryto outside firms.

Consolidation and bill-monitoring canwork, but will work more effectively where theself-interest ofthe law and consulting flrms arereducedoreliminated.Theconsulting firmshould

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Receiving a bill like this is not verysatistying, so do not accept it.

Fortunately, nowadays, most bills aremore detailed. Typically, an invoice from a lawfinn should read something like the exampleon example B.

Ask for detailed billing. The bill should tellyou who did the work, when, what the workwas and what it cost. It should tell you enoughto ask intelligent questions, if necessary.

=$250.00

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$100.00

Bill7/10/95 DWH:Legal research lien statutes andcases, on . Draft letter toattorney X re lack of lien and theft

7/12/95 DWH:Review settlement proposalfrom X; discuss with client Y.5 hours $100.00 =$500.00

2.5 hours

B

If yoursizeable, and youthen you may want to reqrue:stof the cost of attorneysTheoretically, this helpscost-effectiveness of the finn.

Whether or not you receive a "blendedrate," monitor the use of lower cost attorneysand paralegals for routine matters. There isno sense in paying a road-grader to pull a plow,if all you need is a Ford tractor.

Example B

$1,000.00

$1,200.00

$2,600.00

BillMedical research, 5 hours:(This is the "breakdown.")

Deposition:

Medical research andconsultations, reviewmedical files:

A

not nominate the law finn. The arrangementshould begin as a trial run before a long-tenncontract is signed. The new bills, afterconsolidation, should be compared with the oldon same and similar services. The client shouldconsiderwhether it can choose the law finn andmonitor the legal bills.

Ask for AI Itemized AId Detliled Bill.Recently, I received three bills from an

expert witness. Actually, Ifirst received two billsfor two different matters and requested a"breakdown" ofhow my clients $1 ,200 retainerwas applied. The bills Ireceived read somethinglike the following:

Example A

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Checklist~ Talk about moneywith your attorney.

12 Ask about fee agreements.

"} Expect legal bills to be high but notsurprising.

~ Be aware that law firms need to billhours.

~ Legal bills as a plaintiff or as adefendant.

IrJ Non-payment syllogism.

~ Paying by the job.

~ Consolidating legal workpros and cons.

If Bill monitoring servicespros and cons.

W[;} What a legal bill should look like.

Chapter Elevn

Final ThouptsSIIIII."

This final chapter simply gives a checklistof mistakes to avoid in choosing and using anattorney and a modified "Ben Franklin"technique for using and weighting thesefactors. This list is based on the previouschapters of the book.

AS.n." of How Not To ~ooseAad Use Aa Aftorae,

One of the best articles on investing thisauthor has read was entitled something like:"Ten Ways to Lose Money In The Stock Market."The article was excellent because, while it is notalways clear how to make money,certain investor mistakes are almostguaranteed to lose money. Similarly, certainmistakes by clients in choosing and using alawyer are almost guaranteed to result in a lessthan an ideal relationship.

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To summarize, some ofthese mistakes areas follows:

19 Not using a lawyer at all when theclient is not qualified to evaluatethe documents or prosecute or defendthe case.

Wi? Suing as a matter of principle withoutconsidering the transactions' costs oflitigating the merits.

"} Waiting until the last minute to hirean attorney, not interviewing counselon qualifications and experience in thearea, failing to evaluate lawyer'sability to listen and communicate.

-q Not bringing up the expected costof legal representation, and theassumptions upon which it is based,until the bill(s) come in.

'9 Leaving the initial consultationwithout an idea and evaluation ofwhat will or, at least, could happenin your transaction or lawsuit.

IP'J Pestering and haggling your ownattorney over money after hiringcounsel to represent you.

11)1 Entertaining false expectations aboutyour side of the deal or lawsuit andabout the justice system as a "perfectsource of truth and justice."

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Dumping the case in your att()rn(~Y's

lap, without doing your own "h,.,..........work" on the case.

~ Choosing an attorney who will notlet you be partof the team ordecidingonyour own not to join the teamyourself.

-R Not requesting or receiving itemizedbilling statements that tell who hasdone what on the case.

1\e DOl Hldsptt.-lea FralkU.Wei,.ted Amap Techiqae

The "Ben Franklin"technique ofevaluatinga course ofaction is well known to salespeopleand many executives. Under the Ben Franklintechnique, one may list the "pros" in favor ofoneaction in the first column and the "cons" againstan action in the second column. Alternatively,option"A" maybe considered in the first columnand option "B" in the second column. Thecolumn with the most entries wins theargument and the decision is made.

If we used the Ben Franklin technique tochoose an attorney, factors like experience andqualifications might be in the "Pro" column,while costs and relatively low-listening skillsmightbe in the "Con" column, oreachattorney'sname couldbe assigned to the head ofa columnand the attorneys evaluated according to the

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factors. Here, however, we have alreadyidentified many of the factors one may use toevaluate an attorney. Thus, a modified versionof the Ben Franklin technique is appropriate.

Before we discuss this modified version,however, we need to understand theweaknesses ofthe Ben Franklin technique. Thetraditional Ben Franklin technique has twoweaknesses: First, one may omit an importantfactor from consideration in listing the pros andcons. second, under the technique, all factorsare considered equal (at least on the surface),but in the real world not all factors have equalweight. Forexample, a swimming pool light anda hall light might both be factors to consider inpurchasing a home, but the pool would be moreimportant to most people than the hall light inmaking the final decision.

Many people will allow for the differencesin "weight" of the factors instinctively, but thisintuitive approach does not force one toconsider the proportionate and total weight ofthe factors. If factor number 1 is three timesmore important than factor 3, then the valuativesystem should state that expressly.

We will modify the technique in two ways:First, by listing the factors to be consideredalong the left hand side of the chart (points 1through 9), and, second, by weighting thefactors according to an assumed value system(you would substitute your values here).Usting the factors helps us to remember andinclude them, so that none is overlookedand forgotten. Weighting the factors helps us toconsider their relative importance.This weighting system is the key to theDon Hudspeth version of the Ben Franklin

technique.

. Under the weighting system, eachaSSIgned a range of relative importanrange or scale may vary from 1 to 5 or 1 to 10depending on the importance of the factor. Fo;example, an attorney's qualifications may beranked on a scale from I to 10, while theattorney's ability to listen may range on a scalefrom 1 to 5. '

After each factor is assigned a range, andeach range is evaluated in relative importanceto every other range, then the next step is toevaluate and assign a spedfic numeric value toeach factor. This assignment is made accordingto which factors are most important to you.

In the following example, a hypotheticaleyaluation is being made by a woman seeking adIvorce attorney. Most important to the womanare the attorney's qualificationsand experience.The client would prefer a woman attorney, buti~ is n?t essential (see factor 10). At this stage,lIstenmg and communication skills are ofmedium weight, but the client may reevaluateall of these factors as she goes along.

Using this sample evaluation sheet wewill now plug in numbers based on the client'sinitial phone and personal interviews withthe attorney.

Hypothetical Attorney A is a male,educated at the University of Chicago LawSchool, with 15 years experience. Attorney Aisbright, polished, talks a little more than helistens and seems to know what he is talkingabout, but is not always clear. He sometimes"talks above" the client. Attorney A is with anestablished, well-known firm, but his billingrate is about $25.00 an hour higher thanAttorney B's billing rate. Attorney A seems

III

Attorney AttorneyA B

1. Qualifications (I -10) 8 7

2. Experience (1-10) 8 6

3. listening skills (1-5) 3 4

4. COmmunicationskills (I -5) 3 4

5. COst (1-10) 6 8

6. Eagerness toplease (1-5) 3 5

7. Team approach (1-5) 3 4

8. Turnaround time(1-7) 4 4

9. Detailed billing. (1-7) 4 4

10. Other:female: (1-3) 0 3

Total 42 49

ExampleC

sample CompletedEvaluafion Chart

csomewhat indifferent about the case, but thiscould just be due to a natural reticence to beexcited. Attorney A wants the facts from client,but is not anxious to have the client attenddepositions or to be actively involved except asnecessary. Due to the firm's apparent resources,it appears that Attorney Awill be able to get thework out fairly promptly and the bills will besufficiently detailed and accurate.

Hypothetical Attorney B is a woman. Sheattended the College of Law at Arizona StateUniversity, and has six years experience.Attorney B is less sophisticated thanAttorney A, but listens well and restates legalconcepts in everyday language. Attorney B isexcited about the case, but is not quite asfamiliar with the area as Attorney A.Attorney B wants the client to be activelyinvolved in the case, partly because shehas less staff and feels she can get thingsdone faster and better with the client'sinvolvement. Attorney B says she will get thework out promptly and her bills are basically inthe same format as all other firms, which isfairly detailed. Attorney B agrees to add moreinformation to the bills if the client requests it.

Based on these facts the initial evaluationturns out as follows:

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Glossary

Code of professional responsibility ­Rules that govern a lawyer's right topractice law in a state. A lawyer's licensecan be removed or suspended, or thelawyer can be reprimanded for violatingthe code. Each state's code is based onthe American Bar Association's modelcode.

Conflict of interest - Attorney's associationor tie that would jeopardize or biasrepresentation of the client. Failing todisclose a potential conflict of interest to aclient is a violation of every state's codeof professional responsibility.

Contingency fee - With a contingency fee,the law firm takes a percentage of theaward as payment of its fee. Typically,personal injury cases are prosecuted ona contingency fee basis while mostcontract-related litigation is not.One/third is a fairly standardcontingency fee, although somefirms discount the rate to 25 percent.

Defendant - Person against whom a legalaction is filed.

Deposition - Out-of-court proc~ss of taki!1~the sworn testimony of a WItness. This IS

usually done by a lawyer with a lawyerfrom the other side being permitted toattend or participate. The purpose is to

u,o

disclose rel<:~va)J.t it1r.fol'ltl'l~ti()neach sidegoing to trial and decide wnetn1erpursue the claim or settle ~ ...c'-. .........

Discovery - Before-trial formal and informalexchange of information between sidesin a lawsuit. Two types of discovery areinterrogatories and depositions.

Expenses - Charges for a lawyer's workother than fees, typically including longdistance telephone charges, photocopy­ing, court filing fees and expert witnessfees.

lawyer referral service - Telephone servicethat provides the names and addressesof lawyers in a specific geographic areaand by area of practice. Many are run bybar associations and charge a fee to theparticipating lawyers and law firms.

ordinary course of business - Ordinarycourse of business is a function ofyourbusiness. For a real estate firm, buyingproperty may be normal, and thus, in theordinary course ofbusiness. For mostbusinesses, e.g. a trucking company,buying a business would not be in theordinary course of business, thus; thismight be a "fundamental change."

Plaintiff - Person who files a lawsuit againstanother.

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IThis example ignores incluslrvleverage. In the right industry, e.g. onc:~ reciililinghigh-tech knowledge, and withfinancing, the assumption may prove lessfallacy. But this is a simple example to make asimple point. '

2These references refer to styles ofconduct, not gender. They apply equally well tomen and women lawyers.

3Russ McGuire left Kansas City, Kansaswith his wife, children, furniture andeverything he owned in his car. He later becamethe owner of a vending machine companythat did business in most of Kansas, Coloradoand Oklahoma.

41 say "relatively standard" becauseinexperienced clients think that every contractis standard, but all contracts are most definitelynot standard. Even sophisticated clients, whoshould know better, have taken contractsprepared by their attorneys for one transaction,in which the client was the seller, copied it, andused it in the next transaction in which theclient is the buyer. This is a prime example of"shootingyourselfin the foot" and being "pennywise and pound foolish." (Please forgive themixed metaphors).

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Pro se - Representing yourself in courtwithout the help of an attorney. Alsocalled in pro per.

Retainer - Money asked by the lawyer beforebeginning work on a case, oftenconsidered a deposit for a portion ofthe work to be done. The money may beused to cover expenses or the lawyer'sfee or simply to reserve the lawyer'Sservices for a spedfied time period ona lawsuit. The unused portion mayormay not be refundable.

Pleading - Making a formal written state­ment of claims or defenses of each sidein a lawsuit.

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Bihlio!J'aphy

Dandng With Lav.yers:HowTo Take ChargeAndGetResults, byNicholas carroll, Royce BakerPublishing, 953 Mountain View Drive, Lafayette,california 94549 (First Ed. 1992).

Legal Street Smarts: How To Survive in aWorld O!Lav.yers, Dennis M. Powers,J.D. InsightBooks, 233 Spring Street, New York, N.Y.10013-1578 (First Ed. 1994).

Using a Lawyer, Kay Ostberg, inAssociation with Halt, Random House, NewYork, New York (First Ed. 1985).

NOTES:

IJ,S

NOTES:

11,6