Nov 5, 2013
Attorneys fees and Settlement (Observations from the Trenches)
by Barry Seidel
(You can read all of Barry’s fantastic posts here, including his seven part series on Evolutions of a Solo Practice.)
Have you ever been involved in a case that should be settled but isn’t?
Many times the reason for this is…one side or the other (or both) are not in a “proper” fee arrangement with their attorney. Sometimes, it might be you who is not in a proper arrangement. I prefer situations where everyone is acting like big boys and girls, but sometimes a party is acting like a baby…they are not seeing reason, or making a reasonable offer, or accepting a reasonable offer, or even negotiating, just…because. And the extension of this because is…because they can. Let’s look at a few scenarios:
1. If there is no consequence to the client in being unreasonable, sometimes their strongest negotiating position is to be just that. In civil litigation (I am leaving aside personal injury cases with insurance, where there are some other issues), if both parties are paying their attorneys hourly, they should behave like adults. Sometimes one of the attorneys is on a contingency (generally the plaintiff), and if the plaintiffs attorney did not get strong client control from the outset, the client may cheer him on and misbehave. Conversely, if the defense counsel is a family member, or is “doing a favor for a good client” (slap yourself in the face if you hear yourself saying this), the client has a disincentive to negotiate properly.
2. In small matters, the ones that start out “just write a letter”, sometimes you can’t finish the matter because nobody is paying as they go. Little problems get magnified. The clients are asking the lawyers for more and more, and you could stop them with a bill, but the case did not start out that way. “Stop getting involved in these situations, OK?” I’m yelling at myself here, but if you do this, you know what I mean…stop before you start.
3. You got a retainer, started to work, but those next hourly bills take some discipline and systems to produce. Until the clients get the hourly bill after the initial retainer, they don’t understand or respect your time. If you want to control litigated matters, keep time, bill timely, and don’t apologize for it. You can give your best to all your clients if you have time to give, and you will not have time if you don’t control it.
4. Sometimes the clients are willing to pay, and are paying, and they are still acting irrationally and the attorneys are cleaning up. These are called “matrimonial cases”. I respect matrimonial cases and the specialists who handle them, and never begrudge them their monstrous incomes. They earn it, the clients may not be happy to pay them, but they understand it. The surest way for a generalist to learn about why hourly billing is important, and how cases don’t settle if you don’t bill properly, is to “dabble” in some matrimonial cases. (Disclaimer: I am not suggesting that anyone actually “dabble”. I don’t have to suggest it, I know it will happen. When it does, at the very least, understand what is really going on and why.)
There are a few things to learn from all this.
First, control your clients and your billing. To the extent you have issues with this (and I think it is a very common problem), actively work on improving it.
Second, pay attention to your adversaries attorneys fee situation. I always try to assess this at the outset. Clients are sometimes puzzled when I ask whether they know the relationship between the adversary and their attorney, but I consider this valuable and important information. I factor this heavily when considering a strategy for the case. For example, if I know that the other attorney is not really a litigator and is a friend doing it “on the cheap”, I would strongly consider making a summary judgment motion and forcing the adversary to actually pay an attorney. Sometimes cases “miraculously” settle when you do this. You just have to be aware of how important the attorneys fees really are.
Third, clients sometimes think (and say) that we attorneys are obsessed with fees. If you see this issue as it really is, an important factor in every case and on many levels, you will address it professionally. Leave the emotion and innuendo to others. Keep track of your time and bill. Pay attention to the attorneys fees on all sides.
Finally, pay attention to what has and has not been working for you. Don’t beat yourself up over mistakes, we all make them, but for G-d’s sake, learn. When you do this, you appreciate the mistakes for the ultimate value they provided.
All opinions, advice, and experiences of guest bloggers/columnists are those of the author and do not necessarily reflect the opinions, practices or experiences of Solo Practice University®.