There’s been so much going on lately – North Carolina’s consideration of Clio, the NJ Opinion about so-called virtual offices – but I haven’t had time to write. Why? Too many clients!
I have yet to pay for advertising, it’s all been word of mouth and internet based. But between my full time day job and my art time solo practice, I stopped updating here. I know I have to do both (or all three). I have to get business cards printed. That’s on my list this weekend. I want to do a full color add with the owl, but part of me wants to go with heavy linen cardstock, thermographic raised lettering, and a traditional look. I’ve been holding this up until I decide about a fax machine, and I have now concluded that I will not get one. i worried that it would be bad customer service, but I think I will see if it really matters to them that i use email attachments instead.
And, best form of validation ever – my first solo practice client just wrote to me and asked me to represent them on an other matter. And that…is the definition of success. (Nicole Black’s Rule 5)
I read another post today looking at the issue in yesterday’s post, but putting it in different words.
Victoria Pynchon, lawyer, mediator, and author, is teaching an online course “How to Negotiate Anything.” In an interview about the class, she asks, “Are you negotiating what you need, or what you’re worth?”
This is what I was trying to balance in my last post. As a lawyer, I have to price my work at its value, not on what I need to make to survive. That’s why I undercharge – I am relying on my modest personal needs rather than the market price for the service. But the interviewer also brought up the unenviable position of finding that the value of what you provide cannot be realized by your market.
Here’s an example of that. My husband graduated law school two years before me, and went right into solo practice. He often found himself turning clients away because the value of the service was incongruent with his costs (or needs). One client came to him with a landlord tenant issue. She owned some land, and put an old trailer on it, and rented it out to cover the taxes on the land. She was sick and did not get out to check on the property often enough. When she stopped getting rent checks, she went by to pick up the back rent, and found the place abandoned, and in very bad shape. She cleaned it up, and repaired the damage, but the former tenants still owed her money. You know where this is going. We explained to her that just to cover the cost to us of travel time to the court, and the minimal appearance involved, and then the judgement debtor rule to execute and collect the amount the court would award would likely exceed the amount she would collect. In other words, the value of the service was less than the cost to provide them.
This client felt she needed to show her tenants (it was a small community, so they had an ongoing relationship) and others who might try to take advantage of her that she would not allow it. So we went to court, and it ended up costing her $50 more than she collected. She paid us the whole amount, because she did not think it was her lawyer’s place to take a loss when she decided in advance to engage our services and agreed on a rate. She recognized a value beyond the financial return,even when her lawyer didn’t.
The lesson I learned from that client is that the client, not the lawyer, knows what the value of the project is. And it has nothing to do with what it costs the lawyer to provide it.
Future musings: Do hourly rates really reflect the experience and value of the lawyer’s time?
This post was inspired by this blog at Client Revolution, which I saw in this morning’s Twitter-FB-Blog rush. I am supposed to be “taking it easy” and resting, so I took the day off my in house job. However, I can’t seem to NOT work…
Attorney blogger Jay Shepherd says:
But I like to believe that as lawyers, we are knowledge workers. We are experts. We are professionals. Our clients are paying for our creativity, our inspiration, our innovation, our dash. If we are litigators, they want us to solve the problem that is the litigation. If we are family lawyers, they want us to find a way out of their deeply personal family dispute. If we are corporate lawyers, they want us to find a way to let them run their companies the way they want to. If we are trusts-and-estates lawyers, they want us to help them protect their legacies for their families.
They don’t want our hours. They don’t even want our labor.
They want our art.
Of course, most of us would rather think of ourselves as creating art rather than laboring for a day’s wage, so the post challenges us with the question: So why do we bill for the hours of our labor rather than the value of the finished product?
I like to let my clients choose how they want to pay for the work I do. They usually choose to negotiate a flat rate in advance, but some still prefer hourly rates.
The artist analogy breaks down in that artists retain the art until a buyer offers a price they can accept, while a service provider cannot “keep” the work they’ve done. On flat fee arrangements, we define the scope of work, so that if the client wants more or different work done, they get to renegotiate the value to them. So it starts looking like a building contractor rather then an artist.
It matters how long it takes you to do something, but that may not affect the value to the client. Clients shouldn’t pay more than it’s worth to them, and lawyers shouldn’t do work that costs them more than it’s worth to the client. There’s always another lawyer who will take the loss for reasons of their own.
I have often taken work that is valued at less than what wish to get paid: Maybe it’s pro bono, where the client recognizes he value, and needs the work, but can’t afford it. Sometimes I will tell a client I am doing it at a loss to let them get to know my work, and they will see how I am different from other lawyers. I wan them to hire me again and recommend me to their associates, but the only way to get in to the relationship is to underbid the project. So far, clients have always commented after the fact hat they know they got a great deal. Because I am introducing myself to the community, I consider this time well spent, and a good form of self marketing. After I have solidified my reputation in the minds of potential clients, I doubt I will accept projects for less than a good reimbursement. There will be another lawyer cutting his teeth who will be willing to do the low value-high cost projects.
I like the idea of flat fee billing. It’s risky in the beginning, and you still have to keep your time so you know if your time is well spent on that kind of matter, but it caters to the client, and that’s the way I want my practice to work.
How about you? Any war stories about billing or fee arrangements that went awry, or particularly well?
For those of you playing along at home, be sure to catch up on the comments in the ABA online news article NJ Solo Allowed to Proceed with Claim That NY Discriminates Against Out-of-State Lawyers. Lots of different opinions about what the NY requirement actually is, and whether the NJ law change regarding bona fide offices means you can have an office really far away. Taken to their obvious, but absurd conclusions, these restrictions make no sense
Nerd points to those who immediately recognized the post title from The Hobbit.
I laughed when I read the title to Christopher Small’s post “If Starting A Law Firm Consider The iPhone,” because getting my iPhone was one of the things that made me able to start my practice. I used the Blackberry provided by my employer – and it was O..K.., but the iPhone commercials about the web browsing experience really hooked me. A few friends got iPhones, and couldn’t stop singing their praises, so I bit the bullet and spent the money. The data plan wasn’t any more expensive than the other phones, and I actually wanted to switch to AT&T because my house was in a Sprint/Nextel dead zone. This annoyed me. It also showed me the difference between the self motivated person and am and the other type of person one of my coworkers is. I complained about not being able to get or make calls on my work phone when I am in my house, and he asked “Did you have to pay extra for that feature?”
Once I got the Phone, the world opened up. We took the dog to the beach. The sign said “No dogs,” but I had read that the town now allows it in the winter. So there I was, on the boardwalk Googling “Belmar dog beach” and yes, reading the township ordinance as well as the newspaper article about how dogs were permitted until April 15th. All species love the iPhone.
This post in Carolyn Elefant’s blog “MyShingle.com” really hit home. It’s about another NJ attorney with a solo practice who had the guts to challenge the NY restrictions on representing NY clients. She’s licensed in NY, but since her office is in Princeton, the NY court rules don’t allow her to represent NY clients. I can’t wait to see where this goes.
For many years, I just thought about having my own practice. I did not want to leave my in house job. The organization is cutting edge and highly ethical, and I am proud to be a part of it. Therefore, I let inertia guide my actions. There was a false start with a local firm, but a friend confided that the office politics would make even a part time “of counsel” relationship stressful.
Then I got an idea. I explained to the CEO how I needed an office to keep in compliance with the state rules, even though I had no plans to see clients in it. I showed him the rule, and asked if I could count my office there as the place people could find me during normal business hours. I would keep my cell phone number for client use, not my company extension. That would actually add more protection to clients than an empty office at another firm. Since my files are available to me online or on my laptop, and I can get mail there, it woudl meet the definition of a bone fide office.
To my surprise, after thinking about it, he said “yes.”
No more excuses – now I was on my way to creating my solo practice!
Like Susan (see comments to last post), I at first was skeptical that the NJ Bona Fide Office Rule really prohibited me from working out of my house part time without a dedicated office staff. After all, most attorneys do not sit around in their offices all day on the chance a client may wander by. They make appointments. The client who stops by his lawyer’s office unannounced is more likely to find the lawyer in court, with another client, or out of the office at a meeting or CLE than he is to find the lawyer available. So why would I be held to a different standard?
The real reason is jealousy. At some point, New Jersey lawyers were scared that clients would be wooed away by nearby NYC and Philadelphia lawyers (I mean that literally, not as a euphemism), so they made a rule that lawyers without a physical daily presence in their office (not their homes) were unauthorized. I am sure at the time the Rule was crafted, the idea of emailing clients and meeting in rent-by-the-hour conference were not conceivable.
See In Matter of Kasson, 141 N.J. 83 (1995), which held that the Rule “requires more than an occasional attendance in an office by an attorney and more than an answering service unrelated to a place where business is conducted. It requires a responsible person at the office to answer questions posed by the courts, clients, or adversaries so that accurate information about the attorney’s whereabouts and competent advice from the attorney can be obtained within a reasonable period of time. It is insufficient for an employee to receive and transmit messages and nothing more.” [Kasson. at 86]. OK, in 1995 I was still learning about email, and the internet was pretty new. But, the law is still upheld. That cite to Kasson is from a 2002 Ethics Committee Hearing Panel report that I looked at when I first moved here. That report recomended sanction because ”Here, the Respondent did not even have one of his own employees receive and transmit the messages. He relied upon the services of his landlord’s employees, who are also responsible for other firms in answering calls and the like.” That’s how we did it in Louisiana. So I was unethical and I didn’t even know it!
But seriously, the report admonished and condemned a lawyer for only going into the office once a week, not having a legal secretary or paralegal on site who could open his files to answer questions from clients or the courts, and be knowledgeable about his whereabouts. He was an insurance defense lawyer whose clients were corporations. He did meet with them at his office when needed, by appointment.
There was even a federal court case challenging the constitutionality of the rule, alleging it discriminated against non-resident attorneys. Over the years, to keep the rule facially neutral as applied to in state and out of state attorneys with NJ licenses, the rule has actually made it easier for the out of state law firms to represent NJ clients in NJ matters, while keeping the restrictions in place for NJ resident lawyers without offices in the big city.
A few years ago, the court changes the Rule to allow out of state members of the NJ bar to practice in NJ from their offices in their home state. So now, a person with a legal problem in NJ can hire a lawyer in Manhattan (or New Orleans) whom they will never see in person. But they can’t hire me, because I don’t have a bona fide office. Even though I make house calls. There’s no rule prohibiting the out of state firm from having all incoming calls go to the voice mail system, so the client never actually talks to a real person before going to voice mail. I have Google voice send the a text message if I am unable to answer the call on my cell phone because I am in a meeting or in the car. How is that inferior?
I still had an inferiority complex, so I never challenged the rule. I felt like trying to operate a part time practice on a shoe string for my own intellectual stimulation was more of a hobby, and I was embarrassed to go to the bar or the courts and argue that my way of doing business should be approved.
Stay tuned to see how I worked it all out. Oh, and leave me a comment so I know I am not just talking to myself!
One of the most frustrating things about becoming a lawyer in New Jersey, after practicing for ten years in Louisiana, was the idea that all my intuition, my gut reactions, were now untrustworthy.
Rules on service of process: not the same. Civil Code: non-existent. Even the rules on attorney advertising, non-solicitation, and basic ethics are non-identical. This means lawyers here are doing things that could get them sanctioned in Louisiana, and I might do something that is no big deal back there, but will have my new colleges thinking I am unethical here.
Huh. I always thought being ethical was universal. Well, Dorothy, we’re not in Kenner any more… (that was for my NOLA readers).
I’m hyperbolizing here (I know, not a word); in actuality, there are no glaring differences, but you really can’t trust your habits when you move to a new state. You’ve got to check the rules and ingrain the new standards into your muscle memory (metaphorically).
One state rule that stopped me in my tracks was New Jersey’s bona fide office rule. According to the NJ Office of Attorney Ethics:
What must I do if I want to engage in the private practice of law in New Jersey?
In order to engage in private practice in New Jersey, you must:
a. pay the annual assessment;b. complete the attorney annual registration statement and keep the data current throughout the year;
c. maintain a bona fide office under R.1:21-1(a);
d. fulfill the requirements of R. 1:21-6, including trust and business accounts in an approved New Jersey financial institution;
e. keep trust accounts IOLTA-compliant (R. 1:28A); and
f. maintain required levels of malpractice insurance under Court Rules if practicing in a P.A., P.C., L.L.P., or L.L.C. Please direct questions about changes to the bona fide office rule to the Advisory Committee on Professional Ethics at (609) 292-0694
Requirements (a) and (b) were easy enough, and I did them as soon as I was admitted to the bar. I was excluded from the trust account requirement as long as my only client was my employer, so I put that on my list for later. I had the insurance requirement covered, so I need to take a look at Rule 1:21-1(a). Here it is:
(a) Qualifications. Except as provided below, no person shall practice law in this State unless that person . . . maintains a bona fide office for the practice of law. For the purpose of this section, a bona fide office is a place where clients are met, files are kept, the telephone is answered, mail is received and the attorney or a responsible person acting on the attorney’s behalf can be reached in person and by telephone during normal business hours to answer questions posed by the courts, clients or adversaries and to ensure that competent advice from the attorney can be obtained within a reasonable period of time. For the purpose of this section, a bona fide office may be located in this or any other state, territory of the United States, Puerto Rico, or the District of Columbia (hereinafter “a United States jurisdiction”). An attorney who practices law in this state and fails to maintain a bona fide office shall be deemed to be in violation of RPC 5.5(a).
Well, the whole point of the practice was to do work at night, and over the phone or the internet. My clients would be businesses who would want me to come on site to evaluate their operations and attend meetings. I would not use an office. I planned to use technology to connect with sophisticated business clients. I didn’t plan on paying rent on an office I wouldn’t use, and paying a “responsible person” to sit in it and say “she’s not here, can I take a message?”
The prospects for starting a practice were looking bleak…
I’ve been talking about going solo for quite some time – I took it very slow and only did it once I had exhausted every excuse not to do it. My first step was to research the laws in my new state (NJ) and in the state where I learned to be a lawyer (LA). It was very interesting, and very scary. I had discussed with my old firm in New Orleans whether they wanted to subcontract work to me, and they were interested, but the liability insurance requirements were unclear and that languished for a long time. I was so busy at my day job, I didn’t feel like I could spend the energy on more work on the weekends, so I put that on the back burner. However, I kept getting my 15 hours of CLE each year to keep that license active.
On my side, my professional liability insurance at work covers me if I practice independent of my employment. Believe me, I confirmed this seven ways from Sunday. It’s actually the same in Louisiana. Gilsbar was the only lawyer professional liability insurer in the state, so they just covered you for everything, no matter who you worked for. In NJ, our employed lawyers insurance includes a rider for all my pro bono and other client work, at no additional charge.
I did look into it, though, in case they should suddenly start charging for it and the company dropped the coverage. It will probably cost me about $2500 a year, since I’ve been insured since I was in law school. Since my goal is to have a shoestring budget and not have my expenses exceed my income (I am not trying to support myself on this part of my work), that charge alone might have dissuaded me from starting my practice.
Step One, Insurance: Done.
Next Step: Bona Fide Office…
