New Small Firm Staffing Economics: Leverage is Dead

New Small Firm Staffing Economics: Leverage is Dead

During my second year in law school, I interviewed for a part-time law clerk position with a small private firm. I think the interviewer wanted to probe whether I understood law firm economics (which I didn’t). At some point, they said, “See, we’ll pay you $7.00 an hour and then we’ll bill your time at $35.00 an hour.” My first lesson in leverage.

Before the internet, email, laptops, and smartphones, leverage was a key economic principle underlying most law firms. The firm was a pyramid and the people at the top made a good part of their money by billing out associates at way more than their salaries. As a partner, the more work you could generate for associates, the more money you could make. If you were an associate, your goal was to become a partner.

At the time, Rule 5.6 of the Model Rules of Professional Conduct, which bars nearly all types of non-compete agreements for lawyers, was little more than an honorable homage to the holy principle of client choice. Clients had to be able to choose their lawyers. Hence, when a lawyer left a firm, the firm could not prevent the lawyer or the client from continuing that relationship. But there was little risk to the law-firm leverage model from a ban on non-compete provisions because lawyer mobility was impeded by lack of technology.

Rules of Professional Conduct threaten the future of the practice of law

To leave an established firm and start your own, you would need to set up an office with typewriters, furniture, a desktop computer, server, phone system, and staff. A large bank loan would be needed to fund operations for at least the first several months. A lawyer would need to put up their house as collateral for the loan. To ask your clients to follow you to your new firm, you would have to call them one by one or send them letters by mail, each of which might have to be typed individually, probably by someone other than the lawyer, because most lawyers did not know how to type (when I started practicing in 1990, few lawyers had computers on their desks. Computers were for secretaries to use). Want to leave big law and start your firm? Good luck with that.

Today, almost all lawyers need to start a law firm is a laptop and a smartphone. Give your notice to the firm, send an e-mail blast to your clients, and keep working. Rule 5.6 renders the firm nearly powerless to stop you. They can’t bar you from contacting your clients, they can’t get lost future profits out of you, and they can’t handcuff you with financial penalties for leaving.

Sounds great, right? If you’re unhappy at your firm you can leave and take your marbles with you. This is what most lawyers think, especially newer lawyers. And when lawyers with large books of business become dissatisfied with their compensation or the management of the firm, they often do leave for another firm or to set up their firm. Freedom! Self-determination! Hasta la vista!

Compensation models are changing and firms are struggling to find a solution

This paradigm shift has had a significant impact on both large and small firms. Yes, some mega-firms thrive because they handle complex litigation and transactional matters that require large teams of lawyers to tackle and they have worldwide brands and relationships that bring in clients.

But many large and medium-sized firms have been forced to move toward “eat what you kill” compensation formulas to keep their most-productive lawyers, particularly the rainmakers, happy. This weakens the bonds between lawyers in a firm. Instead of a team with a common mission and identity, many firms have been divided into a bunch of individual book-of-business fiefdoms stitched together by a common name and shared overhead.

Firms have learned that if they don’t maximize the take-home pay of their best lawyers, those lawyers will just take their clients and leave. I have heard senior lawyers talk about not letting associates or junior partners have direct contact with valued clients because of the risk the younger lawyer will develop a close relationship with the client and take that relationship to a new firm someday.

Mobility is effecting loyalty and career trajectories

Mobility affects smaller firms slightly differently. Many associates leave after a couple of years. Part of the reason they leave is that they look at how much work they do, they look at how much they are being paid, and they conclude that they could make more money out on their own. They may not appreciate how hard it is to get new clients in the door or to keep a law firm running, but by the time they figure that out, they are long gone. As a result, leverage – the business model in which lawyers make more money by hiring young associates at a low rate and billing them out at a higher rate – is dead or dying.

Firms have a little financial incentive to hire and train new lawyers

Beyond crass compensation formulas and senior lawyers grumbling about the next generation’s lack of loyalty, there are more insidious consequences: firms don’t want to hire new lawyers. Corporate clients are becoming increasingly aggressive about refusing to pay for two lawyers to attend motions, depositions, etc. So firms have to bear that training costs themselves.

Smaller firms not only have to absorb training costs but the nature of the work at small firms often means that the associate develops a direct relationship with the client, even if the associate did not bring that client into the firm. Why invest in new lawyers if they are just going to pick up and leave just when they are starting to become profitable?

In all sizes of law firms, I see a reluctance to hire new lawyers. Lateral hiring of lawyers with three to five years’ experience and a budding book of business is increasing; firms are hiring and training paralegals to perform tasks that new lawyers used to do.

Meanwhile, new lawyers are left to figure it out for themselves in solo practices or small firms with a classmate or two. They do not receive the training and mentoring that used to be obtained through established law firms. Many of them have to feel their way through depositions, negotiations, and transactions. They get by but they’re rough around the edges.

I hear more experienced lawyers complain about short-sighted litigation tactics and missing professional courtesies. As a profession, we are not taking as good care of our own and we are all the poorer for it.

Should law firms embrace non-compete agreements?

There may be many potential solutions to these issues. But an obvious solution is our fixation with the prohibition on non-compete agreements – Rule 5.6. Nearly every other business allows non-compete agreements: medical device companies, accountants, doctors (except in California, where all noncompetes are prohibited). Have you tried to find your doctor after he or she has left the clinic they worked at? It’s like they went into a witness protection program. Your medical issues are not so sensitive that they can’t be handled by another doctor but for your legal issues, if you couldn’t choose your lawyer it would rank up there with a crime against humanity.

Non-compete policy and the effects on client experience

This commitment to client choice doesn’t make much sense. After all, lawyers fire clients all the time. A lawyer has broad discretion under Rule 1.16(b)(1) to withdraw from representing a client as long as there is not a material adverse effect on the lawyer. Lawyers drop clients when they take in-house positions, become judges, or quit practicing to raise children. Their clients survive with a new lawyer – imagine that.

What if we changed Rule 5.6 to allow limited forms of non-compete agreements or perhaps limited embargoes on soliciting clients after a lawyer left a law firm? Yes, it could strengthen the hand of law firms as institutions and put them more in control of compensation and clients. But it could also allow firms to invest in the future. Less mobility, more investment. Maybe it would tighten the bonds between lawyers at firms so that they have to give some value to the future of the institution and not just their self-interest.

The post New Small Firm Staffing Economics: Leverage is Dead appeared first on Lawyerist.com.

When It Comes to Innovation, Lawyers Are Being Left Behind

lawyers left behind by innovation quote eric cooperstein

One of the most frequent excuses we hear for the glacial pace of innovation and problem-solving in the legal profession is that our ethical rules are too confining. Eric Cooperstein and Megan Zavieh propose to remove this last barrier and use this 4-part series to highlight the ethical rules that most desperately need updating. Excuses be damned, these changes would free lawyers to innovate, adapt, and‚ hopefully‚ bridge the gaping access-to-justice divide. This series focuses on updating the Rules of Professional Conduct that threaten the very future of law practice.

In our first post on revising lawyers’ ethics rules, we argued that an overhaul of the advertising rules is long overdue. Today we explore Rule 5 of the Model Rules of Professional Conduct, which is ripe for innovation in its own right.

Professional Independence – Rule 5.4

Let’s begin with Rule 5.4, which purports to govern lawyers’ professional independence and prevent lawyers from sharing fees with non-lawyers.

To set the tone, here’s a composite of several conversations we’ve had with lawyers about the scope of Rule 5.4:

Can I incentivize my non-lawyer employees by paying them a percentage of the fees on files if they meet efficiency goals on that case?

No. Rule 5.4 prohibits that.

Can I defray the costs of rolling out a web-based platform for serving more clients by paying my web developer based on the volume of business generated? 

Nope. Rule 5.4 prohibits that.

Well, can I get some venture capital to fund the franchising of my law firm concept and in exchange give the funders a 10% interest in the business?

No dice. You got it—Rule 5.4.

Rule 5.4 says lawyers cannot share fees with non-lawyers. So no per-case bonuses, no law-firm ownership for non-lawyers, and no referral fees. Without these guardrails, the thinking goes, hordes of money-hungry non-lawyers will improperly influence lawyers to settle cases prematurely or abandon difficult, unprofitable clients. Rule 5.4 protects the profession, and therefore clients, from the ugliness of the capitalist marketplace.

Oh, those weak-willed, spineless lawyers! One might wonder how they dress themselves each morning, let alone represent their clients’ diverse, complex, high-stakes interests. Thank heavens Rule 5.4 insulates us from Machiavellian business interests.

How ironic that other ethics rules—especially Rules 4.2 (contact with represented persons) and 4.3 (contact with unrepresented persons)—protect the public from lawyers’ interrogation and negotiation superpowers. Maybe sharing fees with non-lawyers is our kryptonite?

Rule 5.4 assumes lawyers are unable to maintain independence if a non-lawyer owns a financial stake in the entity providing legal services. This is absurd and, frankly, insulting. With all of ethics rules to which we are subject, the duties we owe our clients and the courts, and the manner in which we are entrusted with client funds, we as a profession have somehow deemed it necessary to protect ourselves from outside financial investment?

Notably, our rules do not explicitly prohibit investment in our law firm by a manipulative and ill-willed licensed attorney who could just as easily corrupt our professional judgment.

Rule 5.4 says that no matter how upstanding lawyers are as a profession, and no matter how much the public trusts us, when it comes to money, we are so susceptible to influence that we must protect ourselves from ourselves. Oy. We wonder why the public doesn’t trust lawyers? We don’t trust ourselves. The prophecy has been self-fulfilled.

We Are Stronger Than Regulators Think

A lawyer’s judgment is influenced daily by financial pressures. Undoubtedly, Rule 5.4’s drafters knew about work in a private law firm. But perhaps they drafted the rule before billable-hours goals, utilization and realization rates, and per-partner profitability came into vogue. Because struggling solo lawyers feel pressure to settle cases (if only to manage their financial exposure). Lawyers with “mill practices” emphasize high volume over personalized client attention. Thinking we need to protect the public by limiting lawyers’ financial relationships with non-lawyers sounds noble (maybe), but it lacks support in the empirical data.

Experiments with non-lawyer ownership of law firms have yet to collapse any democratic legal systems. The District of Colombia Rules of Professional Conduct allow non-lawyers to own up to 25% of a law firm. Great Britain began allowing non-lawyer ownership of law firms in 2011. And Australian non-lawyers have been permitted to purchase equity interests in law firms since 2007.

Sadly, it appears that most innovation in the legal profession is coming from outside the practice and is being spearheaded by non-lawyers. Legal Zoom and Avvo have built super-charged internet engines to identify potential consumers of legal services, increase access to legal services, and—to the extent lawyers provide those services—control how the work is routed to lawyers and how much the lawyers are paid. What roles have lawyers played in these developments? Very few, if any. Except, of course, to oppose them.

Fixing the access to justice gap will require innovation. Indeed, the gap has proven so stubbornly resistant to decades of lukewarm policy tweaks that we can conclude a fix will demand game-changing innovation. Other issues plaguing the legal profession will benefit, too.

Innovation requires significant investments of time and money. Practicing lawyers—whose days are often filled only with their provision of legal services—have proven unable (and, perhaps, unwilling) to reinvest their time and money into meaningful innovation.

Lawyers Funding Lawyers

Some lawyers manage to make it happen. Erin Levine of Levine Family Law Group, a full-service family law firm, recently built and launched Hello Divorce, a self-help platform for California family law litigants. She kept her firm open and helping people during her innovation cycle. But most lawyers with great ideas for innovation can’t fathom launching a powerful new innovation at all, let alone doing it while continuing to run a law firm.

Our observation is that lawyers at the forefront of innovation—often with an access-to-justice angle, but not exclusively—seem to be leaving their law practices entirely. Take, for example, Chad Burton of CuroStudio and CuroLegal and his former partner Nicole Braddick of Theory and Principle as two examples. There are more. When they stop practicing law, the rules let them solicit investors. But relying on innovation by non-lawyers and so-called “recovering” lawyers is fraught.

Our rules—or, more precisely, states’ implementation of the Model Rules—hinder the innovation process. Every entity currently offering legal services lacks access to catalytic outside investment.

Imagine if Uber could have launched and grown only by reinvesting its profits (or by relying on taxi companies and their drivers to give them money to develop their disruptive technology and implement their vision). The game-changing innovations would never have happened. What are we leaving on the table? What could outside investment unlock in our industry?

Consider a law firm that wants to implement a costly custom software solution to allow its lawyers to take and resolve pro bono matters at scale. Or a non-profit or low bono firm that needs a significant influx of cash to create and implement a new solution to grow its services.

The profession’s allergy to outside cash prevents these entities from creating or implementing tools that could—without hyperbole—change the way our profession and our society delivers legal services and bridges the yawning access-to-justice divide.

Arrogance Preventing Meaningful Change While Lawyers Are Left In The Cold

Maybe it’s plain arrogance that lets lawyers believe that other professions have nothing to teach us about business or innovation, or that partnerships with non-lawyers cannot grow the market for legal services.

Still, while lawyers sit around grinding our collective teeth about Legal Zoom, long-established market forces drive non-lawyers and their capital to carve up and repackage a host of services that we used to regard as the practice of law.

We have long known, for example, that accounting firms provide tax consulting and strategic planning services that look an awful lot like giving legal advice. There are entire industries that provide employers with “out-sourced” human resources services, assist closely-held businesses in converting to employee-owned (ESOP) companies, review discovery documents, and facilitate completing and filing mechanics liens.

Non-lawyers can own these companies and provide services that used to be performed by lawyers alone. Notably, they can also accept and leverage investors’ cash to do it better, more efficiently, and in more innovative ways.

This trend is not limited to transactional work. The Social Security Administration has decided that non-lawyers may represent claimants in hearings before administrative law judges. That process, for the uninitiated, involves direct examination of the claimant, cross-examination of government experts, and making legal arguments to the ALJ.

A social security benefits services company—not organized or holding itself out as a law firm—is doing exactly the things that lawyers have always thought was their birthright.

In Washington State, the nascent Limited License Legal Technician program allows “technicians” to provide some legal services after completing a one-year educational program and 2,000 hours of field experience. The program is limited to family law for the moment, but there are plans to expand to landlord-tenant law and elsewhere. These are just a few examples.

These entities are exempt from fee-sharing, trust accounting, multi-jurisdictional practice, non-compete, and advertising rules that restrict how lawyers run their businesses. These “outsiders” innovate, invest, solicit venture capital, and partner with other professionals in ways that lawyers may not. All this because lawyers must be “independent.”

There have been efforts to make Rule 5.4 less stifling. But some of the exceptions are as absurd as the rule itself. In some jurisdictions, insurance companies have “captive” law firms that hold themselves out to the public as law firms, but that only defend policyholders of the insurance company that controls the firm. Bar associations—which are, obviously, not licensed to practice law—operate referral services that require lawyers to split fees with them.

We are asserting our “independence” straight to our extinction. The practice of law is being carved up like so many cuts of meat, each slice a value-judgment that what lawyers do is not quite so unique as we lawyers think. Lawyers are missing out on the spoils of these new ventures, of course. But the greater missed opportunity is that we are not even part of the conversation.

Change Is Possible

Our argument for change is not theoretical. Change is possible. Like Britain and Australia, we could allow full or partial non-lawyer ownership of law firms. We could allow sharing of legal fees with non-lawyers (while ensuring the lawyer retains complete control over the attorney-client relationship and decision-making process).

Until ethics rules evolve, lawyers will struggle under the weight of the old ones that directly cripple their innovation. This crisis should be self-evident: lawyers face possible sanction, clients suffer, and access to justice remains as sticky as ever, all because we lack the will and creativity to create a regulatory regime that fosters innovation and empowers us and our profession. If we continue to do nothing, we’ll just keep getting carved to pieces.

The post When It Comes to Innovation, Lawyers Are Being Left Behind appeared first on Lawyerist.com.

Going Really Paperless with iPad Pro and Apple Pencil

I’ve been operating a paperless office for nearly ten years, ever since I realized a couple of months into my solo practice that I did not want to fill my basement or garage with closed client files. My paperless workflow is simple: I scan all paper that comes into the office and keep most of it until I close a file, when all of the paper gets tossed.

But I have struggled to find a good system for managing my handwritten notes of phone calls, meetings, court appearances, etc. As I wrote on Lawyerist several years ago, taking notes is very important for keeping track of what information you have exchanged with clients and other parties, and it is critical for defending ethics and malpractice complaints.

What to Do with Your Notes

Some paperless lawyers may have shifted to taking notes on their computers but I prefer not to use a speaker phone all the time, and a laptop is cumbersome in meetings. Besides, some studies that show that your brain remembers more when you hand-write your notes.

So, what to do with all those pages of notes? Scanning notes after every phone call or meeting is inefficient because you have to name and save each note. I could scan them to the same file or create a notes file for each client but that, too, was tedious. So I would just stick the paper pages in a folder and scan them all at the end of a case before I trashed them. Relatively efficient, and it meant I didn’t have access to my notes when I was out of the office.

I also used the legal pads as a sort of reminder system to keep track of who had not called me back. This meant I would end up with several legal pads on my desk with notes of active matters. It was kind of a mess.

Then last summer I saw Paul Unger of Affinity Consulting use an iPad Pro and Apple Pencil to take notes right on his iPad. A chorus of angels started singing in my head! Scales fell from my eyes! My note-taking woes would be solved!

Using the Apple Pencil to Take Notes

The transition to taking notes on a screen was seamless. As soon as I started using the Pencil, I was hooked and I have literally not written on a legal pad since. The key feature is that when you are using the Pencil, which is powered by a rechargeable battery, the iPad recognizes its tip instead of your hand. This means you can just rest your hand right on the screen while you are writing, just like you would on a piece of paper (particularly useful for us lefties). The tip of the Pencil is pressure-sensitive, so lines vary in thickness as you write. Writing on glass turns out to be not much different than writing on paper.

GoodNotes 4, an inexpensive app, is loaded with features that make electronic note-taking better than the old-fashioned way. If are a sloppy writer like me, the undo button will wipe away a word you’ll never be able to figure out later. The eraser lets you fix things elsewhere on the page. The “shapes” button will help you draw a box with straight lines or an oval. Of course, you can change colors, line thickness, etc. There’s also a tool that allows you to move blocks of handwriting around on the page, which is great for rearranging notes of calls with your non-linear clients. Your doodles will improve measurably and then you can move them out of your notes so your clients will never see them.

If you write neatly enough the app can translate your handwriting into type with a couple of clicks. I find this not as helpful as I might have thought—if my writing is neat enough for the program to read, then I can read it too. But that same functionality allows the app to search for a handwritten word within a particular file. That’s right, all your handwritten notes—stored as PDFs—are permanently word-searchable.

GoodNotes 4 automatically backs up your files as PDFs to Dropbox, Box, Google Drive, and other programs. It will also back up files you haven’t named yet. It can search for file names within the app. You can import a Word document or PDF, take notes on the document, and then save it as a new PDF. Clients can sign their real signatures on your iPad, not just scrawl with their fingers. My only complaints about GoodNotes 4 is that it does not have an option for automatically numbering pages within a file and that the size of the thumbnails of your files cannot be adjusted.

Notability is another popular note-taking app. And Evernote and its alternatives, of course.

Choosing an iPad Pro

There are two sizes of iPad Pro: regular (the size of the original iPad), and full letter-page size (also known as Ginormous). I went with Ginormous. I’m glad I did, because more than 80% of the time I’m using it for taking notes and I like having the same full-size sheet of “paper” to work from that I’ve always been used to. But it’s a lot of screen space, and many apps don’t seem to know what to do with all that extra real estate.

The only downside for the iPad Pro and Apple Pencil is that the Pencil needs to be recharged periodically. You can stick it in the power jack for the iPad, but then you have this Pencil awkwardly sticking out from your iPad. I tend to use the very small, likely-to-get-lost-but-so-far-so-good power cord adapter. The only way to shut “off” the Pencil is to turn off the Bluetooth on the iPad, which I do at the end of the day so the batteries on both don’t run down. Recharging the Pencil is pretty fast and on a very busy note-taking day I might recharge it once in the afternoon.

… or Microsoft Surface?

In deference to Windows users, I need to acknowledge that I recently tried a client’s SurfacePro 4 with its powered stylus. The stylus is not as elegant as Apple’s (the Windows stylus looks and feels like an engineer’s mechanical pencil) but it is clearly more functional. The top of the stylus works as an eraser, it has a “right-click” button on it, and there is an embedded magnet that attaches it to the tablet. The contact with the screen is slightly different than on the iPad but you can achieve the same handwriting dexterity. Personally, the stylus alone would not motivate me to switch but it is a very good option for Windows users.

Conclusion

Despite the fact that the iPad Pro has been out since the spring of 2015, few lawyers seem to be using it. It’s often a conversation piece when I show up to meetings with it. But this is the best piece of technology I’ve bought since I purchased an iPhone. Now I can say my practice is truly paperless.

Going Really Paperless with iPad Pro and Apple Pencil was originally published on Lawyerist.com.

Go Rural, Young Lawyer!

In tough economic times like these, some new lawyers may want to open their minds to a different type of risk and go west — or north, or south, or east — to find a job beyond their urban dreams.

I met with a lawyer a couple of weeks ago in a small town about two hours outside of the Twin Cities. Our conversation turned to operating a law firm in a small town and the lawyer told me two things I probably knew but did not really appreciate. One was a complaint about how difficult it is to attract new lawyers to join law firms in rural areas. The other was the lawyer’s prediction that in the next ten years, half the lawyers in her quarter of the state were going to retire from the practice of law.

RelatedNew Graduate taking over an existing [rural] law firm

That prediction probably is not unique to Minnesota. New lawyers unable to find a job in a major American city may want to broaden their job searches beyond their local beltways.

There are many benefits to practicing in a smaller community. First off, there is plenty of work to do. All those farms you pass as you drive that two-lane road into the country? That farmland is worth several thousand dollars an acre in many areas. Those farm families need estate plans, contracts, and business advice. There are teachers, small business owners, bankers, and other professionals as well. The folk in small towns sometimes get divorced, commit the occasional DWI, and get in car accidents. They need local lawyers and they do not want to pay for some lawyer from the city to drive out to the rural courthouse to represent them. They need trusted advisors they can form life-long professional relationships with. That could be you.

Not sure what area of practice is best for you? In small towns, many lawyers are generalists. They take a variety of cases and get experience in multiple areas. Eager to get inside a courtroom? You may get more opportunities in a small town than you would as an associate in the big city.

The economics can work as well. The cost of housing may be less than half of what you would find in a major city. Your mortgage could be so small that even with your law school debt you would have less overall debt than you would have living in the city.

I know, you could never give up the city. You would miss the theater, even though you only go once or twice a year. Where would you shop? (Although you do most of your shopping online nowadays.) A small town only has one movie theater! (Of course, you stream most of the movies you see through Netflix.) These fears of cultural isolation may be just that — fears. The lawyer I met with told me that she and her colleagues are simply more intentional about going to the city for entertainment and probably do so more than city-folk. Many people in the city think nothing of traveling three hours each way in the summer to go up to the family cabin; rural residents just do a “reverse commute” to attend sporting events, concerts, and other big city attractions. I have a client who lives 2½ hours from Minneapolis and has seasons tickets to the Minnesota Twins.

Granted, there are some impediments. If you are single, it may be harder to find a mate in a smaller community. Even if you are married, your spouse may not be able to find suitable work in the same area.  But rural lawyers love to tell you how nice it is to raise children in a small town, where they can ride their bikes to every friend’s house and you know the parents of all of their playmates.

Quite frankly, rural lawyers probably do not want you to just show up for two or three years and then pack your bags and go back to the city. But there is always the possibility that once you get out to the country, you might like it and stay. There is risk in any venture, whether it is joining a big firm or starting your own practice. In tough economic times like these, some new lawyers may want to open their minds to a different type of risk and go west — or north, or south, or east — to find a job beyond their urban dreams.

This was originally published on September 7, 2010, but it seems equally relevant in 2014.

Featured image: “Main Street and Old Common Road sign in autumn” from Shutterstock.

How To Become A Small Town Lawyer

Go Rural, Young Lawyer! featured image

I met with a lawyer a couple of weeks ago in a small town about two hours outside of the Twin Cities. Our conversation turned to operating a law firm in a small town and the lawyer told me two things I probably knew but did not really appreciate. One was a complaint about how difficult it is to attract new lawyers to join law firms in rural areas. The other was the lawyer’s prediction that in the next ten years, half the lawyers in her quarter of the state were going to retire from the practice of law.

That prediction probably is not unique to Minnesota. New lawyers unable to find a job in a major American city may want to broaden their job searches beyond their local beltways.

There are many benefits to practicing in a smaller community. First off, there is plenty of work to do. All those farms you pass as you drive that two-lane road into the country? That farmland is worth several thousand dollars an acre in many areas. Those farm families need estate plans, contracts, and business advice. There are teachers, small business owners, bankers, and other professionals as well. The folk in small towns sometimes get divorced, commit the occasional DWI, and get in car accidents. They need local lawyers and they do not want to pay for some lawyer from the city to drive out to the rural courthouse to represent them. They need trusted advisors they can form life-long professional relationships with. That could be you.

Not sure what area of practice is best for you? In small towns, many lawyers are generalists. They take a variety of cases and get experience in multiple areas. Eager to get inside a courtroom? You may get more opportunities in a small town than you would as an associate in the big city.

The economics can work as well. The cost of housing may be less than half of what you would find in a major city. Your mortgage could be so small that even with your law school debt you would have less overall debt than you would have living in the city.

I know, you could never give up the city. You would miss the theater, even though you only go once or twice a year. Where would you shop? (Although you do most of your shopping online nowadays.) A small town only has one movie theater! (Of course, you stream most of the movies you see through Netflix.) These fears of cultural isolation may be just that — fears. The lawyer I met with told me that she and her colleagues are simply more intentional about going to the city for entertainment and probably do so more than city-folk. Many people in the city think nothing of traveling three hours each way in the summer to go up to the family cabin; rural residents just do a “reverse commute” to attend sporting events, concerts, and other big city attractions. I have a client who lives 2½ hours from Minneapolis and has seasons tickets to the Minnesota Twins.

Granted, there are some impediments. If you are single, it may be harder to find a mate in a smaller community. Even if you are married, your spouse may not be able to find suitable work in the same area.  But rural lawyers love to tell you how nice it is to raise children in a small town, where they can ride their bikes to every friend’s house and you know the parents of all of their playmates.

Quite frankly, rural lawyers probably do not want you to just show up for two or three years and then pack your bags and go back to the city. But there is always the possibility that once you get out to the country, you might like it and stay. There is risk in any venture, whether it is joining a big firm or starting your own practice. In tough economic times like these, some new lawyers may want to open their minds to a different type of risk and go west — or north, or south, or east — to find a job beyond their urban dreams.

The post How To Become A Small Town Lawyer appeared first on Lawyerist.com.

This Post is Privileged and Confidential

But you started reading it anyway.

We’re all so inundated with disclaimers and license agreements at every turn that we barely flinch anymore when we see the words privileged and confidential — or worse, long paragraphs in small fonts portending doom for the unwitting recipient of a misdirected email or the surfer of a law firm website. Disclaimers seem to have spread like a consensual virus — a lawyer sees another lawyer using a disclaimer, figures it must be a good idea, and includes it in his own materials.

Website Disclaimers

Website disclaimers are fairly inoffensive. These disclaimers generally warn visitors that the information on the website is not meant to provide legal advice about the visitor’s individual legal problem and caution the visitor not to disclose confidential information in an email or contact form sent to the law firm until the firm has agreed to enter into an attorney-client relationship. Lawyers are concerned, of course, that an opposing or related party to one of the firm’s existing clients might provide confidential information that would conflict the lawyer out of its already existing representation.

There do not appear to be any reported cases that have disqualified a law firm from representing a client because the firm received unsolicited confidential information from a non-client. The Virginia State Bar Committee on Legal Ethics did issue an opinion that compared websites to advertisements in the Yellow Pages. Just as a prospective client who obtains a lawyer’s phone number from a Yellow Pages ad should have no expectation of confidentiality when leaving a voicemail message for a lawyer, the Virginia Bar reasoned that there ordinarily should be no expectation of confidentiality in an email message sent from a website. The opinion recommends, but does not require, that Virginia lawyers include such a disclaimer on their websites and cautions that lawyers may create a duty of confidentiality through sites that offer  a “free evaluation” of a prospective client’s case and invite web visitors to provide the lawyer with information about their situations.

Website disclaimers are designed to address the exact same situation repeatedly: stranger v. law firm. No disclosure of an existing client’s confidential information is involved, and whether the stranger reads the disclaimer or heeds its warning is of no consequence to the law firm, which has discharged its duty to itself (protect against claims of reliance on alleged legal advice) and to its existing clients (prevent being disqualified from existing representations).

Email disclaimers, however, are a different and dangerous breed.

Email Disclaimers

They probably have their roots in that antiquated technology: the facsimile transmission (which our ancestors colloquially referred to as a fax).  Right after the first lawyer sent a fax to opposing counsel when it was meant for the client‘s eyes only, that lawyer starting putting a disclaimer on the fax cover sheet. That way, the next time it happened the blame for the mistake could be shifted from the lawyer to the accidental recipient, who had no business reading that fax in the first place. When lawyers started using email, it must have seemed only logical to try to remedy the predictable calamity of the future misdirected email with a warning to those who receive messages that were not intended for them.

Now, probably 80% or more of the emails I receive from lawyers contain some form of disclaimer. Nearly all appear after the signature block; in longer messages they don’t even appear on the screen until I scroll down further. Some simply declare that the email is “privileged and confidential;” most suggest that the email “may” be privileged and confidential (how I should determine whether it is or not is not explained), and either ask or demand that I notify the sender, and destroy the email and any paper copies I may have printed.

There are several problems with these disclaimers, aside from cluttering up email threads. For one, attorney-client privilege and confidentiality are not the same thing.  Without digressing too much, suffice it to say that while all attorney-client privileged communications are confidential, only a small portion of the client information lawyers are required to treat as confidential is also privileged. Another incongruity is that an email intentionally sent from a lawyer to almost anyone except a client will not be confidential or privileged at all (setting aside agents or experts the lawyer may be contacting on the client’s behalf or negotiations subject to a confidentiality agreement or rule).  So for the vast majority of emails that lawyers send — to colleagues, to witnesses, to vendors, to friends, to listservs, etc. — the disclaimer is meaningless.

Undermining Disclaimers Through Overuse

Which brings us to the real problem with these disclaimers. By overusing them, lawyers may be undermining the effectiveness of disclaimers in protecting the confidential or privileged nature of the information in the email in the (hopefully) rare event that an email is misdirected (or inadvertently produced in discovery).

In Scott v. Beth Israel Medical Center Inc., 847 N.Y.S.2d 436, 444 (2007), the court refused to find that a series of emails were privileged just because they contained a disclaimer that was found in every email sent by the plaintiff. Moreover, by overusing disclaimers and privilege warnings, lawyers are training the world to ignore them — which is precisely what we don’t want people to do.

Using Disclaimers Appropriately

Appropriately used, disclaimers may allow lawyers to rescue misdirected emails that were sent to other parties and preserve the client’s confidentiality, particularly in close cases in which the confidential or privileged nature of the email is not clearly apparent on the face of the email.  Those disclaimers should be sparingly used, appear at the beginning rather than the end of the email,  and state that information in the email is confidential or privileged only when it really is. That way, unintended recipients might really sit up and take notice when they see privileged and confidential declared in an email.

This was originally published on November 17, 2008. It was (lightly) revised and re-published on February 21, 2014.

Featured image: “confidentiality” from Shutterstock.

Ninety-Five

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These remarks by Eric Cooperstein were first given at the Hennepin County Bar Association‘s annual meeting in May, then printed in the July 2013 issue of The Hennepin Lawyer, member publication of the HCBA. I am re-publishing them here because we have talked about the problems with bar associations, wondered whether they are still useful, suggested ways for them to stay relevant, and more. This is one bar association president’s answer. — Ed.

When I meet lawyers and explain that my entire law practice is devoted to representing attorneys in ethics matters, I typically get one of two responses. Either they say “There must be a lot of unethical lawyers out there who need help,” or they say “I hope I never need to hire you.” I’m always a little taken aback. When people meet ophthalmologists, I doubt they say “I hope I never have glaucoma!”

Behind these comments there lies a hope that lawyers who have ethics issues are very different from the rest of us. In a very small percentage of cases—intentional thefts, felony convictions—that may be true. Those cases account for maybe one-tenth of one percent of all lawyers who are disciplined and often they are unrepresented in the discipline process.

For the most part, my clients are people very much like you. You might be surprised to hear that you have a lot in common with my clients. They are:

  • good lawyers;
  • often but not always solo and small firm lawyers;
  • they care deeply about their clients;
  • they are proud of the good work they do for clients;
  • they are typically in mid-career;
  • they tend to have busy practices; and
  • they have made some type of mistake.

One common mistake is accepting the representation of a client that the lawyer knew in her gut she should not have taken. Some mistakes are merely overlooking communications with the client or procrastinating on a file. Some mistakes are more significant than that: mistakes of judgment, mistakes of “perceived expediency.” A false statement, such as a lie to a client about whether the lawyer has worked on a matter. Good lawyers, like yourselves, are tortured by these kinds of mistakes.

I notice other patterns in the lawyers I represent. One that has been particularly striking to me is that oftentimes lawyers are isolated. This is a problem not just for solo lawyers, but also for lawyers who run small firms, and lawyers in larger firms. No matter what the practice setting, lawyers who are facing an ethics violation sometimes seem to have few other lawyers they can confide in. I have seen a similar pattern in lawyers who are marginalized within law firms for other reasons. It’s that sense of waking up one morning and not being quite sure who your friends are.

It seems also that the more serious the misconduct, the more isolated the lawyer is. In serious cases, there is an opportunity to offer character evidence to try to mitigate the disciplinary sanction. A recurring pattern is that my clients have difficulty identifying another lawyer in whom they have confided, who understands the respondent lawyer’s background and challenges, and can talk about the person behind the mistake.

On the other hand, I have also seen the power of true friendship. Lawyers who stand by their colleagues in spite of their mistakes. Those are the lawyers who are best able to get back up on their feet after they’ve taken a fall.

The practice of law is challenging, much more so than the public has any appreciation for. The deadlines, the trust clients place in us, the responsibility, the judgment calls, the multiple sets of rules, the pressure to generate business and collect fees—few other professions face such demands. Nobody understands a lawyer’s problems like another lawyer.

Despite how much we need each other, we have difficulty connecting. Increasingly, we spend our time in front of computer screens. Business development pushes us to spend our marketing time and dollars learning rain dances. And we love our “privacy.” Privacy, of course, was once described by Justice Brandeis as the “right to be let alone.”1 In practice it has become the right to seclusion.

At one time, most lawyers practiced in small towns. Lawyers knew each other, they knew each others’ families, and they had cases with the same lawyers time after time. There was little room for sharp practice. As decades passed we moved to big cities and become used to a certain anonymity. It is easy to be nasty to opposing counsel when you figure that the chances of seeing her on another case are slim.

After hearing this, it should not come as a shock to any of you that I have become a bar association evangelist. A bar association, particularly a geographically-based bar association, has a critical role to play in connecting lawyers and fostering a healthy profession. But we need to make some adjustments to the way in which we view our bar association.

For many years now, one of the primary rationales for belonging to a bar association is for “networking.” There is nothing wrong with networking; we all need to eat and a network of referral sources is the way one builds a strong law practice. In fact, I would argue that lawyers whose practices are referral-based are likely to be healthier lawyers than lawyers whose business generation is driven by advertising—or worse—paying for lead generation.

But networking, as a paradigm or a rationale for belonging to an organization, has a somewhat Machiavellian spin to it. When a lawyer networks, the event—the coffee, the lunch, or the committee meeting—is in some sense only a means to an end. And the end is rather self-focused. What will this contact do for me? A network is a web that we use to snare future clients. If lawyers can build a better web without a bar association, they’re gone.

Networking will always play a role in the life of a bar association but the networking paradigm is failing us as an association. Because not all lawyers generate business through referrals from other lawyers, they think their time is better spent building client-snaring webs through other organizations. And with respect purely to generating business, they are probably correct.

The paradigm I prefer is community. When one is participating in and trying to build a community, the means and the end are the same. The means may be similar to networking—particularly good networking, which focuses on meaningful connections rather than handing out business cards—but the focus in a community is on building the relationship for the sake of the relationship. I’m not having lunch with you because the marketing guru at my firm told me I had to have lunch with X number of people per month; I’m having lunch with you because I want to be a part of a larger community. When we build relationships we are giving as well as receiving.

In my church we have a metaphor for the community. We say the community is like an ocean that embraces people and buoys them up when they need it. Most of the time we are part of the ocean. Our role most of the time is to help others. When we face difficulties, we turn to the ocean to support us.

When lawyers are beaten down by the difficulties of practicing law, when they are feeling isolated, they don’t need a network, they need an ocean. Lawyers who are in trouble because they made a mistake need an ocean, not a network. Young lawyers without jobs, hanging out shingles, struggling to figure out how to practice law, don’t so much need a network as they need an ocean.

I realize that some of this is semantics. Good networking and community building may look very similar. Going to lunch or coffee with someone you’re genuinely interested in getting to know serves both ends. But I want to challenge the way you think of the bar association.

A networker looks at an event like a section meeting or the Judges Social or this annual meeting and says “Who will I see at this event? Will it help me generate business in the long run?” When you see yourself as part of a community, you might instead say to yourself “Who might be at this event who needs to see me? Who might need my friendship, my advice, or my mentoring? Who might be suffering? Who might be helped by reconnecting with me?”

Now, I don’t expect you to save a life every time you go to the Bar Benefit or attend a CLE. But I believe that this bar association will thrive if we can recapture a sense of community we had back in the day, when the bar was smaller and 100 lawyers would show up every Tuesday for lunch at the bar association office, just to get together. That sense of community is important if we are ever going to put to rest the perennial hand-wringing over the lack of professionalism and collegiality amongst lawyers.

Our bar has grown since the days of the weekly lunch and our demographics have changed. We can no longer just let people know lunch is available and expect a crowd of lawyers to show up every week. But we will be working this year on providing more ways for lawyers to connect with each other through the bar association in ways that resonate with them.

Other bar associations have experienced tremendous success with affinity groups that are not limited to providing CLEs about the latest changes to the title standards or the Rules of Civil Procedure. Books clubs, running clubs, lawyers who brew their own beer—we are going to try to find ways to foster connections amongst lawyers through the interests they already have. Some of these new groups will launch as early as this fall; see the announcement in this issue (on page 35) and in the weekly e-newsletter.

I am just the 95th in a long line of lawyers who cared enough about our colleagues and the profession to want to become the chief evangelist of the bar association. Whether the HCBA prospers depends not on some clever program I come up with that will cement my place in bar association history, marvelous though that might be, but on whether you will join me in thinking of our association as a community that exists primarily because of how much we value the community itself. I am looking forward to connecting and working with you in the coming year. Thank you.

(image: http://www.flickr.com/photos/evaekeblad/632538407/)


  1. Olmstead v. United States, 277 U.S. 438, 478 (1928) (Brandeis, J., dissenting). 

Networking Strategies for Introverted Lawyers

Lawyerist readers are familiar with the mantra for building a law practice: networking, networking, networking. But there are lawyers out there who, despite their keen legal minds, are just painfully shy. For these lawyers, the idea of “working the room” at a cocktail party or calling someone that they hardly know to arrange a coffee or lunch meeting is not just undesirable, it actually could make them break into a cold sweat.

The risks of isolation

The introverted lawyer is not just at risk of being unable to develop a referral network that will generate business. In representing lawyers in discipline matters, I often see lawyers who are very isolated from other lawyers, whether it is by virtue of office location (working from home, renting an inexpensive office in a suburban office park, working in a rural area), a strong independence streak (“I will prove I can do this myself”), or, sometimes, not knowing how to get started networking. For some lawyers, isolation leads to bigger problems, such as not having colleagues to turn to when tough questions arise on files or not having anyone around to notice that the lawyer is showing signs of depression. It is troubling in a discipline case to represent a lawyer who cannot identify one or two friends with whom the lawyer has shared his or her problems and know the lawyer well enough to testify as a character witness.

Get in the game

Introverted lawyers should approach networking in ways that will minimize confrontation. For starters, become a joiner. Sign up for one or two bar committees, social organizations, or nonprofit boards that will have regular meetings. Small nonprofits, in particular, are eager to have lawyers serve on their boards. Through these meetings, over time, you will get to know your fellow participants and they will have the opportunity to get to know you.

These relationships may lead to a coffee or lunch date but it is not critical. You should find appropriate times—before meetings, during breaks, walking to the parking lot afterwards—to slip your elevator speech into the conversation. After you’ve served a two or three-year term, move on to another activity. Yes, this is a long-term strategy. But really, all networking is a long-term strategy and you will likely make deeper connections with people who actually work with you on projects than you would just by drinking a lot of coffee.

Go on-line

Introverts should also take the opportunity to participate in on-line discussion groups. Ask anyone who is active in a listserv and they will tell you that they get to know the personalities of their fellow participants just by reading their posts. More importantly, they develop trust in their colleagues and refer business to them. This is where an introverted lawyer can shine because often your strengths lie in deliberation and thoughtfulness (as opposed to your extroverted cousins, like me, who think while speaking, which occasionally has unintended consequences).

If your local bar association does not have an on-line discussion group or listserv, consider joining the ABA. No, it is not likely to generate referrals. Networking, however, is a skill. Like all skills, it needs to be practiced. After you get the hang of participating, perhaps you can be the one to introduce a listserv to your local bar.

Lastly, look for situations in which you can develop one-on-one relationships without the cold calling. Sign up for a mentoring program, for example. You put your name in, they contact you. Offer to visit or take meals to members of your religious community when they are ill. Join a book group. Just try to form relationships with people in environments that are suited to your personality.

Introversion is a personality type, not a disability. Everyone needs to play to their strengths, networking included.

Avoid Ethics Complaints by Taking Notes

Despite lawyers’ efforts to get the best possible results for their clients, sometimes clients are dissatisfied. Their disappointment is often accompanied by finger-pointing; surely someone must be to blame for the outcome of the case besides the client or the opposing party. When the lawyer ends up in the path of that finger, the most common complaint is that the lawyer rarely, if ever, talked to the client and that on the few occasions the lawyer did talk to the client, the lawyer never let the client know what bad events were about to unfold.

For the lawyer who has tried to do everything right, defending against such allegations might be unpleasant but not threatening. Of course the lawyer talked to the client. Quite frequently, in fact. And yes, the lawyer is certain she warned the client about the possible outcome. The client was given the choice of how to proceed and, unfortunately, made a poor choice.

“Sounds great,” says the investigator from the attorney discipline office. “Can I see your notes of those conversations?” “Well, I’m not sure I have notes of every conversation . . . ”

Most of my practice is devoted to defending lawyers against allegations of unethical conduct. As a result, I often review my lawyer-clients’ files for the matters they have  handled. This includes not just the substantive documents, such as pleadings, correspondence, financial documents, etc., but also the parts of the file that one typically does not see in the course of discovery, such as the client questionnaires, the e-mails, the time records, and –hopefully– the notes.

In the last few months, however, finding notes in my lawyer-clients’ files has become the exception rather than the rule. I do not doubt my clients when they assure me that there were multiple phone calls with the client and at least a couple of meetings, but there are no specific records of those contacts: when they took place, what was said, how long they lasted. The ethics investigation is suddenly at risk of being reduced to a battle between “Did not!” and “Did so!” The disgruntled client may be regarded as having a legitimate gripe.

Why bother taking notes?

The value of taking notes should not be underestimated. Beyond providing a first line of defense against a client’s ethics complaint, notes can be helpful in tracking previous conversations with a client. The client does not then have to repeat information or suspect that the lawyer cannot remember the client’s case. For clients who challenge a bill or later demand a copy of the file, the notes fill in the gaps between written contacts with the client and show how attentive the lawyer was to the client’s case (under most states’ ethics rules, your notes are part of your clients’ files and belong to them, so avoid excessive doodling and gratuitous comments about your clients’ mental health). Your notes will also provide the chronology of events on which you may need to rely when explaining your decision to withdraw to the client or the court.

Contingent and flat fee lawyers who eschew time keeping seem to be more prone to avoiding note-taking, perhaps a byproduct of their attempts to streamline their practices. Lawyers who do not keep time records are probably in greater need of good notes than lawyers who bill hourly and can use their timesheets to track very brief conversations with clients, some of which may be written-off. The inconvenience of taking notes while talking to clients from a cell phone while walking, driving, or waiting for some other appointment to begin may have led many busy lawyers to get out of the practice of taking notes. Whatever the reason, the time lawyers save on the front end can come back to bite them on the other.

Making record-making a habit

Note-taking should be a habit, hopefully one developed early in a law practice. Personally I think that hand-written notes are the most efficient way to make a record of a conversation with a client, but it doesn’t matter whether the notes are handwritten, entered into your practice management software, typed into a Word document, scrawled on your iPhone or iPad, or dictated to your legal assistant. The goal is to create a record of the date and time that you talked with the client and, even for short conversations, some indication of the subject matter that was discussed. Lawyers should do the same for conversations with opposing counsel, witnesses, court clerks, prospective clients, supervising lawyers, and so on.  If you are talking, there should be a notepad or a keyboard in front of you.

In addition to the client’s name, the date, and at least some brief description of what the conversation, it is a good idea to note whatever advice or instructions the you gave the client. It is also wise to spend an extra few minutes after the conversation ends to fill in details you did not have time to record and clarify on paper the advice you orally gave the client. At the end of the conversation or meeting, I typically also record in the margin the length of the conversation, usually in tenths of an hour. This can help corroborate the fees you charged a client and refresh your recollection years later about the length of a conversation.

Taking notes is a lot like wearing a seat belt: 99% of the time it probably doesn’t matter whether you do it or not but it is the other 1% that you are preparing for. Take notes. The license you save may be your own.

(Photo: http://flic.kr/p/8HNqQi)

Opening the Door (Slightly) for Grads of Unaccredited Law Schools

The Minnesota Supreme Court appears ready to open the bar admissions door just a little wider – at least enough for some graduates of unaccredited law schools, modifying the recommendations of a year-long study and report (9 MB) by the Minnesota Board of Law Examiners (MBLE).

Under the present rules, there are essentially two ways to get admitted to the bar in Minnesota: by taking and passing the bar exam or by practicing law in another jurisdiction for five of the past seven years (different rules may apply to in-house counsel). But these routes to admission are only open to graduates of ABA-accredited law schools. If you went to one of a handful of unaccredited law schools in the United States (mostly in California) or graduated from a law school in a foreign country, you cannot be admitted to the Minnesota bar unless you go to law school again at an ABA-accredited school. In fact, I know several foreign lawyers who had to do just that. Minnesota is in the minority of jurisdictions that adhere to this strict rule.

Read moreOpening the Door (Slightly) for Grads of Unaccredited Law Schools