My Shingle

How Good Solos Suffer When the Greedy Sell Out for $125 A Pop

Carolyn Elefant — Sun, 14 Mar 2010 22:50:28 -0500

Back in July, I denounced three Cincinnati, Ohio lawyers who shamelessly served as a front for a foreclosure solutions scam. The lawyers never met with clients (who were going to lose their homes!) or did any work on their behalf; they merely signed their name to canned pleadings prepared by a so-called foreclosure solutions company for $125 a case (later upped to a whopping $150).

Turns out, though, these lawyers did much more than simply sacrifice their own law licenses (they were suspended, though honestly, at least two deserved disbarment) for a $125 a pop. No - sadly, lawyers like these and others of their ilk sold out the overwhelming majority of ethical solo and small firm lawyers who capably and zealously represent clients in foreclosure and loan modification proceedings.

Last month, the FTC issued a notice of proposed rule (NOPR) that forbids loan modification providers -- including attorneys -- from charging up front for these modification services, even though we attorneys have our own set of ethics rules governing advance payment of fees and trust accounts. And it's precisely because of the bad acts of more than a few that the FTC refused to issue a broad exemption for lawyers from the upfront payment ban. From the FTC's NOPR:

In the Commission's view, the present record does not support a broad exemption for attorneys. Some attorneys have engaged in unfair conduct in conducting activities covered by the proposed rule. First, some lawyers have engaged in the same deceptive practices as non-attorney MARS provides, in failing to provide promised services, falsely touting high likelihood of success, misrepresenting refund policies and falsely claiming affiliation with the government. Second, some MARS providers have begun employing or associating with attorneys to support the MARS providers (often false) claims that they provide legal services and to avail. In such attorney MARS provider arrangements, attorney often do little or no legal work on behalf of consumers, with non-attorneys handling most functions including communications with the lender...Many state statutes offers exemptions, but attorneys offering MARS often have flouted state bar rules, such as prohibitions on fee splitting, referral fees...

What a disgrace.

The practical effect of the FTC's rule is to eliminate many lawyers (including this heroic one) from offering loan modification services. That's too bad, modification was a fairly manageable niche for new solos given the many pro bono training programs for handling loan modifications under the Obama HAMP plan and the huge demand for affordable loan modification options.

However, in the absence of the ability to collect a fee up front (and hold it in a trust account as required by ethics rules), most lawyers simply cannot afford to handle loan modification cases. For starters, there is no guarantee that even an exceptional attorney will actually be able to secure a HAMP modification - with only 30 percent granted, the odds are stacked against success from the get go (something good lawyers will disclose). Yet without an upfront fee, clients who don't obtain a modification would likely never pay their lawyers, thus leaving them uncompensated for a substantial amount of work. Second, modifications can take a several months, even as long as a year. To be sure, a lawyer doesn't have to wait that long to send a bill, but if the bill is sent several months into the process and the client fails to pay, what can the lawyer do? Withdrawing could jeopardize the modification but remaining on the case means more work for no pay.

The FTC rule does allow a limited exception for lawyers to the "no fees up front" prohibition - lawyers may collect a fee up front when modification services are provided in connection with bankruptcy or a document that must be filed in a court or administrative proceeding (so, presumably, if a client has already been sued for foreclosure, a lawyer defending the case could take a fee up front and apply for modification as a way to avoid foreclosure). Unfortunately, by that time, a case will be more expensive, and the lawyer's ability to do anything with respect to the modification would be limited.

In addition, the bar on upfront payments won't necessarily shut down non-lawyer foreclosure providers. These companies are private entities - they can get funding from a parent company or seek private investors. Lawyers don't have that option.

Reporting on the Second Circuit's recent decision in Alexander v. Cahill striking down New York's onerous lawyer advertising regulations, Simple Justice's Scott Greenfield warns lawyers that they'd better behave themselves, asserting that:

I don't want my free speech restricted because your tacky and disgraceful marketing effort makes people's stomachs turn.

But it's not enough for lawyers to police their own conduct. Scott makes the point that lawyers also need to call out colleagues who don't tow the line, and he's been doing more than his fair share. Restrictions on advertising are one consequence of standing silent as lawyers engage in unseemly or unethical advertising -- and that's bad enough. Far worse, in my view, is a rule like that of the FTC, which restricts good lawyers' ability to earn a livelihood.

So if you see lawyers going astray - whether it's a new lawyer who does so inadvertently or a seasoned lawyer who's gotten jaded or greedy - please, step forward and say something. You're not interfering or overstepping boundaries; it's your obligation. Moreover, if as lawyers we don't step up to the plate, someone else will step in and do it for us.

Note: The FTC's rules seeks comment on the impact of the ban on advance payment on attorneys. If you handle loan modifications responsibly and believe that the ban would prevent you from doing so, please file comments and let the FTC hear from you. You can access the rule through this page - a notice of proposed rule.

Thank You, Justice Scalia for Remembering Who Pays (the Client!) for the Vanity Footnote

Carolyn Elefant — Sun, 14 Mar 2010 21:48:54 -0500

If you're a solo or small firm lawyer who litigates against biglaw, you're probably familiar with the vanity footnote -- that smug, yet entirely superfluous annotation to legislative history, obscure law review article, treatise or string citation included in many large firm briefs. Though intended to corroborate a case cited in the text or flaunt just how smart the brief's authors are, the vanity footnote gilds the lily, mucking up an elegantly persuasive argument with TMI. Even worse, vanity footnotes compel a response, and thus force lawyers to engage in additional and unnecessary research on the client's dime.

But now, those of us who represent clients on tight budgets have an advocate on our side in the form of Justice Scalia. Concurring with the majority in Milavitz, Gallop & Milavetz v. US, Scalia took his colleagues to task for a vanity footnote of their own regarding the legislative history of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. From Scalia's concurrence:

The Court acknowledges that nothing can be gained by this superfluous citation (it admits the footnote is “unnecessary in light of the statute's unambiguous language,” ante, at 6, n. 3). But much can be lost. Our cases have said that legislative history is irrelevant when the statutory text is clear....The footnote advises conscientious attorneys that this is not true, and that they must spend time and their clients' treasure combing the annals of legislative history in all cases: To buttress their case where the statutory text is unambiguously in their favor; and to attack an unambiguous text that is against them. If legislative history is relevant to confirm that a clear text means what it says, it is presumably relevant to show that an apparently clear text does not mean what it seems to say. Even for those who believe in the legal fiction that committee reports reflect congressional intent, footnote 3 is a bridge too far.

Though in this economy, many clients are struggling with legal fees, it's solos' and small firms' consumer and budget oriented clients are are disproportionately burdened by the costs of responding to vanity footnotes. Premium services like WestlawNext are ideally suited for tracking down the kind of secondary information contained in vanity footnotes, but as I've noted along with my colleague Lisa Solomon, WestlawNext doesn't come cheap for solo and small firms.

So from solos everywhere on behalf of our clients -- thank you, Justice Scalia for remembering that when lawyers or judges make easy law hard, we make things harder for our clients.

Note: In response to the reader comment below, of course I read Millavitz and I'm familiar with the problems you cite. My point here wasn't to get into the merits, but simply discuss a piece of dicta to highlight a problem when solos litigate against large firms in any practice area.

But since you raised a substantive point, here are my thoughts. The way I see it, the BAPCPA provisions that classify attorneys as debt relief agencies and impose restrictions on their ability to counsel clients (which was at the crux of this case) are clear and in the absence of ambiguity, reference to legislative history is not required. In fact, here, the reference to the legislative history simply amplified the point that Congress regarded bankruptcy attorneys as scoundrels and enacted BAPCPA in response. Do you really want that as part of Supreme Court precedent?

I agree, completely that BAPCPA makes life difficult for solo and small firm lawyers and their clients. But if that's the case, Congress needs to change the law, not the Court. Given that the decision was unanimous, it seems that the Court agreed that the law was clear as well.

Sale of a Law Practice, Interview With Ed Poll & Lawyers at Midlife

Carolyn Elefant — Fri, 12 Mar 2010 13:00:00 -0500

Searching for fodder for blog posts, I came across this advertisement posted by a soon to be 70 year old retiring lawyer who is seeking buyers for his law practice located in Syracuse, in Hamilton County, Kansas. According to the ad there are only two other lawyers in the County, thus allowing for a County-wide practice. And with the firm located just sixteen miles from the Colorado border, with reciprocity between the two jurisdictions, expansion into a second state is a possibility as well. Finally, the firm uses practice management tools like Amicus, HotDocs and QuickBooks, which allows for automatic document production and scheduling and includes a database with a list of 4000 contacts.

Though a young lawyer taking over this practice might want to consider moving to a cloud based system which is the wave of the future, at least the attorney selling the practice has invested sufficiently in technology to enable a seamless transfer and provide a new owner with the means to hit the ground running. Often, when I travel on speaking engagements, I am struck by how many long practicing lawyers have not taken the time to invest in technology, and still run practices heavily dependent upon support staff and paper. When these lawyers retire, what will they have to pass on?

To find an answer, I spoke to the preeminent authority on selling a law practice - Ed Poll of LawBiz Management, publisher of the Law Biz Blog and author of many, many books on law practice, most recently, Growing Your Practice in Tough Times Ed graciously answered my questions on law firm succession, selling a practice, what lawyers can do to position themselves for retirement and how younger lawyers may be able to position themselves to take over retiring lawyers' practices. Ed also has some of his own videos on this topic
here and here.

Finally, if you're not yet ready for retirement and thinking about your future plans, check out Lawyers at Midlife by Michael Long, John Clyde and Pat Funk, published by DecisionBooks (which also published Solo by Choice). Lawyers at Midlife helps lawyers decide whether and when to retire, how to make the transition to the next stage and closing a practice. The book contains extensive practical advice interspersed with personal commentary by the authors and other lawyers.

Big Ways for Small Firms to Grow Now

Carolyn Elefant — Thu, 11 Mar 2010 15:57:16 -0500

A few weeks back, I posted about several innovative business models that might work for small law firms. Along those lines, yesterday's online issue of Time Magazine offers eight quick and decidedly twenty-first century tricks to grow a business in a down economy. I've focused on two below.

Outsource: Outsourcing is a theme that I've covered here at MyShingle several times (such as discussing use of virtual assistants and outsourcing as the new leverage) as well as in Solo by Choice. My friend Lisa Solomon of Legal Research and Writing Pro has been at the forefront of this movement. Through outsourcing, a solo or small firm can acquire a far more experienced lawyer (like Lisa) or support staffer than it could otherwise afford on a full time basis. That's because you outsource only when you have the work and therefore, you can match hours spent on extra help with increased billable matters. The Time article discusses outsourcing in the context of software development, but it holds equally true for small firms.

Another interesting outsourcing idea mentioned is teaming up with universities to work with graduate and research students. From the article:

This [team effort between a private company and university] is truly a collaborative effort," Hines points out. "The school loves the opportunity to give students real-world commercial experience, and if the scientists there come up with a patentable technology, I have the option to license it.

With so many law students eager for real world experience, maybe law schools would be willing to back a similar arrangement. I could certainly do a lot with a team of students working for me at no cost but experience and mentorship - couldn't you?

Licensing: Time discusses the licensing option as a way for small businesses to generate revenue without giving up large hunks of equity to venture capitalists. Small firms can do the same. Perhaps a small firm in a highly specialized area could license content to larger firms for use in materials for clients. But the licensing model can work for lawyers in any practice area through of counsel arrangements. After all, of counsel agreements resemble licensing agreements in that of counsel lawyers essentially "license" expertise to another firm for a set amount of time.

I noted one irony in the Time article, here. It quotes Andrew Sherman, a partner at Jones Day on what small business can do to grow. Sherman's advice is right on point; he says:

Now is the time business owners have to become bootstrappers and reinvent all their strategies — from how they finance their business to how they market and sell.

It's only unfortunate that Sherman's biglaw colleagues have yet to take his advice.

Note: I've been thinking a lot about new business models myself, particularly as my own practice has been fairly busy these days. I'm hoping to give a talk on one of my ideas at the Ignite Law event that Matt Homann is organizing for TechShow, and if my proposal is accepted (or not), I'll eventually share it here.

By the way, feel free to chime in -- what are you doing to grow these days?

To Win the Hearts and Minds of Consumers, Lawyers Need to Sell, Not Sue

Carolyn Elefant — Thu, 04 Mar 2010 22:20:02 -0500

To date, we lawyers haven't been able to effectively sell the public on the idea that document preparation services like Legal Zoom are a poor substitute for the services of a lawyer. So, being lawyers, we've done the next best thing to selling: suing. Last month, a Missouri law firm filed a class action lawsuit against LegalZoom on behalf of three LegalZoom customers, alleging that LegalZoom violate Missouri's unauthorized practice of law statute. Likewise, several months back, the North Carolina Bar challenged LegalZoom for unauthorized practice of law.

What's interesting about both actions is that neither cites specific incidents of harm to consumers, such as an individual winding up personally liable for business dealings because of an improperly formed corporation or LLC. Or a widowed spouse losing an inheritance to her deceased husband's ex, because LegalZoom botched the will. In fact, in Estate of George Mounts v. Barrett, a Missouri Court of Appeals case from 2000 on UPL (note - I found it on GoogleLegal, haven't shepardized it), a concurring judge expressed surprise at the relatively few complaints raised over unauthorized practice:

Even so, it appears to this writer there is an alarming increase in the unauthorized practice of law especially in the area of real estate law. Inexplicably, there does not appear to be a prevalence of complaints about this trend (if it is a trend)

So why the crackdown if apparently, there isn't any problem?

Well, for starters, lack of complaints doesn't mean that LegalZoom is either appropriate or adequate for consumers. Texas Wills and Trusts lawyer Rania Combs explains that LegalZoom's description of the law is outdated or just plain wrong, while Start Up Lawyer Ryan Roberts points out that the documents provided are inadequate for the needs of many start ups. While both Combs and Roberts are one hundred percent correct, their arguments aren't entirely persuasive to many consumers because the harm that Combs and Roberts describe is speculative. As a result, it's easier to ignore.

Moreover, telling consumers (many of whom are already skeptical about the value of legal services) that LegalZoom documents are inadequate doesn't make much of an impression because many consumers realize (or have experienced first hand) that lawyers can also commit malpractice or overcharge for simple paperwork. Thus, unless lawyers can show that a greater percentage of LegalZoom documents than lawyer-prepared documents are actually botched or more likely to give rise to litigation or added costs or some other horrible down the road, then consumers would just as well take their chances with the lower priced option.

Still, there are other compelling rebuttals to LegalZoom. And what's worst about UPL actions is that in the rush to shut these companies down, those bringing the lawsuits overlook a far better remedy: cracking down on LegalZoom's deceptive advertising practices. For example, the Ninety Five Years blog comments that LegalZoom claims that a lawyer would charge $780 for a copyright application - which is highly unlikely. Why not require LegalZoom to produce evidence of these legal fees before allowing it to state that a lawyer would charge as much?

There's another claim at the site that seventy percent of consumers who complete their own documents make mistakes. What's the support for those statistics? And when consumers make mistakes, are they the kinds of mistakes (e.g., spelling errors or filing at the wrong agency) that LegalZoom can cure? Or do the errors concern more substantive issues - inadvertently failing to list an LLC member - that even LegalZoom can't correct?

Finally, Legal Zoom also cites several talk show celebrities as endorsers of the LegalZoom products. Are those celebrities paid for giving endorsements? The site doesn't say (or I couldn't find where it did) - but it should.

If the FTC or other body regulated LegalZoom ads as strictly as, say, cigarette advertisements or ads for pharmaceutical drugs, consumers could learn more about the potential drawbacks of these sites and make informed decisions. In some instances - for example, an incorporation for a thirteen year old's dog walking business business or a will for a $2500 estate - a consumer might legitimately decide that a Legal Zoom document would suffice. But for more complicated matters, a consumer might realize that any promised savings from Legal Zoom (which are currently inflated by Legal Zoom) are not sufficient to justify the risk of not using a lawyer.

It seems unlikely that any of these lawsuits will prevail on UPL grounds. As a general matter, most forms and kits do not fall within the category of the practice of law (courtesy of Google, this Missouri case has a pretty good round up), though offering personal advice on how to complete the forms could cross the line into UPL. Though LegalZoom offers a customer service hot-line, the company is likely to argue that the help provided is not legal advice, but rather is more technical or administrative in nature.

The bottom line is that lawsuits aren't likely to shut down companies like LegalZoom. Worse, these suits send the message to consumers that lawyers are so fearful of competition from computerized form companies that they need to drive them out of business.

In addition, do lawyers really want to argue that an impersonal, fill in the blank form is, in fact, "the practice of law?" Did we really go to law school three years of law school to help someone fill out a form? From Abraham Lincoln (lawyer's advice... is his stock in trade) to Richard Susskind (who emphasizes the continuing vitality of bespoke advice even in an automated world), our currency is our judgment and ability to counsel. Why do we want to diminish that value by arguing, as these kinds of lawsuits do, that we're nothing more than form-fillers or paper shufflers.

Rather than sue, lawyers need to sell the idea that document preparation services are a waste of money and don't always offer the benefits (e.g., cost or time savings) that they claim. Gregory Luce of the Practice Blawg is doing a bang-up job on that front with a detailed video showing exactly what happens when you sign up for Legal Zoom and how that experience compares, in cost and quality, to a sit down meeting with a lawyer (and perhaps, also, a virtual, unbundled legal service provider).

Ultimately, even if lawyers manage to shut down LegalZoom, there's no guarantee that clients will choose to retain a lawyer over a DIY alternative. Unless we lawyers can win over the hearts and minds of clients by showing that we can bring value to basic transactions without much added cost, then even if lawyers manage to win a UPL case, we still lose in the long run.

Solo Blogosphere Round Up

Carolyn Elefant — Mon, 01 Mar 2010 22:00:00 -0500

1. Lisa Solomon takes on Westlaw - It shouldn't take a detective to figure out the answer to one single question: How much will WestlawNext cost? Yet, apparently, it does and so my friend, Lisa Solomon of Legal Research and Writing pro has been investigating. Lisa hasn't yet figured out the price, but she's figured out something else: WestlawNext isn't interested in the solo market.

2. Got a Bar Complaint? Get Tannebaum. Brian Tannebaum of MyLawLicense has another great e-book out, I Got a Bar Complaint which you can download by clicking on the URL. Probably a good idea to read the ebook before you even get a complaint.

3. Newbie Solo Shows That Skills Training is Overrated: There's a terrific solo success story here that's been making the rounds on a bunch of blogs, about newbie lawyer and solo Wajahat Ali's first case: fending off a foreclosure action for two terrified clients, already scammed once by another foreclosure attorney. Ali's training for the case? He crammed for the case using Nolo books (disclosure: Nolo is a sponsor of MyShingle) and Internet research. Who says you need to learn skills in law school?

4. A Pair of Marketing Lessons: I have two new posts up at the Legal Marketing Blawg : Three Es of Cold Emails and A Word About Logos.

5. Small law attorney Jim Reed of Ziff Law does some undercover work on a recent e-mail scam that's nabbed several lawyers. As an added bonus, Reed offers two suggestions to avoid getting duped: (1) don't disburse funds til a check clears and (2) remember, if it sounds too good to be true, it usually is. H/T New York Personal Injury Attorney Blog.

Guest Post: State Bar Regulations on Lawyer Advertising

Carolyn Elefant — Mon, 01 Mar 2010 12:00:00 -0500

The following is a guest post by Kelly Spradley, VP of Marketing and Sales at Impirus Legal Websites.

Florida is not looking too sunny for lawyers today. The Florida Bar recently announced that Florida attorneys must put website testimonials, laudatory statements, and past results behind a disclaimer page. Many Florida lawyers currently have testimonials directly cited on their websites, even though the rule went into effect on 1/1/2010. The testimonials will need to be concealed behind a disclaimer page, but it is not clear as to how rapidly it needs to be done. Although Florida lawyers will need to comply with the new rules, they do not have to submit their websites for review.

This is in contrast to Texas where websites do have to be submitted to the State Bar for review. A criminal defense law firm in Houston was recently reprimanded for not submitting its website for review. Lindeman, Alvarado & Frye’s website contained images which were not appropriate for a criminal defense firm. The firm has since removed the images, and paid a $300 fee to the Texas Advertising Review Committee for a belated review.

The Houston firm was having its site revamped, which brings up a point about re-submission to the State Bar of Texas. If a website initially passes muster with the State Bar of Texas Advertising Review Committee, does it need to be re-submitted for review every time the website is updated? This would be a great time and financial constraint on Texas lawyers, as websites today are no longer static advertisements. Some websites are frequently edited, as blog posts or articles are added.

The Texas State Bar does post this question and answer on its site:

“Do I have to submit my advertisement for review every year?

No. Once an ad has been approved by the ARC, the lawyer is not required to resubmit an advertisement unless a substantive modification is made to the ad. According to the ARC, a simple change of street address or numeric phone number does not constitute a substantive change. However, any other addition, deletion or text edit requires that the ad be submitted with a new application form and filing fee.”

According to that answer, it seems as if you do have to re-submit your website each time you add an article or blog post. But an email from Gene Major at the Texas State Bar explains that you do not have to re-submit your website (or blog) if you are adding articles that are educational in nature.

The Texas State bar also requires that internet videos be submitted for approval. The cost is $75 for review. This form of advertising could get expensive. Submit a couple of videos, and you’ve spent more on advertising reviews than on the purchase of a video flip camera. Lee Rosen is fortunate to live in North Carolina. He markets his law firm with educational videos. The videos are prominently placed on video sharing sites like YouTube. He doesn’t have to submit each video for review as the North Carolina rules state:

“Although prior review of an advertisement is not required by the Rules, the ethics staff of the Bar will provide an advance informal oral opinion on whether an advertisement complies……”

AND

“A lawyer may display truthful information about the lawyer's legal services on a World Wide Web site accessed via the Internet.”

North Carolina seems to be pretty progressive. But if you cross the border into South Carolina, you do need to submit your websites and videos for filing to the Commission on Lawyer Conduct.

Do you know the advertising rules in your state? The ABA offers this page with a link to each state’s rules.http://www.abanet.org/legalservices/clientdevelopment/adrules/states.html Even if you read your state’s rules, though, you might be left with a lot of questions. Most of the rules do not address advertising with Pay-Per-Click ads, blogs, podcasts, social media sites, and other internet forums.

The people in charge of creating the advertising rules for each state need to update the rules for modern technology. They need to consult with lawyers who are using the internet to advertise, as they are developing the rules. Furthermore, once the rules have been re-defined for the age of the internet, they need to be clearly stated.

Internet marketing is a very effective form of marketing for lawyers, and is typically an affordable form of marketing for solos and small firms. However, when the state advertising rules are not up to date, are cost prohibitive, or are murky it is difficult for lawyers to fully capitalize on internet marketing strategies.

What do you think? Are your state rules on advertising reasonable? Is it easy to stay in compliance with the rules? Do the rules need an overhaul for Web 2.0?

Resources used to write this article:

http://www.floridabar.org/tfb/TFBLawReg.nsf/e0f40af2c23904c785256709006a3713/f0f34ceae87853cc85256b2f006c8848?OpenDocument

http://www.floridabar.org/TFB/TFBResources.nsf/Attachments/C103D838A491419E8525769D005665AF/$FILE/Guidelines%20for%20Firm%20Websites.pdf?OpenElement

http://www.distasiolawfirm.com/testimonials.aspx

http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202436082095&No_Defense_for_Law_Firm_Web_Images

A Million Dollar Website

Carolyn Elefant — Sun, 28 Feb 2010 22:49:33 -0500

California mega law firm, Morrison Foerster is MoFo, and this (above) is its website.

Understandably, the site might confuse you since mofo has more widely recognized, colloquial meanings. But Morrison Foerster ranks first in search for "mofo."

The Mofo website cost one million to build, claims Above the Law. Was it worth it? Above the Law trashes the site in a hilarious review but I have to admit that the clean design and originality of site (as well as the little graphics and puzzles - see ATL review for details) wowed me at first. Until I realized that my opinion of the site really doesn't matter; it's what clients think that counts.

So what would a client think about the MoFo site?

Well, for starters, some clients might not even be able to read it. After asking around on one of my listserves, seems that many people can't read white on black (which is how the interior of the site is designed) and skip over any site with that kind of text. Others couldn't experience the full effect of the MoFo site (which is flash based) since they've disabled flash from their browsers. Spending a million dollars on a site that a large percentage of prospective, or more importantly existing clients can't read or otherwise fully appreciate doesn't come across as particularly client friendly.

Nor does the site provide much in the way of resources for clients, or an opportunity to gain insight into how the firm's lawyers write or think. The firm doesn't have any blogs, and the resources - newsletters, client alerts and the like (accessible through the "resources link" on the toolbar), but all are in PDF format. Thus, users must go to the trouble of opening a document to find content instead of being able to access it on the screen or through an RSS feed.

Admittedly many clients might find the MoFo site innovative or distinctive and therefore assume that MoFo practices law with similar flair and creativity -- which was presumably the site's intent. But if clients discover the million dollar price tag, they'd think twice. It doesn't take much creativity to design a fancy website or handle a complicated legal matter on a million dollar budget. The real test of creativity is what a firm can accomplish when clients don't have unlimited dollars to burn.

Would You Work on Spec? Why Should Your Logo Designer?

Carolyn Elefant — Thu, 25 Feb 2010 15:08:09 -0500

Back in my last year of law school, one of my friends who was still looking for permanent employment responded to an ad seeking a new associate for a three person law firm. The firm's managing partner contacted my friend and they had a nice chat. The partner said that my friend was definitely in contention for the position but to make a final decision, my friend would need to submit a five page memo on a question that the partner described (something under New York CPLR as I remember). Desperate for employment and believing that this would clinch the deal, my friend drafted the memo and sent it in. And then he waited. And waited. And waited.

Eventually, my friend called the partner who informed him that the firm decided not to hire anyone at that time. Thereafter, my friend and I joked that the memo assignment must have been some kind of a scam to get free work, and we wondered if the firm had a racket going -- routinely posting similar ads to generate a steady supply of slave labor.

Fast forward two decades, and the type of spec work scam that my friend and I derided back in law school now abounds, rebranded as crowdsourcing. And it's all the rage for logo design at sites like Crowdspring or 99 Designs, which are sometimes recommended as an inexpensive way for new solos to acquire a logo.

Generally, contest sites work like this. Users can create a contest for a new logo by listing a design project and a prize amount (recommended amounts are $100 to $600). Once the contest is posted, designers submit concepts, after which users have an opportunity to offer feedback or request additional modifications. At the end of the designated contest period, the user must select a winner and award the prize money. The theory is that even those designers who don't win (and therefore don't get paid) accrue benefits from their uncompensated labor, such as increased exposure and feedback on their designs.

But are logo contests really crowd sourcing - or simply a slick way to get free work? Serious design professionals like Jacob Cass say that logo contests aren't crowd sourcing, but rather, spec work. Spec work is any job "for which the client expects a finished product before agreeing to pay," while crowdsourcing is way to generate feedback or opinions of an already completed piece of work:

Crowdsourcing: “Vote for our new logo, we will use the one you all like the most!” This means the logos have already been designed (and hopefully not via spec).

Spec or Free Pitching: “We need a logo, someone design one for us and we will pick the one we like.”

Not surprisingly, the design community reviles logo contests, even creating a No Spec! website to warn the public about how spec work contests are a disservice to both designers and clients alike. As No Spec! explains, logo contests devalue design work and create an expectation that great logos shouldn't cost much money. Apparently, that's what someone like Tim Ferriss of Four Hour Work Week fame, believes. Though Ferris who could well afford to compensate a designer, he held a contest to pick a design for his book cover, defending his choice by reasoning that "for a couple of hours of work," a designer could potentially reap the reward of seeing his work on a Times Square billboard. (As a lawyer, the phrase "couple of hours" should ring familiar - as in "Why did you charge me $2000 to get the lawsuit dismissed. It only took a couple of hours to call the other side and get them to drop it).

Other logo contest opponents point out that contests are exploitative, preying on the desperation of new graduates who will do just about anything to build a portfolio. Sure, no one puts a gun to a contest entrant's head to force them to participate under penalty of death. But lets face it - if these designers had well paid jobs, would they be participating in these contests at all? Just like my law school buddy who wanted a job badly enough to write a memo that he'd never had done if he could have found a job more easily, most designers who enter these contests need the cash and have few other choices. And unfortunately, even if a designer gets lucky and wins a few hundred bucks, most of the contests are one-offs, and don't lead to long term relationships.

But logo design contests aren't in the contest sponsor's best interests either. As Jacob Cass points out, much spec work is of inferior quality, with little or no research by designers because there's no relationship (contest sponsors often don't give many details about their business). Besides, why would a designer want to invest this kind of time in a design when there's no guarantee of any payment?

Receiving shoddy work product is perhaps the most benign downside to logo contests. Other consequences are far worse. As the Logo Factory cautions, many contest participants submit designs inspired (read: copied!) from other logo sites. Which means that for $150, you're buying not just a sub-par logo, but a potential lawsuit as well. In addition, questions have been raised about the legality of contest design sites. Though most likely, the site itself, rather than a contest sponsor would face liability for violations, it just doesn't look very good for an attorney or a law firm to be caught up in an activity that may not be lawful.

Which raises another point: the impact of participating in a logo contest on your firm's reputation. Really, just how prominent is the prominent law firm looking for a $260 design?

Yet for all the compelling negatives associated with logo design, for me, the primary reason that lawyers shouldn't participate in these spec sites (and why I won't use them) boils down to this. As lawyers, we'd never draft up a contract or outline the best causes of action for a potential lawsuit for a prospective client with scant hope of ever seeing payment. So why should we expect our logo designers to work on spec when wouldn't do it ourselves?

Update (2/28/2010): There's plenty of interesting discussion in the comments, including comparisons of spec work to, for example, lawyers working on contingency. However, for lawyers, I think that the closest analogy between speculative legal services and logo contests is this:

A potential client conducts a contest, offering $750 to a lawyer to draft a lease agreement addressing (x, y, z) and that complies with California law. Lawyers submit a lease agreement, with fee awarded to the lawyer who produces the best agreement.

Would you enter this contest? And how is this kind of contest different, if at all, from contests for logo design?

Solo Marketing Makeovers: What's Your Advice?

Carolyn Elefant — Thu, 25 Feb 2010 01:58:18 -0500

This month's ABA Journal features a piece on the results of marketing makeovers provided to three solos brave enough to bare their practices for all to see. The article summarizes the advice given by two marketing experts to three different solos and follows up six months later to see how they're doing.

I had mixed impressions about the article. On the one hand, I felt that it offered a realistic view of some of the challenges of solo practice. All of the lawyers depicted have been practicing solo for five years or more, are highly qualified and love what they do. Yet, they still struggle to keep abreast of the rolling hills and valleys that comprise the terrain of solo practice. It's a very realistic view, and one that's often overlooked with so much emphasis on get rich quick schemes, and I'm glad that the article exposed it. Still, on the upside, these solos are still in business with the future looking bright, in spite of a few bumps in the road (low overhead and agility make for good shock absorbers) whereas several big firms collapsed or downsized substantially.

So while I liked some of the realism of the piece, nevertheless, much of the advice offered to the solos seemed awfully old fashioned. The marketers did not suggest to any of the three solos that they incorporate social media, Google ads, video or other Web 2.0 and Internet trends that are so common. (The sole exception came in the form of a recommendation to one of the solos who is fluent in Spanish, to offer a bi-lingual version of her blog (which I thought was a great idea). Instead, most of advice focused on old school activities like building and reinforcing referral networks and following up religiously after networking events or seminars. In fact, one of the marketers advised a cash-strapped criminal defense solo hurting for business to take out ads in the Yellow Pages or perhaps a church bulletin. To me, a Yellow Pages ad seems like a waste of money - not only is circulation way down (when's the last time you consulted the Yellow Pages for any service provider?), but unless you can afford a full page ad, you're likely not to be noticed. If you're going to throw down money on ads (which I don't really advise any), it would be better spent on Google ads or even some of the emerging social media ads rather than the Yellow Pages.

On the positive side, the article emphasized the tried and true measures that have always been effective. These include time management and measuring results to eliminate efforts that are time intensive but don't produce revenue, seeking out referral sources and cultivating those that have been helpful, keeping up to date with substantive law and considering one's legacy as an inspiration to stay on task with marketing.

What do you think of the advice given in the article? Can lawyers promote their practices without social media at all? And what suggestions might you have for the lawyers profiled?

I Can Unbundle The Case, But I Can't Unbundle My Heart

Carolyn Elefant — Mon, 22 Feb 2010 13:00:07 -0500

I want to wholeheartedly embrace the concept of unbundled legal services, I really do. After all, what's not to like? The demand for affordable legal services is greater than ever. With courthouses overrun by pro se litigants, even judges are pressing for unbundled legal services. Technology is empowering a generation of educated, sophisticated consumers who actually want to take on increased responsibility for legal affairs. And finally, given that companies like Legal Zoom, which aren't even lawyers, are providing unbundled legal services through forms, lawyers should surely have the ability to compete and offer the same services as well.

And yet, much as I support unbundled legal services in theory (as well as in certain finite matters like a will or corporate document), I'm not so sure that I could deliver unbundled services in practice without losing a bundle myself. Because if an issue came up in the course of a case that was beyond the scope of my agreement but nonetheless critical, I'd probably take wind up taking it on, whether or not ethics rules or malpractice considerations compelled me to do so.

Case in point. Last summer, I volunteered to take on a foreclosure case as part of Maryland's pro bono foreclosure defense program. The case assigned to me wasn't yet in active foreclosure, and I was told that all that I'd have to do was negotiate a loan modification for the client. And thus, my pro bono retainer provided that I'd assist with renegotiation. Nothing else.

Except...neither the law in general nor the law of foreclosure specifically is equally clean and neat. What I didn't realize at the time I accepted the pro bono case was that only a scant percentage of loan modifications are ever granted permanently. And that the waiting period between a trial modification and permanent modification could extend for months, during which time the lender can reactivate its foreclosure action.

That's precisely what happened in my pro bono case. After a couple of hours work gathering information from the client and filling out forms, I secured a trial loan modification for the client. Then, while waiting for a decision on a permanent modification, the lender initiated foreclosure proceedings. Not surprisingly, the foreclosure action was defective both procedurally (non-compliance with Maryland's rules and HAMP guidelines) and on jurisdictional grounds (both the Trustee, acting on behalf of the putative lender, and the lender itself lacked standing).

Even though foreclosure defense wasn't part of my agreement with the client, I couldn't ignore the foreclosure action. So I called opposing counsel and asked for a dismissal. OC admitted that the case was prematurely filed, but wouldn't dismiss outright. Instead, he said that he'd put the case on hold. Technically, a hold would solve my client's problem because it would allow the modification proceeding to run its course. If the lender granted a permanent modification, the foreclosure suit would go away.

Trouble is, the hold wouldn't toll the time for my client to file a response and raise objections. And if the lender turned down the requested modification, my client would need those defenses as leverage. And by that time, my client's objections would be deemed waived. So even though my retainer didn't require me to represent my client in a foreclosure action in court and even though I'd come up with what some might view as an acceptable band-aid (put the case on hold), neither of these approaches in my view satisfied my obligation as a lawyer to provide zealous representation to my client. So after about 20 hours of research and dissecting all the transactions (remember, I'm a novice at all of this plus a bit of a research nerd), I filed a motion to dismiss, and I'll be in court next month to argue it.

Right after I'd extinguished that fire, my client sent me paperwork on another matter. Turned out that he'd owed some debts and worked out an agreement with a debt consolidation company to make the repayments. The debt consolidation company stopped making the payments, and the creditor filed a writ of garnishment. Now clearly, this issue fell outside the scope of the foreclosure matter, right? Well, not exactly.

If my client's wages were garnished, he'd no longer be able to continue to make the monthly payments necessary to keep his trial modification. As such, he'd be disqualified for consideration for a permanent modification - which was what I'd originally been tasked to achieve. So in order to preserve my client's ability to get the modification, I needed to address the garnishment issue, even if technically, it was unrelated to the foreclosure matter.

In addition, as with the foreclosure papers, the garnishment action was rife with error. It identified the wrong garnishee, the wrong amount due on the judgment and the wrong creditor, for heavens' sakes. Now if this had been an unbundled situation, I could have whipped out a motion to dismiss and given it to my client to sign and file. But I knew that filing a motion to dismiss wouldn't help in the short term, because the employer is obligated to withhold wages once the writ is filed. So if the motion to dismiss took a month to resolve, my client wouldn't get his check, thus jeopardizing his foreclosure payments.

As an attorney, I could call the other side and try to force a dismissal, then offer to renegotiate payments. But my client would not have the same leverage. And even as an attorney, getting the writ dismissed involved a set of emails to the opposing counsel that bordered on stalker-ish (since I wasn't getting a response), two phone calls and a draft motion (since I hadn't heard and figured that I'd have to file a dismissal after all). But just a few hours ago, I learned that the garnishment action will be dismissed and that we'll reinstate a payment plan similar to the one that my client had with the consolidation company.

In my lawyer's mind, I can neatly dissect all of the separate elements of my client's foreclosure proceeding: the loan renegotiation, the foreclosure case in court, the garnishment. With my lawyer's hand, I could draft a wicked retainer letter that isolates each element and specifies those which I'll handle and those which I won't.

Yet even though I can unbundle the case, separate it into tiny, manageable pieces, I can't unbundle my heart. I simply can't abandon a client because my original, limited agreement didn't contemplate the emergence of damaging tangential issues or adopt a second rate approach that won't solve my client's problem simply because I haven't been paid to do more. Though I don't advocate an over the top, scorched earth strategy in every case and I'll concede that some finite matters - incorporation, leases, wills and such - can readily be unbundled and automated, I'm not so sure how well ongoing matters like foreclosure, collection, immigration or criminal cases, particularly those involving less sophisticated clients translate to the unbundled model.

Indeed, perhaps that's what judges are counting on when they advocate for unbundled legal services: that lawyers' sense of compassion or ethics or professionalism will convince them to stay in a case even if it's not necessarily what they signed up for. In fact, it just may be that unbundling doesn't give lawyers an out so much as it inextricably binds them -- either by judicial fiat or personal conscience -- to a case that they never intended to see all the way through.

Help, My Virtual Assistant Is Turning Me Into A Moron!

Carolyn Elefant — Sun, 21 Feb 2010 10:40:07 -0500

I've always considered myself a "practical technology user," adept at mastering the latest and greatest on a strictly need to know basis. For example, I still can't program a Tivo or download a movie on my ipod or operate the family Wii because I have no interest in the activities enabled by those technologies. But I can code HTML, create a mini online video, create a Google group or post on virtually any blog platform because mastering these skills lets me indulge my passion for engaging in discourse online, communicating my ideas to a broader audience and educating lawyers about solo and small firm practice.

Yet even while I'm facile with technology when I want to be, it's still time consuming. So lately, I've delegated much of my behind the scenes tech administration to my virtual assistant. Whether it's creating a form or updating a social media profile or even figuring out a feature of new online data base, I no longer take the time to figure out how to do it myself but instead, let my VA handle it (and no, I don't outsource content creation, ever, in case you wondered). Many times the answers to my questions are fairly obvious and I feel lazy for not having taken the time to figure it out myself or idiotic for having asked about something so basic. In addition, I've noticed that my own tech skills are growing stale because I don't get as much hands on practice using many of these applications since I have someone else to do the work for me.

As technologies become more user friendly, most lawyers feel that they ought to be able to figure them out on their own. And certainly, when you start a firm and have more time than money on your hands, the user-friendly characteristics of today's Web 2.0 technologies are a godsend. However, as your firm grows and becomes more financially secure, even the few minutes here and there that you spend creating a database or setting up a new list or updating a social media profile or formatting a newsletter collectively amount to time that you could devote to other activities - whether generating more revenue or doing pro bono or spending more time with family or friends.

The first rule of technology is that it should liberate, not enslave. Relying on an assistant, even to the detriment of improving my own skills, is a small price to pay to harness technology and leverage my time so that I'm free to do far more than I otherwise could if I had to master it all on my onw. Maybe that makes me a technology moron, but at least I'm a happy one.

Update: I see that my virtual assistant has submitted a comment below. Thanks, Tina!

Newbie Lawyers Sidelined in NALP-Biglaw Smackdown

Carolyn Elefant — Thu, 18 Feb 2010 00:03:10 -0500

I've never been a fan of NALP, the National Association of Legal Professionals. So far as I've been able to tell, the organization focuses almost exclusively on supporting law school career offices in helping students get jobs at biglaw and promoting diversity within biglaw's ranks. Even NALP's public interest initiatives are aimed not at helping law students find public interest positions, but rather -- you guessed it -- helping biglaw firms identify public interest programs where they can place downsized associates.

Even though NALP never helped the majority of students find jobs, it's never received much criticism. Until now. NALP's policies on law school recruitment are coming under fire, not because they're useless or even detrimental to many students, but rather, because they threaten biglaw's hiring practices.

NALP wants large firm employers to put off hiring decisions until January and then, give students 14 days to make a decision. The NALP proposal represents a change from the current practice, whereby firms interview students before the start of second year of law school and allow 45 days for students to make decisions. In a recent opinion piece in the National Law Journal, Peter Kalis of K&L Gates criticizes both of NALP's recommended practices, arguing that they unreasonably constrain biglaw's flexibility over hiring decisions. As such, Kalis issues the battle cry to Abolish NALP Now, a charge that Bruce Macewen echoes with a lengthy post at Adam Smith.

As I said at the outset, I'm no fan of NALP. Because it serves only a small segment of the population, it fails to provide law school career offices with resources that would enable them to make other options - like government or public interest jobs or solo practice accessible to law students and alumni. So NALP has always been a huge waste of time and further, has done little to serve student interests. But naturally, no one ever thought to eliminate or criticize NALP until its actions started hurting biglaw.

Moreover, does biglaw really need protection from NALP? What about the law students who are issued offers, which are then deferred which are then revoked when they show up for work? Or law students holding their biglaw careers in abeyance while marching off to work at public interest jobs while waiting for the firm to bring them on board? Let's face it. The present NALP system doesn't do much to help students. It puts students in a situation where they're forced to make job decisions months in advance of starting which is risky business in a volatile job market. And rather than help students identify biglaw alternatives when those jobs fall through, NALP encourages them to sit around a dead-end public interest job while waiting for a call to start work that might never come.

In looking at whether to eliminate NALP, we should be talking about students and young lawyers, not biglaw. Biglaw's already hung young associates out to dry once, with mass layoffs that probably could have been avoided with firm-wide salary caps, termination of unproductive partners and of course, basic planning (did firms REALLY think they could keep charging $950/hr in a recession?) Now biglaw wants the freedom to issue and rescind offers at will without any repercussion.

Ultimately, in the smack down between NALP and biglaw, it's law students and young lawyers who wind up on the sidelines. They say you don't learn anything in law school, but this recent incident teaches one important lesson: if law students and young lawyers don't look out for their own best interests, no one else will.

Who Loves You Solos? Dueling Videos - Join the ABA v. What You Don't Know About Solo Practice Can Hurt You

Carolyn Elefant — Wed, 17 Feb 2010 23:46:09 -0500

Last week, my colleague Susan Cartier Liebel posted on why the ABA's recent decision to slash dues for solos is too little, too late. I agree. While I appreciate the ABA for Solosez (and publishing the upcoming social media book I've co-authored with Niki Black), dues cuts or not, I won't join simply because the ABA spends too much money on political issues that I either don't agree with or which don't make a difference to most lawyers.

I don't have much to add to Susan's commentary, so instead, I'll just leave you with these dueling videos: the one by the ABA, and the one that the ABA would put out if it really cared about solo and small firm practice. Enjoy, and let me know what you think in the comments.

Attorneys Defending Bar Requirements Say that Lawyer Must Violate Them To Bring a Challenge

Carolyn Elefant — Mon, 15 Feb 2010 20:33:39 -0500

Princeton, New Jersey based solo, Ekaterina Schoenefeld did what every good lawyer is supposed to do: she abided her state bar's ethics rules even though doing so cost her financially. Though duly licensed in New York, Schoenefeld couldn't practice there. That's because New York Judiciary Code section 470 requires non-resident, New York barred lawyers like Schoenfeld to maintain a New York office to serve New York clients. The office requirement applies only to non-resident, New York barred lawyers; those who reside in New York are not subject to the office requirement.

Lacking a New York office, Schoenefeld dutifully turned down business from prospective New York clients to comply with bar rules. But because Schoenfeld was paying $350 a year to maintain a bar license that she couldn't use, she challenged New York's law in federal court, arguing that it violated the Privileges and Immunities Clause, the Fourteenth Amendment Equal Protection Clause and the Commerce Clause of the United States Constitution.

But no good deed goes unpunished. Instead of getting praise from the Committee on Professional Responsibility and judiciary for complying with an unfair law, they moved to dismiss Schoenefeld's challenge, arguing that because Schoenefeld hadn't actually violated the law, the case wasn't ripe for review. As such, the defendants characterized Schoenfeld's case as a mere "academic exercise."

I realize that in litigation, lawyers frequently raise procedural arguments for strategic reasons. Even so, here, there's a difference. In my view, it's simply inappropriate for a bar ethics committee to adopt a position -- even for the sake of litigation -- that attorneys must violate the law as a prerequisite to challenging it.

Let's consider what would have happened had Schoenefeld decided to engage in a little civil disobedience. According to the New York Law Journal, the state attorney general can bring misdemeanor charges for violations of §470 as well as seek treble damages, such as triple the fees that an out-of-state lawyer may have charged while practicing law in New York without having an office. Furthermore, we all know that once lawyers violate the law, they're vulnerable to ethics charges for unprofessional conduct. Thus, even if Schoenefeld was prosecuted for violating the law, but successfully challenged §470 as a defense, her law license might still be in jeopardy for having violated the statute to begin with. Yet, that's precisely the route that the New York Disciplinary Committee preferred Schoenefeld to take.

My criticism of the defendants' position isn't limited to procedural matters, though. At a time when thousands of large firm lawyers have been laid off, you'd think that the New York ethics authorities would want to do away with an archaic, protectionist law that makes it more difficult for displaced lawyers to start a practice. Many New York licensed, former biglaw attorneys never lived in New York to begin with or may have moved out of state since their layoffs to save money. Yet New York's current law would prevent these lawyers from working from home or even permanent offices space in adjacent jurisdictions - even though if they lived in New York, the same requirement wouldn't apply. As numerous commenters on this ABA news story point out, the New York rules don't protect consumers from ne'er do wells. A fly by night lawyer from Buffalo located six hours from New York City can represent a clients there without an office, while a New Jersey lawyer with a physical office just across the river in Newark (but without space in New York) and a short train ride from most New York courts could not.

It's bad enough that New York already has draconian unemployment laws, under which a laid off lawyer earning a couple of bucks from a blog or potentially, from starting a practice is deemed ineligible for unemployment compensation. But New York's office space requirements for out of state residents presents another barrier for laid off lawyers determined to put their New York law degrees to good use.

Happily, Northern District Court judge Laurence Kahn concluded that Schoenfeld didn't need to violate Section 470 to challenge it. Kahn found that Schoenfeld's loss of business and desire to abide by the law gave rise to a real controversy ripe for review by the court. Meanwhile, Kahn also denied Defendants' motion to dismiss Schoenefeld's privileges and immunities claim, which means that her case will move forward.

Congrats to Ekaterina Schoenefeld for doing the right thing and obeying the law, even if the Disciplinary Committee would have had you do otherwise. And good luck in the next phase of the case - MyShingle is rooting for you! As we like to say here, Go, Solo, Go!!

When You're the Boss, You Don't Beg For Work Life Balance. You Make It So.

Carolyn Elefant — Sun, 14 Feb 2010 23:27:13 -0500

Like every parent on the planet, I've told my daughters more times than I can remember some variation of the following:

Yes, you can eat chocolate for dinner or stay up until three am or leave orange peels on the floor or [fill in the blank] when you have your own place and pay your own bills. But so long as you're living in this house under my roof, I make the rules.

It's surprising, then how quickly we parents who practice forget our own advice. We take a job at a law firm, and suddenly find ourselves resentful that the boss wants us to work 60 hours a week or finish a project for a client over the weekend. And so, like my daughters (and most kids, I imagine) we grouse or complain or beg for exceptions instead of growing up and creating a job where we can be the boss and make our own rules.

I was reminded of the benefits of being in charge after reading in the New York Times (2/12/10) about how President Obama gives priority to certain inviolable family events, like his daughters' band recitals, sports games, parent-teacher conferences and family meals. From the article:

[Obama] knocks off work at 6 p.m. each evening to have dinner with his family, and has given his schedulers strict instructions that, if he must have night-time activities, they are to take place after 8 p.m. That includes matters of war; in November, as the commander in chief wrestled with sending more troops to Afghanistan, he called an 8 p.m. meeting of his national security team, in deference to his role as father in chief.

If the President of the United States can set aside national issues to make time for his kids, there's no reason why you can't set your own priorities as well. That is, if you're willing to grow up and be the boss.

If you're not in a position to leave your day job just yet, learn more about the part time practice option at my upcoming teleseminar this Thursday February 18, 2010 with Julie Tower-Pierce. Register here. I'm also speaking on the nuts and bolts of starting a practice at American University, Washington College of Law, on Tuesday February 16, 2010 at noon.

Ideas for the Firm of the Future + One: Diversify Your Offerings

Carolyn Elefant — Wed, 10 Feb 2010 17:51:08 -0500

Via Dan Pinnington at Slaw.ca, I learned of Merrilyn Tarlton's excellent article, Figuring Out Your Place in the Race (ABA Law Practice Magazine, Jan/Feb. 2010). Recognizing that technology advancements and economic upheaval have rendered extinct the high leverage business model, Tarlton predicts that "the future of the business of law is going to be about difference, not sameness."

Thus, Tarlton offers seven interesting and innovative business models for law firms of the future:

The Virtual Firm: Typical legal services at a better price.
The Retail Firm: Off-the-rack legal solutions with options for custom-tailoring.
The Legal Line: What You’re Selling: Quick answers to questions like “Can I get a divorce without paying a lawyer?”
The Teaching Hospital Firm: What You’re Selling: Top-drawer legal services and elite on-the-job training.
The Firm’s Firm: What You’re Selling: “Shovel-ready manpower,” backroom legal services.
The Drive-Up Mediation Firm: What You’re Selling: Quick and easy resolution of simple conflicts.

(See Tarlton's full article for the details of each model, including its potential target client base and competitive advantage).

I'm intrigued by and see the value in all of Tarlton's proposed business models. However, as terrific as these ideas are as stand-alone models, many of them operate even more effectively in combination with each other. Because it's not just the billable hour and the associate leverage model that left law firms high and dry in a down economy. Rather, it was also firms' failure to diversify their offerings, as I described here (see original post for links):

Like the high tech stock portfolio, biglaw's so-called diversity is illusory. What's the point of offering 50 different practice areas if they're all premised on the billable hour? When the economy tanks as it has now, clients reach a point where they can't afford any of the firm's offerings. In short, multiple practice areas don't provide much of a hedge against a poor economy because when the economy hits rock bottom, all of those services are priced way out of most clients' range.

By contrast, smart solos diversify - for real - both in fees charged and products and services offered. As to fees, most solos offer a variety, from billable hour to flat fees to phased fees (flat fees for different phases of a protracted process) to value based billing or reduced fees with success bonuses and of course, the good old contingency fee. Different fee structures mean that clients can always find some service in their price range, which insulates us in a downturn. Few solos I know (myself included) who offer these varied billing structures have even had to cut rates much, if at all even in the midst of this economic turmoil.

Fees, however comprise only one component of diversification. Solos are also diversifying the products they offer, many times through leveraging existing expertise. For example, many family law or estate lawyers provide full service to clients, but also offer unbundled service to clients who can't afford or don't want more. Unbundled services diversify a practice and guard it against economic downturn, but it's also a form of leverage: because lawyers already have deep familiarity with certain practice areas, it doesn't take much effort to squeeze more value out of that knowledge by providing it in an unbundled package. Tollbridge agreements which provide a small service on an ongoing basis are another way for lawyers to diversify their revenue stream.

Diversification can also take the form of different side businesses. In my own case, in addition to my law practice, I generate a small amount of revenue from this blog (which I hope to increase over the next few months) as well as from work with a trade association that I formed. Some lawyers offer for-fee seminars on their practice area, coach other lawyers, help them market law practices or build legal reseach and writing outsourcing services. Some even go so far as to develop software products or other technology that enable lawyers to run practices efficiently. Some solos ghostwrite for other companies or even operate businesses totally unrelated to law practice (such as party planning or leasing companies) that bring in money without detracting from the practice of law.

For lawyers interested in diversifying the types of services that they offer clients, Tarlton's business models offer some great ideas on where you might start.

Social Media or the Internet Alone Won't Help You Find A Job

Carolyn Elefant — Mon, 08 Feb 2010 08:28:15 -0500

Don't get me wrong - I'm a fan of social media when used ethically and responsibly. Heck, I've got a book on social media for lawyers with Niki Black that's coming out at the end of next month.

As a shy person myself, I understand the appeal of social media: it's easy. You don't risk huge rejection or embarrassment when you follow someone on Twitter or ask to friend or link with them. It's much harder to call someone on the phone to ask for advice or set up a meeting or coffee date.

And yet, if you don't come offline, you miss opportunities. This past weekend, I spoke on a CLE panel on solo and small firm practice at Case Western Law School. Four of the six solos or "start up" lawyers who participated in the event had either minimal, or no Internet presence in the form of a website, let alone social media. At least one guy boasted that he doesn't even use email.

And yet, these four lawyers could have helped graduating students or new lawyers -- either looking for a job or hoping to start a practice -- if only they'd shown up (despite widespread advertising, the event attracted only around 15-20 people). Here's how. These four lawyers had thriving practices. They'd been in business for twenty or thirty years, and cultivated connections within their respective communities and a deep referral pool from former clients. Three of the four emphasized how much they disliked matrimonial work and referred all family law cases to other lawyers. Likewise, two of the more advanced lawyers, who were modernizing their law firms with technology admitted that they were still learning, and could benefit from lawyers who could help keep them abreast on new technology products or e-discovery developments. At least one lawyer admitted that she planned to pass her law firm on to the next generation in the next few years, and was looking to cut back on her role in the firm and cede more responsibility to other lawyers.

Maybe the four lawyers on the panel didn't have job openings at their firm. But they cared enough about helping new lawyers to show up at a CLE event, and I suspect that they would have appreciated the opportunity to build a relationship with a go-getting young lawyer who could accept family law cases or maybe offer some advice on technology. Maybe the relationship wouldn't have gone anywhere, but maybe it would have lead to a connection with another lawyer who might have work, or even an opportunity down the line to buy into an existing law practice.

Based on ABA statistics on Web 2.0 use (still, less than half of solo and small firm lawyers have blogs or engage social media), my guess is that there are hundreds of lawyers in communities across the country, similarly situated, with contacts, a need for help in moving into the 21st century technology wise, and potentially a desire for an apprentice who could eventually take over a practice. But you won't find those lawyers on Craigs List or bantering on Twitter. To track 'em down, requires legwork: attending bar meetings, panel talks or hanging around in the hallway at the courthouse. Likewise, to reel 'em in may require get together for coffee or an offer to do a little bit of work on spec, which sadly, many lawyers are already doing - but at least, with a solo or small firm, you'd have less competition and more hope for a permanent position or opportunities for referrals. In fact, even many lawyers who use social media extensively won't even consider colleagues as a referral until they've had a chance to meet face to face.

Yes, I know that responding to dozens of inquiries on Craigs' List and searching Linked In for job openings and chatting on Facebook makes you feel busy and productive. Me too. But is your online activity getting you the job or referrals or skills that you need? If not, maybe it's time to supplement online connecting with face to face contacting.

Boutique Practice: Leaving the Land of Loss Leaders

Carolyn Elefant — Thu, 04 Feb 2010 09:22:55 -0500

The twenty-first century version of loss leaders, big-law style, is nothing more than old fashioned price cutting wars, observes Toby Brown at Three Geeks and a Law Blog. A loss leader refers to a pricing strategy whereby a product is advertised below cost to lure customers in the hopes of selling them more profitable, big ticket items. As Brown points out, biglaw's so called loss leaders - deeply discounted M&A deals and large dollar, complex litigation cases -- are in fact, nothing more than big-ticket items being passed off at bargain basement prices. Rather than stimulate clients to spend more money as is the case with a true loss leader, discounting big ticket items only gives client a continued expectation of lower prices. As Brown puts it:

This is akin to the car dealer selling Escalades at a loss, hoping you’ll buy … maybe some nicer wheels? Law firms using this technique are expecting the customer to be so happy they come back next year and buy another Escalade - at full price. The likelihood of this: Zero.

Of course, some big firm lawyers are abandoning the loss leader. How so? By leaving the land of the loss leader entirely and starting their own boutique practices, as described at Law.com's Small Firm Business. Many of these lawyers want to provide better value to clients - not just in the form of superior service, but also at lower, more flexible rates. And they aren't able to do so in the confines of biglaw. From the article:

If the lawyers who started their own firms had different personal reasons for leaving their old firms, their business rationales are nearly identical: It's all about value. The recession has increased clients' price sensitivity, creating an opening for smaller firms with lower, more flexible costs. Boutiques cater to cost-conscious clients by lowering overhead expenses, slashing rates and offering alternative fee arrangements, while providing the same legal services that their founders offered at their old firms.

Once free of biglaw's overhead, bureaucracy and love affair with the billable hour, these lawyers are free to come up with pricing mechanisms that are at once more creative and lucrative than the loss leader. In fact, matters like litigation, which many lawyers believe are toughest to "flat fee" - are actually the easiest to price, according to former Shearman partner, Steven Molo, now principal at Molo Lamken had this to say:

"Trials are the easiest things to budget for," Molo says. "If it's an eight-week trial, you can charge a client a flat fee per week." Clients then make bonus payments depending on the trial result or the amount of settlement. "From the client's perspective, it makes all the sense in the world, because they know going into something what it's going to cost," says Molo. He used alternative fee arrangements occasionally at his former firms, Molo says, although it was more difficult because the larger firms were more dependent upon the billable hour.

Not all boutique lawyers save costs through flat fees. Some of the lawyers mentioned in the article have cut their billable rates by as much as 40 percent, moved to cheaper office space in the suburbs and rely on contract lawyers instead of full time, high cost associates. Other lawyers have changed the way they practice; for example, culling arguments to streamline litigation instead of adopting a scorched earth, no holds bar approach for every matter.

As these new boutiques thrive, many other large firm lawyers may decide to take the same approach. After all, why work for a loss at someone else's firm, when you can win big on your own?

One cautionary note: biglaw attorneys considering this approach may want to act sooner rather than later. After all, you never know when the bar might change the rules of the game.

Return of the Part Time Shingle - February 18, 2010

Carolyn Elefant — Wed, 03 Feb 2010 23:20:30 -0500

The wildly popular The Part-Time Shingle Teleseminar is back. Carolyn Elefant, author of Solo By Choice and the blog, MyShingle and Julie Tower-Pierce, author of Staying at Home: Staying in the Law and the flexible lawyering blog, DarlingHill.com, are teaming up once again on Thursday, February 18, 2010 at 12:30 p.m. ET to offer another teleseminar – the latest offering in their PinkSlips, Detours & Re-Entry series.

If you’ve ever dreamed about starting your own practice or staying in the law on your own flexible terms, this is an event you absolutely can’t miss!
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TELESEMINAR DETAILS:

The Part-Time Shingle: Why starting a part-time law practice part time can be done, and how to make it work.A Teleseminar, Thursday, February 18, 2010 – 12:30 pm ET

Can you start a law firm part time? Conventional wisdom says no, that you need to commit fully to starting a firm to succeed or that starting a firm will dominate your time.
We disagree. Though starting a part-time practice (as with starting any other endeavor) can prove challenging, it’s eminently feasible and enormously satisfying. In this 75 minute teleseminar, we’ll discuss the concept of the part-time shingle, including:

1. Why start a part-time shingle? There are plenty of reasons to start a part-time practice. Maybe you have a lucrative day job which you want to keep as you get your law firm off the ground. Perhaps you’re home with children and want to work part time to spend more time with family. Or maybe you have another passion outside of the law and hope to use your legal skills to earn some money to support your other endeavors.

2. Practice area selection: Some practice areas work better than others for part-time practice. We’ll give several examples of those fields best suited for part time work and identify some of the skills needed for each practice area so that you can choose the one that works best for you.

3. Malpractice Insurance/Ethics: How do malpractice insurers view part time practices? Are they considered lower risk because you handle fewer cases? Or high risk, given that you’re only devoting part of your energy and attention to your practice. We’ll offer some views on malpractice insurers attitudes towards part time practice and also discuss whether you will need coverage at all. We’ll also identify any potential ethics issues of moonlighting as a lawyer while working at another job.

4. Time Management: Part-time practice demands efficiency. We’ll identify ways that you can carve out blocks of time to maximize productivity. And for part-time shinglers who are also parents, we’ll give tips for how to avoid being imposed on by other parents who believe that you have the time to volunteer or host playdates since you work from home.

5. Marketing: Any successful practice, part time or full time depends on regular marketing. But if you work part time, meeting for lunch several days a week is going to take a bite out of your schedule. We’ll offer an overview of marketing strategies that you can incorporate into your part time schedule.

6. Technology: Part-time practice is enabled by technology which can let you work from anywhere. We’ll examine cloud computing and some of the tech tools you can use from VLOTech to SAS practice management and free Google apps to organize your practice and take it on the go.

7. Personal Considerations: You may feel that between balancing your law practice and other activities, you may feel isolated, never fully engaged in either the at-home or full time work community. We’ll show you ways to connect and collaborate with other lawyers in your same situation so that you don’t feel so alone.

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The Part-Time Shingle is part of the PinkSlips, Detours and Re-Entry series, presented by: Carolyn Elefant, Esq., author of Solo By Choice and the blog, MyShingle, and Julie Tower-Pierce, Esq., author of Staying at Home, Staying in the Law: A Guide to Remaining Active in the Legal Profession While Pursuing Your Dreams and the blog, Darling Hill. For more information, visit www.pinkslipsanddetours.com.

Event Cost: $31.95 – feel free to share the line with others at the same location. Save 15% - click here! The cost includes the call, sign up materials - and after the call, an updated version of the 50+ page ebook.

To register for the event, click on the button below and mark your calendar. REGISTRATION CLOSES FEBRUARY 17, 2010, at 10:00 AM. You will receive course materials, instructions for the call and a dial-in number 24 hours before the event. If you have any additional questions, contact Carolyn Elefant at elefant@myshingle.com or Julie Tower Pierce at darlinghill@gmail.com.

To register for the event at the regular price, click here: