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How to court a lawyer.


America is a nation of laws. Which means it is also a nation of legal fees, and with many lawyers now charging over $400 an hour for their services, a law office is hardly the land of the free. Attorneys routinely bill clients for meetings, interviews, and telephone calls (whether the phone is answered or not). However, few have the nerve of a famous lawyer I know in Chicago who tried to collect money in his sleep.

The attorney's firm represented some of the most important businesses in the city, so large bills were common. One particular client felt he was grossly overcharged for 12 hours of work. After getting no satisfaction from the lawyer, he took his complaint to the local bar association, which examined the attorney's records and found that his billings for the day in question covered the entire 24 hours! When asked how he could practice law while he slept, the lawyer imaginatively replied, "I dream about my cases."

Not all attorneys have that kind of earning power, but a lot come close.

Unlike most economic activities, the legal profession has never been seriously affected by the law of supply and demand. The more lawyers there are, the more ways they seem to find for expanding their business horizons. There are lawyers who specialize in sports law, animal law, and surrogate-mother law. If it pays, or if it just gets publicity, it exists as part of the practice. Stock market crashes and political power shifts--which are revenue-threatening disasters for some people--are opportunities for attorneys to create new profit centers.

Since 1960, the number of lawyers in this country has doubled to more than 650,000. Today there is one attorney for every 400 Americans. That's nearly 3 times the lawyer-per-capita ratio of England and 20 times that of Japan.

Since collecting fees can be the most challenging part of practicing law, lawyers spend a great deal of time pondering what services clients will and will not pay for. Frequently, the magic formula has less to do with real customer care than creating the right illusion. A client is more willing to accept a large bill from an attorney who is in demand, or at least pretends to be. By the same token, successful law firms get that way by generating an aura of indispensability, the feeling that nothing important can happen without their assistance.

Still, attorneys in the top firms are always disposable. A lawyer is a tool for problem solving, and if one has trouble finding the right solution, there are a thousand others who think they can.

Although companies and individuals may use the same lawyers for years, nothing is more impermanent than the makeup of law firms, most of which change names regularly as new partners join and others depart. Big firms are forever merging with mid-size firms or having members leave to form smaller ones. The law is a nomadic profession, and whether attorneys are rotating in and out of partnerships or auctioning themselves off to the highest corporate bidder, they tend to be in constant motion.

The cause of all this movement is the hunt for clients. Sharks have to keep swimming forward or they die; lawyers have to bring in new business or they go belly up. At the high end of the income pyramid, that means attaching themselves and their firms to big companies, banks, and industries--first by doing legal work, then by moving into board-level and executive positions. At the low end, it often means taking anything that comes through the door.

When a major corporation has a legal problem, its counsel springs into action and business goes on as if nothing has happened. When the average person needs a lawyer, everything in his life comes to a stop. And since he usually needs help in a hurry, there is little time for comparison shopping.

The typical civil case begins with a trip to an attorney's office. If party X is being sued by party Y, party X's lawyer will ask him for details, then get in touch with the attorney for party Y to see how much money he wants. As the plot thickens, both sides flex their muscles. The lawyer for party X answers the complaint, motions are filed, letters and phone calls are traded, and a settlement may be offered, accompanied by more muscle flexing. If Y accepts, the case is over. If Y isn't interested, a trial date is set, briefs are filed, a jury is selected, and the two sides get ready to face one another in court. On the big day, lawyers for X and Y meet and have a private discussion, and then the case, more often than not, is settled.

Seventy-five percent of all civil cases follow this pattern. The rest are resolved in court or are continued once or twice for dramatic effect and then settled. In the meantime, lawyers log hundreds of hours of billable time, while their clients usually have no idea what is actually going on.

If you know a good attorney or know someone who does, you are ahead of the game. But taking your problems to a lawyer you trust does not necessarily mean he's the one who will handle your case. Chances are good that he will refer you and your troubles to someone else. There is easy money in legal referrals, and some attorneys, working on a split-fee basis, broker clients the way Hollywood agents sell movie ideas. The practice is considered unethical, but so are a lot of things lawyers do. Just for making the call that sent you next door, an attorney can pick up a sizable percentage of any money you gain by going to court. At best, if your case is referred, you will be funneled to a lawyer who knows what he's doing and does it at no added cost. At worst, several attorneys from several different firms could get involved, each taking a cut and each adding his own extras to the final bill.

Since legal problems are often emergencies, law firms, in the great tradition of price gouging, charge whatever the traffic will bear. But like everything connected with the profession, attorneys surround their fees in mystery. Until the first bill arrives, smart lawyers try to keep the emphasis on what the client stands to gain from his case, not how much it will cost.

Some firms, like Wachtell, Lipton in New York, are so expensive that price is no object for most of its clientele. Last year the firm made $20 million for two weeks' work representing Kraft Foods in its takeover by Philip Morris. "Our feeling is that if our services aren't going to satisfy you, we're not going to have a good working relationship," said managing partner Martin Lipton. If, for some reason, a client does not like the bill--retainers reportedly begin at $250,000--Wachtell, Lipton lawyers simply ask him to pay what he thinks is fair and never come back.

For years, local bar associations suggested minimum price guidelines, and most run-of-the-mill attorneys followed them. Several anti-trust suits put an end to the practice, and legal fees are now largely a reflection of what a firm thinks it is worth--or thinks it can get away with charging.

As a rule, small firms are less expensive than big ones, mainly because they operate on less overhead. (It helps to remember when selecting a law firm that the Oriental carpets and rare antiques in the lobby are paid for by clients.) Small firms are frequently started by ambitious lawyers from big firms who leave to prove themselves. What they lack in interior design, they often make up for in special skills and hard work. Still, that's no guarantee you will find the right talent to handle your case.

Big firms have resources small firms lack. The largest firm, Baker & McKenzie, the McDonald's of law, has offices around the world. But size can be deceiving. Among larger firms it is common for name partners (the "finders") to sign up cases, then hand the actual work over to junior associates (the "grinders"). As a result, clients frequently pay for top-quality attention they never get.

A classic example is overbilling for routine court appearances. Large firms file dozens of motions on various cases every day. This is often done in one mass dumping by a legal underling, but at first-class hourly rates for each motion. Few people ever know that all they buy when they hire a big-name lawyer is his name.

Billing tricks are common, and large and small firms have many ways to disguise doing nothing as work. Assigning more lawyers than needed to a case and then passing the added cost on to the client is standard practice. "Review, analysis, and study," a phrase that often appears on legal bills, can mean virtually anything from opening mail to reading the newspaper. "Conference time" is another favorite billing term. It might sound important, but it usually means the client is paying for a lunch.

Most firms charge by the hour. Billing clients for every six minutes of work is the wave of the future. Advocates say the new system makes accounting more precise, even if it misses some of the hidden costs. When I pressed a New England tax specialist for his firm's hourly rates, he told me the average was $350, then quickly added, "That doesn't include photocopying."

He was not kidding. Copying can be a very expensive extra. In big merger cases a million dollars is cheap. Photocopying documents for a divorce or a contested will can increase a lawyer's fee by hundreds of dollars. Although knowing the cost per page up front may not minimize the bite, it will lessen the surprise when the time comes to pay.

The most common complaint from clients, aside from being overcharged, is that their lawyers never pay attention to them, never call, never write, never keep them informed. This goes for corporations as well as individuals. The worst cases of neglect can be remedied by a malpractice suit, which will require you to hire a second lawyer to sue the one you hired in the first place. But smart shopping to start with can help separate the knights in shining armor from the shysters.

Cross-examining a Lawyer

* Trust your instinct. Whether your legal problem involves the breakup of a business partnership or the end of a marriage, a good lawyer should be able to put you at ease without putting you in a coma.

Beware of attorneys who agree with everything you say. You want a lawyer who will tell you the truth from day one, even argue with you, not one who nods understandingly while the meter is running overtime.

Even though you may need consolation, watch out for the attorney who encourages you to pour out your soul every time you meet. His mission is usually mercenary.

* Trust your wallet. When people need a lawyer it is usually because they feel economically threatened. Do not compound the problem by hiring a thief. Lawyers are in business to make money. Make them earn it.

Any attorney who is not willing to draw up a budget for your case may be setting you up for the kill at billing time. The same is true of attorneys who advertise low-cost wills and divorces and try to sell you other legal services the minute you walk in the door.

* Trust the record. The law is based on precedents--past cases and opinions that tell the courts what to do. Before you hire a lawyer, apply the same principle. The best way to know what kind of attorney you're dealing with is to know what he's been doing lately.

Ask him for information about past cases, clients, and lawyers he has argued against in court. If he fails to comply, consider him history.
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Title Annotation:hiring an attorney
Author:Grutman, Norman Roy
Publication:Saturday Evening Post
Date:Oct 1, 1990
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