California Law
California Selecting & Managing Counsel
- Selecting & Managing Counsel
Selecting & Managing Counsel
It is surprising how many business executives are intimidated by selecting legal services. Business people who fail to use the same sound decision-making methods to select a lawyer that they use to make other major business decisions often make inappropriate choices and wind up unhappy. There is a right way to select and manage counsel, and it does affect how satisfied a business will be with the legal representation it receives. Given the importance of the issues businesses trust lawyers to handle, and the amount of money spent on their services, businesses have a right to be satisfied with the representation they receive.
No one should fall into the trap of believing the tired old saying that, "lawyers are all alike." Lawyers are not all alike. Every California lawyer must have the equivalent of two years of college before being admitted to law school. However, the college study may be in any area, so a particular lawyer might have had course work in English, accounting, biology, or any other academic subject. In law school, students study many required subjects but they also have the opportunity to study areas of special interest, such as environmental law, family law, or tax law. After law school, law students must pass a state bar exam to practice law in that state. The United States is broken down into many different systems of courts, known as bars. Each bar sets its own requirements for lawyers who practice there. A lawyer who is not a member of the California bar cannot practice law in California absent special permission. Bars also may have special categories of lawyers who are certified to practice in particular areas.
The businessperson who exercises care and intelligence in choosing a lawyer will be satisfied that he or she has found a competent lawyer whose skills match the business' needs. The following three-step process can help a business find the right attorney for its legal needs.
Step 1: Preparing a List
The first step in choosing a lawyer is to generate a list of potential prospects. This usually is an easy step. There are over 100,000 lawyers in California alone, and their names are available through referral services, personal referrals, and advertisements. The quality of these referrals varies greatly, however, depending on the source.
Advertising
Ever since the United States Supreme Court lifted the bank on attorney advertising, there has been an explosion in the amount of print and broadcast advertising done by the thousands of California lawyers eager to reach new clients. However, not all forms of lawyer advertising are permitted. For example, a lawyer is never allowed to solicit business from an accident victim in the hospital unless specifically invited there by the victim. But while some forms of advertising are banned, the range of permissible forms of advertising is quite broad and can include some fairly outlandish forms of self-promotion. Given the amount of advertising that some lawyers do, the average person could easily rattle off the names of at least a few lawyers who practice in his or her community. The trouble, of course, is that the best known attorneys are not necessarily the best practitioners. While it may be easiest to look up the section on attorneys in the phone book or call a telephone number broadcast on radio or television, it often pays to use other sources of information.
Personal Referrals
Another good source of attorney names is personal referrals. Friends and relatives often are able to recommend a lawyer. Business associates also may be a good source of names. A trusted accountant or insurance agent also might be able to recommend a competent lawyer. The benefit of a recommendation from a business associate, accountant, or insurance agent, is that these people regularly consult with attorneys on a variety of issues and may be in a better position than a friend or relative to steer a business person toward the best lawyer for the needs of the business.
Regardless of who recommends a lawyer, ask specific questions. How does the person know the lawyer? Has the person ever consulted the lawyer? If so, for what reason? What are the lawyer's strengths and weaknesses? Does he or she return phone calls promptly and keep the client informed about the case? What outcome was the lawyer able to obtain? Is the lawyer a member of the California bar? A referral may seem promising at first, but if it turns out that the lawyer practices a different area of law or is not a member of the California bar, the business will not benefit from the recommendation.
Referral Services
Because there are so many lawyers with so many specialties and various backgrounds, organizations have created attorney referral lists, databases, and other services. A local bar association can be a source of names. Some industrial trade organizations have attorney referral networks. This book is an excellent source of help for businesspersons to find competent, peer-referred attorneys to handle their legal affairs. Consulting one or more of the lawyers listed at the end of the chapters is an excellent way to start the search for a good lawyer.
Some people seek out an attorney with a background or characteristics that match those of the business or the business executive. Women may turn to other women to handle their legal affairs because they believe that women can understand the unique legal problems women face. A person of color might prefer to give business to another person of color, or a gay man or lesbian might believe that a person from the gay and lesbian community can best represent his or her interests. Law schools have made tremendous strides in recruiting more diverse student bodies in the past two decades and consequently, every race, gender, ethnicity, and lifestyle is represented in the legal profession. In order to make the legal community more responsive to our changing society, numerous organizations have sprung up in California that refer callers to lawyers sensitive to the needs of a specific race, gender, ethnicity or lifestyle. A person who would feel more comfortable hiring a lawyer from a particular background should not hesitate to seek out names from one of these special referral organizations. Most of these organizations do not charge businesses or consumers for their services.
Once the businessperson has a list of a few potential lawyers it is time to think about the next step--researching the attorneys on the list.
Step 2: Researching the Attorneys on the List
Once a person has gathered the names of a number of possible attorneys, there are many issues to consider. Some questions can be answered by a quick phone call to the lawyer's office, but others can be answered only by talking to other people. Some of the important issues to research include reputation, specialty, location, and the size of the lawyer's firm.
Reputation
An attorney's reputation for technical skill is important, but only the individual can determine its relevance to a particular legal matter. A lawyer who has built a sterling reputation for competent handling of complex probate disputes may be overqualified to draft a simple will. Similarly, a lawyer whose head is full of knowledge gained from representing large corporations may not be the best candidate to represent a small start-up company. Savvy individuals with a variety of legal concerns often employ different lawyers to work on different matters, because they realize no lawyer can be the expert for every type of legal question. Certainly if the case involves a lot of money, the company's reputation, or an extremely unique or complex issue, then the business wants to find the very best attorney available to handle the matter. For more routine matters, a less experienced lawyer may be a better fit, as well as more affordable.
As important as a lawyer's technical reputation is, his or her ethical reputation may be even more important. It pays to ask around, for a lawyer's ethical reputation will be well known among other professionals. Also, the State Bar of California has information about whether an attorney has been subject to disciplinary action. A lawyer should be willing to provide references or a list of past clients, and the businessperson then can contact those past clients. Lawyers with poor ethical reputations should be avoided.
Despite the considerable criticism they get in the media, lawyers are held to very high ethical standards. For every example of misconduct reported in the media, there are literally thousands of honest and reputable attorneys that will do the right and ethical thing. Putting effort into choosing a lawyer can ensure the lawyer retained by the business is reputable.
Specialization
Following trends in other professions, many lawyers today devote themselves to one area of law and present themselves as "experts" in that area. Because it is wise to get an attorney whose experience matches a company's particular need, many decision makers will be tempted to hire a lawyer described as an expert in his or her area of law. This may not always be the best course of action. The state of California only has certification standards for specialization in appellate law, criminal law, estate planning, trusts and probate law, family law, immigration and nationality law, personal and small business bankruptcy, taxation, and workers' compensation law. Outside these areas, no lawyer should claim to be a specialist, specialized, or certified in any area of law, but some lawyers might use similar terminology. One attorney may call herself a tax expert because she has handled tax matters for over 20 years, while another attorney may call himself a tax expert because, although he only passed the bar examination last month and is still quite inexperienced, he plans to devote himself exclusively to tax matters. Clearly one expert is not equal to another.
Another important point to keep in mind is that not all legal matters require the attention of a specialist. Just as one would not automatically turn to a medical specialist for a common cold, one need not turn to a legal specialist for every routine legal matter. Chances are good that if a general practice attorney has done a fine job on a variety of legal matters in the past, he or she can be counted on to handle routine legal matters in the future. Also, because most legal specialists tend to be clustered in larger cities, a business in a small community may choose to hire a generalist practicing locally for the ease and convenience of being able to work with a member of the community.
Firm Size
Another important issue to consider is whether to retain a solo practitioner, a lawyer in a small firm, or a lawyer in a large firm. In most cases it is an individual attorney who will work on a particular file and with whom the client will have the most interaction. A solo practitioner or a lawyer practicing in a small group may be able to provide more personalized attention to a file, but a larger firm brings with it resources that most small firms do not. Lawyers at large firms typically charge more for their services, however, so an individual may not want or need to pay extra for a relatively straightforward legal problem. Again, it all depends on the needs of the particular business.
Location
A lawyer's location is another obvious consideration. A lawyer in the client's hometown may not always be the best choice. If many meetings will take place in a city other than where the client lives, it may be advantageous to hire an attorney who lives in the other city. Most larger firms in California are centrally located in downtown office buildings in major cities. While these locations may provide the most convenient access to courthouses, banks, and corporate headquarters, they may not be the most convenient for the individual client. Most lawyers charge for transportation time and the time necessary for them to get to and from meetings and court appearances, so it may be wise to choose someone located near the courthouse or any other location where meetings will take place. If a particular matter will not require many meetings or trips to the courthouse, the convenience of a downtown office may be unnecessary. Of course, because nice office space downtown is usually more expensive than office space in a suburb or small town, downtown lawyers may have higher overhead expenses that they pass along to their clients.
Step 3: Interviewing the Attorneys
Once a businessperson has narrowed down the list to a few attorneys, he or she should phone them individually and seek a personal consultation with each one. It is wise to ask on the phone whether the lawyer charges a fee for the initial consultation. As with any major purchase, a consumer of legal services is not obligated to hire the first attorney he or she sees.
Initial Consultation
It is not reasonable for a business to expect free advice from a lawyer, but good attorneys will welcome opportunities to spend time with potential clients answering questions and being compared with their peers because they know their knowledge and experience will show through. The initial consultation is no time to be shy. Years ago, many lawyers liked to think that they were above the need to market their practice or to pursue clients. Some law firms reflexively recoiled from the suggestion that a potential client would ask them to show why their firm was the best to handle a matter. Times have changed and lawyers today are accustomed to sitting down with potential clients to discuss representation.
An initial consultation will be more productive if the individual takes relevant documents and a list of questions to the meeting. At the initial interview the individual should be open and honest with the attorney. It is best not to embellish or hide facts because doing so may obscure the strength of a case. Some facts, such as events that occurred some time ago, may make a case impossible to win because of the statute of limitations, and the lawyer can explain that any money spent pursuing the claim would be money wasted. Some facts may be less damaging than one individual might assume, and the lawyer can minimize their effect by acting quickly. The attorney may feel that a conflict of interest prevents him or her from representing the client. For example, the lawyer may already represent the opposite party in a dispute. Most of what an individual tells a lawyer in an interview is confidential and protected by the attorney-client privilege.
Consulting a lawyer does not obligate the business to employ or retain that lawyer. Most initial consultations are either free of charge or available for a nominal fee, especially if the businessperson decides not to employ the attorney consulted. Some attorneys will charge for the initial consultation if they are subsequently hired.
It is important to note an important distinction between consulting an attorney and retaining an attorney. Only retaining an attorney obligates him or her to act on behalf of the client. Many Californians have learned this lesson the hard way. A businessperson may have consulted a lawyer about his or her legal problem and thought that the case was being handled so stopped taking steps to pursue a claim. Meanwhile the lawyer allowed the statute of limitations to run out on the claim because the lawyer believed that he or she had not been retained to act on the client's behalf. Many legal malpractice suits have centered on whether a original office visit with a lawyer constituted a consultation or a hiring. The lesson to learn is that at the end of the consultation both parties should be absolutely clear whether the lawyer has or has not been hired.
Personal Chemistry
Much of being a good attorney has to do with responsiveness, empathy, and the ability to communicate. The lawyer who has bad rapport with a client may not be an effective representative of the client's interests. Because each person is different, the chemistry between a client and an attorney is one of the most important elements of their relationship. Smart shoppers ask themselves many questions. Is the lawyer listening to the client's story or does he or she interrupt in the middle of sentences? Does the lawyer present a variety of options to pursue or insist there is only one way to do everything? Does the lawyer try to dominate the conversation? Does the attorney seem to have a business philosophy and an approach to risk-taking compatible with those of the client? Is the attorney open to working with in-house counsel to lower bills? Is this someone with whom the client wants to spend time? Gut feelings at this stage of the process are important. The client has a right to expect that the attorney will spend time explaining the progress of matters he or she is working on and to involve the client at appropriate times. If the attorney is difficult to work with early on, it is a good bet the relationship will be tense later.
Malpractice Insurance
It may be an uncomfortable subject to raise at the initial consultation, but it is important to determine whether the attorney carries malpractice insurance. The financial losses stemming from a poorly handled case can be quite large. If the lawyer does not carry malpractice insurance, it may be impossible for the client to recover any losses if the lawyer commits legal malpractice.
Experience
Many individuals naively assume that the longer a lawyer has been in practice the more experience he or she has. This assumption may be unfounded. Relevant experience in a particular areas of law is far more important than the total number of years that a person has practiced law. A young attorney whose practice has been narrowly focused on one area of law may have far more insight into how a problem should be handled than an attorney with more years of practice in a broad variety of legal matters. In addition, because laws change so quickly, in some cases a recent graduate may have greater knowledge of a particular area of law than a more senior attorney. The potential client should ask pointed questions about a lawyer's specific experience handling similar cases.
In some large firms, a senior partner may agree to handle a matter, then assign most of the work to less experienced associates. It pays to ask who is going to work on a file, and discuss that person's experience and success in doing similar work. Not having experience in the relevant area of law is not necessarily reason to rule out the lawyer. A lawyer inexperienced in one area of law may still be a terrific choice to handle a case, but it is appropriate to ask how long it will take the lawyer to learn the relevant laws and whether the client is expected to pay for the educational time.
Estimate of time
The lawyer ought to be able to estimate a timetable for completing the case. This will depend on many variables, including the complexity of the matter, whether the lawyer expects the matter to go to trial, how cooperative all parties are, and the lawyer's workload. Asking for a timetable is likely to bring a number of these issues out into the open. A relatively simple matter may take a long time to complete if a particular lawyer is too busy to devote his or her full attention to it. A lawyer with very little experience may reveal that inexperience if he or she cannot describe the steps necessary to complete a task and estimate how long each will take.
Cost
Money should be discussed at the initial meeting with an attorney. It is important to know how the lawyer will charge the client and at what rates. Although a lawyer may not be able to give an exact cost, a lawyer with experience should be able to provide a ballpark estimate of his or her fees and costs.
An individual should not feel uncomfortable comparison shopping for a lawyer. Hiring an attorney can be a major outlay of resources so, like any other expenditure, a businessperson should find out how and how often bills are sent out, whether the firm requires a retainer, and whether the firm has minimum billing increments. Lawyers have several different ways that clients pay the fees for their services.
Flat Fees
The simplest fee payment option is the flat fee. A lawyer charging a flat fee simply quotes a fee for which he or she will do the work. Flat rates were traditionally quite rare, but recently have been growing in popularity. A lawyer often has no way of knowing for certain how complex a matter is until investigating it and can be understandably adverse to committing to a flat fee in advance. Today, lawyers are increasingly willing to discuss the possibility of flat fees for relatively simple legal matters such as regulatory compliance filings or friendly acquisitions. The client should bear in mind, however, that some lawyers advertise low flat fees as a ploy to get a potential client in the door in the hope that, once in the office, the client can be convinced that his or her case actually justifies a different rate structure.
Hourly Rates
For many matters a lawyer will charge an hourly rate for time spent on a file. The hourly rate is usually a reflection of the lawyer's competence, experience, and overhead expenses. An experienced lawyer may have a high rate, but usually will be able to complete a matter more quickly than a less experienced lawyer with a lower rate. A common complaint about the hourly rate structure is that it gives the lawyer no incentive to handle a matter in a timely fashion. Legal services charged at hourly rates can unfortunately open the door to much disagreement over how long it should have taken a lawyer to complete a task. Because law firms are under increasing pressure from clients to hold down their bills, today many attorneys offer "blended rates," an arrangement in which a partner's billing rate is blended with an associate's lower billing rate. Before agreeing to hire a lawyer to work for an hourly rate, it is appropriate to request a written estimate of the hours that will be needed, as well as an estimate of how much money will be necessary for miscellaneous expenses.
Retainer Fees
There are actually two kinds of retainer fees used by lawyers. The first is a variation of the flat fee. Rather than paying a lawyer a flat fee to handle a specific matter, some large corporations will simply pay a lump sum each year to retain the attorney for the year. In return for this kind of retainer fee, the lawyer agrees to be on call for any legal problems that arise or to manage routine day-to-day legal affairs. The average business does not have a sufficient volume of legal questions to require this type of arrangement.
The more common retainer fee is actually just an advance on the hourly rate, described above. If it is the first time that a lawyer has represented a particular client or if there is any question about the client's ability to pay, the lawyer may insist upon the payment of a large retainer up front. This money is placed in a special account and the costs of legal services provided are deducted from that account. A client who agrees to pay this type of retainer is still entitled to periodic written statements detailing how much has been deducted from the account for legal services and, of course, the client is entitled to any money remaining in the account when legal representation has been concluded.
Contingent Fees
Another common legal fee arrangement is the contingent fee. Years ago, contingent fees were unheard of in the business context, but today more businesses are seeking these agreements from their legal counsel. The contingent fee is most common in personal injury cases in which the attorney simply takes a percentage (one-fourth or one-third) of whatever is recovered or saved for the client, whether through an out-of-court settlement or a jury award. The percentage that a lawyer asks for depends on the difficulty of the issues, the amount of money at stake, and the skill and experience of the attorney. Essentially, when a lawyer takes a case on a contingency basis, the lawyer is gambling on the outcome of the case. A case with only a very slight chance of success can consume a great deal of the lawyer's time and energy and yield no fee if the case is lost.
There are several reasons to be especially careful when hiring a lawyer to work on a contingent fee basis. Many law firms specializing in these kinds of cases make their money by handling a large number of cases and settling them quickly. Given the typical contingent fee arrangement, some lawyers are motivated to accept early settlement offers. But the client has the right to refuse any settlement offer made and should consider doing so, especially if the case is a strong one that may cause a jury to award a large sum of money.
Another, related, payment option becoming fairly popular among some lawyers is the variable contingent fee arrangement. In this situation, the attorney's fees vary depending upon when the case is settled. Typical arrangements specify that the attorney collects 20 percent if the case settles before initiating a formal lawsuit, 25 percent if the case settles within a year after a lawsuit is filed, and 33 percent of any damage award received after one year. Although contingent fee agreements are quite popular with some attorneys, they are inappropriate in some types of cases, and ethics rules forbid lawyers from making contingent fee arrangements in criminal cases. It is wise to clarify the exact terms of a contingent fee arrangement before signing it. Almost all contingent fee agreements stipulate that the attorney's expenses (discussed below) are deducted from the award first, and the remainder of the money is split on a one-third/two-thirds basis. Thus, the statement common in the advertisements of many lawyers, "no fee unless we win your case," does not mean that a client pays nothing for legal representation. Win or lose, a client is almost always responsible for the attorney's costs. A client must make sure, therefore, that he or she fully understands what kinds of costs he or she is expected to pay before signing a contingent fee agreement.
Miscellaneous Expenses
Many disputes that clients have with lawyers over money stem from a misunderstanding of the difference between "fees" and "expenses." Regardless of which type of fee plan is used, most lawyers will charge for their expenses in addition to their fees and regardless of the outcome of the case. The client may be responsible for sizable expenses incurred handling the case, such as travel time, secretarial overtime, delivery services, court costs, filing fees, deposition fees, expert witness fees, investigation expenses, and the initial consultation. Many law firms bill incidentals such as photocopying and postage at rates far higher than what those services would cost at an independent copy center or post office, so it is important to discuss specific details.
Benefits of the Process
Business people who use this three-step process become more sophisticated consumers of legal services, including referral services. The three-step process described above should begin with a list of names and, after diligent research and meetings, conclude with one name standing out among the others as the best choice. A decision maker should be able to cross some names off the list before actually meeting the lawyers, because after researching the names it will become apparent that some attorneys are inappropriate for the legal matter at hand. It is even possible that every name on the list will be crossed off for one reason or another, and the businessperson will have to return to step one and seek more names.
Unless the business is under extreme pressure to resolve a legal matter immediately, it is far better to spend time choosing a good lawyer than trying to undo a poor decision later. If a businessperson chooses well, the job of working with counsel should be far easier. It is always the prerogative of the client to change lawyers before a legal matter has been concluded, but doing so can be costly and time-consuming.
Resources
The State Bar of California publishes a number of free pamphlets including How Can I Find and Hire the Right Lawyer? and What Can I Do if I Have a Problem With My Lawyer?, that can be ordered from the State Bar of California, 555 Franklin Street, San Francisco, CA 94104, (415) 561-8200.