Roundtable Discussion Part 2

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Wisconsin Law Journal: You send out a 30-day billing, but it goes unpaid. Who in your practice handles that? Does the lawyer involved in the case follow up on it? Is there somebody designated in the firm, or is it sent outside the firm to follow up on that?

Patrick W. Brennan: We handle it administratively at first with a simple reminder letter. If it goes beyond a certain time that stretches our comfort level, the attorney will make a call.

WLJ: And it’s the attorney involved in the case?

Brennan: Yes.

Thad W. Jelinske: As opposed to…

Brennan: The administrative support at the firm. They’ll generate the reminder, maybe more than one. But there comes a point when the attorney who’s responsible for the particular matter has to get involved personally. It always is a very beneficial thing when that happens.

Jelinske: I agree. That’s essentially how we do it. However, we would use, not only the individual working on the file, but the attorney who brought the client in and somehow communicate so that one person – the most effective person – goes and speaks to him. But we never send outside the firm.

Erich C. Straub: Generally, I handle it myself. My secretary or receptionist will send out a reminder letter. But we’re a smaller firm and I’m usually the person who’s having the communication with the client.

It’s just more appropriate for me in that type of situation to talk to them. Particularly in a criminal defense environment where you have people who have a lot of things that are going wrong in their lives. There are usually a lot of different problems that have brought them to where they are in the criminal justice system.

It’s very easy, if you don’t stay on top of it, if you don’t have a sufficient retainer up front, if you’re not paying attention to the cash flow – of whether they’re paying their bill and whether the retainer is sufficient – to find that they will reprioritize you to the lowest point.

I’m hearing some laughs, so maybe this translates into the business world too. But my experience is that I have to be very, very firm up front that, other than the lives of your wife and your children, that I come second after those. If I don’t do that or if I show any sign of weakness in terms of that firm line, I will be taken advantage of very quickly just because of the situation they’re in.

Michael J. Lund: Our practice is much like Pat’s. It usually isn’t an issue. If it does go more than 30 days, a reminder statement is billed out and the billing attorney is aware. Then usually if it goes any longer than that, the billing attorney is in a pretty good position to decide who in the firm – whether it’s the person who was responsible for the matter or the person responsible for bringing the client into the firm – [contacts the client]. We usually can get things resolved with a phone call. It rarely happens, but that seems to be the best way to handle it if and when it does.

Richard J. Bliss: It doesn’t happen very often, but I’ll toss a little wrinkle into this. The group said this before … lawyers really don’t like to have to deal with billing and collection. And there are lawyers in firms who really don’t want to have to do this. They’ve got a very close personal relationship with the client. You’d think that that would make it easy to discuss these things, but it doesn’t. It actually makes it very difficult for them to discuss these things.

So there are times – not frequently – but there are times when bringing someone else, someone who is dispassionate, who is not involved in the relationship into that discussion … can be very helpful. We have all sorts of alternative ways that those sorts of things can be addressed. We have staff who can do that and are trained … to talk a client through the payment process.

Sometimes, although very rarely, it will end up on my desk and I’ll talk with the client. However, it’s never done in a way that is without the approval of the lawyer who’s initially involved – the lawyer doing the work. We’re not trying to pull work away – or pull the process away from that lawyer. And we don’t send things outside.
It’s always done inside the firm, but sometimes through other channels.

WLJ: What if it is a situation that continues? It does not appear that it’s going to resolve and if representation continues, there’s not going to be payment for that ongoing representation. Is there a point when there’s a time to say, the relationship is ended? If so, how does that happen?

Pamela Pepper: I wish I had a good answer for that because I don’t. And that’s a problem. Where the problem arises for me is in the litigation context. Criminal litigation moves so much more quickly. Even in federal court it moves so much more quickly than civil litigation does for the most part.

You can literally find yourself upon a trial date or upon another significant date … Three weeks ago the retainer was fine and now … it isn’t. The trial’s in a month and now you’ve got to deal with walking into a courtroom and saying, "You know, judge, I understand that this person has an absolute right to have their trial and to have it speedily and to have good representation. But I now find myself in a quandary."

Some judges say, "Okey-dokey. This isn’t a indentured servitude." and "Be on your way." And other judges say, "I’m sorry, but you’re an officer of the court. You should have planned ahead. I can’t help you."

So I have been struggling, myself, with what a logical point is at which to say to a client, "The retainer is low; there’s still plenty of work to be done. I think you need do some decision-making here; because if you don’t, as much as I would not like to do this, I’m going to have to end our relationship."

And I haven’t found a good answer to that.

Jelinske: What I try to do in litigation matters where we have engagement letters, it’s typically a scenario where I will obtain the sufficient retainer, and that retainer is held. They pay the bill against that retainer. Meaning that when the monthly bill goes out, you pay that. If you don’t pay that, there will come a point in time very soon that if I see the receivable is out, approaching or just in excess of what we have in retainer, it will be the last phone call.

Litigation is a different animal than anything else … and if you’re not careful in litigation, you’ll lose a lot of plays. Judges just don’t give you breaks.

Pepper: Right.

Jelinske: That is your responsibility. So you can’t let it go too long. If you let it go too long, you take the risk. So from that standpoint, I have a client submit the retainer and I hold the retainer until the last bill. Because in any decent commercial litigation case, you can plan on somewhere between five and 25,000, depending upon the complexity, just for the week of trial or the week leading up. It’s a lot of hours, a lot of time.

If you have an institutional client, that’s different. If you have a client who’s an established client within the firm, again, that’s different. But with the one-trick pony, so to speak, where I get a call from New York and they want to retain us for this particular, that’s fine. Send a retainer in, and I’ll work against it.

Brennan: It sounds to me like in the scenario you present an ethical question is implicated. One cannot generally withdraw from a case due to a nonpayment at a time that will prejudice the client’s rights. I think that’s true in the broad gamut of litigation.

Comments have been made about what courts will approve and when they’ll let you go and so forth. It’s certainly our obligation as attorneys to find that logical point that was referred to earlier when you really must fish or cut bait and tell that client, "I can’t go forward anymore." After a certain limited period of time – 10 days or two weeks – if no answer is received, one must go to the court and seek formal withdrawal as counsel of record.

I can’t think of a time when I’ve had to do that. In my practice, it could come in under this type of situation. If our client that we’re representing is potentially covered by insurance and our fee is being paid by the insurance carrier yet a coverage motion is

successful by the carrier, that makes the payment the obligation then of the policyholder. A new relationship must be structured and if it isn’t, the withdrawal as counsel has to come in then right away.

Bliss: I’m glad you brought up the ethical side of it all because that is a real concern and needs to be. Our reading of the rules of professional conduct would seem to say that, if the client is not meeting an obligation to you – for example, an obligation to pay – you have a right to withdraw even when there is, perchance, a material adverse effect on the client. That’s one of those cases where you read the rule and you think, it’s interesting it says that, but I know very well the judges aren’t going to buy it.

(L-R) Patrick W. Brennan, Pamela Pepper, Thad W. Jelinske, Erich C. Straub, Michael J. Lund, Richard J. Bliss

You can’t let yourself be governed by the literal words there. We withdraw from representation of clients in any range of activities when they don’t pay. But we spend a lot of time talking about it before those judgments are made. And it’s actually pretty infrequent that we actually pull out. Most of that does end up on my desk.

Pepper: The other thing about that is that this idea of withdrawal sounds like an easy fix. It sounds like you just sort of walk in and say, "I’m not going to be able to represent you anymore," and that ends it. But we also have an ethical obligation, once we are no longer representing a client, to ensure that the transition from us to whatever new lawyer comes along is a smooth one. And that can be no mean feat.

If you’re well into a case and you’re up to it to your eyeballs and you know it and now you’ve got an obligation to not just hand a box of files over to somebody else, but to actually explain what’s happened thus far. … At some point you start thinking, "Jeez, it’s as much work to withdraw as it is to finish what I’ve got to finish." That’s aside from the ethical implications of knowing that I can’t prejudice my client.

Bliss: Even if it gets to the point where we’re pretty comfortable about the ethical side of it, if you have the sense that you’re working some unfairness on the client or you’re putting the client in an awkward spot, as angry as you may be with them for not paying, you know you’re buying trouble by doing anything other than making your very best effort for them.

Pepper: Right.

Jelinske: Nonetheless, we’ve all heard the war stories where the attorney is upset about the fact that he hasn’t been paid or the relationship has gone sour and then they hold the file.

Pepper: Yeah.

Jelinske: It’s the worst mistake you can make.

Bliss: Yeah. Dumb move.

Jelinske: You just compound the serious problems.

Bliss: That’s true.

Jelinske: We’ve all heard it, seen it. Regrettably, it still happens. … That’s why society’s taken the approach to lawyers. We’re not using our common sense in our practices. We’re not thinking about all of the ramifications like we would for the client. We start representing ourselves, and then we become idiots.

Bliss: That’s my point exactly.

Pepper: It’s a difficult thing though. I think most attorneys – and I would suspect most people in the room would agree – are ethical and try hard … to do this in an ethical manner.

But you cannot help as a human being if you are sitting there at 7:30 at night when your kids are at home, your spouse is home and you’re sitting there working on this matter that you know you’re not going to get paid… As a human being, it’s a hard thing to sit there and not feel angry… Someone said it earlier, you want me to do good work for you, client. As a human being, what that means is I feel like my work has value.

WLJ: Let’s get back to the beginning of that relationship. Are there things that could be done up front, screening issues that can be considered when meeting clients and discussing the initial relationship, to help keep from getting to this endpoint where things have fallen apart?

Jelinske: I’m the guilty one there. They’ve all said they do engagement letters across the board, and that’s how you stop it. That’s the way to do it. We just take that risk. Philosophically, it’s something that we’re willing to do, but the way to stop it is with the engagement letter.

WLJ: Where does the knowledge of handling billing issues properly come from? Where do you learn this?

Bliss: This is it.

Brennan: This is the first I’ve ever talked about it.

Straub: I suspect if you go to the larger firm that you probably have a system in place and there’s some education going on. But I think that it’s a real challenge for the small and solo practitioner.

One of the competing interests that I’ve found, as a small and solo practitioner and watching other small and solo practitioners, is that in addition to that "I could be on the beach" or "I could be
with my family," a lot of times you’re building a business… It is extremely tempting, when someone comes in with a problem that you think you can handle and that is going to be a very interesting problem to work on, to take the chance … even though you know they’ve got many other issues that may be a distraction to them to pay you. There’s a temptation to not be firm and to not make a realistic assessment of the amount of money that it’s going to take to carry the representation through.

As a small and solo practitioner, I have seen myself do that earlier in my career and I have seen many of my colleagues continue to make that mistake. I think that’s one of the most difficult things for the small and solo practitioner to do is to say, "No," to new business and to come up with a guideline – a set of rules that you are going to stick by and simply not compromise on it.

Pam and I were in a seminar with a motivational speaker for attorneys and he preaches this. One of the things that he talked about is that it’s one of the most terrifying moments for the small or solo practitioner to turn that business away and then to be sitting in the office with nothing to do. But the reality is that usually, if you stick to your guns, the next case is a week or two away.

There’s a terrifying principle that’s at work for small and solo practitioners. You really don’t get the business skills in law school.

And you really don’t understand, except through practice, where you know, you’re going to make it. Somebody else is going to come through the door who’s going to pay your price.

Brennan: In our area, it’s not so much a matter of screening the clients. Because if we don’t know them, we’ll know of them or we’ll know the industry from which the client comes. The problems with billing more often come in with understanding ahead of time the budgetary pressures our clients are under, the litigation guidelines, and the cost-cutting that’s endemic in many industries now. It affects the way we bill and the way our bills are perceived. So that gets back to the engagement discussion that we had earlier.

For those who do get clients from many different sources, I’ve heard it said that if that client has been to another attorney for the same matter and been turned away, or even has not paid that prior attorney, that is a major red flag in accepting that client.

Pepper: I think there are some common sense things that perhaps you guys don’t necessarily do as much because a business is more of a known entity than an individual.

If somebody walks into your office and says, "You’re the third or fourth attorney I’ve talked to…" and they mean it as a compliment. "All these other people are dumb, and you’re smart so now I’m here."

The truth of the matter is we know that most of our colleagues aren’t completely witless. So if someone’s been to three people, that’s a danger signal. The other danger signal to me is the person who walks in just itching for a fight. You know, "The other side is completely, totally wrong; there’s absolutely nothing valid in what they say; everything I say is right; I’m being framed; I’m being set up; I’m being put upon; I’m being…" The litany goes on and on.

Jelinske: That’s the bad one. The barracuda request is a request I always put the sign against. They walk in my office, "I’m looking for the bulldog; I’m looking for the barracuda."

You’re looking for the door.

You can’t make that client happy. You need to be aware of what type of personality you’ve got and whether or not you can satisfy the needs of that client, whether it be through the issues in the case or whether it be through the personality of the player versus whomever is on the other side. You have to make that read, and you have to make it early. … Because if you can’t satisfy the client, there’s no point in taking them.

Straub: Two red flags, without fail, that I hear are, "Money is no object…"

Pepper: Which means it’s always an object.

Straub: It always is when that’s said. The other one is, "It’s a matter of principle."

Jelinske: There you go. And the people who want principle are the ones who want it on contingency.

Pepper: The other thing is the outcome-determinative client. When I ask them what they want out of this relationship, what they are expecting out of me, if I hear, "I want you to win, I want to not be charged, I want the investigation to stop…" Then I know I’ve got a problem.

I’ve given this speech 112 times: "A lawyer can’t guarantee that and if you’re telling me you’ve seen someone else who can, maybe that’s where you ought to go. Because I can’t sit here and tell you that at the end of this you’re going to be where you want to be. I wish I could. I’d make a lot more money. But I c
an’t do that."

It’s always a danger signal to me when they say, "You need to tell me right now that you’re going to win this for me, you’re committed to win this for me." And I have to say, "I’m committed to doing the very best for you that I can; but I can’t sit here and tell you I’m going to win it for you."

Jelinske: In Pam’s practice or Erich’s practice, a win is somewhat definable. In a commercial environment a win is widespread. If you’ve got a liability case where you’re dead on liability and their damage claim against you is $3.5 million and you come in with a verdict for $75 grand, you know what, guys? Post a "W" on the board. That has to be communicated clearly with the client.

Bliss: I do think that there’s a lot of discussion that needs to occur during the intake process and it doesn’t always occur. But we sure try to encourage it. There are times when a client comes in and we’ll just tell the client, "We’re not going to be very good at doing what you want done; I mean, we’re really not very efficient at that; that’s not something we do well."

Can I take one of my real estate people to do a residential home closing? Sure, I can. If they can buy plants around the country, they probably can do a residential home closing. But it doesn’t get them very excited and at our billing rates, it rarely makes sense for the client.

When a client comes from another firm and was unhappy at the other firm, we spend a lot of time talking about what made them unhappy. Like Pam, I tend to think that the bar is pretty good in Milwaukee. There are good lawyers around here.

When someone comes in and tells us that they really had lousy representation, that is a big red flag. And we really need to understand what’s gone wrong. It’s one thing if we’ve been trying to pry them away from somebody else. But when they come to us and they come telling us that they’re unhappy, as often as not, they’re not going to be happy with us either.

None of this is taught in law school. In our shop, I think people learn it through the mentoring process. They watch the older, more experienced attorneys. We try to bring younger people into those discussions just so that they can sit there and observe and learn that that’s how you get to it.

Jelinske: It’s the same with the billing process. Erich’s in a tough position that way. Any solo practitioner is. In my firm I have taken each one of my guys in other litigation divisions, and we sit down and I go through any time that they’ve billed… And we’ll go through all the bills so that they can get a flavor of what’s to be included, the editing process. Sometimes you put stupid things in bills. You’re not thinking on that particular day. It just happens. Then you edit accordingly so it reads right, it just flows, and everything is correct.

If you write down a bill, they’ve gotta know whose time is getting written off and why. They have to know the philosophical side. We’re a really touchy-feely firm in many respects. So as a result, you know, that philosophy has to be brought about. People have to learn that, but it takes time.

Lund: There’s a key point a number of people have already expressed. It’s, when you first discuss a matter with a client, does he get an understanding of what they want you to accomplish and to understand it in their terms, not necessarily yours.

	Related Article Roundtable Discussion Part 1

A client may come in complaining of how a business partner is breaching a contract that they were a party to. A lawyer may then say, "Well, I can sue them for this and we can bring a suit and get this type of damages." And they don’t really want to sue for damages. They just want the other party to comply with the terms of the contract. Or you may find that you can add these people as parties and say, well, if I add them as parties we’ll be able to piece a deal together, then they’re going to be mad at me because I named them as a party.

So you need to understand what their objectives are as business owners or as an insured business and then try and make sure you approach the engagement in those terms, not necessarily the terms that you would answer if this were a law school or something.

WLJ: Any final thoughts?

B
rennan: Clients who come in to see lawyers truly do want us to work ourselves out of a job. It’s often a distasteful process for clients to go through litigation, especially if they’re unfamiliar with it. Our task is to provide that value and good judgment and expertise in the most expeditious way possible, bill for it fairly, and put the matter to an end as quickly as we can.

Straub: I think the emphasis on communication is important. I think I’m competent at what I do. I think I’m a good attorney. But, honestly, I don’t think many of my clients know whether I’m a good attorney or not in a lot of instances because they’re relying on my expertise.

I have found that returning phone calls, communicating what I’m doing, communicating expectations of what’s going to happen in the case are some of the absolutely most valuable things to them. I’ve had many clients, especially in the criminal defense area, where there just is not going to be a good result. But they get value and satisfaction out of the fact that they got good customer service.

I think that that’s important to reflect, whether it’s on your billing statement or whether it’s in the first client interview. If you stay on top of that, I think a lot of these issues with people complaining about bills or litigation about bills is going to take care of itself.

Tony Anderson can be reached by email.