A recent Illinois Attorney Registration and Disciplinary Committee (ARDC), reported here misses the point.  The ARDC charged a solo estate planning attorney with ethics violations for splitting fees with a non-lawyer financial planner over a five year period between 2007 and 2012. During that time, the financial planner hosted six seminars each year, referring approximately 189 different clients to the attorney for estate planning matters. On average, the attorney paid a total of $30,000 in referral fees or an average of $1600 per case. The ARDC gave the attorney a pass, however, noting her pro bono service at church and community clinics as a mitigating factor.

So what’s the problem with the ARDC decision? After all, the attorney did indeed split fees, a fact that she admitted in her response. Quite simply, that’s an ethics violation – and yes, rules are rules. Still, it’s increasingly more difficult for me to support the prohibition on fee splitting, when today’s much-celebrated new law players are effectively doing the same thing. For example, a recent article in the Atlantic spoke approvingly of  Rocket Lawyer’s business model, where attorneys offer a 40 percent fee discount for business referred through the site. How is payment of a 40 percent discount any different from paying a $1600 finder’s fee for a $4000 estate planning case?

That’s not to say that the Illinois attorney wasn’t at fault. She was.  Only her misconduct arose from actions unrelated to fee splitting but failure to oversee and supervise a non-lawyer vendor.

Last week, Bob Ambrogi posted an updated roundup  of state ethics decisions — 17 to date – that clear the cloud for use by lawyers. But while I appreciate the bars’ efforts, they’re a poor use of resources.

For starters, every one of those 17 ethics decisions says roughly the same thing.  Lawyers can use the cloud, but because client data is involved, they’re ethically obliged to use due diligence in vetting cloud vendors and understanding the terms of a cloud service provider agreement.  In addition, in most jurisdictions, lawyers are advised to explain risks of cloud computing to client and obtain their express consent for lawyer use of the cloud – because hey, after all, if lawyers can’t figure out how to deal with the risks, why not push them off on our clients?

Given that the states are pretty much in agreement about the ethical parameters of cloud use by lawyers, why is it necessary for each state to weigh in with a separate opinion?  I’d estimate that each of those cloud opinions took at least 50 hours to research, write, review and work through the bar’s multiple levels of bureaucracy.  Assuming a very modest $150/hour cost for the work, that’s a total at $127,000 for 17 decisions (50 x 17 x $150) that say the same thing; $375,000 if all the bars weighed in. What a waste. Wouldn’t it have been much more sensible for the states to pool their dollars, hire to top notch ethics expert at $400/hour who could have spent 150 hours to produce a first rate, model opinion that would apply in all states – for just $60,000 – $1200 per state.

Last month over at Attorney at Work, practice management consultant Peggy Gruenke shared her Mini-Checklist for Trust Account Management. Gruenke’s list is an exhaustive compilation of the do’s and don’ts and best practices for trust account management and therein lies the problem. Because in a digital age when most firms accept electronic payments and credit cards, aren’t the protections afforded by trust accounting utterly obsolete and ridiculously burdensome?

Just to clarify, my critique concerns situations where trust accounts are used to hold advance payments from clients for legal services – and not funds from third parties, such as proceeds of settlements or large escrow payments.  In these types of situations, all or the bulk of the funds held belongs to the client – and under existing ethics rules, lawyers have an obligation to safeguard client property. Moreover, settlement proceeds and escrow often involve large amounts of cash, so the formality and added safeguards, such as bar oversight, of trust accounting in these circumstances makes sense.

But requiring lawyers to deposit retainers or other advance payments of fees by clients simply doesn’t make any sense in today’s world. For starters, many clients often use credit cards to pay for legal services – which in theory, should be a convenience not only for clients, but for lawyers. Yet trust accounting requirements add layers of complexity to an otherwise simple transaction: to accept credit cards for advance payments, lawyers need to set up not only a trust account but a separate operating account to cover fees associated with credit card charges and chargebacks. So complex are trust accounting rules that they delayed the use of credit cards for legal services and continue to deter some lawyers form accepting credit card payments.  

Marketing god Seth Godin recently urged his audience to take up the challenge of doing what’s hard:
In an industrial setting, the obvious plan is to seek out the easy work. You’re more likely to get it done with less effort and then move on[…] Today, though, it’s the difficult work that’s worth doing. It’s worth doing because difficult work allows you to stand out, create value and become the one worth choosing.

Seek out the difficult, because you can. Because it’s worth it.
Great advice if you’re thinking about your legacy. But how does doing the difficult work as a  growth-based business model for solos and smalls?

Not very well. And if my opinion surprises you, well, it surprises me as well.

For years, I bought into Richard Susskind’s belief that the bespoke shall inherit the earth  — meaning that lawyers with special or unique skills would survive and thrive even in a world where many routine legal tasks formerly handled by lawyers are increasingly automated. I built my practice on a niche specialty in energy regulation that’s always been in demand and enabled me to command more for my work than many of my colleagues in general practice. In an already complicated field, I chased the toughest work possible because most of my peers didn’t want it and plus, I love a good challenge. Today in my industry, I may be viewed as a bit of an outsider, but I know that I’m also respected for the quality of work that I do. 

Today, MyShingle is pleased to host this guest post by Roy Ginsburg. Other posts authored by Roy at MyShingle are available here. 

A frequent complaint of solo practitioners is that since they are alone and in charge, it is difficult to get away for a vacation.  But somehow, most seem to manage by finding another lawyer to cover for them should there be an emergency type of situation. That’s easy to do because the vacation is planned. But what if you are taken away from your practice for something that is not planned? What if you are incapacitated or even die from an accident? Do you have another lawyer to cover for you under these circumstances?

The Rules require it

For solo practitioners, having a contingency plan is crucial. As an initial matter, it is ethically required.  Attorneys are usually well aware of Model Rule of Professional Conduct 1.3’s directive that “a lawyer shall act with reasonable diligence and promptness in representing a client.” However, they are usually not aware of Comment 5 to that rule which states:
To prevent neglect of client matters in the event of a sole practitioner’s death or disability, the duty of diligence may require that each sole practitioner prepare a plan, in conformity with applicable rules, that designates another competent lawyer to review client files, notify each client of the lawyer’s death or disability, and determine whether there is a need for immediate protective action.
Although the Comment states that having a plan is not mandatory, one would be hard pressed to imagine a scenario where a solo practitioner would not need one.

A variety of practical reasons support the Comment. A contingency plan protects client interests. It also prevents unnecessary headaches for relatives, colleagues and judges who, without a plan, are frequently tasked to pick up the mess. Along the same lines, if the mess is not properly addressed, there is always the potential for a misconduct or malpractice claim. 

Last week, I wrote about how the rise of large health networks in the medical profession is making it harder for independent doctors to compete – and pondered whether solos and smalls might face the same fate potentially from the growth of branded lawyer networks. Of course, that’s not the only source of competition for solos and smalls; Richard Susskind has long predicted  that automated, online form platforms will bring about the demise of most general practice solo and small firm lawyers (I don’t agree, but that’s an argument for another post).

Still, the fate of solos and smalls isn’t set in stone. Just as Walmart hasn’t killed off mom-and-pop retailers, there’s plenty that solos and smalls can do to compete. And some of the best ideas come from Dave Ratner, a small retailers who’s successfully held off bigger competitors with the advice summarized here.

One of the tips is “personalize everything you do.”  In the case of Ratner, who runs “Dave’s Soda & Pet City,” a small chain of pet supply stores, personalized service has meant developing Dave’s own brand of dog food, with a message on the can that reads “Thanks for trusting me with the health of the creature you love more than anything in the world.”

There are lots of ways that lawyers can personalize their services. Ditching professional copywriting and ghost blogging services is probably one of the best and most obvious places to start – but there’s more you can do.   

A couple of weeks ago, I embarked on the long journey of learning and mastering computer code for several reasons. First, as I approach a milestone birthday (and work through the concomitant midlife crisis), I’ve felt compelled to try something new. Second, since I so frequently criticize  many of the legal tech startups for not understanding what lawyers need, I thought that I ought to put my money where my mouth is and see if I could do better. Finally, as I’ve written previously, there’s nothing like doing something that you suck at to make yourself a better lawyer.

As part of my journey (which has included a weekend course and a few tutorials at Code Academy and other websites), last night I attended a Learn Ruby MeetUp at one of the incubators here in Washington D.C. I expected that there’d be someone leading the class, perhaps running through snippets of code or introducing different methods. But coding isn’t law school or CLE – and instead, there were just a bunch of random people — from gurus who code in Ruby as part of their day job to programmers learning a new language to novices like me and some even lower on the skill scale (hard to imagine) who’d basically read about Ruby online but never tried it. After introductions, people opened up their computers and started working on projects, moving into groups and sharing their screen with others or asking for help from some of the more experienced attendees. There wasn’t much I could do – I wasn’t working on a program – so I opened up my terminal and text editor and started to work my way through some exercises that I found online (pathetically, it took me 15 minutes to get started because I could not remember certain command line controls and was too intimidated to ask for help at first because it’s such a basic question). Still, by the end of the night, I felt that I had made some progress – and I also felt as if I were part of something.  

In many respects, we solo and small firm lawyers have more in common with freelancers than the big firm attorneys who set the bar associations’ agendas. Frequently, when foraging for blog fodder, I find the advice, tips and trends covered at freelance or tech start-up sites are more compelling and relevant than what’s available at more lawyer-centric sites.

So today, I’m highlighting two articles aimed at freelancers but that contain valuable advice for solos. The first, 53 Freelancing Mistakes That Are Costing You Clients, Cash and Credibility by Samar Owais for Copyblogger contains a comprehensive list of everything that freelancers – and solos – do wrong and that hurts their bottom line. Moreover, because solos, like freelancers, are often so busy juggling a dozen different matters, we often don’t notice the pattern – not making a sale, clients abruptly departing or refusing to pay – until it’s too late. Take a look at the article, and see whether you’re making any of these mistakes and take Owais’ advice on how to correct them.

The second article

In reading this article about physicians feeling pressure to join hospital or health network systems, I wondered whether this might be the future for the practice of law as well. The article describes the experience of Dean Pollack, an OBGYN, in practice for thirty years, who is committed to maintain an independent practice – notwithstanding that he competes with well-funded corporate networks, which have the money to advertise on billboards and the leverage to keep him relegated to less prominent listings in physician referral directories.

Although a health network has offered Pollack a significant amount of money to acquire his practice, Pollack declined. According to the article, Pollack wants to practice medicine rather than be an “assembly line physician.” He’s also concerned that network membership is not in the best interest of his patients because the networks rely on lower cost but less experienced new doctors to provide services. In addition, physicians employed by the network are, with limited exceptions (emergency or stated patient preference) obligated to refer all patient services within that system rather than based on the physician’s belief on who is the best quality.

Is this what we want for the practice of law – because that’s exactly what many of the branded networks will deliver. Although current ethics rules theoretically protect against mandatory in-network referrals since clients have an “unfettered” right to the lawyer of their choosing, you can bet that if rules on outside investment are changed, we’ll see a relaxation of other rules as well.  

For the first time in a very long time, I went a full week without posting at MyShingle. Needless to say, last week was busy – but here are some of the highlights:

I had my fifteen seconds of fame (quite literally) in this appearance on The Daily Show, which grew out of this…