Session 4 - Unbundled Legal Services: The Business Perspective

Transcription

1 Unbundled Legal Services: The Business Perspective Paul Barrera Jessica Lewis A Few Notes Throughout this presentation: When we say you we mean you, the attorney When we say client we mean the potential client that you re meeting with (regardless of whether or not s/he hires you), and also the client who has hired you in any capacity Please feel free to ask questions at any point Keep in mind that we only have 75 minutes, so this is not the most comprehensive presentation Keep in mind what has worked for one or both of us may not work (or sound good) for you and that s okay June 8, 2018 Page 1 of 10

2 Creating a Business Plan (Handout) The Unbundled Legal Market Your Team Your Practice Pro Forma Financial Statements Setting Prices: Determining Your Hourly Rate(s) Consider: Typical hourly rate in your state Typical hourly rate in your city / county Your level of experience But, also consider: How much you need to make to meet your financial obligations / needs (rent, mortgage, insurance, student loans, entertainment, etc.) Your business expenses (office rent and utilities, equipment, supplies, bar dues, malpractice insurance, business cards, etc.) How much you want to work The time you ll spend on non-billable tasks (bookkeeping, billing, running a business, etc.) June 8, 2018 Page 2 of 10

3 Setting Prices: Determining Your Hourly Rate(s) (Salary + overhead) hours billed (not worked) ($50,000 + $15,000) 900 = $72.22 $50,000 salary $15,000 expenses 900 hours billed (~18 hours per week) So, the lowest you can charge to meet your salary and overhead obligations is ~ $75 Collection rate? Setting Prices: Determining Your Sliding Scale Once you ve determined the lowest rate you can charge while still meeting your obligations, you have the bottom of your scale commit to charge at least this amount, otherwise, you may not be able to meet your obligations If you can charge as little as $75/hour, but the average hourly rate for someone in your locale and with your experience is $250, maybe you want your hourly rates to be between $75 and $250 Standard hourly rate is $250 Discount down to $75 based on pre-determined factors (generally household size and income) Many firms base their scale off of the Federal Poverty Level Guidelines Offer as many or as few hourly rates as you d like June 8, 2018 Page 3 of 10

4 Northwest Advocacy Foundation Fee Schedule Northwest Advocacy Foundation Fee Schedule Household size FPL (2018) < 200% 200% $250% 250% 300% 300% 350% 350% 400% 400% 450% 450% 500% 1 $12,060 <$24,120 $24,121-$30,150 $30,151-$36,180 $36,181-$42,210 $42,211-$48,240 $48,241-$54,270 $54,271-$60,300 2 $16,240 <$32,480 $32,481-$40,600 $40,601-$48,720 $48,721-$56,840 $56,841-$64,960 $64,961-$73,080 $73,081-$81,200 3 $20,420 <$40,840 $40,841-$51,050 $51,051-$62,260 $62,2601-$71,470 $71,471-$81,680 $81,681-$91,890 $91,891-$102,100 4 $24,600 <$49,300 $49,301-$61,500 $61,501-$73,800 $73,801-$86,100 $86,101-$98,400 $98,401-$110,700 $110,701-$123,000 5 $28,780 <$57,560 $57,561-$71,950 $71,951-$86,340 $86,341-$100,730 $100,731-$115,120 $115,121-$129,510 $129,511-$143,900 6 $32,960 <$65,920 $65,921-$82,400 $84,401-$98,880 $98,881-$115,360 $115,361-$131,840 $131,841-$148,320 $148,321-$164,800 7 $37,140 <$ $74,281-$92,850 $92,851-$111,420 $111,421-$129,990 $129,991-$148,560 $148,561-$167,130 $167,131-$185,700 Hourly Rate $75 $100 $120 $140 $160 $180 $200 North City Law Fee Schedule North City Law Fee Schedule Household size FPL (2018) < 200% 200% $250% 250% 300% 300% 350% 350% 400% 400% 450% 450% 500% 1 $12,060 <$24,120 $24,121-$30,150 $30,151-$36,180 $36,181-$42,210 $42,211-$48,240 $48,241-$54,270 $54,271-$60,300 2 $16,240 <$32,480 $32,481-$40,600 $40,601-$48,720 $48,721-$56,840 $56,841-$64,960 $64,961-$73,080 $73,081-$81,200 3 $20,420 <$40,840 $40,841-$51,050 $51,051-$62,260 $62,2601-$71,470 $71,471-$81,680 $81,681-$91,890 $91,891-$102,100 4 $24,600 <$49,300 $49,301-$61,500 $61,501-$73,800 $73,801-$86,100 $86,101-$98,400 $98,401-$110,700 $110,701-$123,000 5 $28,780 <$57,560 $57,561-$71,950 $71,951-$86,340 $86,341-$100,730 $100,731-$115,120 $115,121-$129,510 $129,511-$143,900 6 $32,960 <$65,920 $65,921-$82,400 $84,401-$98,880 $98,881-$115,360 $115,361-$131,840 $131,841-$148,320 $148,321-$164,800 7 $37,140 <$ $74,281-$92,850 $92,851-$111,420 $111,421-$129,990 $129,991-$148,560 $148,561-$167,130 $167,131-$185,700 Hourly Rate $110 $ $165 $ $220 $ $275 June 8, 2018 Page 4 of 10

5 Fee Structures Consultation Free (i.e. half hour) Hourly (i.e. $75 for one hour) Flat fee (i.e. $150 for however long it takes (within reason)) Hourly Based on your sliding scale Contingency Flat fee Advance Fee Deposit Money required up front to get started Hourly rate x estimated hours needed, based on the scope and agreement Types of Fee Arrangements Full representation Limited representation (RPC 1.2(c), CR 4.2, CR 70.1) Unbundled services (RPC 1.2(c), CR 11(b)) If you offer multiple kinds of arrangements, explain all of them to your client Whatever kind of arrangement you enter into, make sure to review it in full with your client June 8, 2018 Page 5 of 10

6 Types of Fee Arrangements: Full Representation Most common / typical arrangement Pros: Cons: Attorney handles everything (with client s cooperation) Much less stressful for the client Attorney handles everything, so, more expensive for client Depending on your practice area, it can be nearly impossible to estimate how much time (and thus money) will be required Types of Fee Arrangements: Limited Representation Attorney is representing a client for a specific part of a larger case, but not the whole case (i.e. temporary orders hearing for a parenting plan establishment) Pros: Cons: Client gets representation when and where she needs it, without having the expense of full representation Depending on the scope of the representation, it can still be quite difficult to estimate how much time (and thus money) will be required For everything else, client is representing herself June 8, 2018 Page 6 of 10

7 Types of Fee Arrangements: Unbundled Services Client is representing herself, and the attorney is assisting with a specific task or tasks Advice and counsel Drafting or reviewing pleadings, settlement offers, etc. Preparation for hearing, mediation, trial, etc. Pros: Cons: Client gets help when and where she needs it, without having the expense of full representation Much easier to estimate how much time (and thus money) will be required Client alone is responsible for her case Some types of cases and some types of clients don t do well with unbundled services Fee Arrangements: Explaining Types of Arrangements to a Client Practice talking about money with clients a lot of people are uncomfortable with this, but it s a huge part of running a business If, after talking to the client, you think limited representation / unbundled services would be a good fit for the client and case, start the conversation by explaining those options first Discuss pros and cons Discuss what the arrangement might look like in the client s particular situation Then discuss full representation Presenting limited and unbundled services as legitimate options, and not as well, if you can t afford X, Y might do often helps people to not feel like they re getting a less-than-alternative to what they actually need June 8, 2018 Page 7 of 10

8 Getting Paid Regardless of the scope / agreement, we always require an advance fee deposit (AFD) to get started, and we don t lift a finger without a signed agreement and AFD For full representation, on top of the AFD, we also require the client maintain a minimum trust account balance If the minimum trust account balance is $1,500, and on July 1, when we do our monthly billing, we invoice $100, client must deposit an additional $100 to their trust account Getting Paid: Billing Practices Do your billing at the same time each month, and include this information in your agreement, so that the client is aware of and expecting it Consider offering clients their choice of delivery method ( , mail, practice management software) Consider what kind of payment methods you want to accept Cash Cashier s checks Personal checks Can take a bit to clear, so keep that in mind before working Credit and debit cards Require a credit card processor, which is an added expense Consider your firm s liability exposure to Consumer Protection Act claims The entrepreneurial aspects of the practice of law, which are principally counterclaimed by defendant, fall within the sphere of trade or commerce under RCW (2) and Short v. Demopolis, 103 Wn.2d 52, 65, 691 P.2d 163, 170 (1984). June 8, 2018 Page 8 of 10

9 Getting Paid: Payment Plans Choose predictable practice areas Small TEDRA actions ( search for the truth ) Attorney fees provision by contract or statute Consider minimum amount based on number of hours needed to setup action (e.g., in TEDRA, filing and serving a notice of appearance, request for special notice, and demand for inventory, reviewing response and advising client on the same: worth two hours of time) Balancing Wanting To Help With Needing to Survive For many clients, even $75 an hour for a few hours isn t doable, but they still want your help. So, what do you do? PRACTICE SAYING NO (without saying no) After informing the client of how you can help them, what their hourly rate would be, what kind of arrangement you would offer, etc., sometimes, clients will say, I really need your help, but I can t afford to pay anything Sometimes, the client will push back and flat out ask you to work for free This doesn t have to be awkward, you just have to be prepared for it Have a list of free resources on hand for them to look into I would love to be able to do this for you, but the only way that I can have a sustainable practice, and continue to do the work that I am doing, is to require payment. June 8, 2018 Page 9 of 10

10 Making a Living Supporting Access to Justice Listen to your gut if you have a bad feeling about a client, don t let her hire you Be willing to withdraw if your client becomes unable or unwilling to keep up with your payment arrangement Be willing to withdraw if your client is ruining your life (communication issues, expectation issues, abusive, etc.) Work smarter, not harder embrace things that make your work life easier Paul Barrera paul@northcitylaw.com Jessica Lewis jessica@northwestadvocacy.org June 8, 2018 Page 10 of 10