Judgment Proof: Winning your case is worthless until you collect

sandy fingersSometimes the biggest hurdle to success in litigation is the most obvious: You can’t get blood from a stone.  In litigation this means that even if you have a great case, a sure winner, you can still lose if your opponent doesn’t have the money to pay (or spent it all on their losing lawyers).

Here’s an interesting example of a legal malpractice case revolving around a law firm’s failure to listen to the client’s instructions about how much the client could afford to pay.  The lawyers kept billing and billing, then “won,” only to learn that the judgment was worthless against the deadbeat defendants.  That creates an interesting malpractice theory — the lawyers won, but they really lost in practical terms.  Of interest to me is that, given the numbers in play for this malpractice case, it looks like someone’s making pretty much the same mistake again:  Even if the client “wins” this time, the numbers look like a loss in practical terms.

Legal malpractice cases are hard to win for a variety of reasons.  First, any malpractice case, including medical malpractice, can be fairly complicated and expensive, requiring expert testimony and usually lots of motions and discovery.

Second, having been burned once, most clients are reluctant to wade back into the legal system.  Many clients assume the system is rigged for lawyers, and sometimes it actually is.

Third, the issues to prove in a legal malpractice case can be factually complicated — calling for analysis of judgment calls that aren’t as clearcut as even medical malpractice might be.  The “easier” cases tend to involve missing deadlines or making some rookie mistake.  Harder cases involve situations where the lawyer had to make a judgment call that different lawyers might agree or disagree with or it’s not clear how things would have turned out, even if the lawyer had done things perfectly.

Fourth, to win a case, you usually have to prove what would have happened differently without the mistake, and that it would have netted a better result for the client.  If the client still should have lost the case anyway, there’s no malpractice.

Fifth, sometimes the client’s damages can be tough to prove or don’t amount to enough to make the time and money of pursuing malpractice case worthwhile.  A client who was advised to plead guilty and pay a $1,000 fine isn’t going to find a lawyer willing to take on a malpractice case that may only be worth $1,000 if you prove the lawyer should have fought the case (and probably spend more).  If there’s a potential ethics violation, you might make a complaint to the Bar instead, but most Bars take few incompetence cases and their concern isn’t to make money for you. Continue reading

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Hybrid Legal Fees: Beware of lawyers bearing alternative fee proposals

Every few years, especially during recessions, another generation of lawyers, and a few clients and reporters, claim to have invented or discovered alternative lrecipe bookegal fees.  In this context, alternative legal fees are any fee other than a basic hourly fee.  Common “alternatives” are contingent fees and flat fees.  You can also put together a hybrid fee using pieces from two or more types of fees, like a discounted hourly rate plus a reduced contingent percentage.

Actually, for many aspects of legal practice, hourly fees would be the alternative to how those particular services are normally charged.  Contingent fees for personal injury or similar cases are standard there, with hourly fees entering only when there might be fee shifting to an opponent (like civil rights cases).  And there are flat fees for almost all criminal cases, especially simpler ones that usually plead guilty — or even for the bigger ones that go to trial, so the lawyer can get paid in full up front, before the meal ticket ends up in jail without any more money to pay by the hour.  Many simpler divorce cases are also done on a flat fee basis, for the basics.

There are some alternatives that are a bad idea for the client — they aren’t really alternatives, but just ways to fool clients into thinking they are getting a discount or special arrangement, which often fails.  This included “blended” hourly rates, where all lawyers, for example, are billed at the same in-between hourly rate — higher than associate rates, less than partner rates.  Of course, clients think this is a discount for the partners, but what they get is a gaggle of poorly supervised juniors at marked up rates.  Another fake alternative is capped fees, say $100,000 for the whole case, which are supposed to be even better than a flat fee because the lawyer might do the job for less, but isn’t supposed to cost more than the cap.  Often this guarantees the lawyer will exhaust the cap right away, then demand additional payment — usually by blaming the court, client, or opponent for going overboard — or recommend settlement as soon as the money is gone.  The cap just lulls the client to sleep until it’s too late to change firms. Continue reading

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Object to the Form: Lawyer’s absurd deposition objections yield videotaped mea culpa

video-depositionA deposition is supposed to record testimony — each side asks its questions and the answers of the witness are recorded, usually by a stenographer, but also by video or audio means.  There is rarely a judge in the room, so problems can arise if lawyers misbehave or witnesses fail to cooperate.  (I had a deponent once who claimed he couldn’t be asked questions about any documents because he wasn’t required to bring his reading glasses — which he had never worn on earlier occasions — so we bought him a magnifying glass at the lunch break.)

If you’ve ever attended a civil deposition or been deposed, you’ve probably noticed that the process of discovering information through a deposition can be tedious and often pointless, hostile, or both.  I have heard of depositions where lawyers, witnesses, or others got into a physical fight or shouting match.  Some depositions go on for days, including many hours per day, while some are constantly interrupted with snide remarks, objections, and debates among the lawyers.  Depositions are also expensive, often costing the parties more than a thousand dollars per hour, and over the course of a case up to tens of thousands or hundreds of thousands of dollars in even a moderately complicated case. Continue reading

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Lawyer Glut: Until everyone has a lawyer they can afford, there’s no glut

lawyer-glutWhile individual lawyers and law firms sometimes suffer in economic recessions, like everyone else, they usually do much better than most.  In the most recent real estate bubble recession, lawyers with business depending on some investments, some business transactions, and real estate and financing were hurt, but bankruptcy, for example, does well in tough times and other sorts of legal work, like most litigation, continued doing well.  Indeed, there’s a whole cottage industry of litigation like class actions against the Wall Street firms and others who caused the financial problems leading to the recession — bad news for others is good news for some lawyers.  (Firms doing litigation, for example, only took a hit if they had become too greedy or inefficient — as clients became more careful.)  Lawyers have a monopoly on legal services and litigation, though some out-sourcers can compete on the ancillary services, like document review.

The press has interpreted the demise of a few big law firms, plus a reported glut of new law school grads without jobs waiting for them, as the demise of lawyers in general.  There are many things going on here, including an unusually tough recession, plus overextended law firms accustomed to being paid by the hour for excessive, wasteful effort.  Then too, clients have gotten smarter and more willing to negotiate, so firms are presenting inflated bills that they then mark down, while implying that they are thereby taking a loss when this is just a bargaining game.

This is also a time when many of the “major” law firms that grew up in the 60s through 80s have their founding generations retiring, which causes many firms to collapse as current rainmakers decide it’s better to stiff the founders in favor of making big bonuses for themselves.

There is also a glut of law schools, partly because law schools with mostly adjunct faculty, cheap buildings, and few other resources are relatively easy to start up and make good money for the school.  (Law schools don’t need, for example, labs, dorms, gyms, or even a giant paper library and most schools aren’t far from plenty of lawyers and faculty willing to teach for the credential.) Continue reading

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Condo-million: Legal fees and penalties punish condo and homeowners

condo boardOne very common complaint about legal fees arises when condo or homeowners’ associations tack huge legal fees onto every past due payment, fine, or other charge.  Sometimes these are hundreds or thousands of dollars, ten or more times the original charge.  These are not, however, fees for litigation or some complex dispute:  Often these are just routine charges, the homeowner or renter was a little late paying, and they are suddenly hit with what amounts to a punitive bill.

These fees are often inflated and may not even be legally billable — usually they are for clerical or administrative work or very routine pre-litigation steps, like drafting the notices and possibly filing a routine complaint with the court.  But it’s hard to challenge them because you just might get hit with higher fees for your trouble, and many judges won’t bother to look them over closely.  (There are often close ties between judges in such courts and the law firms submitting the bills — even in a big city, you can face a small club atmosphere.) Continue reading

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House Rules: Clients should think twice before trying bar-sponsored fee arbitration

As we’ve noted before, arbitration (and its neutered friend mediation) is a private replacement for civil litigation in court.  Many parties consider arbitration when the local courts are slow, perhaps to get a private “judge” with some specikangacourtal expertise, or to stack the deck in favor of the party insisting on arbitration (like stock brokers, banks, and so on with mandatory arbitration before a panel of their choice in their non-negotiable contracts).  Arbitration also can, in theory, provide more confidentiality than a public court.

Unfortunately, arbitration tends to be just as expensive and slow as court litigation in many instances.  For clients considering arbitration of legal fee or even legal malpractice disputes, there are additional problems, like conflicts of interest:  (1) most private arbitrators are paid by the hour, just like most lawyers, (2) most private arbitrators are former or current practicing lawyers, and (3) arbitration services (like JAMS or AAA) depend on lawyers to write them into their arbitration clauses.  Arbitration of legal fee disputes with pay-as-you-go services and arbitrators is, in most situations, not in the client’s best interest. Continue reading

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Yikes: Law firm sues client for negative Yelp review

yelp logo

Yelp Trademark

The internet has opened unlimited channels for everyone with something to say to communicate with the world.  Whether everyone has something worth saying and anyone is listening are still issues.  The days of public information that is systematically filtered and edited by a finite number of publishing organizations with semi-exclusive control of what gets published are certainly over.

This may be good in terms of broadening the perspectives available and loosening the grip held by a few, but one byproduct is that the days of professionally edited, high quality publications that one can rely upon just because they come from a reputable source are waning.  Even the best of the old name brand outlets have been hijacked with shallow, poorly researched and sloppily written pieces.  When it comes to journalists covering the legal beat, for example, it’s rare to find any who are actually lawyers any more, let alone experienced lawyers who know what they are writing about.  (Many stories are now just google-bait full of outright fake or mistaken material — based on skimpy or no reliable facts, press releases, or silly gimmicks like unreliable polls or surveys — that never would have gotten through a traditional editor.)

As a result, much of the current reporting about the legal profession and the law is simply wrong or skewed.  You see lots of marketing hype masquerading as advice to the general public, especially aimed at attracting the potential paying clients lawyers are trying to reach.  You’ll also see plagiarism and imitation of legitimate content by the fake content crowd, usually people paid a few bucks to throw “articles” together just to attract search engines like Google that have no ability to assess quality. Continue reading

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Passive Aggression: Juror research limited to “passive” means, while clients can’t just scrub own online records

paul2Social media provide possible sources for lawyers of the public or semi-private thoughts of clients, opponents, witnesses, and even jurors.  This can be a goldmine for witness impeachment or an opponent’s admissions, but it can also be an ethical trap for the lawyer who is too aggressive.  And lawyers need to be especially careful before advising clients to clean up their online act to avoid spoliation of evidence.

Long before Google, there was Paul Drake, Perry Mason’s private detective extraordinaire, who could find out anything about anyone, in an instant, then deliver it to court at precisely the right moment.  In real life, Paul wouldn’t have been able to find nearly so much, or so fast, and he would have spent most of his time in jail because you can’t cut that many legal corners, even if you work for a lawyer.

Lawyers need (or want) lots of information about people for all sorts of reasons, including background on opponents and witnesses, who are generally considered to be fair game, within broad legal boundaries.  [This isn't true just for lawyers -- any business or nosy neighbor might want lots of data, too.]  You can, for example, use some types of criminal convictions to imply a witness or opponent is untrustworthy.  And you can also use relevant prior statements to discredit inconsistent statements now.

How the lawyer obtains that information often raises legal and ethical issues, however.  Opponents in litigation are subject to all sorts of discovery, from themselves, their company or employer, and beyond — but there are limits because discovery is so often abused.  Non-party witnesses get more protection, but are still subject to investigation. Continue reading

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More Is Rarely Better: Spending more for lawyers only guarantees a bigger bill

_MG_6608An otherwise political debate about differences in how laws are unevenly enforced for the one percent versus the rest of us became distracted by suggestions that people who can afford to pay more for their lawyers get better lawyering as a result.  (The argument broke out in the New Republic of all places.)

There are many people who cannot afford any lawyer at all, so they end up in jail or suffering through a cruel divorce, for example, for no reason.  Our legal system needs to do something about that or else the public will no longer respect the system.  Even as its actions disrespect many civilians, our legal system craves respect, while it makes the equally serious mistakes of taking the right to respect for granted or demanding respect (often backed up with threats of retribution against the unimpressed majority).

And there are also many people and businesses who can afford at least some sort of lawyer, just not the overpriced or unlimited kind.  Their modest means may be their salvation:  Spending more on lawyers is not guaranteed to yield better results, and may backfire.  Once you get past the threshold to cover the necessities, there is no positive correlation between the total fee or hourly rate a lawyer bills a client and the net result or quality of the lawyer’s performance, let alone efficiency or effectiveness.  Indeed, with hourly billing, incompetent or wasteful lawyers are rewarded for their incompetence and inexperience, unless the client objects. Continue reading

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Jury Duty: Judge jails lawyer for complaining that jury duty conflicted with client duty

There are several common “types” for judges — so common that they are frequently portrayed quite accurately on TV and in movies.  You’ve jury dutygot your passive, cerebral, experienced judge — the ones who never yell or make snide remarks.  Then you’ve got your angry, hostile judges, always taking a shot at the lawyers, parties, and some witnesses — these bullies tend to be intellectually insecure, so they like to throw their weight around, even if it undermines public respect.  I’ve even seen judges who seem to be so lonely that they prolong every proceeding with their stories and jokes — a captive audience always has to laugh and can’t just walk out.  And then there are judges with a  political agenda, often because they must be elected to office or who hope to get promoted to a higher court, who bend with the political wind and look for the best quotes just in case the press is around.

Most judges are in-between.  Here’s a story about a judge who jailed and fined an in-house lawyer who complained to the judge about being left on a jury because the trial would interfere with her professional duties to her client.  Apparently the judge informed the jurors that any work-related excuse would be rejected.  Actually, I’ve never seen any court where a job-related excuse wasn’t at least considered, although routine job issues, especially with larger employers or government agencies, usually won’t do it. Continue reading

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