No Way Out: Court blocks lawyer’s attempt to dump non-paying client

wrong-way-do-not-enter-signThere are lots of stories about the games some lawyers play to induce reluctant or poor clients to pay up.  The usual theme is that the lawyer will undermine the client’s position to gain leverage to force the client to pay — or else the lawyer will abandon the client.  In reality, even if the lawyer has a legal right to be paid and the client has no legitimate excuse, the lawyer cannot just drop a client.  Indeed, how the lawyer treats the client and whether the lawyer follows the special rules before exiting can be very important.

Quitting or even scaling back work or threatening to quit can be a big mistake for the lawyer.  Once you sign up to be someone’s lawyer, you’ve entered into a professional relationship and there’s no easy way out, even if the client is stubborn, disagreeable, or too cheap to pay.  Many times the lawyer’s attitude will cost money, or worse — the lawyer can even be compelled to continue representing the client if the matter is in court, for example. Continue reading

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To The Victor: State officials fight over legal spoils cloaked in secrecy

coneofsilence

Get Smart’s “Cone of Silence”

There is an entire sub-industry of private lawyers catering to federal, state, and local governments, paid directly or indirectly out of taxpayer or government money (or some other pile of cash at the disposal of government agencies, like government fees, fines, or the like), plus the lawyers who live off opposing them.  In many locales, this source of business is very political — the spoils go to the lawyers with current connections.  A prominent example recently is the millions spent by New Jersey over “Bridgegate” — the closing of a bridge into Manhattan one day in 2014 as apparent retaliation by Governor Christie against commuters passing through cities the governor doesn’t like.

This doesn’t count, for example, “private attorney general” or other arrangements for paying legal fees and expenses out of recoveries from the pockets of defendants by private lawyers in the name of the public, but not actually out of public pockets.

Part of the problem with this underground quasi-public legal economy is the tendency toward favoritism (and overpayment).  Another problem is that it moves what should be routine, but known, expenditures covered in every government budget into a hidden slush fund.  Except for the smallest government entities — like a village or small town or county — pretty much all governments have lawyers on staff, who are paid much more modestly than private lawyers, usually. Continue reading

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In The Beginning: Hourly fees are relatively new for lawyers

merry go roundHourly billing for legal or any services raises all sorts of potential issues, not only with quantity, but also quality of work, staffing, and distorted incentives for the lawyer and impact on the legal system and clients.  Hourly billing is a mixed bag, but so are the alternatives — there are advantages and disadvantages to each, if you know what to look for.

Here’s a gee whiz piece from some lawyers and others who are recounting — inaccurately — the genesis and subsequent history of hourly billing in America.  From before Lincoln through around 1965, most legal billing was either (1) a monthly or other periodic “retainer” in some amount to handle all a regular client’s work, for business or larger individual clients, (2) a flat fee set by the lawyer, usually at the end of a matter, perhaps based on vague ideas about time but mostly on value, for anything “major”, (3) one shot, bar-dictated, flat fees for most routine legal tasks, like divorces, wills, criminal cases, or whatever, mostly for civilians, or (4) rarely, contingent fees.  Hourly billing was not championed by lawyers:  Those wacky MBAs and accountants apparently required it in the 1960s because they needed beans to count. Continue reading

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No Closure: Law firms among scammers diverting mortgage payments

foreclsoureAlthough the Great Recession is slowly fading, there are still thousands of people whose homes are subject to foreclosure.  While federal and some state governments have attempted to help, their efforts have provided a cover story for scam artists claiming to be affiliated with government agencies or offering to provide worthless or counterproductive “help” for people trying to use the real government help.  This is sometimes called foreclosure rescue fraud.  Comparable legal scams and games have been played with the BP Oil Spill, Katrina, and so on, too — money attracts lawyers and con artists, and lawyer con artists.

Some of these scams are run through law firms or, at least, people and websites claiming to be with law firms.  The typical scam involves convincing the homeowner to divert money to the lawyer so the lawyer will take care of getting the “client” whatever legal help there may be.  But then the help never arrives, the “lawyer” turns out to be fictitious or maybe real, but useless — so the money spent on the lawyer is gone and the “client” is still on the hook for the original debt, but probably deeper in the hole thanks to wasted time and the missing money. Continue reading

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Innocent Targets: Target class action settlement worthless to consumers

target-board-with-bullseyeConsumer class actions are supposed to bundle many small consumer claims together so justice will be done.  Normally, such small claims wouldn’t be viable on their own because there’s not enough at stake to justify the legal fees, even a small claims court with no lawyers wouldn’t be cost-effective.  The court system, and arbitration for that matter, are for much bigger claims — it’s hard in many courts to justify litigation over anything less than the high five figure numbers and often it needs to be far more.  (To discourage claims, legislators and some judges, as well as professional litigants, craft extra litigation hurdles to further tip the scales against the general public.)

About a year ago, Target reported that its consumer credit card database was hacked and the data stolen, putting tens of millions of credit card holders at risk.  Naturally, class action lawyers raced to various courthouses and recently they came up with a settlement proposal, capped at $10 million for the class — pennies per potential victim — which appears to be more of a public relations stunt than serious relief for consumers (many of whom may be vulnerable for years — credit cards take years to expire). Continue reading

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Legal Roulette: Malpractice insurer seeks to drop claims after the fact

Insurance is a form of gambling:  You put your bet down (call it a premium), then the roulette tablewheel of life starts spinning, and you see what happens while the wheel spins for the term of your policy.  If the ball drops into a “safe” slot — you never make a claim — you might feel like you wasted your money, but that’s only because you had no claim against you for insurance to cover.  Or, if the ball drops in another “bad news” slot, you’ve got a claim against you, but it’s covered by insurance.

Most people only know those two options, but it’s the others that are often a bigger problem:  What if the ball drops and you’ve got a claim against you, but it’s supposedly not insured — says the insurer — because the ball dropped too early or late, or the insurer refuses to pay based on some excuse, even if your claim would normally be insured.  (A coverage dispute is like arguing with the “house” at a casino — casinos like to disqualify sophisticated gamblers, for example, because they expect the odds to skewed in their favor.)  By denying a claim after the fact, the insurance company wants to use the benefit of perfect hindsight — eliminating the risk it was supposed to be running in exchange for taking your premium payment.

That’s where the big money in insurance coverage litigation arises — because the cost of litigating the coverage claim is far less than the cost of paying the claim or pursuing a frivolous claim.

Legal malpractice insurance is about the only protection clients with big claims against law firms have to get paid.  Even big firms carry little insurance and it doesn’t cover everything — like excessive legal bills in most situations.  Healthy law firms might have some assets, but that’s usually accounts receivable, which can dry up if the firm fails.  Chasing lawyers to pay a judgment of an old firm is tricky, as you can imagine.  One crooked or incompetent lawyer (or employee) can bring an entire law firm down, leaving their clients out of luck except for insurance (and sometimes special bar funds set up for certain types of lawyer fraud). Continue reading

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New Jersey Casino: Contingent fees are not for everyone

LAPT LIMA PERU SEASON 3New Jersey sued Exxon Mobil for billions in environmental damages, using a private law firm, which gets a big piece of the taxpayers’ pie, even though the state has plenty of lawyers of its own who are paid much less.  The outside firm here will receive over $45 million, including costs as well as legal fees, to settle a case after trial but before the judge was allowed to rule.  The firm negotiated a contingent fee of 20% with the state, with the money coming off the top from the settlement that was supposed to remedy billions in environmental damages to the state and taxpayers.  Many reports suggest that the only winner is the law firm.

As you might expect, part of what’s going on here is the result of lobbying by law firms to sign up states with a simple “something for nothing” pitch:  If the case is lost, the state’s off the hook, but if it wins, politicians look like geniuses for recovering money without investing much taxpayer money to get it — except if the law firm’s oversized piece of the pie gets headlines, like here.  Even if the press picks up on the law firms’ share, what’s left out of the usual press analysis is that most of these cases never go to trial and the cases don’t have the circumstances that typically justify a big contingent fee.

This sort of state-lawyer arrangement became big business with the tobacco litigation and now occurs in all sorts of situations.  Some states regulate the practice, others pretty much let anything go — leaving it to the judge usually to approve the fee, with no one in a position to object.  Like anywhere else that politics and money intersect, this has attracted all sorts of dubious arrangements and relationships. Continue reading

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Lying Detectors: California polygraphs sex offenders for “dangerousness”

The intersection of science and the law is a confused place:  Lawyers used to lie detector machinebending facts and law to suit their clients often cannot tell real science from quackery and many scientists get their understanding of the law and court proceedings from TV detective shows.  A long-running example of the nonsense on the science-law border revolves around the “lie detector” or, by it’s pseudo-scientific name, the “polygraph,” from the Greek for much or many writings — even it’s name is nonsense.  Lie detector interpretation is entirely subjective, with high error rates — both false positives and negatives.

The polygraph’s efficacy is a myth — it’s “gizmo theater” — not real science.  The show of the various inputs for pulse, electrical resistance on the skin (for sweating), respiration rate — with the little scratchy pens tracing in parallel on a roll of graph paper — is supposed to impress you that it’s “scientific.”  The script followed by the person administering the test is part of the game, to make the subject nervous and believe in the magic powers of the machine.  About the only time the polygraph “works” is when the subject spontaneously (but under duress) admits guilt or something probative of guilt.  In that situation, the machine is just a prop, along with the patter of the operating con artist.

I know quite a bit about lie detectors and the fools who use them because I used to be a trial attorney at the US Department of Justice, which lets federal agencies use them, mostly as part of security clearance procedures, where it’s all about the theater — no one goes to jail, but they do cost people their jobs.  I also worked on a well known case brought by a quasi-religious sect which uses a crude version of a lie detector  to gather information about its members.  And I brought perhaps the only, and apparently the first at least, civil case for lie detector malpractice.  When the lie detector company engaged by my client failed to catch a manager who was actively stealing from the cash register, my client sued.  The lie detector operator’s defense (raised by his insurance company) was that lie detectors are fake — so any client relying on them should have known they cannot be relied upon. Continue reading

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Search and Destroy: How lawyers aspire to unmask and sue negative online comments

cloudIn the good old days of the internet, everyone thought they were free to say what was on their mind, and share it with the world.  As many people pursued pornography, recipes, Star Trek trivia, and so on, there were a few interested in righting the wrongs of the world that “little people” without money for advertising and PR could not do in the age of TV, radio, and print media.  The age of nearly universal expression on the internet was born, including the avalanches of vicious, threatening comments that drive some people to suicide, for example.

About fifteen minutes after the first negative comment was posted, the subjects of these exercises in free speech started looking for ways to squelch negative comments (while faking positive comments, tracking everyone’s use of the internet surreptitiously, and so on, too).  So, about thirty minutes into the exercise of free expression, the age of the threat of litigation against negative comments on the internet was born. Continue reading

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The Retention Dance: Law firm claims duty to forward potential client’s inquiry to his employer

Nearly all law firms now have websites, which are primarily marketing tools to impress jump gunpotential clients.  I suppose some firms would say their websites are not looking for business, they are just “informational,” whatever that means, but that’s certainly how they are used by the public.  And that’s why most state bar organizations assume they should be regulating websites as legal advertising.

Most but not all of these websites provide email or equivalent links for potential clients to contact the firm.  (If no link, email address, or form is provided, the firm would usually provide a telephone number, which actually would have been a solution to the problem described below.)  In addition to providing contact information so the firm can get back to the potential client, or the potential client can call the firm, the usual “contact” form typically has a box through which an aspiring client can say whatever they want — so most potential clients are going to describe their problem and why they think your firm should be interested, so they will get the firm to respond. Continue reading

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