Saturday, November 14, 2009

Money, Ethics, and Law Firms

Today, I feel like starting an experiment. I need to find out how many of the people I am dealing with are honest and intend to handle ethically the 'money' situations that come their way. (It is often unclear what the law requires in each situation, but ethics invoke at least an element of moral right that we can talk about together. This is a better gauge right now as I try to ascertain how much of my public engages in or at least attempts to engage in right action, even if it is individually, and variably defined, culturally). This applies to my clients, affiliate law firms, collaborative law firms, friends, colleagues etc. Let me be clear, I am not casting stones... he who throws the first, right? That would be fairly arrogant. I am just trying to learn.
The experiment is this: I would like clients to think for a few moments what my services and time are worth to them and pay what they like. If ethical considerations were at work, I think no one would be trying to take advantage of me, and they would be paying as much as they could afford. What do you think?

In money, we have constructed a tool for communicating mutual and one-way obligation with one another. Such notions as reciprocity, self and generic worth and value are all mixed up with money. As long as a certain level of comfort can be guaranteed by our country's economic conditions, and our currency retains a certain value, we can intuitively ascertain and apply a monetary value to our sense of the worth of the effort we put into our work, our relationships, our homes etc.

Money may have nothing to do with effort. Some of us come into a boat load of money and do nothing to earn it. Others work their hands and other body parts off, but somehow don't see any of it. Supposedly money begets more money, sometimes money also is lost because not everyone is above board. There is a premium on acquiring as much money as possible while doing the least amount of work. Why is that? Theft is incentivized directly. You steal, you keep and you see what you keep, no commissions and little competition (at least one of my clients would say I am being naive).

However, what is not taken to heart is: where do the thieves think they are going? We all have 80 years or so to live. And none of us is taking it with us where we are headed. It won't be needed over that border. No matter what kind of insurance we have, there is no guarantee that all our money will not be lost. None. Something may happen and we may finally see that our money is worthless to satisfy our deepest desires and wishes, even without being visited by a large meteor or tsunami. You store away or work endlessly to accumulate wealth over the course of 20 years and come to see that your kids have grown up without you. As a result, when you are older, they are not there for you, just as you were not there for them. You are a millionaire a hundred times over at the age of 55. What a great situation right? But you are hit by a cancer that cannot be cured and oops, there is nothing you can do. Suddenly, there is no way to pursue the legitimate right to enjoyment for which you have worked so hard. And you don't know how your money can help. It can't, in most cases. Sometimes, money does buy hope and opportunity.

I have also seen that something strange can happen when people get a little more money than they "really" need. "Greed". Something also happens when people have too little money, and want to find a way to get enough, theft. Somehow the latter situation is easier to understand. Isn't it? There are ways then in which money due to our association of it with concepts of 'worth' and 'value' can be used to compensate ourselves and others for deficiences, real and made up. Instead of addressing questions of reciprocity, obligation, worth and value for what they may really be, we conflate them with money and lose sight of the real context of those issues and questions.

I am not trying to write a sermon here. I am just trying to understand how to get on in the world. I am a lawyer. I have started a new law firm, and this brings some growing pains and money is an issue, of course. But I am also a mom of two formidable individuals, who I helped grow (a social service to be sure), have grown a host of clients (many of who are my best fans, another social service) and a number of friends, even boyfriends and fiances (another social service!). Do I bring these experiences with me into the services I provide? I have an hourly rate of $600 which when compared to my plumber in times of emergency ($210) doesn't seem too steep. In an emergency, who would you pay more, your lawyer or your plumber? Maybe it is more of a toss up than we would care to admit. The analogy is painfully pertinent. We all can study the law. Lawyers are not Gods, as some pretend to be. The law applies to us and is a tool for the people. You should know the rules that govern you and your relationships. Similarly, those pipes are in our house -- we should know how to fix them when something goes wrong. How can we live in a place we don't have the tools to repair or change to do our bidding?

Here is where another element enters the picture, time. Time is money, we are told. It turns out that world wide studies show that folks who go to college and put in that 3 or 4 years to get a degree earn much more than those who don't. So the time you put into getting that higher education is worth it, so to speak! Once you get to graduate school, law, business, Masters, Ph.D., it would make sense that having spent the additional time may also mean greater income, or it may justify that extra few hundred on your hourly rate. How about if you have 5 graduate degrees? Do you maybe reach a plateau somewhere? Maybe that plateau exists at your own sense of fairness. Does the wisest and smartest person in the world charge an outlandish amount? She could. But what would that say about the wisdom and ethics she is espousing? You can see hopefully, where I am going. (Go back to where we are not taking it with us.)

This is an earthly dilemma, some tell me. It is based in the market. There is such a thing as market value that we hold as the standard to help us determine the worth of our qualifications and wisdom. It may have little to do with our own reality. It is a more 'objective' and 'independent' barometer of value. Yet, this value, as we have recently seen in the financial crisis, may be skewed, as it certainly is, by a systemic fiction (subprime, derivatives). How and why do we then apply it to all we do in life? All those social services I was referring to. What if I don't want to put a money value on them? Does it mean I get taken advantage of? And if you take advantage of me, is there a money value I can place on your newly created obligation to me? Do things like guilt and shame have a money value too. Sometimes these are more powerful and valuable tools than money.

There are two situations that have prompted these inquiries and the experiment I related above. One, I have embarked on this new terrain of contingency work in which I don't charge clients up front and I get paid when a recovery comes in. Sometimes, I charge up front fees to cover some expenses, but ask for a portion of the recovery as well. The theory behind this work is that you are logging your hours and upon recovery you show the work, time etc. you have put in and the contingency covers (if you are lucky) all the time and expense put in on behalf of clients and even a certain portion of equity. Most clients like this situation as they should. They don't have to pay while you take a risk that you will succeed in providing them with relief and at that point, you, as their partner, have earned, maybe more than earned, your keep. Contingency fees can run up to 40% of recovery as a result. So you are a real partner with your client. You just need to make sure you have enough financing to keep yourself and your staff paid while you work for umpteen years at a time. This is the market... it takes no account of your special circumstances. Some lawyers have gone bankrupt in this process, never able to recover. One would think that clients would be well served to make sure basic expenses are covered if they are real partners and believe that this lawyer has knowledge that serves their interest, but where there is competition, clients don't have to do so. They may not take the time to understand the specific wisdom, or special experience/expertise of the lawyer in question.

Two, even in non-contingency work, clients and others who don't pay when they are obligated to do so is a recurring nightmare of those in any business. I am already seeing the repercussions of it. Yes, collections agents have approached me. These folks keep saying for months that they will pay, but don't. They don't provide any conditions to be fulfilled in order to allow the payment to come forthwith, they just don't respond and don't pay. When does one stop providing service? What if it is an intermediary counsel who owes you your part of the retainer fees? He is your partner in the case but clearly holding onto your money in his own firm's bank account. Clients are clients, but lawyers can be susceptible to greed too. There are ethical rules governing lawyers' conduct with client funds in some countries, but not all. As the communication and common work increases across borders, more concert in such rules must be in the offing. But the implementation and enforcement of such rules, is the real difficulty.

We all have a moral compass, and we know right action. It is acting on our moral compass that is of real value for clients and lawyers alike.

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