The Five C’s of Hybrid Fee Agreements

Call it a hybrid fee agreement (HFA) or an alternative fee agreement (AFA).  Lawyers are looking for creative ways to appeal to clients who are resisting the traditional hourly rate approach.

Employment Law HFA

Consider the employment law case that is less than a slam dunk.  You could put in many hours only to see no fee. Ah, the life of a contingent fee practitioner.

Or is it?  One creative lawyer decided to offer his client a hybrid fee arrangement: a reduced hourly rate of $100 per hour with a 25% contingent kicker in the event of a recovery. (Lower than the “going” contingent rate of 33%.)  If the client agrees, and your fee agreement passes the test below, there is nothing wrong with such an arrangement.

Family Law HFA

Among family law practitioners – who are forbidden to take a contingent fee – a popular hybrid fee arrangement incorporates a flat fee earned upon receipt with an hourly rate that kicks in at a specific stage. The flat fee compensates the lawyer for work done in the early stages of a case: initial consultation; file opening; drafting and finalizing the Petition for Dissolution (or preparing a response); serving the opposing party; drafting and serving the first request for production of documents.  The flat fee could encompass additional services – each lawyer can determine where the cut-off should be – but charging a flat fee for time spent from the first consultation through initial discovery is predictable and easy to do.  Again, if the client agrees and your fee agreement passes the test below, this is a perfectly fine arrangement.

Does your HFA or AFA Pass the Test?

Every fee agreement must satisfy the 5 “C’s” test:

  • Clarity
  • Completeness
  • Compliant
  • Common sense
  • Can’t be excessive

Clarity

If a fee agreement is ambiguous, it must be construed against the lawyer. Cf. OSB Formal Ethics Op No 2005-15.” Oregon State Bar (OSB) Formal Ethics Opinion No. 2005-124.

If you decide to experiment with your fee agreements, strive to be as clear as possible.  With the employment law scenario, the main challenge is the math.  Conceptually the idea is pretty clear.  With the family law scenario, the number one problem is failing to explain what the client is “buying” with the initial flat fee earned upon receipt.  Just how far does the $1,000 initial payment go and when does the $200 per hour rate kick in?

Completeness

Consider all possibilities.  A good example in the employment law context: if you have the right to recover attorneys fees, address this in your agreement.  See OSB Formal Ethics Opinion No. 2005-69 [Attorney fee awards are the property of the client unless "the terms of the fee agreement expressly provided that Lawyer was entitled to the greater of the fee computed thereunder or the court-awarded amount."]  Fee agreements should address all conceivable outcomes.

Compliant

If your client is entering into a contingent fee agreement, he or she must execute the “Oregon State Bar Model Explanation of Contingent Fee Agreementbefore signing an agreement with you.  If you are charging a flat fee earned upon receipt, read and comply fully with Oregon RPC 1.5, Oregon RPC 1.15, and OSB Formal Ethics Opinion 2005-151 (Revised 2011).  May I also suggest reviewing this excellent article: Helen Hierschbiel, “Alternative Pricing Models: What’s in a Fee?,” Oregon State Bar Bulletin (November 2011).  Practice Tip: flat fee earned upon receipt fee agreements must include special “disclosure” language set out in Oregon RPC 1.5.

Common Sense

Don’t torture yourself or the client trying to figure out the math of your hybrid fee agreement.  Once you’ve developed a sample, run it by your next door neighbor or another lay person.  Ideally, run it by several nonlawyer friends.  Does it make sense to them?  If not, go back to the drawing board.  Remember: “If a fee agreement is ambiguous, it must be construed against the lawyer. Cf. OSB Formal Ethics Op No 2005-15.” Oregon State Bar (OSB) Formal Ethics Opinion No. 2005-124.

Can’t be Excessive

“The Oregon State Bar Legal Ethics Committee has also said that split contingent/hourly fee agreements do not automatically violate the rules of professional conduct. See OSB Formal Ethics Opinion No. 2005-54. However, the committee cautions lawyers that a fee that appears to be lawful at the outset, may turn out to be clearly excessive in the end….” Helen Hierschbiel, “Alternative Pricing Models: What’s in a Fee?,” Oregon State Bar Bulletin (November 2011).

All fees are subject to a look-back at the end of the case. The employment law HFA is more likely to be challenged than the family law HFA.  In the employment law scenario, tabulate the total hourly fees charged to the client and your contingent fee share of the recovery.  Add the two together.  Do these exceed the standard contingent rate of one-third?  If they do, you may be on perilous ground. Helen’s article, Alternative Pricing Models: What’s in a Fee? discusses all the factors that go into gauging the reasonableness of a fee.

Parting Thoughts

Developing HFAs or AFAs that are ethically compliant and legally enforceable can be done – don’t get discouraged.  In fact, the ABA Law Practice Division (ABA LPD) will soon release Alternative Fees for Business Lawyers and Their ClientsIf you are an Oregon lawyer and want this book (who wouldn’t?) but do not belong to the ABA, use the Professional Liability Fund discount code at checkout to save money: OSBPLF.

All Rights Reserved [2014] Beverly Michaelis

 

Ethical Issues and Responsibilities in Billing for Paralegals

On July 25 I am presenting Ethical Issues and Responsibilities in Billing for Paralegals on behalf of the National Business Institute and Institute for Paralegal Education.  This program is a practical course designed to enlighten attendees on using ethical billing practices while still satisfying billable hour requirements.  Here are the details:

Program Description

The requirement of paralegals to maintain a certain number of billable hours can sometimes lead to a slippery slope of what qualifies as billable. As you enter your time, you need to be conscious of the fact that every bill tells a story. What do your entries convey? Is your time frequently written off? Do clients fail to appreciate the value of your services? Examine hands-on, practical tips any one can implement so you can avoid ethical missteps and see immediate improvement in your overall productivity and billing practices.

Attendees Will Learn

  • The three key steps to success in billing
  • How to keep time accurately – even if you don’t have sophisticated software
  • How to avoid time being written-off or written down
  • How to manage your time to meet monthly/annual billable hour requirements
  • The magic formula for transforming time entries into the perfect bill
  • The ethics of billing: dos, don’ts, and the role of professionalism
  • Landmark cases establishing the client’s right to collect paralegal fees in conjunction with an attorney fee award
  • Tips for beginners

Who Should Attend

  • Paralegals
  • Legal Assistants
  • Anyone who bills time

CLE Credit

The program has been accredited for 1.0 ethics credits in Washington, California, Delaware, Florida, Indiana, Montana, North Carolina, Ohio and New Mexico.  NALA and NFPA have also accredited the program for 1.0 ethics credits.  Detailed information is available here.

Registration

Register now by following this link.  This is a Web-based audio program, which includes a Q & A session.  Upon registering, attendees will have access to the downloadable coursebook.  Cost:  $99.00 for the first registrant; $89.00 for each additional registrant.

All Rights Reserved [2014] Beverly Michaelis

 

Progress Update: Limited License Legal Technician (LLLT) Program

Originally posted on NWSidebar:

news
The first courses for legal technicians are being taught. Learn more about the next steps and how the legal community is reacting.

newsAs you may recall, the Supreme Court adopted the Limited License Legal Technician (LLLT) rule in June 2012, which authorizes new legal professionals who meet certain educational requirements to advise and assist clients in approved practice areas of law. The LLLT Board began implementation of the rule in January 2013, and I want to provide an update on our progress.

We began the process of implementation by addressing the following parts of the process: define the scope of practice; develop an education program that teaches to the scope of practice; develop Rules of Professional Conduct; develop examinations that will test the competency of the applicants.

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Free Shred Day – Coming Soon to a City Near You?

We hope so!

The Professional Liability Fund has held several successful shred events at the OSB Center, most recently on May 17:

678 bankers boxes shredded

box

Stretching the equivalent of 24 school buses parked end-to-end

bus1bus2bus3

Weighing as much as 2 full-grown hippos with 26 stout offspring

h2

baby h

We are working with Recall, our document storage and destruction provider, to host future shred events in:

  • Salem
  • Bend
  • Eugene
  • Medford
  • Newport or Tillamook
  • La Grande
  • Pendleton

Stay tuned!

 

Escape from the Office

If you’re a regular reader, you are accustomed to my annual “reminder” to build vacation plans into your schedule.9371665116_dca14d2541_k

Work without rest, relaxation, and rejuvenation leads to burnout.  So banish the excuses!  This will take a bit of effort and planning, but your body and mind will thank you.

I Can’t Afford It

“If I’m not at the office, I can’t bill.  If I can’t bill, I won’t get paid.”  True enough, but there is a solution:  budget for your vacation.  A bit of research and number crunching is in order here.  First, calculate your vacation expenses. This should be relatively easy.  Next, quantify the lost revenue you need to replace during your time out of the office.  Now that you know how much you need, begin setting aside funds every week to meet your financial goal.  If necessary, find little ways to cut back that can really add up: like bringing your lunch to work, deferring your daily Starbucks fix, using public transportation, or telecommuting.  Saving weekly will keep you on track and help manage expectations. If you’re just getting started, then your plans this year may be more modest.  Next year, you can begin saving for your summer vacation in January.

I’m Too Busy

Work will never go away, but I guarantee that if you look ahead in your calendar you will find a block of time with no commitments.  Even if you haven’t made plans yet, block the time out now before your calendar fills up.  If you have a habit of backsliding, enlist your family as enforcers.  This time should be sacred.  If you need an extra incentive, consider non-refundable travel reservations.

Preparation is Key

If you’re a member of a firm, going on vacation is a matter of meeting with other lawyers who will be covering cases during your absence.  If you are a sole practitioner, use the buddy system.  Find a colleague who is experienced in your practice area and willing to cover for you.  This arrangement is usually reciprocal and is helpful if you have an unexpected absence from the office due to injury or a medical condition.

Get a game plan in place:

  • Notify clients, opposing counsel, judges, or other appropriate parties that you will be out of the office;
  • Prep your files.  They should be well-organized and current, with status memos so your buddy can easily step in if needed;
  • Create a “Countdown Schedule.”  Identify what needs to be done when and whether certain tasks can wait until your return;
  • Allow for wind down.  As your vacation approaches, leave time in your schedule to finish up last minute work.  Reduce or refer out new matters;
  • Train staff.  Do they have a clear understanding of office procedures?  How will they screen client calls during your absence?  Give them parameters for contacting you or your buddy in the event of an emergency.
  • Resist constantly checking voice mail, e-mail, or text messages.  Technology is a God-send, but part of rejuvenation is taking a break from our instant Internet society. Checking in is okay, but stick to a schedule to avoid obsessing over what is going on back at the office.  Remember – you have an emergency plan in place.  If something happens, staff or your buddy will get a hold of you.
  • Avoid post-vacation overload.  Just as you blocked out dates to go on vacation, allow yourself time to get back up-to-speed.  Otherwise, you’re right back where you started.

Give yourself and your family a well-deserved break.  With a bit of organization, you can budget for (and enjoy) your time off.

All Rights Reserved [2014] Beverly Michaelis

Use Strikingly to Enhance Your Job Search

Looking for a job?  Stand out from other candidates by creating your own personal Web site with Strikingly.  Simply create a login, then choose from one of six templates under the Personal tab or scroll to the bottom of the page and select “One Click Online Resume” to convert your LinkedIn profile to a personal Web site.  It’s that easy and it’s free!

To give you an idea of how Strikingly uses LinkedIn, let’s do a comparison of the two.

Here is a partial screen grab of my LinkedIn Profile:

Here is a partial screen grab of my Strikingly Web site:

Click edit to change the background image, upload your own image, change the template style, add content or edit content.  Save at any time to avoid losing your edits and use Preview to test drive your site before making it live. When you’re done, click Publish.

To navigate your site, use the slide bar or simply scroll down the page.  (Note:  recommendations follow experience, but don’t have their own navigation.)

What did I appreciate about Strikingly?

  • It is incredibly easy to use.  Hard to beat a “one click and you’re done” Web site.
  • If you build one personal site and don’t mind the strikingly.com domain name, there is no charge.
  • Sites are available instantly – about 10 seconds and I was off and running.
  • Editing is easy and intuitive.  I was pleasantly surprised to learn I could upload my own background images and change the template style.
  • Stock iconography and logos are used advantageously to enhance content.
  • A key recommendation was showcased in an appealing way.
  • Publicize your new site on Twitter or Facebook when done!

If you are looking for a more engaging, interesting way to present your qualifications, please give Strikingly a try.  Take the time to edit and personalize your site by uploading your own background image and tweaking the template.  For custom domains and other features, check out the Limited or Pro pricing plans.

All Rights Reserved [2014] Beverly Michaelis

 

 

 

 

 

 

 

Brush Up on Oregon Notary Law

The Oregon Secretary of State is offering free notary seminars statewide in May, June, July, August, September, October, November, and December.  Dates, times, and locations are available here.  Get comprehensive training on what a notary is, responsibilities and liabilities, how to notarize, notary certificates, and how to maintain a notary journal.  Learn more about electronic notarization and ask questions about procedures and practices.

Setting Up an Effective Filing System

I’m a member of Slideshare, a site where users “share what they know and love through presentations, infographics, documents and more.”

As a Slideshare contributor, I receive weekly analytics.  With over 9,000 views to date, my most popular document by a long shot is Setting Up an Effective Filing Systemslideshare

This article first appeared in the Oregon State Bar Bulletin in June 2000.  At a time when practitioners feel compelled to go digital and store data in the cloud, why would an article addressing organization of paper files remain in high demand?  It must be that many still prefer tangible documents and folders.

If you are a legal professional who likes paper, but struggles with how to organize files, here is an up-to-date redeux of an oldie, but a goodie:

All Rights Reserved [2014] Beverly Michaelis