Law practice management advisors specialize in fielding questions.  Here are a few recurring ones that have been posed to me in recent months:

Conflict Procedures

Question:

If our firm purchases practice management software, is it necessary to continue routing new client intake forms to all the attorneys to review for possible conflicts?

Answer:

Yes!  It is important to circulate new matter information to all lawyers and staff in the office.  Ask that everyone review new matters for possible conflicts that may not be in the conflict system.  Someone in the office may recognize a conflict that would not be detected otherwise.  This can be done by routing new client intake forms or sending a firm-wide e-mail.  In either case, circulate the new matter information on a weekly basis.

Time Entries for Contract Work

Question:

I recently completed a contract project for another lawyer.  She is asking for time entries to include in the client’s billing statement.  Is there a particular format I should follow?

Answer:

Bill the lawyer as if you are billing the client directly.  Most clients want to see the following for each billable activity:

• Date
• Matter
• Description of work performed
• Time spent
• Amount due (hours spent x hourly rate)

Give the lawyer the same information.  Remember that every time entry, and every bill for that matter, should tell a story.  An easy way to accomplish this is to  remember the “three W’s:” who, what, and why.

• “Who” are the parties or persons involved in the activity.
• “What” is the actual billable activity.
• “Why” is the reason for spending the time to complete the task (For example: in preparation for trial or in response to a discovery request.)

Here are some more do’s and dont’s:

DO’s

• Use results-oriented verbs to describe your billable activity:  “Attend hearing in response to Defendant Smith’s objection to attorney fee award,” or “Prepare Plaintiff’s First Request for Production to Defendant Jones.”
• Be as detailed as possible.  Don’t just say “Review documents,” describe the documents you reviewed: “Review documents, including [then list some of the key documents].”
• Use present tense rather than past tense.
• Be consistent in your phrasing.

DON’Ts

• Don’t repeat the same phrase over and over again:  “Review discovery,” “Review documents,” “Review medicals.”
• Do not use “etc.”
• Avoid abbreviations the client won’t understand.
• Avoid acronyms (which no one understands).
• Weigh the formality of your language.  Should you say “memo” or “memorandum?”  “Fax” or “facsimile?”  “Telcon” or “Telephone conference?”  Many clients prefer a more formal approach when it comes to billing.   In either case, see the last bullet point under “Do’s.”

Third Party Payments

Question:

We have a case where an advance deposit was paid by a third party (not the client).  The work is now complete and there are funds remaining in trust.  To whom do we issue the refund?  We do not have a written fee agreement with the client or the third party.

Answer:

This issue is addressed in the Oregon State Bar Fee Agreement Compendium, available as part of BarBooks:

“A lawyer must deliver funds requested by a client ‘which the client is entitled to receive.’ Oregon RPC 1.15-1(d).  If the client is not entitled to the funds, the lawyer may be civilly liable to the payor for conversion or otherwise.”

I don’t have a bullet-proof answer for you, but here are two suggested approaches:

Option 1

Render a final bill to your client reflecting the balance remaining in trust.  Inform the client via the bill or in a covering letter or e-mail that you will be processing and issuing a refund to the third party within [some number of days] of the billing date.  Wait the stated number of days, then process the third party refund.

Option 2

Prepare a final bill reflecting the proposed refund to the third party.  Submit it to the client for her approval.  Process the refund after you receive your client’s consent.

Lesson Learned

The best course for this type of arrangement is to enter into a written fee agreement which specifies to whom any prepaid, but unearned fee is to be refunded.  Remember:

• Billing statements sent to third parties should be redacted to protect client confidentiality or obtain client consent to disclose detailed billing information.
• Third party payment arrangements are subject to Oregon RPC 1.8(f) – the client must give informed consent and the paying party cannot interfere with the “lawyer’s independence of judgment or with the client-lawyer relationship.”

Also see Avoid Serving Two Masters: Take Care in Accepting Payment from Someone Other Than Your Client and The Pushmi-Pullyu Resolving Third-Party Claims to Client Funds.

Copyright 2011 Beverly Michaelis