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Over the last few weeks I’ve reported on the presentations given at the first ever Solo & Small Firm Conference in Bend, Oregon. As noted previously, the lineup included several Oregon-based experts, including the incomparable David Elkanich of Holland & Knight.
David was the closer on day one, and conference organizers couldn’t have chosen a better speaker. The topic: Legal Ethics for the Solo and Small Firm Practitioner.
David touched on client screening, fee agreements, engagement/disengagement/nonengagement letters, referral fees, data privacy and security, use of contract lawyers, supervision of lawyer and non-lawyer staff, IOLTA, mobile devices, and office sharing. Click here to see a complete review of David’s spot-on advice.
Last weekend the Oregon State Bar held the first ever Solo & Small Firm Conference in Bend, Oregon. The lineup included nationally recognized speakers and Oregon-based experts, including the incomparable David Elkanich of Holland & Knight.
David gave two great presentations at the conference, and I promise to blog about both. Today I start with a subject near and dear to my heart: The Ethics of Social Media and Online Marketing. Here are a few tweets to give you the flavor of David’s presentation:
We communicate with clients along a continuum – using emails, texts, letters, phone calls, video conferences, and in-person meetings. When selecting a communication medium, what drives your choice?
When Your Convenience Determines How You Communicate
Choosing a communication medium that is most convenient for you is understandable. Odds are you’re busy, maybe overwhelmed. You have information to convey and want to pass it along to the client quickly and easily. More likely than not, you’ll fire off an email, maybe a text, or post a document and notify the client to login to your secure client portal.
This is perfectly fine if the information you have to convey is cut and dried: not controversial, unexpected, upsetting, or likely to provoke a series of questions.
For best results, prime clients at the first client meeting. Let them know to expect emails, texts, etc. when you have routine information to convey.
When Client Convenience Rules Communication
Some might argue this should be the gold standard 100% of the time: choose the communication method the client prefers or finds most convenient.
While I understand the spirit behind this point of view, it ignores some important realities. Consider this typical scenario: Client sends you a question by email or text, but is unclear in what she is asking or leaves out key details. In the name of letting the client control the means of communication, you can:
Begin an inefficient exchange of messages in an attempt to clarify the question.
Spend an inordinate amount of time “issue spotting,” then answer every conceivable variation of the client’s real question.
Have I made this mistake? Yes, indeed. But the goal here is to do better. Neither of these choices is a good way to go.
Client convenience/preference can rule when you have straightforward information to convey. [Spot a theme here?]
If the client is being murky, don’t text or email. Pick up the phone. You’ll get to bottom of the real question far more quickly. Send back a quick message: “Let me call you to discuss this. Is 2:00 p.m. a good time?”
Purposely Choosing a Communication Method that is Inconvenient for the Client
If we’re being truthful, most lawyers have done this at one time or the other. You leave a voicemail at home because you know the client is at work. You send an email late at night when the client is likely to be sleeping. You mail a letter instead of picking up the phone to talk.
If you occasionally choose a means of communication that avoids contact with your clients, don’t worry about it. You might legitimately go this route to simply get something done. [Your convenience is driving how you communicate.]
But if you find yourself avoiding clients (plural) repeatedly (chronically), stop and reflect. Most lawyers who choose an “avoidance” means of communication are doing it because:
They anticipate the client will be unhappy about whatever information it is they have to convey – or –
The client is already unhappy [which could be reasonable or unreasonable]
Chronic avoidance can become chronic procrastination, which is a no-win for everyone. Lawyers who repeatedly procrastinate are anxious, stressed, and sometimes depressed. They find it impossible to break the self-perpetuating cycle of avoidance: as clients become more and more unhappy because the lawyer isn’t communicating, the lawyer retreats even more – not checking email, not opening postal mail, allowing voicemail to fill up, not reading texts.
Talk about communication at your initial client meeting. Let the client know what to expect and set the tone.
My goal is to keep you informed at all times during your case. I will email (upload) routine updates and documents.
If you have a question, feel free to call (text, or email) me. I set aside (mornings) (afternoons) to return calls and messages.
If the answer to your question is complicated, or if I need more information to give you an answer, I may ask to set up a telephone or video conference.
I like to meet with clients in person to (talk about settlement offers, prepare for deposition, prepare for trial, etc.) If you want to meet in person, feel free to (call my assistant or me) any time to set up an appointment.
You are welcome to drop off documents (any time, after 1:00 p.m.). If you want to talk (leave me a note or speak to my assistant so we can schedule a time to meet).
Consider the information you need to convey and remember your goal in communicating: you’re trying to build and support a better client relationship.
Convey bad news in person, by video conference, or over the phone.
Discussing something complicated? Use the same approach.
Is your client prone to anxiety? Do you anticipate the client will have a host of questions? Ditto on the approach.
Potential Legal Malpractice
If you’re an Oregon lawyer, call the Professional Liability Fund at 1-800-452-1639 and ask to speak to an on-call claims attorney in any of the following circumstances:
You believe you committed malpractice
The client is threatening to sue or is asserting you malpracticed
In 2013, the U.S. District Court for the Eastern District of New York approved a Class Settlement among merchants, Visa, MasterCard, and other defendants. Allegedly, the defendants conspired to collect excessive “surcharges,” also called merchant fees, transaction fees, or convenience fees.
On September 28, 2015, the Second Circuit Court of Appeals held a hearing regarding an appeal of the settlement. The matter has now been submitted to the Court for decision. It is not known when the Second Circuit will issue its decision.
Depending on the situation, these fees can add up to real money:
Jane Client owes her law firm $7,000. A fan of frequent flyer miles and other perks, she charges her legal bill to her Visa card. Surcharge to the firm: $210.* Net amount collected by the firm: $6,790. If the firm has five “Jane’s” in a month, it ends up losing over $1,000 in billed fees.
Corporate client Oregon, Inc. informs its law firm that henceforth it will pay only by credit card. A typical monthly invoice for Oregon, Inc. is $10,000. Over a 12 month span, the law firm will eat $3,600 or more in legal fees – the cost of absorbing surcharges each time Oregon, Inc. pays its bill by credit card.* Bottom line: taking credit cards isn’t cheap.
You Might Say a $10,000 Client Payment is a Good Problem to Have
Agreed. It may not be easy to sympathize with or relate to either of these scenarios. But most lawyers do take credit cards, and by year-end the surcharge fees add up.
What to do?
If you’ve read my blog before, you know I’m an advocate of building the cost of taking credit cards into your fee – what you charge for services. This continues to be a valid approach for the following reasons:
Assessing surcharges [or crediting clients for the net amount less fees] involves extra administrative and bookkeeping steps. If you get the math wrong and the transaction involves trust account funds, you could face disciplinary action.
Passing on surcharges is unpopular. Clients don’t like to be “nickel and dimed” to death.
Ethically, clients are not obliged to pay any cost to which they did not agree. If you did not include the right to assess surcharges in your fee agreement, you cannot unilaterally pass on the cost after the fact. [Granted, you can fix this by modifying your fee agreement – but it isn’t necessarily advisable and may not be successful.] See OSB Formal Opinion 2005-97.
Step two might require you to change your credit card processing practices. When a card is swiped, a receipt is generated. Assuming it shows the surcharge as a separate item, and you provide the receipt to the client, you have complied with this step. But what about “card not present” transactions where the card is not available to swipe? These are far more common in a law firm. Do you currently email a contemporaneous receipt? Maybe you should. Will you list surcharges as a separate line item on billing statements? Maybe you should do that too.
Step three may mean displaying a sign in your office, drawing prominent attention to the fees in your written fee agreement, including information on your intake form, discussing surcharges during the initial client interview, etc.
Step six would require vigilance when working with out-of-state clients. Surcharges are illegal in California and nine other states. Some predict this number will grow.
Passing the merchant fee on to the client or crediting the client for the net amount of the transaction only … may implicate Regulation Z of the Truth in Lending Act,
12 CFR §226. As a result, you may be compelled to offer cash discounts to all clients and make specified disclosures to your clients who pay by credit card.
See CONSUMER LAW IN OREGON ch 14 (Oregon CLE 1996 & Supp 2000).
While the language is “may implicate Regulation Z,” the safe harbor has always been to assume the Truth in Lending Act applies to these transactions. [The Ethics Committee added this substantive law caveat to alert practitioners to the possibility.]
Assuming the appeal doesn’t upset the apple cart, my suggestions on how the Payment Card Interchange Fee Settlement would translate to lawyers are only best guesses. There is no authoritative source to guide us on applying point-of-sale retail transaction requirements to a law firm setting. For example, how does a law firm “display prominent signage at checkout?”
Proceed at Your Own Risk
If you want to assess surcharges, do your own substantive legal research and proceed at your own risk. Before taking the plunge, consider these words of wisdom from LawPay, a popular credit card processor serving the legal profession:
Many law firms simply build the additional cost [of accepting credit cards] into their fees as a standard business expense. This is generally recommended as the proper and more professional way to handle the business expense of processing payments.
[All Rights Reserved 2016 Beverly Michaelis]
*Based on a surcharge of 3% per transaction – transaction rates vary.