How COVID-19 Will Change Solo and Mid-Size Law Firms

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A recent report by Clio assessing the impacts of the coronavirus on the legal industry and consumers found that the virus has created a 40 percent drop in the number of new legal matters opened per week. Almost half of the polled consumers said that if they had a legal issue, they would delay seeking legal help until after the virus subsided. Further, 22 percent of consumers indicated they were under the impression that attorneys stopped working altogether because of COVID-19.

From our friends at NW Sidebar.

This post focuses on how COVID-19 is likely to affect small to mid-size law firms. I encourage you to read the full post. Here are some key points of interest:

Life is different and also the same. Clients expect you to cater to their needs. Put yourself in their shoes and you will do well.

All Rights Reserved 2020 Beverly Michaelis

 

Earned Upon Receipt Fees – Proposed Rule Change

At the Board of Governors meeting last Friday, the BOG approved for referral to the House of Delegates three amendments to the Oregon Rules of Professional Conduct:

  • ORPC 1.5 and 1.15 relating to  fees earned upon receipt
  • ORPC 3.4 and 1.2 to prohibit violating or assisting a client to violate court rulings and standing rules
  • ORPC 3.3 to clarify the rule of candor

You can read more about the amendments to ORPC 3.4, 1.2, and 3.3 here, beginning at page 75 of the PDF.

Earned Upon Receipt Fees

The proposed changes to ORPC 1.5 and 1.15 would explicitly require a written fee agreement informing the client:

  • The funds will not be deposited into the lawyer trust account; and
  • The client may discharge the lawyer at any time and in that event the lawyer may be required to refund all or part of the fee if the services for which the fee was paid have not been completed.

Additionally, ORPC 1.15(c) would be amended to state:

(c) A lawyer shall deposit into a lawyer trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred, unless the fee is denominated as “earned on receipt,” “nonrefundable” or similar terms and complies with Rule 1.5(c)(3). [Proposed language in bold.]

While existing case law and OSB Formal Ethics Opinions already support these requirements, General Counsel, Disciplinary Counsel, and the BOG have found them “elusive to many practitioners.”

The House of Delegates is scheduled to meet on October 29, 2010.  It is not clear at this time whether the proposed amendments to the ORPCs, if adopted, would be effective immediately or at some future date.

Mandatory Ethics School

One other ethics development of note:  The bar is moving forward with a proposed Ethics School.  Attorneys who are sanctioned or suspended for ethics violations would be required to attend a one-day course of study on ethics issues prior to readmission to the bar.  Read more about the proposed Ethics School at page 84 of the BOG Meeting Agenda.

Copyright 2010 Beverly Michaelis

 


 

Should You Be Charging Flat Fees?

A recent Business Journal post suggests that the number of clients requesting flat fee arrangements in Oregon has doubled in the past year. 

Why would clients prefer a flat fee?

  • Certainty – the client knows up front exactly what your services will cost.
  • Budgeting – if the client knows what it’s going to cost, he or she can plan appropriately.
  • Negotiating room – flat fees may offer a client more bargaining room if the lawyer is willing to commit to volume legal services.

Flat fee arrangements may or may not include costs. This should be clearly spelled out in your fee agreement.  Hybrid contracts – a mixture of flat fee and hourly billing – are also becoming more common.   If the hourly rate is triggered by a particular event, or when you reach a certain stage in the case, describe the event or stage in a way that leaves no doubt in the client’s mind. Remember, if a fee agreement is ambiguous, it must be construed against the lawyer.

Flat fees earned upon receipt (payable up front) are subject to strict regulation by the bar.  Read and understand OSB Formal Ethics Opinion 151.  Never call these fee arrangements “nonrefundable.”  Fees are always subject to refund if the work is not done.

For more information on this subject, see The Ethical Oregon LawyerFor a collection of fee agreements that comply with the ethical rules, consider purchasing the Fee Agreement Compendium. Both are included in the Oregon State Bar BarBooks subscription. Additional fee agreements are available on the PLF Web site.  Select Practice Aids and Forms, then Engagement Letters. 

When charging flat fees, be sure to track your time.  If you disengage from the case early or the client terminates your services, it will be easy to calculate the refund due the client.  Tracking your time will also allow you to monitor whether your flat fee needs adjustment based on the amount of time spent on a particular type of matter.

Copyright 2009 Beverly Michaelis