Lawyers Can Make Mistakes When Business Is Slow

// Solo practitioners and small firm lawyers have much flexibility over how they approach legal practice. Indeed, small firm attorneys are often much more open with the matters they can handle and the types of fees they can charge since these lawyers do not need to report to many other attorneys (if any) and said lawyers often do not need to worry about conflicts of interest or other issues impacting a firm’s ability to take on a case. However, small firm lawyers often have more difficulty maintaining a steady workflow since they often have fewer institutional clients who can provide steady work. This can lead to some negative outcomes, and lawyers should keep the big picture in mind when they decide to take on new business during slow times.

Many small firm lawyers are not paid a set salary for the legal work they perform. Rather, they usually operate in an “eat what you kill system” by which a substantial part of their income, if not their entire income, comes from work that they help originate or tasks that they perform. During slow times, it can be difficult for small firm lawyers to earn enough money to pay for firm expenses on top of the living costs that all of us need to pay. This can make it much more likely that attorneys will take cases that they would not consider if they were completely busy with work.

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For instance, I was talking to a lawyer friend of mine not too long ago who was having a difficult time generating work. This lawyer decided to take on a number of contingency fee cases in a specific area of the law. The lawyer reasoned that since the cases were all relatively similar, he could manage the cases without too much effort, and since there was a high volume of the cases, once a few of them started resolving, he would eventually have a consistent revenue stream. A lawyer who was busy with work likely would not have taken these types of cases with such a contingency arrangement, but my friend had nothing else to work on so he reasoned that this strategy was better than nothing.

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However, my friend originated a lot of these types of cases all at once, so it took a long time for any of these cases to begin settling. All the while, my friend needed to front his own money to pay litigation expenses for the matters, and the costs added up. In addition, my friend ended up needing to spend much more time than he ever imagined, and all of these matters he originated took time away from hourly or other work he could have handled. The situation got to a point where my friend needed to abandon his practice and accept an associate position since he was not making enough money to float his living expenses. However, my friend had a difficult time handing his files off to other lawyers, even though my friend had nursed the files along for years, and this made it more difficult for him to accept an associate position. If my friend had been busier, he likely would not have accepted these matters since there were objective reasons to be cautious about handling such work that was put aside since my friend needed some kind of work with which to keep busy.

Lawyers can also put relationships with their existing clients in jeopardy if they are making decisions because they are slow on work. When an attorney does not have enough billable work to complete, they may rely on their existing clients more than usual to find tasks to fill their days. Moreover, lawyers are more likely to suggest that their clients approve the lawyer to file motions or take certain types of discovery that may not be needed because they lawyer wants more tasks to complete.

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I once worked for a large law firm at which all of the associates had a difficult billable hour requirement. The firm fell on hard times and many associates had difficulty billing enough hours to meet the billable hourly requirement. Many of the lawyers accordingly made hay out of the existing clients we already had by working on tasks that were less necessary to the completion of the representation and suggesting that our clients take action that might not have been needed, but which would lead to more work. The situation got so bad that partners at an office-wide meeting told everyone that people should not heavily rely on existing clients to fill the work gap since this could strain relationships with existing clients and add to financial issues at a firm.

All told, lawyers can approach legal work differently depending on whether they are busy with work or whether they have little to do. Attorneys should keep the big picture in mind so they do not make mistakes when business is slow.

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Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at [email protected].

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Biglaw, Jordan Rothman, Small Law Firms