Strategist - The FindLaw Law Firm Business Blog

Recently in Finance / Accounting / Fees Category

With the price of Bitcoin going absolutely bonkers, law firms, like many other businesses, are wondering whether they should accept, or even invest in, new, and even old, cryptocurrencies.

However, few cryptocurrencies will ever make it off the ground, and there are quite a few different ones out there. Choosing to accept one as payment for services has been okayed by at least one state bar, whose guidance seems to be good for just about every jurisdiction. However, you may want to think twice about whether or not you want to be the one to convert a digital currency to dollars or if you should leave the crypto-to-dollar conversion to the client that wants to use it.

Will New Tax Laws Help or Hurt Your Small Law Firm?

If a dog takes a smaller bite out of your leg, is that a benefit?

Didn't think so. Likewise, if the new tax laws take a smaller bite out of your business, it's still gonna hurt.

It is especially true for solo practitioners and small law firms. That's because a few new laws were made just for you -- woof, woof.

Tax Bites: Is the Season of Giving Over?

Taxpayers are rushing to claim deductions before the new tax bill goes into effect, and few know what their final bill will be.

According to reports, the tax legislation will be approved before Christmas and bring an end to certain deductions in the New Year. It will cap the amount of state, local, and property taxes individuals can deduct from their federal tax bills at $10,000.

But the new law may also cut into charitable deductions at this time of the year, according to one law professor. That's right, people are getting Scrooged.

Anything goes when it comes to collecting fees because collecting fees isn't easy, right? Well ... while collecting fees isn't easy, you surely know that anything does not go. In fact, often there are rather strict rules.

Complicating matters even further is the hesitancy among attorneys to discuss fee and billing issues not just with other attorneys, but even with clients. There's a fear that raising billing issues or problems with collecting fees will reflect poorly on the attorney or their firm, or may upset a client.

To help, here are five tips on client billing:

There are only a few things worse than sitting down to type out a motion, letter, or any other piece of writing and being struck with a case of writer's block. However, for attorneys, the writer's block problem is amplified because of the ethical issues surrounding billing. Can you bill the client for banging your fists against the keyboard while staring blankly at an empty word document?

Like bathroom breaks, or other short breaks, whether continuing to bill your client while working through your writer's block will depend on what you're doing to do so, and what's on your mind while doing it. While each state has its own set of legal ethics, generally, whether or not you can bill will depend on where your head is at.

When it comes to structuring contingency fee agreements, most state bars allow quite a bit of latitude, so long as fees are reasonable. There may be some required magic language about the fee being negotiable that's mandated in your agreement, or some limits, but for the most part, lawyers are as free to undercut competitors and competitively price their services as they are to set prohibitively high fees.

In contingency matters specifically, one of the hot button issues that often results in conflict between clients and attorneys is when costs get deducted, or charged after a loss. No matter how clearly you communicated it to your clients, when the settlement check comes in, ten out of ten clients will tell you that they believed costs would be deducted from the recovery first, then your contingency percentage, rather than the other way around, regardless of what your agreement says. However, if you actively negotiated this term with the client at the outset, it's more likely they'll remember when the check arrives.

As the tax season has passed and the basketball season winds down, here's a story about how they crossed over years ago and still affect lawyers today.

It was 1997, and the NBA's most flamboyant player had just tumbled into a crowd of courtside photographers during a game. Dennis Rodman, whose career was marked by wild hair and wilder behavior, got up and kicked a photographer in the groin.

The assault turned into a confidential settlement, which later became public when the IRS got involved. The taxman wanted to know how much Rodman paid the photographer.

Ronald L. Burdge, writing for the ABA, said the case illustrates the tax problems with confidentiality and settlement agreements.

3 Reasons You Shouldn't Cap Hourly Fees

Capping your hourly fees is like going on a Jenny Craig diet.

For most people, any diet is hard to do. But Jenny also costs money. The best-case scenario is that you will get skinny.

Same thing with capping fees. It's a difficult discipline. It will definitely cost you money. And if you don't make enough money to put bread on the table, well, you get the point.

Sure, capping fees is great for clients; they like their lawyers lean. And it may pay off in the long-run if it keeps clients coming back. But maybe you actually want to make more money for desserts at the end of the day. Here's some food for thought:

Should You Sell Clients' Uncollected Debt?

Times are tough when you have to borrow money to pay your bills.

Well, it's about that time for more than a few law firms. And it's not just the solo practitioners working on shoe-strings.

According to reports, even some BigLaw firms are reaching for money at the end-of-the-year rope. Cadwalader, Wickersham & Taft, New York City's oldest law firm with more than 450 lawyers around the world, sold off some of its receivables to make ends meet last year.

Cadwalader saw gross revenue drop 3.7 percent to $463.5 million in 2015. Managing partner Patrick Quinn attributed the decline to lagging collections. A former partner anonymously told the American Lawyer that the firm sold off some of its receivables at the end of that year.

How Do You Respond to 'You Cost Too Much'?

Something that many solo attorneys hear perhaps all too often is the interjection: "You cost too much!" We're sure you've heard this one before.

Even with the advancement in technology making a fair number of attorney services quickly obsolete, there are still a great many tasks that should only be handled by a competent attorney. Here are a few tips for handling sticker-shocked clients.