Finance / Accounting / Fees for Small Law Firms - Strategist
Strategist - The FindLaw Law Firm Business Blog

Recently in Finance / Accounting / Fees Category

Relax folks: unless you are really successful, this proposed tax "reform" won't affect you.

Section 3301 of the Tax Reform Act of 2014 [PDF], as it is currently drafted, applies to personal services businesses with ten million dollars or more in annual gross receipts -- a figure most solos and small firms can only dream of. But if you're an attorney to the stars, or a small firm that does big business, or if inflation gets really bad, a mandated switch to accrual accounting, instead of cash accounting, will be a major pain in your behind.

Besides, even if you're solo now, who's to say that you won't team up, or make it big, at some point in the next few years?

Some call it a race to the bottom.

Some say that you're a lawyer, and you deserve to be paid $300 to $500 an hour.

Alright, but what percentage of the population can afford to pay such a rate? And can you afford to charge less, while still making a living and paying off your student loans?

What's the sweet spot?

What's in a retainer? Your rights and responsibilities. Your client's rights and responsibilities. Fee structures. Billing details for expenses. Malpractice insurance details or disclaimers. Limits on service. A termination plan. And, of course, state-mandated legal argle-bargle.

We don't care about your client -- that's your job. We care about you. And contracts are usually interpreted against the drafter, especially when one party is a lawyer. What do you need to include to cover your rear?

We said it once, we'll say it again: new year, new taxes. We've done a pretty good job of discussing your tax obligations by giving you small law firm tax preparation tips -- but what about your clients? They need tax tips too.

Since many of the clients you advise may be small business owners as well, many of the same considerations apply. So while you're getting your to do list in order, why not get one ready for your clients -- might we suggest a tax preparation newsletter? Never. Not. Marketing.

Who says law is no longer lucrative?

A guy gets sexually harassed by his female boss. She sends him vulgar texts, including one about banana "Luv cake" which involved milk jugs and is far too gloriously offensive to repeat here. (See the unpublished appellate court opinion for all of the naughty texts.) She also comes on to him, and other male coworkers at work.

But bottom line, the jury (a) didn't think that the company knew about the harassment and (b) didn't think his emotional distress lasted a full four years, as he claimed. They awarded $550. His attorneys, meanwhile, are set to walk away with nearly $350,000 in legal fees, unless the California Supreme Court intervenes.

Lawyers are people. We have needs too. Sometimes we need new furniture. Other times, we might need tax advice or a stiff drink. And clients, often, lack the liquidity required to pay for legal services, especially when a lawyer requires a retainer.

So, do you barter? Or, in the immortal words of Randy Moss, is it "straight cash, homey?"

It's a question as old as the business of law itself, and for new solo attorneys, it is an important part of your business plan. Do you charge for consultations?

Feelings on free consultations vary. Some think it is a great idea, as it gets potential clients in the door, where they can be wooed by your personality and professionalism. Others are wary of giving away "free" time, or have had too many experiences with people seeking free legal advice.

Here are some factors you should consider when setting your consultation rate.

The beauty of a blog is that it is always brimming with new, brilliant tips and information. That also means older posts can get lost in the shuffle.

Today, we're going to try something we haven't done in a while. We're going to take a look back at some of our best posts on a topic near-and-dear to every small firm's heart: getting paid. From billing blunders, to the annoyances of alternative fees, here is a listing of what you need to know as a solo or small firm practitioner.

Meet Mr. McCutchen. In order to obtain a $110,000 settlement, he agreed to a 40 percent contingency fee. His recovery was then $66,000. US Airways, however, had an ERISA lien of $66,866 in medical expenses.

For the privilege of acting as US Airways' collection agent, he would've ended up $866 in the hole, had it not been for a contract that was silent on attorneys fees -- and you can bet that after U.S. Airways v. McCutchen, such contracts will no longer be so silent.

Let's get paid!

Getting paid, however, requires billing. And billing requires effort. And postage stamps. Boy, do I hate postage stamps. There has to be a better way than drafting invoice-by-invoice, then printing, then mailing them with those stupid, easy-to-lose sticky stamps.

And no, the better way doesn't require you to spend hundreds of dollars on a dedicated accounting software suite.