RSS FeedBilling By The Hour
There has been a great deal of discussion among legal commentators about the failure of hourly billing for legal services and the need for alternatives. The most recent article I’ve seen is in the CBA’s Jan/Feb issue of National. Although I’m a law student and have never billed a single hour as a lawyer, I have worked for more than a decade as an entrepreneur and I wonder … what are the alternatives, really, but masked versions of hourly billing? Given the limited amount of hours available to work in any day/week/year/lifetime, billing by the job MUST reflect the time that the task requires.
Flat fee services must have caps on the input of resources to succeed as business models and, as a result, will tend to put a floor rather than a ceiling on the cost of any given service. At best, a flat fee will reflect the average amount of time required to perform a service. Innovators can find ways of doing things more quickly through economies of scale, computer processing, outsourcing and so forth, but price reductions that service providers choose to pass on to the clients can be built into an hourly billing model just as easily as any alternative. Innovations might put pressure on hourly rates through competition, but this has nothing to do with the method of billing.
Frankly, I fail to see how alternatives to billing by the hour will change the cost of legal services. The real pressures on cost come from the the well-known forces of the marketplace … the rest is just packaging. And if clients are becoming more sophisticated, will they really be impressed by a fancy one-size-fits-all (unless you want more) gift bag?
The real issue is value. Lawyers that provide it will gain clients and those that do not will lose clients. Those who insist on talking about how the billing is done, please explain (and be nice about it): What am I missing?
An Interview with Quebec’s first black lawyer
Anthony Morgan, a McGill law student and president of the Black Law Students’ Association of Canada, interviewed Frederick Phillips, McGill’s first black law grad and Quebec’s first black lawyer.
You can read the interview on inFocus online, McGill’s news magazine.
Business is Changing – For Lawyers
Richard Susskind of Times Online says,
Clients say that law firms are not doing enough to respond to the economic downturn. Law firms, meanwhile, say that clients are too focused on costs. These are two of the main findings of a recent study, commissioned by LexisNexis, on the state of the American legal industry.
Pricing emerges as the top issue, according to 71 per cent of the 150 in-house lawyers surveyed, and to 60 per cent of the 300 practitioners in private practice. Taking various findings together, American lawyers seem to agree that, in due course, hourly billing will be largely displaced by alternative billing structures — but not in 2010 and never entirely. Clients are keener on this shift than law firms.
Legal Profession has not Adapted to Realities
Donna Nebenzahl writes in today’s Star,
Despite the gains of recent years, women in the workplace are still taking it on the chin, according to several wide-ranging studies.
A report released last year for the Law Society of Upper Canada’s working group on the retention of women in private practice indicated that the legal profession has not adapted to the “reality” of child rearing and its effect in the workplace…
This is not the only place where disparity shows up. According to a 2004 Law Society report, fewer women make partners than men and they seem to earn less across the board in comparable jobs – 32 per cent less in sole practice, 11 per cent less in law firms and 3 per cent less in government jobs.
Body Part Maker Aptitude Test (BPMAT)
Fast Future Research has released a report of the jobs of the future. Fortunately lawyers still made the list, but with a slightly different role that they call a “virtual lawyer,”
The internet is a major facilitator of innovation in both the legal and illegal realms. Hence a significant part of a virtual lawyer‘s time will be spent monitoring new legal developments and precedents that apply to the virtual world. Much of the legal territory remains the same e.g. disputes, contractual failures, ownership issues, intellectual property theft, sabotage, copyright infringements and trademarks. However, the complexity comes from the global nature of the web and the different legal jurisdictions that could be involved…
Virtual lawyers will make extensive use of technology – for example setting up bots and spiders to develop a reverse audit trail of suspect transactions and scanning the web for possible clues or experts that could help in the prosecution of a case. A key role will be to advise customers on how to set up online activities – particularly e-commerce transactions – in a manner that is legally sound across a range of jurisdictions. The goal is to prevent possible future prosecutions in areas such as online gaming and content download.
Here are some of the other careers you could have considered that probably wouldn’t have required a BPMAT either:
- Body part maker: Create living body parts for athletes and soldiers.
- Nano-medic: Nanotechnology advances mean sub-atomic treatments could transform healthcare.
- GM or recombinant farmer: That’s “GM” as in “genetically modified” or engineered crops and livestock.
- Elderly wellness consultant: As an aging population increases in size, we’ll need folks to tend to their physical and mental needs.
- Memory augmentation surgeon: Like Eternal Sunshine of the Spotless Mind, surgeons could boost patients’ memory when it hits capacity.
- ‘New science’ ethicist: With the rise of cloning and other ethically-dubious practices, ethicists will be needed to ford the river of progress.
- Space pilots, tour guides and architects: Space tourism will allow for space pilots, tour guides and the architects that will allow them to live in lunar outposts.
- Vertical farmers: The future of farming is straight up. Vertical farms in urban areas could significantly increase food supply.
- Climate change reversal specialist: Regardless of what you think about human-induced climate change, it’s clear we’ll need scientists who specialize in altering it.
- Quarantine enforcer: When a deadly virus spreads rapidly, quarantine enforcers will “guard the gates.”
- Weather modification police: If weather patterns can be altered and adversely affect other parts of the world, law enforcement will be needed to keep things legal.
- Virtual lawyer: As international law grows to supercede national law, lawyers will be needed to handle cases that involve people living in several nations with different laws.
- Classroom avatar manager: Intelligent avatars will replace classroom teachers, but the human touch week be needed to properly match teacher to student.
- Alternative vehicle developers: Goodbye, internal combustion engine. Zero-emission cars will need smart people to design and manufacture them.
- Narrowcasters: As in, the opposite of “broadcaster.” Media will grow increasingly personalized, and we’ll need people to handle all those streams.
- Waste data handler: Think of it as an “IT axe man”… for information. Waste data handlers will destroy data for security purposes.
- Virtual clutter organizer: Now that your electronic life is more cluttered than your physical one, you’ll need someone to clean things up — including your e-mail, desktop and user accounts.
- Time broker/Time bank trader: What’s more valuable than precious metals, stones or cold, hard cash? Your time.
- Social ‘networking’ worker: A social worker for the Web generation.
- Branding managers: These already exist for celebrities, but now everyone needs a “personal brand” so others can easily digest who you are and what you stand for.
ABC’s The Deep End
The stories of young associates in big law firms are legendary among law students, and it seems there’s enough fodder her for a television sitcom. Starting January 21, 2010, ABC is launching The Deep End, which follows the careers of five lawyers in Los Angeles.
Check out the interview with David Hemingway, the lawyer who quit his career to write and produce the show, on Bitter Lawyer.
And you think you have student debt?
The expense of a professional school education to study law represents a significant investment. For many of us, that investment has required substantial aid in the form of student loans – both public and private. Yet, we take on that debt with the understanding that 1) it is important to have legal professionals, and that 2) practicing law should enable us to meet our obligations.
Consider then the case of poor Robert Bowman: the 47 year old recently lost an appeal to a decision denying his application to the New York State Bar on Character and Fitness concerns for his approximately $480,000 student debt.
Get Efficient or See Employees Go Elsewhere
Kohjinsha dual screen laptop
We’re all increasingly dependent on technology. And as much as we love our portable Blackberrys and iPods, for serious work we usually need an actual computer – a laptop at the least.
The new Kohjinsha Dual Screen DZ Series is now available in Japan for ¥95,800, about $1,170 Canadian. Yes, that’s a dual-screen laptop computer with two 10.1″ LED displays, Athlon Neo 1.6 GHz MV-40 CPU, 1 (exp to 4) GB RAM, ATI Radeon HD 3200, and 160 GB of storage. There’s even a 1.3 megapixel web camera.
In some industries like health information management (one of my other pre-law areas of study), dual screens are considered a necessity for coders. Although your law clerk probably already raves about the benefits of dual-monitor workstations in your workplace, lawyers should be more aware of the productivity boost they can receive as well – and now on the go.
Dr. Jon Peddie, a graphics and digital media technology consultant, estimated in a 2007 workstation report that productivity gains from multiple displays can be as high as 42%.
A 2005 study by Susan E. Russell and Katherine Wong of the University of Oklahoma Libraries looked at the use of dual-screen by staff using self-reporting questionnaires. Respondents found they printed less paper, took less physical notes, found greater ease, noticed less work interruptions, and were able to do so with little training.
The authors note,
The underlying goal of ergonomic studies is to identify ways of enhancing the performance of people and is not directly focused on producing improvements in efficiency merely for financial benefit. Studies have shown that ‘‘designing work methods, equipment, and environments to suit the capacities of the users greatly improves their performance, comfort and health.’’ Although financial advantage from ergonomic improvements may not be easily identifiable, it can be indirectly observed that comfort-related improvements in the workplace often lead to improvements in morale which in turn can lead to higher job performance and/or a better end product…
The main objective for equipping staff with dual-screen monitors should be to improve the physical comfort and the efficiency of the user. In many cases, increased productivity results as a by-product of an improved ergonomic environment.
[emphasis added]
The main drawbacks from the systems in this study was the need for more physical space, and increased cost. The space factor is not really an issue with the Kohjinsha laptop, and with LCD flat screen monitors getting increasingly slimmer, this is less of a concern for the office as well.
But what about the costs involved, especially if you’re a managing partner responsible for budget expenditures and you’re multiplying this by the number of employees each using dual-screen systems?
Diana Contino, a nurse and MBA currently with Deloitte Consulting, discusses the issue of ROI for technology investments,
Ever-increasing information technology (IT) expenditures often dominate capital budgets. By increasing the amount of capital per employee—a process known as capital deepening—business investment in computers increases output per employee hour (labor productivity). To improve outcomes and foster greater return on investment (ROI), we seek ways to streamline processes and enhance the accuracy of care delivery strategies…
Classical financial analysis of ROI is reported as a ratio and is a measure of an investment’s performance. It’s calculated by dividing the return—the money earned during the time period—by the average investment— the average amount invested over the time period. With IT purchases, there’s no set formula because the sum of the gains is difficult to quantify. Investment evaluation involves quantifying savings and expenditures…
The person proposing or evaluating an IT project must consider the savings obtained by:
- decreased manual labor costs
- decreased supply or printing costs
- fewer days in accounts receivable
- the projected life of the equipment and its replacement costs
- the cost of maintaining or upgrading equipment over time
- efficiency gains such as error reduction or improved
- communication between providers
She identifies a number of efficiencies that may present as “quasi-savings” from capital deepening which can relate to workstations and laptops as well.
But the most compelling argument to invest in technology generally, and perhaps dual-screen systems specifically, come from Russel and Wong’s note that respondents in their study found it more difficult once they were accustomed to dual-screen systems to cope in settings like other workplaces where there was only one monitor.
One respondent mentioned spending his or her own money to buy one if faced with losing his or her second screen, and another wrote that he or she ‘‘will defend my monitors with my last breath.’’ It was obvious from the various responses that the perceived value of having a dual-screen monitor system was very high and staff members felt a morale boost because management was interested in their physical wellbeing as well as their efficiency and productivity levels. All respondents concluded that it was worth spending $600, which was the estimated cost of the second flat screen monitor at the time of research..
Turbulent financial markets don’t just affect client work, they can also result in high employee turnover.
And if a relatively small capital expenditure can help reduce the high cost of talent recruitment, it might easily be money well spent. Especially if it makes it that much more difficult for employees to go to another law firm that hasn’t made the same investment.
Announcing the Launch of ObiterTweet by Steven Pulver
It’s a law student’s dream – or maybe a nightmare. Law firm recruiters scouring social media networks to find an appropriate candidate for their firm.
The current recruitment process does little to reveal the personality, collegiality, drive and habits of applicants. It does nothing to demonstrate their business connections, an important quality for “finders,” or political involvement, for firms that engage in lobbying and government relations.
The majority of law students do spend hours on social media platforms, usually behind walled gardens that they think are impermeable, so why wouldn’t law firms go where they are? We’ve already seen Edward Prutschi discuss how his firm used Twitter during articling recruitment, which helped them find Joel Welch.
Earlier today Michael Fitzgibbons of Borden, Ladner, Gervais LLP in Toronto pointed to this Globe article, showing an increasing trend by employers to use social media for recruitment. But is this just commentary about management-side employment practices, or could law firms be using it too? What about BLG, the largest law firm in Canada? (Hi Halla!)
The firm does have a Facebook group for employees, and another one for law students and lawyers to connect.
But the telling sign is a tweet from last Friday by the firm,
The Toronto office of BLG is looking for a Financial Services Associate with 3 to 4 years experience http://bit.ly/2RJO9I #law #job #career
It appears as if Bay St. firms are not only using Twitter for recruiting, but they’re using shortened urls and hash tags properly too! Kudos.
For our part, law students are trying to meet the law firms half way.
Enter the brainchild of Steven Pulver – a 1L at UWO – the first-ever Chief Technology Officer for our Student Legal Society. Pulver is working on ObiterTweet, an upcoming platform to help law students and law firms interact.
Or as he says,
Twitter, Meet Law School.
Law firms, meet Twitter at Law School too. Send him an email if you’re interested in participating.
My Fourth Year of Law School
From the October 2009 issue of Amicus Curiae
Many law students find law school to be so painful that few can understand or relate when I say I actually enjoy the ordeal. They would probably understand even less if I told them that I enjoy it so much that I actually subjected myself to an extra semester of it voluntarily, and not for an LLM.
This is the story of my 2L summer.
I had the opportunity to work for a local law firm during my first year and through my first summer. I had a pleasant enough experience, but I learned all that I could as a law student in that context. For my next summer I decided to do something different.
Most of my time this summer was dedicated to consulting and writing projects. My work projects took me to several locations, including Calgary and B.C. While on the West Coast, I also managed to catch a federal political convention.
Some of my friends outside of law already joke that I do law school on the side. I figured I could probably pick up some legal experience this summer while I was running around. I checked out some summer law abroad programs, and registered for ABA-approved courses at UofT, Bar Ilan in Israel, and Universidad Autonoma de Guadalajara in Mexico.
Before you get any smart ideas, keep in mind that Western doesn’t accept summer transfer credits, even though many other Canadian law schools do. I’m not saying that they should, but if they did I would have graduated before my January term even began. Yes, it was a pretty intense summer.
The trip to Israel had some personal reasons behind it, in addition to my other activities. During my last trip there about 10 years ago I stayed in (primarily Arab) East Jerusalem and the Territories. I enjoyed a rather privileged lifestyle in the primarily Jewish West Jerusalem, staying in Golan resorts overlooking the Galilee, driving through the Negev desert, floating
in the Dead Sea, and swimming on the beaches of Tel Aviv. The tensions within a very complicated country were highlighted with a visit to the assassination site of Yitzak Rabin.
My last summer destination was Mexico. After an unexpected stop in Monterrey when someone decided to have a baby mid-flight, I arrived at my destination in Guadalajara. I soaked up a lot of local culture during my stay including assorted local crafts, Mexican ballet (sans any sign of tutus), Lucha Libra wrestling, and horseback riding along Lake Chapala.
But it seems that politics and law is inescapable no matter where you go. Prime Minister Harper, President Obama, and President Calderon were in town for the North American Leaders’ Summit. Calderon was even staying a few doors down from me at my five-star hotel. One of the major issues on the agenda for them was the North American Free Trade Agreement (NAFTA), which was becoming increasingly contentious to citizens of all countries during the current economic turbulence.
So what exactly did I study while I was running around the world? Most law abroad programs focus on international legal issues, for obvious reasons, so there were courses on the International Criminal Court, environmental law, international economics and NAFTA, cyberspace law and human rights. But I also got some specialized training in Jewish law, holocaust law, and national security issues that I probably would not get anywhere else.
Some of the faculty I studied with included world-renowned rabbis, someone who worked on the Rome Statute through an NGO, and even the infamous Kenneth Starr from the Clinton-Lewinsky case. Starr held a special session to discuss his role in Proposition 8, the same-sex bill that was shot down in California last year.
There is one key lesson unrelated to my summer courses that I would like to impart and share with others. In the summer of your second year you will typically be applying for your articling position. I was extremely fortunate that it worked out for me, but I would not recommend taking your interview call on a Tel Aviv beach, actually doing the interview on a Mexican cell phone, and skipping the law firm reception entirely to tour a Spanish cathedral.
You’ll have a hard time making an impression and competing with candidates who actually bothered to be in the country to interview in person.
And no matter how many excuses you make, or how many times you show them this article, they’re just not going to buy that someone voluntarily subjected themselves to additional law school that they won’t get credit for.
Call Them Feel-Good Expenditures, but These Girls Will Cost You
Running a call-girl business is an inherently risky venture. The lines frequently blur, and participants end up in what the law would describe as prostitution.
To sort out these complicated legal dilemmas operators frequently have to hire counsel. Should these expenses be reportable for tax purposes?
The now-defunct Exchequer Court examined the issue back in 1964, in Canada (Minister of National Revenue – M.N.R.) v. Eldridge, when several employees of the respondent were arrested on prostitution charges.
The Taxation Division provided Notices of Assessment of $22,046.75 and $19,103.77 for the previous two years. Objections over the government collecting taxes on illegal revenue were dismissed by Mr. Justice Cattanach,
25 … it is abundantly clear from the decided cases that earnings from illegal operations or illicit businesses are subject to tax. The respondent, during her testimony, remarked that she expressed the view to the officers of the Taxation Division that it was incongruous that the government should seek to live on the avails of prostitution. However, the complete answer to such suggestion is to be found in the judgment of Rowlatt, J. in Mann v. Nash ((1929-1932) 16 T.C. 523.) where he said at p. 530:
It is said again: “Is the State coming forward to take a share of unlawful gains?” It is mere rhetoric. The State is doing nothing of the kind; they are taxing the individual with reference to certain facts. They are not partners; they are not principals in the illegality, or sharers in the illegality; they are merely taxing a man in respect of those resources. I think it is only rhetoric to say that they are sharing in his profits, and a piece of rhetoric which is perfectly useless for the solution of the question which I have to decide.
The court was more lenient with some of the substantial business expenses excluded, namely $1,925 legal fees for some of the girls who had been arrested.
The court held that the fees were properly deductible because:
- it was for the purpose of income, because the call girl could not earn any income while she was imprisoned
- it was part of the arrangement that the operator would assume legal fees in the possibility of legal troubles
Most criminal lawyers would say that $1,925 is not a lot of money for that kind of an operation, even back then. And maybe there’s good reason why they skimped on legal fees. A more sizable deduction for $16,500 was rejected, because it was claimed as “protection fees.” The recipient of the fees was none other than the local law enforcement.
So if prostitutes can claim their legal fees as a tax deduction, can lawyers claim prostitutes as a legitimate tax deduction as well? It’s a disbursement that many Bay St. firms probably wouldn’t flaunt in their recruiting brochures.
Garry Slapper of Times Online suggests that the answer, at least before the U.S. Tax Court, is that they cannot.
William G Halby, a tax lawyer from Brooklyn, claimed $111,364 in 2002 for therapeutic sex. His 2005 claims were more detailed, $5,005 in books, magazines, and videos, and $42,152 for specifically for prostitutes. He cited section 213 of the Internal Revenue Code:
§ 213. Medical, dental, etc., expenses
(a) Allowance of deduction
There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof), to the extent that such expenses exceed 7.5 percent of adjusted gross income.
Brian L. Friedman, Administrative Law Judge, said in the case,
…portions of petitioner’s “sex therapy” were, in fact, sex for a fee, in violation of Penal Law § 230.02. Such expenses were not paid to medical professionals or for activities prescribed by medical professionals but were made to unlicensed providers for legally proscribed services. (See Penal Law § 230.00.)
Additionally, even if it were accepted that sex constitutes medical care, such expenses would be more for petitioner’s general well-being rather than cure, mitigation, treatment or prevention of a specific disease or condition.
…petitioner failed to produce evidence that the claimed expenses were for prescribed activity, and he had little regard for physician’s advice on sexually related matters. As the periodicals cited by petitioner were neither specific towards him nor for a specific illness, they cannot possibly constitute a prescription or medical advice. Because petitioner purchased the videos, books, periodicals, pornographic materials and sexual performance aids without prescription, and they were not medically necessary to treat a specific disease or condition, they are not medical expenses for which an income tax deduction is warranted.
We still have to overcome cases like Nina Baccala of North Providence, cum laude from the New England School of Law and clerk for Superior Court Judge Raymond J. Brassard, one of the many new law graduates who moonlight as an escort. Her case was only revealed after an assault last year while on the “job.”
With a clever title for a Constitutional paper like, “A Guide to Aborting Roe v. Wade and All of Its Bastard Progeny,” I would’ve hoped Baccula could come up with some fundamentally different choices in life.
But at least next time someone cracks, “What’s the difference between a prostitute and a lawyer,” you can give them a different answer:
“Taxes.”
Bitter Lawyer Tell All About OCIs
It’s probably the most stressful part of many law students’ time at law school – the On Campus Interviews (OCIs).
The Bitter Lawyer has a 3-part series on OCIs:
- Part 1 (Partners’ favorite interview questions, resume impressions, “wish I would have known” insight)
- Part 2 (Worst things interviewees can say, most common mistakes interviewees make, how to do damage control if you blow it in the first five minutes)
- Part 3 (Do looks matter or thank-you notes matter?)
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