Maybe it’s a sign of the economic times. Maybe it’s a function of the way legal services are provided. Maybe it’s coincidental. Maybe it’s all of these factors and more, but I’ve been speaking with colleagues and it’s very clear that lawyers are having a hard time making money. I expect that it is the same for accountants, business consultants and other non-health professionals.
I’m not expecting people to start breaking out the violins but it is an interesting situation. Suppose I go to my corner store and ask to buy a newspaper. If I don’t pay, I don’t get the newspaper. If I stand there and just start to read the paper I will be quickly told (whether politely or not) that the store is not a library and if I’m not going to pay I should move on. I’m not allowed to get the information from the newspaper for free and then put it back on the display rack when I am finished reading the paper. And yet, that is what can happen to lawyers and other professionals all the time.
I have had clients come to me and ask me to do injunctions. My standard answer now is that I want a $25,000 retainer up front or I will not do anything. Pretty harsh? Possibly. But it comes as a result of being burned by clients in the past. If you have a significant motion, such as for an injunction or for summary judgment, fees can easily go up to $25,000 because this is the equivalent of marching into a trial. I once saw a speaker pull out a bell curve and he called it something like the “litigation curve”. It started at the one end with “Do I really need a lawyer?” at the start of the lawsuit and went up the curve with the realization that legal representation was necessary up to its high point which coincided with the time of the trial when the lawyer was definitely necessary and won the case. It then proceeded down with comments like “yeah, he did a pretty good job” all the way down to the end a fair time after the trial with the comment “yes, he won, but any monkey could have won that case.” The diagram was not only amusing, but also telling.
As a lawyer, I have only two commodities to “sell” – time and expertise. If I meet with you, you get my time. What happens if you do not pay my bill? I can’t get my time back. If I prepare a document for you or represent you in a lawsuit and you do not pay my bill, again, I cannot take back the document or ask the judge to reverse any findings in your favour. At that point all I can do is take even more of my time and sue you to pay my bill. So, to avoid not only facing the prospect of working for nothing but also to spend extra time to sue, I will ask for a retainer.
Retainers also serve another purpose – to determine if the client is truly serious about the lawsuit. I have now been practising law for almost 17 years and over that time I have had many people come in and say that they either have great plans for their business and need all sorts of work done for their companies or that they have been truly wronged and that the wrong ought to be fixed. So I ask for a retainer. With the exception of major motions, my retainers are much more reasonable in amount. However, they also serve as an indicator of whether this person is truly serious about the legal work that he/she wants or if someone is just looking for free advice or significantly reduced fees. If you want me to work for free, then ask me and I will decide yes or no. However, if you say that you will pay my full fees and then don’t pay or later confess that you cannot pay, then I have effectively worked for free but I have not done so voluntarily.
The reality is that I have to pay the rent on my office space, pay my law clerk’s salary, pay all other expenses and then hopefully make money for me to live on after the expenses are paid. I’m not any employee who gets paid so long as the company is operating. I’m not a health-care professional who gets paid by OHIP or some benefits program whether or not the patient is happy with my services. If I am not paid, I can suffer significant, and immediate, consequences.
Happily, unlike some of my colleagues, I have been lucky in that I have not suffered any significant losses from clients not paying me. Why? Because I ask for retainers. So if you come to me and I ask you for a retainer, or if you go to another lawyer and he/she asks you for a retainer, it is nothing personal and it is not a reflection on whether your legal matter is seen as meritorious or not. For a lawyer, it’s just good business.
Something to think about.