Showing posts with label lawyers. Show all posts
Showing posts with label lawyers. Show all posts

Wednesday, May 13, 2015

Some Clients and Industries Are "Better" to Represent than Others

A hushed and taboo topic of conversation that lawyers rarely write much about is what clients and industries are "better" to represent than others.

Their reticence is largely because outside counsel are perennially fearful of offending any potential clients.  So, they would rather pretend that "all clients and industries are equal," than openly discuss the vagaries of representing clients that come from very different industries.

But the reality is that representing a small startup client in the media industry will be a totally different experience for the lawyer than counseling and representing an established banking industry client, or a large multinational pharmaceutical company, even if the legal subject matter of the representation is similar. 

Each industry and client will have its own pros and cons for the outside counsel, and clients will often have very different expectations of their outside counsel.  Here are a few examples:

Large multinational corporations are highly structured and regulated, and have become extremely demanding of their outside vendors.

Over the last decade, most multinational corporations have come to view outside counsel services in the same category as any commodity vendor.  This type of treatment often leaves lawyers feeling like their services are being viewed about as uniquely as paper products.

Further, in-house lawyers working for these companies are usually very sophisticated and will pressure their outside counsel to offer extremely unfavorable deals.

Many law firms that regularly represent and counsel Wal-Mart complain that they are required to offer "most favored nation" status to Wal-Mart for their hourly billing rates.

What that demand means, in layman's terms, is that if a law firm offers a special discount to any other client, it is required to offer the same (or better) discount to Wal-Mart.

Consequently, given Wal-Mart's strict "Outside Counsel Guidelines," many lawyers will simply refuse to even consider representing a behemoth, regardless of the volume of work that could be involved.  If a lawyer's standard billable rate is $800 an hour, and she must offer a discount down to $475 an hour to Wal-Mart, she may very well end up working for peanuts (relatively speaking, of course).

The reality is that Wal-Mart will have no problem finding another law firm to underbid the legal work, leaving the outside counsel with zero leverage.

Industries can matter more than a client's size.  For example, companies in the agriculture and mining industries are notoriously difficult to work for, for a variety of cultural reasons.  Agriculture and mining jobs often have lower salaries and workers in these industries are often very unhappy.

Such unhappiness about their career prospects generally can rub off on the outside counsel, who may be seen as charging too much for her time.

Similarly, representing non-profit enterprises and software companies is also notoriously difficult, given the stringent demands on those particular workforces.

According to Forbes, media, entertainment and retail fashion companies tie for the third unhappiest industry to work in.  These industries often pay their employees with glitz and glamor rather than cash, and expect their outside counsel to similarly discount their own financial expectations, in exchange for prestige.

Small companies and startups are also a mixed bag.  Some outside counsel report that some of their most enjoyable work has been advising smaller companies and startups during their nascent phases.

This satisfaction is in part because these companies often possess wide latitude in making decisions and are not hampered by the extremely top-heavy management styles of large multinational corporations.  A lawyer's advice may end up shaping significant business decisions that the client makes.

The obvious downside is that these companies are often so legally unsophisticated that they "need their hand held" by their outside counsel, but may not be in a position to pay the lawyer enough money to remotely justify micromanagement of their day to day legal affairs.  Whether a client has an in-house counsel will make a huge difference for the outside counsel.

Individuals are sometimes the most interesting to represent, but perhaps may be the most rewarding and challenging of all.  When a lawyer represents a client so small that it may consist of a single individual or family, that relationship will often become very close.  

A lawyer may become a trusted advisor affecting all parts of that individual client's life.  Some lawyers report becoming so close to their individual client's lives, that they become like family.  Of course, such intimacy can lead to obvious tensions, too.

Whether a client is foreign or domestic can make a huge practical and cultural difference, too.  For example, lawyers have reported that representing Japanese electronics companies will offer an extremely different experience than representing a midwestern American auto maker.

Similarly, representing a German cellular phone company will be as different as night and day from representing a North Carolina based tobacco company.  These clients' unique cultures and expectations will make for very different experiences for their outside counsel.

The reality is that clients are people, too.  Each client has its own unique personalities and traits.  Clients also function in industries that are often absurdly demanding and, in some cases, dysfunctional due to no fault of the client.

Over the course of her career, the aspiring outside counsel would be well advised to be careful to choose her clients wisely, as the internal and external pressures that the client faces will often affect her own lifestyle, as well.

Monday, April 29, 2013

Internet Scammers Targeting Lawyers

Attorneys in the United States, particularly solo practitioners and lawyers with small firms, are apparently falling prey to sophisticated international Internet scams that can have severe consequences, financial and otherwise, the California Bar Association has noted in an Alert.

To date, these scams have been more prevalent among, although not exclusive to, collection and commercial lawyers, mainly because these practice areas make it easier for those initiating the scams to make them appear legitimate. However, such frauds have affected lawyers working in family law and other practice areas, as well.

The fraudsters perpetrating the scams engage in the following conduct:

1.  The lawyer receives what appears to be a legitimate solicitation e-mail from a prospective client.  The client may be a company or an individual. The e-mail sounds something like this:  "We are a media publishing company in Japan. We have a breach of intellectual property agreement matter in your jurisdiction, we can forward you the agreement and other party information for your review to enable you run a conflict check."  The client will be willing to forward seemingly legitimate incorporation documents.

2.  The lawyer and client discuss a fee agreement by e-mail.  Most commonly, the client will offer that the attorney may keep a certain sum in exchange for collecting on an unpaid debt.  The lawyer signs the agreement, creating an ostensible attorney-client relationship.

3.  The lawyer then receives a "congratulatory" e-mail from the new client announcing that they have received a settlement offer from the debtor, and that all the lawyer needs to do is deposit the settlement check and forward the proceeds of settlement, minus the lawyer's fees and expenses.

4.  The lawyer quickly receives in the mail what appears to be a valid paper check from a reputable bank, which is deposited into the lawyer's trust account.

5.  The client then demands an immediate wire distribution of the settlement proceeds (nearly always to a foreign bank).

6.  The lawyer then wires the proceeds to the client from the trust account, as requested.

7. By that point, the lawyer's bank has discovered that the paper check is fraudulent and it is returned unpaid.  By this time, the scammer is long gone, and the lawyer's trust account is overdrawn by the amount of the fraudulent check.

This chain of events leaves the victimized lawyer in a vulnerable position.  The lawyer cannot easily press criminal charges, because of possible fear of violating client confidences.  Second, the identity of the fraudster isn't even clear.

Further, the lawyer cannot easily recoup his losses.  Malpractice insurers may not qualify the lost sum as "damages" from professional negligence.

The California Bar Association notes that, in choosing clients and accepting to represent them, it is better to err on the side of caution.  Hitting the "delete" button may be the best course of action when receiving one of these "too good to be true" new client offers.

Tuesday, August 14, 2012

Internet Scammers Target Sophisticated Law Firms

A creative and sophisticated Internet scam has targeted sophisticated law firms.

Indeed, the Gioconda Law Group PLLC was targeted by this type of scam artist, but (thankfully) we were able to recognize it very quickly.

It works like this:  A potential foreign client that appears to be legitimate will send an unsolicited e-mail inquiry seeking legal assistance in collecting a relatively modest commercial debt that it claims is owed to them.

For example, a Taiwanese company that supplies parts and equipment to electronics vendors will contact a New York law firm, claiming that it sold $1.2M worth of goods to a New York-based electronics business.

The company will provide a variety of written documentation to the law firm that appears totally legitimate, including signed contracts, supply agreements, purchase orders and invoices.

The company will gladly sign a formal lawyer's engagement letter and agree to pay the lawyer for his time and effort in seeking to collect on the debt.

The company will eventually send an e-mail to the lawyer saying, "Great news!  The debtor has agreed to pay for the goods and send you the settlement check for processing.  Please deduct your fee and send us the remainder by international wire transfer."

If the lawyer doesn't catch on by then, he may indeed deposit the settlement check, and wire the funds to the company.

However, the check he deposits is counterfeit, and the law firm is left holding the bag for the missing funds that it wired to the foreign company from its trust account.

Sound implausible?  

Some of the biggest law firms in the country have been suckered into writing trust account checks or wiring money to bank accounts based on funds they thought had cleared their trust accounts, only to later learn that the check deposited with the law firm was a forgery.  The result is that the law firm ends up on the hook for hundreds of thousands of dollars, while the recipient of the money has disappeared.

Minnesota law firm Milavetz, Gallop & Milavetz (MGM) fell victim to such a fraud three years ago.  Founding partner Robert Milavetz says that when MGM got an email from a 40-year old Korean woman seeking to collect a $400,000 judgment owed her for an accident, the firm thought nothing of it: "We do this kind of thing every day," he says. "We help people get settlements. That's what lawyers do."

In one recent case, a pair of foreign nationals are facing criminal charges for allegedly having duped 70 U.S. lawyers and law firms out of $29M and of having tried to make off with another $100M from 300 more.

Lawyers must implement and consistently utilize a high level of due diligence when taking on new clients, especially ones that are self-introduced through online channels.

Ask for tax returns or other official documentation demonstrating that the client has been a solvent business for at least the previous two or three years.  Ask for professional references or other credentials, and don't let your zeal to take on a new matter cloud your judgment.

The moral of the story is, if the deal sounds too good to be true, it probably is.