Wednesday, July 31, 2013
Neville Johnson is founding partner of Johnson & Johnson LLP in Beverly Hills.
The most important attribute of a trial attorney is the ability to know which cases to take and which to turn down. In making this decision, one must consider many different factors. Determining whether to finance a case involves the interplay of four factors: cost and overhead, damages, collectability, and client likeability. Each must be evaluated individually – and any one of them can sink the ship.
Cost and damages
The potential damages in a case must be evaluated against the anticipated cost of litigation. If the case is on contingency, does the attorney have the wherewithal to finance – i.e., enough money in the bank or a line of credit? Is it possible to enlist a funding company to defray costs, and what will the cut be for engaging the same to both client and counsel? What are the claims and the corresponding damages? Is there a way to get attorney fees because of a fee-shifting statute, a contractual right, case law permitting the same, or the so-called Private Attorney General Act?
Financial costs include litigation expenses and lost opportunity costs. Out of pocket costs include all discovery expenses, such as depositions, expert witness, private investigators, travel, and filing and service fees. Then there is overhead: staffing, rent, phones, computers and research costs. Don’t figure a case is going to settle just because it is filed and has good facts.
Damages are a function of liability. The intelligent lawyer maps out all claims and all defenses to determine economic value. How sophisticated are the issues? Is the law unsettled, making an appeal likely? Is the case fact or law driven? Who are the likely adversaries? Many insurance companies litigate all soft tissue cases just to make it difficult for the plaintiffs’ bar. Is the case against a sophisticated company or counsel that is known to be unreasonable? Will the case resolve itself once a good showing is made? Is the forum conducive to settlement? For example, arbitration may not be the most attractive forum for some entertainment cases because of the cost and apprehension that the arbitrators are biased toward large entertainment companies.
If you are the latest in a string of attorneys, chances are the client is the problem. Some want to take control in a manner that supersedes the role of the attorney – don’t let it happen, decline the matter.
Use verdict reports to determine what cases with similar facts are settling. Research by asking experienced colleagues what they believe the case is worth and the difficulty and time involved.
Don’t take on a case unless you are prepared for the economic consequences. There are situations where an attorney might work pro bono or knowingly below cost to gain experience, build a reputation or establish precedent. But they shouldn’t look back in anger or dismay when the bills come due.
Is the case too big? If it is a good case, refer the matter to a firm or attorney with the wherewithal, clout, experience and credibility.
There are two aspects to collectability: collecting from your own client and collecting from the adversary. If the client is hourly, can he or she pay the retainer and fees as they accrue? Does the client understand the cost? Ensure that the client is fully apprised that costs will mount up and in what amounts. Some lawyers take liens on property to secure payment. Get an adequate retainer and get out of the case if the client does not keep up.
Likewise, there is no use having a judgment that cannot be collected.
Will the client be a problem? Are the client’s motives suspicious? Turn down any case where the client only wants to pursue the matter “for principle,” unless it is a constitutional matter or similar ilk. Consider a clause that provides that when judgment is entered or a settlement reached that the attorney has a proprietary interest in that portion that equals the attorney fees.
What will be the terms for collection? Specify them or ensure that the recovery can be sent to a collection attorney. In doing so you will run into California Rules of Professional Conduct Rule 3-300, which states that a member may not enter into a business transaction with a client or acquire any other pecuniary interest adverse to a client unless all of the following has been satisfied: (1) the transaction and its terms are fair and reasonable to the client and are fully disclosed to the client in a manner which should reasonably have been understood to the client; (2) the client is advised that the client may seek the advice of an independent lawyer of his or her choice and is given a reasonable opportunity (three days is necessary, though not specified in the rules) to seek that advice; and (3) the client consents in writing to the terms of the transaction.
This may cause the fee to exceed 50 percent; does the client understand and accept and is it a reasonable fee? Fees that exceed 50 percent will be very carefully scrutinized for unfairness. On the other hand, the fee for collection is commonly 50 percent of the money due. This should be explained in writing.
Other issues may exist, such as whether the defendant is an entity and the veil can be pierced. What work will be required to do so? Is there a homestead exemption that makes a difference? Is a bankruptcy filing likely? If so, is there an intentional tort or fraud that makes the obligation nondischargeable?
Client likeability refers to both working with the client and relevant witnesses and how they will look to others – i.e., “how they present.” There are differing types of difficult clients. If you are the latest in a string of attorneys, chances are the client is the problem. Some want to take control in a manner that supersedes the role of the attorney – don’t let it happen, decline the matter.
Always check to see if the client is using social media. Recommending that embarrassing information be deleted arguably can constitute spoliation of evidence. Figure that it will be discoverable at some point and it may be admissible evidence. Consider doing a background check on the potential client. You know the defense will.
Do not be seduced into representing problematic clients because there is a good retainer or fee arrangement. A bad client will throw the lawyer under the bus at the first opportunity.
Once representation commences, always protect yourself with covering letters explaining issues that are complicated, tricky, treacherous or which may defeat or diminish the client’s interests. Use these letters with all clients, even those you trust implicitly and explicitly. Clients often act like they are friends or even family, but they are not and often will turn on you when things don’t go their way.
If you are faced with an unlikeable client or one with skeletons in the closet, strategize whether there is a way to mitigate the potential harm. While it is impossible to put lipstick on a pig, a case shouldn’t be declined just because a person has issues that must be addressed. The mark of a good lawyer is the ability to accentuate the positive and neutralize and deflect the negative. An effective attorney does not shy away from bad facts, but faces them head on during voir dire and trial. Be prepared to address them before the other side exploits them. For example, if the client is a substance abuser, emphasize that the client has dreams, a loving family, etc. That is, addiction is an illness and doesn’t make one a “bad person.”
There are prejudices against sexual orientation, former felons, ethnicities, religions and occupations. Can these be overcome by reminding the trier of fact that everyone is a person entitled to dignity, that not everyone operates at the same level of intelligence and skill, that we all make mistakes for which we should be forgiven, that we live in a free country where life, liberty and the pursuit of happiness are fundamental rights?
Follow your gut
Use common sense and your instinct. You don’t need to take any case; there are plenty out there. Don’t underestimate the work required. Don’t think you are going to change who the client is or that you can ignore prejudices that may occur. If you don’t like the client at the outset, chances are you are really not going to like the client as the matter proceeds. By knowing what you’re getting yourself into ahead of time, you can avoid headaches and save time, energy and money. You cannot right every wrong. Don’t get in over your head, and be realistic.
Neville Johnson is founding partner of Johnson & Johnson LLP in Beverly Hills.
Ani Artsvelyan, a student at Loyola Law School, contributed to this article.