Back when I practiced law, I could tell the corporate attorneys from the personal injury attorneys at a glance. The corporate guys wore tailored suits, sparkling gold watches and cufflinks that reflected their clients’ seemingly unlimited budgets.

They looked good, and they knew it: you could tell by the way they invariably distanced themselves from the more common place attorneys like me — those of us who represented real people with real budgets — clients facing traffic tickets or involved in a personal injury suit. The corporate guys stayed away from us as if we had something horrifying they might catch: poverty. Or, at least, “poverty” in comparison with what they were making.

My how times have changed.

These days corporate attorneys are having to come up with creative ways to earn their money. Some are switching to flat-fee representation, while others are adopting the contingency-fee method commonly associated with a personal injury attorney. Which, really, only makes sense.

Denver attorney Steve Long of Shughart Thomson & Kilroy has been filing corporate lawsuits on contingency for nearly two decades. It started in the late 1980s when he represented a client who sued Denver- based TCI in an antitrust case. Long’s client won a $43 million judgment, and a business model was born for the Kansas City, Mo.-based firm.

“In every other part of the business world it’s ‘We’ll pay you if you’re successful. If you’re not, you won’t be working here,”‘ Long said. “That’s not how it works with traditional law-firm billing. In that way, lawyers are advantaged and businesses are disadvantaged.”

It’s good for the client, certainly: no more $200 phone calls that last only 5 minutes (but which get billed in 15- and 30-minute increments). No more charges for an attorney to attend a firm-wide half-hour meeting wherein numerous cases are discussed in one-sentence summaries, with each of those clients being billed for the attorney’s full half-hour.

It’s good for the legal system, too. Nothing brings on superflous, unnecessary motion practice like a corporate attorney’s representation of a client with deep pockets.

Unfortunately, this comes as very bad news for my friend, Doug, who recently hung out his own shingle specializing in small business representation. Seems he thought he’d be better off billing the same hourly rate his former Big Name law firm used to pay him. Instead of getting a salary that amounted to just a fraction of his actual billed hours, he figured he’d keep the whole $350 per hour himself and be able to pay off his student loans that much faster.

After signing a 1-year lease on a fancy downtown office, hiring a secretary and renting office furniture designed to impress, he began calling old clients to let them know he’d enjoyed representing them and asking them to refer anyone they knew to his new solo practice. (This, roughly translated, is how attorneys get around those little non-competition clauses we’ve all got to sign when working for big firms.)

When one of his biggest, wealthiest former clients — a man who owns numerous not-so-legitimate businesses in Kansas City — indicated he’d give it some thought and would get back in touch, Dougie went out and bought himself a new suit, a very nice dinner, and… wait for it… an iPhone. Why not? He was about to become rich, right?

Poor Dougie. His client just called this afternoon to say he’d be happy to sign on with the firm: for a monthly flat rate that doesn’t even cover Doug’s student loan payments.

He’s returning his iPhone this evening.

Friday, July 20th, 2007, 2:27 pm   |   Law Bites  |  RSS feed Comments and pings are currently closed.