Many of you have heard me say what a good time we could have if it weren’t for clients. They always want and need something done, and right now. I say all that in jest. We all learned immediately in law school that the legal profession was all about our relationship with and our duties to clients. In the modern world, performing those duties well and in a timely fashion is the heart of good marketing, as well as good loss prevention. Most of your future business comes from your existing happy clients.
But there is also that pesky thing about guidelines and such issues with clients. It is becoming a bigger issue with clients and their carriers. We can all agree that setting out reasonable expectations constitutes good business practices. So it is perfectly fine for clients to state what they expect and what they desire for compliance and uniformity. Instead, it is the overreaching, or the heavy-handed, ones that present conflict in the profession.
Let me take you back to the insurance wars. Firms with trusted personal relationships with claims professionals suddenly found themselves with regional or national claims contacts with no faces. They studied new metrics, issued rigid guidelines and treated your bills as a “first offer of compromise.” The early guidelines were compliance traps and were used by third-party auditors to reduce your bills for non-conformity. You could regularly count on a 20‑30% reduction of your already agreed lower rates. If you took the time to “appeal” them, usually only 15% was reduced from the original bill. The guidelines routinely told you how to practice law for them.
Many states reacted with their ethics bodies declaring (1) bills to third-party auditors waived the privilege unless it was a knowledgeable consent given by the client, i.e., here; and (2) that guidelines limiting the lawyer’s ability to represent clients properly were of no effect (who does what work, what legal work to do, or penalize required work) as opposed to reporting and billing logistics which were not addressed, e.g., here.
So most carriers now understand what is allowed, but many still do machine assisted review of bills searching for entries that are to be reduced because they are not provided in the guidelines. My advice is to take the time to set up your files and procedures to match the requirements upon the file opening. Your reductions will be reduced by this proper compliance set up on the front end. Embrace the reasonable guidelines and use them for a prompt payment.
We are starting to see business clients issuing their own guidelines to outside counsel (and even a few national counsel issuing their own guidelines for work for them as national counsel). Again, reasonable guidelines are not an issue. It is the heavy-handed ones that still require push back. Think back to the early insurance issues and review all these guidelines very carefully. It is worth your time to have a few people tasked to review them all the time and to keep charts or research of each set. That saves time later when they come into a different lawyer. Push back and take exceptions to any that are problems. I recommend that any exception letter to guidelines say: “We shall strive to comply with your guidelines except for X, Y, or Z because . . . .”
For instance, some quoted rates do not include the billed expense items that are being precluded by the guidelines as expenses, or the guidelines tendered are not legally valid in the involved jurisdiction, etc. I always recommend that any guidelines that require a signature be (1) reviewed by another first and (2) be stated to be “subject also to firm engagement letter of - - - -.” Otherwise, you may violate your professional obligations that you had carefully met with your own letter. You can always resolve any conflicts between the two if they actually occur.
Here is the latest rub - - clients sending firms a form engagement letter to be done on the firm’s letterhead and returned. Back up the truck here. This is pretty basic — are we independent professionals willing and able to tell the king he has no clothes or are we their employees? Excuse me here, but a firm’s engagement letter is to meet its professional obligations and to carefully define the client and the scope of the client’s work. It is the firm’s engagement letter. The client’s version can be viewed as guidelines, but they should not dictate the engagement letter you send back to them, the client.
Let’s face it, guidelines are there to control costs. We all know that. But with these client prepared form engagement letters they go much further and may impose some different company “Code of Conduct” being beyond the Professional Rules, or include indemnity provisions (usually not covered by a firm’s E&O policy), or expand duties and obligations beyond the recognized professional rules. A right proper push back is in order. Reasonable clients should understand the differences. Make sure all your lawyers run these all (both guidelines and form agreements) through a select few who are familiar with them before signing any! Be a professional here and not just the statue where the pigeons rest. A fair number of claims arise because the lawyer did exactly what the client insisted upon, instead of being the professional offering proper legal advice.
But there is also that pesky thing about guidelines and such issues with clients. It is becoming a bigger issue with clients and their carriers. We can all agree that setting out reasonable expectations constitutes good business practices. So it is perfectly fine for clients to state what they expect and what they desire for compliance and uniformity. Instead, it is the overreaching, or the heavy-handed, ones that present conflict in the profession.
Let me take you back to the insurance wars. Firms with trusted personal relationships with claims professionals suddenly found themselves with regional or national claims contacts with no faces. They studied new metrics, issued rigid guidelines and treated your bills as a “first offer of compromise.” The early guidelines were compliance traps and were used by third-party auditors to reduce your bills for non-conformity. You could regularly count on a 20‑30% reduction of your already agreed lower rates. If you took the time to “appeal” them, usually only 15% was reduced from the original bill. The guidelines routinely told you how to practice law for them.
Many states reacted with their ethics bodies declaring (1) bills to third-party auditors waived the privilege unless it was a knowledgeable consent given by the client, i.e., here; and (2) that guidelines limiting the lawyer’s ability to represent clients properly were of no effect (who does what work, what legal work to do, or penalize required work) as opposed to reporting and billing logistics which were not addressed, e.g., here.
So most carriers now understand what is allowed, but many still do machine assisted review of bills searching for entries that are to be reduced because they are not provided in the guidelines. My advice is to take the time to set up your files and procedures to match the requirements upon the file opening. Your reductions will be reduced by this proper compliance set up on the front end. Embrace the reasonable guidelines and use them for a prompt payment.
We are starting to see business clients issuing their own guidelines to outside counsel (and even a few national counsel issuing their own guidelines for work for them as national counsel). Again, reasonable guidelines are not an issue. It is the heavy-handed ones that still require push back. Think back to the early insurance issues and review all these guidelines very carefully. It is worth your time to have a few people tasked to review them all the time and to keep charts or research of each set. That saves time later when they come into a different lawyer. Push back and take exceptions to any that are problems. I recommend that any exception letter to guidelines say: “We shall strive to comply with your guidelines except for X, Y, or Z because . . . .”
For instance, some quoted rates do not include the billed expense items that are being precluded by the guidelines as expenses, or the guidelines tendered are not legally valid in the involved jurisdiction, etc. I always recommend that any guidelines that require a signature be (1) reviewed by another first and (2) be stated to be “subject also to firm engagement letter of - - - -.” Otherwise, you may violate your professional obligations that you had carefully met with your own letter. You can always resolve any conflicts between the two if they actually occur.
Here is the latest rub - - clients sending firms a form engagement letter to be done on the firm’s letterhead and returned. Back up the truck here. This is pretty basic — are we independent professionals willing and able to tell the king he has no clothes or are we their employees? Excuse me here, but a firm’s engagement letter is to meet its professional obligations and to carefully define the client and the scope of the client’s work. It is the firm’s engagement letter. The client’s version can be viewed as guidelines, but they should not dictate the engagement letter you send back to them, the client.
Let’s face it, guidelines are there to control costs. We all know that. But with these client prepared form engagement letters they go much further and may impose some different company “Code of Conduct” being beyond the Professional Rules, or include indemnity provisions (usually not covered by a firm’s E&O policy), or expand duties and obligations beyond the recognized professional rules. A right proper push back is in order. Reasonable clients should understand the differences. Make sure all your lawyers run these all (both guidelines and form agreements) through a select few who are familiar with them before signing any! Be a professional here and not just the statue where the pigeons rest. A fair number of claims arise because the lawyer did exactly what the client insisted upon, instead of being the professional offering proper legal advice.
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