Wisconsin Lawyer: Managing Risk: Be a Choosy Lawyer :

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    Managing Risk: Be a Choosy Lawyer 

    Client selection is even more important during an economic downturn, especially for solo practitioners and lawyers with small practices who might feel pressure to ignore the risk and accept a client or case outside their focus area.

    Thomas J. Watson

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    Wisconsin LawyerWisconsin Lawyer
    Vol. 82, No. 5, May 2009

    If you have read my columns before or attended a CLE program at which I spoke, you no doubt know the importance I put on meticulous client and case selection. Careful selection is a risk management tool for your law practice that you should always engage in. But in today’s economy, with many lawyers experiencing a slowdown in business, careful selection is more important than ever. Never has a lawyer’s judgment about what clients and cases to take been tested like it is now. With the economic downturn hitting the practice of law just as it has almost every type of business, the temptation and pressure to take every client who walks in the door has never been greater, especially for solo practitioners and small law firms.

    If your practice is still thriving and the struggling economy has not affected you very much, consider yourself fortunate. Other lawyers, however, are feeling the pinch. Keeping the lights on, paying staff, and keeping your practice profitable may not be as easy as it was a few years ago. The economic rules seem to keep changing, as more people are out of work and are less likely to spend money, even when they may need legal help. The percentage of pro se litigants seems to be on the rise, and the economy may be one reason for that.

    Several lawyers who I have known for many years have told me that parts of their practices have dried up or at least slowed down considerably. Some lawyers are branching out into areas of practice they have never considered before, such as bankruptcy. Caution is advised if you are venturing outside your areas of expertise. Taking every case that comes along or practicing in areas of law that are somewhat unfamiliar to you are dangerous business approaches that you ultimately may regret.

    Dabbling

    For some lawyers, especially newer lawyers, passing up business is not easy. It’s tempting to take everything that comes in, especially during tough economic times. Maybe when that real estate dispute came in the door, you saw it as an opportunity to make some money and expand your practice at the same time, even though you may never have done any litigation. Lawyers can be tempted to take a case outside of their focus areas, thinking they need the case for financial reasons or even for survival. Bankruptcy is a practice area that might attract new clients, but are you really suited for it? Do you know enough about it to serve your clients well?

    Although it may be tempting to diversify because of the bad economy, dabbling in an unfamiliar practice area may bring you more trouble than it’s worth. Sally Anderson, vice president of claims at Wisconsin Lawyers Mutual Insurance Co. (WILMIC), says it’s okay to take on a new area of practice, as long as you make sure you can devote enough time to learn it. “Using a mentor or consulting with a more experienced attorney in that particular area of the law is a good idea. Because things may now be less hectic for your practice, this may be the opportunity you need to learn and develop new expertise.”

    Even experienced attorneys may be lured by the possibility of a big payoff to take a case that, because of its size, subject matter, or both, is outside their areas of competence. Milwaukee-area attorney Kelly Centofanti says, “I think younger lawyers, or inexperienced ones, or those without enough business, clearly take cases they shouldn’t take. When I was a new lawyer, I wanted to help every client who called, whether their case was viable or not. I learned early on, thanks to my mentor, that if we try to help every client and sink our practice, we will never be able to help anyone. Over the years, that advice, coupled with time pressures, has helped me to ‘just say no’ to the iffy cases or the problematic client.”

    Anderson says a high number of malpractice claims are directly related to dabbling. According to WILMIC statistics, more than 60 percent of claims involve attorneys who practice less than 20 percent of the time in the area that is the subject of the claim. Conversely, lawyers who practice almost exclusively in one area of law account for less than 7 percent of claims. Anderson says, “Don’t be afraid to refer a case if you do not have the required expertise.”

    Anderson often tells lawyers that “No” is a complete sentence, and that, “No, but…” can be a direct line to trouble. “There are times when you simply have to turn away business – times when you just are not the right lawyer to handle this client’s matter. Lawyers need to believe they can say ‘no’ and the phone will ring again.”

    Be Selective – Even In Tough Times

    If the effects of the tough economy have altered the way you choose your cases, it may be time to review your selection process. Often, cases can turn out well even if you took on a client about whom you knew very little. But sometimes, poor client selection can blow up on you. Too often, lawyers take a case before they know all the facts or have elicited as much information from the client as is really needed. Centofanti says jumping in without all the facts is a big mistake and can be costly. “Always do the research first and take the case second.”

    Thomas J. Watson

    Thomas J. Waston, Marquette 2002, is senior vice president and director of communications at Wisconsin Lawyers Mutual Insurance Co., Madison. Contact him at com Tom.Watson wilmic wilmic Tom.Watson com.

    Even after you have accepted a case, continue to evaluate it. Too many lawyers develop blinders about their cases. They become advocates in the first meeting with a client and instantly believe in the case without stepping back to realistically review the strengths and weaknesses. Sometimes you’ll discover you don’t have as good a case as you first thought. After your initial meeting with a client, take time to reflect on the case and try to envision how you think the case might develop in the long run.

    Some clients also may view your services differently now if they are struggling financially. Madison attorney Janice Wexler, who does primarily family law work, says with money being tight, she sees clients coming in with a different perspective than they may have had in the past. “They expect financial miracles – a financial bailout by their lawyer who will somehow magically correct the overspending that has occurred in the past.” Wexler also says to be wary of clients who want to negotiate fees due to their economic circumstances. “They may say ‘I can pay $200 now and $400 next pay period.’”

    For some lawyers, getting people to come in seeking legal services at all has become an issue. Wexler says, “I’m sure some folks are delaying a divorce because they can’t finance duplicate sets of expenses. They are more willing to live together in the same house and stay out of each other’s way, while waiting for the house to sell – which can take a very long time these days. I think the middle class is being introduced to access-to-justice issues that were previously perceived as a problem only for the working poor or indigent. As more people lose their jobs, or have their pay or benefits reduced, the more glaring the problem.”

    Many lawyers believe that the people who can afford lawyers are hiring them – even in today’s economy. Wexler says what has changed is the number of clients she sees in family law cases who are also facing other legal problems as a result of the economy. “These are people who are filing or contemplating bankruptcy, who are in or will be in foreclosure actions, who are homeowners with upside-down mortgages, or who anticipated retiring, created a financial plan accordingly, and now face entirely different circumstances than they expected.”

    Warning Signs

    No matter what kind of economy we’re dealing with, there are some general warning signs that all lawyers should keep in mind. For example, if you are not the first lawyer the potential client has come to, it may be an indication that the person will never be satisfied no matter who is representing him or her.

    If the potential client has unreasonable expectations, there could be trouble ahead. Anderson says every case sounds the best it will ever be when the lawyer and the potential client first meet. “You only hear the client’s side and what the client wants you to know. Only later, after you take the case and begin investigating the facts do you learn the downside.” Centofanti also says to not overpromise. “This can only cause problems down the road. Then, the client’s high expectations will be tough to meet.”

    If the person doesn’t want to listen, claims to know everything, or attributes all his or her problems to other people, you are in for a long, difficult case. This is the type of client you may be better off declining.

    Conclusion

    When you think you need to take almost every case that comes your way, you should think twice. It may look like a sure payday at the time, but further evaluation could suggest otherwise. As Centofanti says, “Resist the feeling that you must get business of any kind. Instead, use that time for family or hobbies. You may not like turning down the business, but you’ll be better off in the long run.”

    Many lawyers have told me they learned the hard way. Anderson, who has handled claims for 15 years, says WILMIC has had many claims in which the insured lawyer told her, “I knew this was not a good client to take on. I wish I had listened to my instincts.”

    When considering a new case, evaluate the merits of the case; learn whether the potential client has already fired at least one attorney, has realistic expectations, and is willing to listen; determine if you have expertise in the area of law; and figure out if you are considering taking the case for financial reasons. If any of these considerations raises a red flag, it may not be the case for you.




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