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    Wisconsin Lawyer
    November 01, 2013

    Final Thought: The Economics of Practicing Law: It’s the “Principal” of the Matter

    Lawyers and clients are frequently aligned economically. It is our responsibility to not only protect our fees (our principal), but also advise clients that spending money solely on principle may not be good business.

    Kevin J. Palmersheim

    When I hear “economics of practicing law,” I think of typical managing-partner considerations such as regional hourly rates; average attorney salaries; and the projected number of hours you may chain associates to their desks before sympathy or rickets sets in.

    The above factors address a firm’s production and payments (and perhaps the mitigation of any persnickety OSHA investigation). What is often missed is the return on the investment – what I refer to as the fight for principal (with the “pal” ending meaning money). One way to collect on that investment is to keep you and your clients out of costly fights that have no ultimate economic benefit.

    Kevin J. PalmersheimKevin J. Palmersheim, U.W. 1992, practices business law with Haley Palmersheim S.C., Madison.

    Clients are often emotionally involved in their legal situation. Their initial reaction often is to fight for principle (with the “ple” ending meaning a fundamental truth), regardless of the cost. This includes the prospective client who states that he will fight his overdue library fine all the way to the Supreme Court; or the divorce client who refuses to sign settlement papers and demands a trial because her ex won’t turn over the Lord of The Rings Trilogy box set valued at $79.99.

    Once the clients’ combative emotions dissipate, on the other hand, they frequently express equally strong emotions such as, “What do you mean I owe you $5,000?! For just a couple phone calls and emails?!” The client’s bad experience with the legal dispute gets tied to the lawyer, and the lawyer may not get paid or may end up significantly discounting the bill to collect something or prevent a fee dispute.

    Most attorneys I know work hard. They represent their clients well. They invest time and money in their daily practices. Lawyers need to recognize that we and our clients are frequently aligned economically, and it is our responsibility to not only protect our fees but also advise the client that spending money solely on principle may not be good business. We want our clients to be in a better position than they were before they came to us, or at least do our best to keep them from being worse off.

    “We want our clients to be in a better position than they were before they came to us, or at least do our best to keep them from being worse off.”

    Sure, sometimes it is the principle and it’s worth the fight. So fight for principle if it relates to substantial matters such as Hobbit equality under the law; the freedom to shout “my precious” without interference; or the ability to congregate in large groups to protest against evil-doing Orc lawmakers. Before you fight that fight, though, advise the client of the potential cost of doing so.

    On the other hand, if the fight is more about short-term emotions followed by long-term law firm invoice payments, then eliminate your potential grief and loss of principal – and advise your client that it makes more financial sense to simply throw the DVDs, along with her gold ring, into the volcano and spend her time and money on an entirely new drama.


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