Mining for gold: making a profit in today's tough times
Posted by: Matthew B.F. Biren
December 23, 2009
Topic: Lawyer Referrals
Mining for Gold: Making a Profit in Today’s Tough Times
Financial Arrangements among Lawyers
In the past year, it seems as if every day i hear about the tough times that many law firms face. Now, more than ever, i receive calls from attorneys and legal administrators throughout california asking about my firm’s policies regarding client referrals and referral fees. Lawyers are often confronted with a quandary: what to do when a client, relative, or friend calls with a legal problem that is outside their field of practice. The attorney wants to help the client but is concerned that he/she may not have the expertise or resources to do a proper job. In some instances, the lawyer may wish to be involved in the case, recognizing its financial potential for the firm, but is not willing to embark into new areas of practice at the potential expense of the client. Or, for lawyers who are have an hourly (as compared to contingency) practice, the client, relative, or friend cannot afford to pay the hourly rates that can drastically mount up throughout the course of the litigation.
The Source of the Gold
Lawyers and law firms have a golden asset. Their asset is their client and contact base – their personal network. The problem is that most lawyers only capitalize on this asset when it results in cases that they are comfortable handling. The key to mining your practice for gold is to capitalize on the total asset. They key is converting the cases you do not want to handle into a golden income stream.
Referral Fees: Ethically Permissible
Rule 2-200 of the professional rules of conduct of the state bar of california permits the division of legal fees with a lawyer who is not a partner of, associate of, or shareholder with the member provided that:
- the client has consented in writing thereto after full disclosure has been made in writing that a division of fees will be made and the terms of such division; and
- the total fee charged by all lawyers is not increased solely by reason of the provision for division of fees and is not unconscionable as that term is defined in 4-200.
Benefits of Attorney Referrals
All parties involved in a referral relationship – the client, the referring lawyer and the handling attorney – stand to benefit.
Perhaps most significant is the benefit to the client. Rather than being represented by a lawyer with inadequate experience and/or resources trying to work over his or her head, or the client’s being abandoned to try and find competent counsel or his or her own, the client is referred to a specialist and is positioned to receive the best possible representation.
The referring lawyer avoids handling a case outside of his or her field of expertise and all the potential pitfalls – including malpractice – that come with such folly. Additionally, the referring attorney stands to realize additional income – fees without a concomitant expenditure of time or resources. In many instances, a cross-referral relationship can be established, which can also result in new business opportunities coming to the referring lawyer as well.
About the Author
Mr. Garcia is the Los Angeles representative of the State Bar of California, California Young Lawyers Association and is an attorney with the law firm of Biren Katzman Trial Lawyers. Mr. Garcia is admitted to practice in California, Arizona, and Nevada and is a graduate of the UC-Berkeley and UC-Hastings, School of Law. Prior to joining the team at Biren Katzman, Mr. Garcia specialized in the field of Elder Abuse and Dependant Adult Abuse. Mining for Gold is a program originated by principal Marc Katzman in conjunction with the Los Angeles County Bar. All rights reserved.
BIREN | KATZMAN is pleased to announce that firm founder Matthew B. F. Biren has been recognized by his peers as a Southern California Super Lawyer 2006-2010.
