The Invisible Hand And The Bar Regulator's Glove

Little by little, we are creeping toward the regulation of legal fees. Whether this is a good thing or not depends, I suppose, on whether you are just starting out in the law and scrambling for your next client, or whether you are tap-dancing on the threshold of retirement, hoping to salt away enough to keep you until the Reaper calls.

Apparently, fees for lawyers’ services were set in colonial times. Before John Marshall became chief justice of the United States Supreme Court, he worked as a lawyer, handling matters for his clients. There was a fee card set in Richmond, Virginia. One biographer relates that Marshall would represent as many as 300 clients a year to generate the income he wanted. A lawyer handling as many clients a year today would undoubtedly face discipline; how could you adequately communicate with each?

The other day, my phone rang. It was a high-profile sort of guy who wanted to vent about his lawyer. Counsel had been paid; there was no trial, but a guilty plea. Yet more than one hundred thousand dollars in fees were demanded, and the bills just kept on coming. I listened. Not much I could say.

Another client complained that their lawyer had taken a six-figure fee, placed a lien on a home, threatened to foreclose, and jumped all manner of ugly when the bill didn’t get paid on time. The client did not think he had hired a banker.

Thomas Hobbes once said the value of a man is his price. This reflects a certain jarring cynicism. But I suppose it is true. In the rough and tumble for legal services, we are such things as fee quotes are made of.

Markets don’t discipline themselves in any meaningful way when it comes to professional services. Desperate people do desperate things. And lawyers are in the business of representing, if not outright offering, hope. Is it any wonder that the stars of the bar sometimes are blinded by the stars in their own eyes?

The Rules of Professional Conduct require that lawyers charge only a reasonable fee. The factors to consider in determining just what is reasonable are about as helpful as a detergent advertisement. One factor is an invitation to vanity: "The experience, reputation, and ability of the lawyer ... performing the service." Does this mean that one lawyer’s defense of a speeding ticket is worth $10,000 to another’s $500. Is there an upper limit?

Bar regulators keep an eye on such things when fee disputes arise. Suppose a client is given the option between an hourly fee and a flat fee. The client chooses a flat fee because that minimizes the risk of later sticker shock. Months into the litigation, the client decides he doesn’t love the lawyer anymore. The client fires the lawyer, and goes to seek another miracle worker. What sum, if any, should the lawyer return to the client?

A lawyer who returns nothing, and simply states a deal is a deal is in trouble. We are to give an account of our time upon discharge. But who in their right mind keeps track of their hours in a case in which there is no hourly retainer? Most small firms are not set up minutely to monitor the production of legal flatus. Yet bar regulators want estimates of time spent in a dispute; they want affidavits from other lawyers about reasonable hourly fees. These regulators are a glove on the invisible hand, and these gloves fit perfectly around the necks of small-firm lawyers.

Oliver Wendell Holmes Jr. once wrote about the bad man theory of the law. We all bargain, he thought, in the law’s shadow. Take the perspective of the bad man seeking to get away with all that he can to determine what is and is not permissible at law. The bad lawyer, then, bills for every moment and keeps track of every bill, the better to defend against the claim of the disenchanted client. Billable hours are religion in some firms; regulators are evangelists promoting uniform billing practices. I doubt there is a stake stout enough to pierce the heart of these heretics.

But tell me, regulatory geniuses, will you add yet another factor to the list of things to consider in calculating whether a fee is reasonable? How about a category called the cost of compliance with an ever-expanding, demanding, and, sadly, seemingly endless series of rules. What bureaucrat’s tax can we assess to comply with all this chatter?

Reprinted courtesy of the Connecticut Law Tribune.


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