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Starting and Managing a Solo Law Practice: Business, Legal and Ethical Issues, Part II

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Starting and Managing a Solo Law Practice: Business, Legal and Ethical Issues, Part II

Opening your own law firm? Congratulations! You are officially an entrepreneur. As an entrepreneur you will face many challenges and you must operate your practice ethically and professionally. The law is a profession, but it is also a business and to maximize your chances of success you must have a plan. In the conclusion of this exciting two part presentation, hosted by a leading legal author, columnist and media personality who has operated a solo law practice out of his home for the past 25 years, you will learn best practices for dealing with clients and making sure your operations are profitable at all times.

Presenters

Cliff Ennico
Attorney
Law Offices of Clifford R. Ennico

Transcript

Cliff Ennico: Hi, and welcome to today's program on starting a solo practice, part two, business, legal, tax and ethical considerations. I'm your host Cliff Ennico. And the two things you need to know about me are that, number one, I am a solo practitioner. I've been a lawyer in New York, New Jersey and Connecticut for 40 years. 25 of those years have been spent as a solo practitioner working out of my spare bedroom, otherwise known as the home office, in Fairfield, Connecticut.

  In that time, and in the 40 years that I've been practicing law, I have worked with about 30,000 or so people who have started businesses of their own, everything from mom-and-pop small businesses to tech startups, to some companies that you probably have read about on the Inc 500 list of the fastest growing privately owned companies in America. I have been responsible for many of those. I call myself an entrepreneur's lawyer, although that is not a trade name I can use ethically, but it's a good way to think about me.

  The second thing you need to know about out me is that back in the 1990s, I was the host of the very first Shark Tank type television show for entrepreneurs, it was called Money Hunt, and it ran on public television, PBS, from 1994 to 2003. Basically, the same format that Shark Tank follows today, except we didn't give out money on the show. We would invite entrepreneurs on, they would pitch their business plans, and then a team of experts would basically tell them what they were doing wrong and how to do things better. It was more of an educational type of show.

  So what we're going to be talking about today is the business side of things. And when you're starting a solo practice, you are an entrepreneur. That is the key lesson. You are just like everyone of the clients that I have represented over the last 40 years, and you have many of the same challenges that they do.

  I mean, you are practicing a profession, and a profession that is rather heavily regulated, but at it's core, it is still a business. It is impossible to be sued for malpractice if you do not have any clients. You have to be making money at this in order to justify all of the long hours that we attorneys put in for our clients. There has to be a pretty decent reward at the end of that to justify us doing that and giving this profession the years of our lives that we have.

  So this program is going to be talking about the business side of things. In our first part, part one, we talked about getting started. We talked about choosing the right practice mix, which areas of law should you be practicing in? And there's some things you have to think about when making those kinds of decisions.

  We then talked about whether or not you should work from a home office, or whether you need to be working from a real office, for which you pay rent. We then talked a little bit about how you organize the solo practice legally. Should you form a professional corporation or a PLLC? And then we spent a lot of time talking about how you manage a solo practice so that it continually makes money. How do you do your budgeting? How you do your financial planning.

  So with part two, we're going to pick up where we left off on part one. Today's segment, we're going to be talking about how to deal with clients, the pros and cons of client management. We're then going to talk about billing and collection practices, which is part of client management, obviously, making sure it doesn't ... It doesn't really matter how much your billable hours are if the clients aren't paying you. We're going to give you some tips for how to deal with that. Also, how to deal with deadbeat clients, if and when they happen, and they do happen sometimes.

  And then last but not least, we're going to be talking about the ethical considerations of running a solo practice, specifically how you market the solo practice, rule 7.1 through 7.5 of the Model Rules of Professional Conduct, that deal with how you market and advertise a solo practice.

  So without any further ado, let's get started. Let's talk about dealing with clients. I like to say that there are four inconvenient truths about clients, with apologies to Al Gore. There are four inconvenient truths about clients.

  Number one, you cannot run a business without them. A law practice without clients is called a hobby. It is something you can talk about at cocktail parties, but it doesn't make any money. The practice of law would be tons more fun without them, there is no two ways about it.

  I loved law school, I thought it was one of the most intellectually challenging experiences I had ever had in my life up to that point. The problem, of course, is that most clients don't need cutting edge services. It's just routine type things that they need, and that can get real boring after a while, it really can.

  The second inconvenient truth are they are your boss. You do what they want, not what you want to do. One of the biggest letdowns that most of my entrepreneurial clients have when they start their businesses is no one pays you to do stuff that's fun, or interesting or fulfilling. No one does. They want you to do the stuff that is scary, that is boring, that they're afraid of doing themselves, because they're afraid they're going to screw it up. This is the key.

  A former Dean of Harvard Law School referred to attorneys as the janitors of society, and there's a lot of truth in that. We clean up other people's messes. People do not call their attorneys when they're having a nice day and when life is beautiful. If you're calling an attorney, it's because something is really wrong in your life, you have a lot of anxiety, and you need to have that situation dealt with. The wolf has not only broken down the door, it's eaten up half your body by that point.

  Just about every phone call that I get from a client begins with, "Cliff, thank God you picked up," that's just how it is. When you want your lawyer, you want to get through to that person right away. You want that person to spread wings and fly to your side immediately.

  Sometimes you disagree with your customers, your clients' choices. Sometimes the clients don't listen, they don't follow your advice. Even though you've got excellent reasons for advising the way you have, they still want to do things their own way, and they still want you to bail them out when the you know what hits the fan.

  Sometimes you don't like your clients. And don't get me wrong, I think it's a mistake to love your clients too much. I don't think you want to be too close to your clients, because then there's that inconvenient border between clients and friendship, and we'll talk about that in a minute. And that can get you into trouble. But disliking your clients too much can also be a problem. It can turn into malpractice if you're not careful, and we'll talk about that more later on in the program.

  If you really truly dislike your clients, you're not going to give them the priority and the care that they deserve. And sooner or later, that's going to turn into a malpractice suit if you're not careful. So there's kind of a fine line you have to walk there. You don't have to like them too much, but you also shouldn't dislike them too much either.

  Inconvenient truth number three, every client is a potential plaintiff in a lawsuit. Always remember that. No matter how friendly, no matter how fun some of your clients may be to deal with, every one of them is a potential plaintiff in a lawsuit. And if you give them the opportunity, they will sue you. Always keep that in mind. Practice defensively.

  And then last but not least, inconvenient truth number four, if you are too nice to them, they will walk all over. When a client begins to see themselves as a friend, well, people can take advantage of their friends and family member. Clients should never be able to do that.

  I included, in your course materials here, I've included a nice handout. It's a column that I wrote actually for Creator Syndicate in Los Angeles, just recently. It's called 25 Rules For Better Happier Clients. The best advice I can give you on this program is to print this out, it's only, I think, two or three pages long, reduce it to one page and put it up on your PC, your laptop, your breakfast table.

  Put it in a place where you can read it once a day. Remind yourself daily about the 25 rules, commit them to memory, and recite them once a day, and you will go a long way toward good client management. These are the rules that I have followed for the last 40 years. That's in the handout materials.

  Good contracts make good clients. Whenever you have a problem with a client, the first thing need to do is to look at your agreement with that client, which we call a retainer agreement, or a retainer letter, and just make sure that you haven't given them permission to do all the crazy, weirdass things that they are doing.

  Every retainer with your client should contain at least a detailed description of your services. A provision that discourages project creep. This is language that says, "Okay, I'm doing this much. Anything else that's not specifically in this letter would have to be a subject of a different agreement, and a separate fee arrangement." Let them know, because clients will always ask for more than what they told you upfront they were going to need. That always happens in my practice.

  Make sure you specify the fees you will charge. If you're going to charge an upfront retainer, or an early termination fee, a breakage fee if the client doesn't respond within a week or something like that, make sure that's all clearly spelled out. Most importantly, when your fees are due and payable.

  I do consulting agreements for a living, which is what a retainer agreement basically is. I cannot tell you how many contracts I look for that are excellent contracts. They are well drafted by the best firms, all the indemnity language is right, as it should be. But then when it talks about when the payment is due, all of a sudden the language gets wonky, and it gets wobbly. That is a crisis.

  Your agreement needs to be crystal clear. Here's how much I charge, and when is payment due and payable? When can you sue the client because a payment is overdue? That has to be crystal clear. If it's fuzzy, if you say, "Well, when the client accepts the work, or when we hit a certain milestone or whatever," you are allowing clients to become deadbeats.

  The first thing about a retainer agreement, make sure it is crystal clear. "All invoices are due within 30 days of delivery, and interest at 12% per annum will accrue on all past due payments," that language needs to be in every retainer agreement. Believe it or not, if you do not put that language in about the interest at 12% accruing on past due payments, that may be illegal. Many states consider it usury, charging an improper interest rate, to charge interest without warning the client first that you are going to do that. They consider it usury. So all your retainer agreements should have an interest clause in there.

  Make sure there's a cooperation clause. "This is all contingent upon your cooperating with me. If you don't respond to me, if you don't give me what I ask for within the next days, I have the right to terminate the contract, and keep your retainer," make sure that language is there.

  Warranty disclaimers, never, ever give a warranty of satisfaction. It's okay to say, "My services will be performed in a professional matter to the best of my ability." That's okay. What is not okay is to say, "You will be satisfied. I will perform services to your satisfaction." In fact, you should have a very specific disclaimer in all your retainer agreements saying that, "I do not warrant that you will be satisfied, or that you will achieve a particular result, even if I know what it is."

  You cannot guarantee that people will have a nice life. I can do the best job I can forming an LLC, but there's no way I can guarantee that the person won't be sued anyway the day after I hand them the paperwork. I cannot guarantee that people will have ... People expect that their lawyers are going to guarantee that they'll have a nice life. You have to disabuse them of that.

  Make sure you put caps on your liability, and some kind of escape language that allows you to terminate the agreement if the client turns out to be a jerk, which happens more often than you'd like to admit. So that's the retainer agreement. Make sure your agreement is airtight, especially about when you get paid.

  Now, let's talk about managing client communication. Successful client handling is all about communication. The more, the better you communicate with your clients, the fewer issues you will have with them. Clients hate surprises, especially regarding fees. They hate surprises. I will repeat that. They hate surprises.

  One of the surest ways to get a client to hate you is to send them a bill they are not expecting. You said it was going to be 500, you render a bill for $1,000, that is a client problem, and it's one that you yourself created. If you do estimate something, and you do go over, tell the client before you do additional work. Say, "Those couple of things that the other side hit us with, just so you know, I wasn't anticipating those. Just so you know, it may be an extra couple of hundred bucks to be able to address these the right way. Are you okay with that?"

  And get the client to buy into it. Whenever you have a difficult conversation with a client, always make sure that you get the client's buy-in to it. I'm going to talk about this a little bit more, especially what happens when a client disagrees with you.

  When a client disagrees with you, there's a very specific conversation you need to have with them. But right now, I just want to get across the point that you always should get the client's buy-in to a difficult decision. If you're not as exactly sure what the client wants, give them a range of options and let them sort of guide you in the direction of what they are looking for. And then focus in and figure out the best way to do that.

  Now, when a client refuses to follow your advice, there's a very specific thing you have to do here, get it in writing. So let's say you give your client advice saying, "I really think it's a dangerous course of action, I see some issues here. I really don't think you ought to open that office in North Korea, it's a rather difficult place to do business right now." But the client says, "No, no, I think it's a great opportunity. We're going to appoint thousands of people over there."

  Get it in writing. Send them an email saying, "This will just document the fact I did tell you, I did share with you some concerns I have about this proposed move to North Korea. Are you still okay doing what you want to do?" And then have him send back, "Yeah, I'm okay with that." Once that email exchange takes place, print out the email and put it in a paper file folder.

  Now, I know, it's 2021, everything is digital. We do everything with digital backups, cloud solutions, yes, I am totally on board with all of that, I do it myself. But when the you know what hits the fan a year from now, and this whole North Korean thing has turned into an utter disaster for this client, the client is never going to remember that you told him or her not to do this. What they're going to remember is, "Why did Cliff let me do this? Holy crap. I am suing him for malpractice." That's what their mindset is. And when you get the angry phone call, you want to be able to access that email exchange, scan it, and send it to the client within 60 seconds of getting that phone call.

  I will share with you, I had this situation a number of years ago. A client was forming a subchapter S corporation in New York. If you've ever done one of these, there's certain paperwork you have to file with the IRS, and with the state tax authority, to take what they call the S election.

  The client had a very obnoxious accountant, who felt that he could do anything that an attorney could do three times better. And he said, "Cliff, I'm sorry, I know they've hired you to do this corporation, I'm okay with that, but I want to do the two filings for the subchapter S, the IRS filing and the New York State Tax Department filing. I want to do that." "All right, fine. I'll reduce my fee a little bit, because normally I do that for the client, but that's fine. Do me a favor though, just send me an email, letting me know that you're going to be handling those two things," which he did.

  I printed it out. I kept it in a paper folder. Sure enough, five years later, I get a frantic call from the client. They were audited by the IRS, and guess what? The subchapter S filings were never done. The client had to rewrite and redo five years worth of tax returns, and be taxed as a C corporation, which exposed it to a couple of million dollars in tax liability. They were threatening malpractice.

  What I did was, I went to my folder, I pulled out that email exchange with the accountant, the one where he said that he was going to handle that. I scanned it, I emailed it to the client, and I never heard back from that situation ever again.

  Whenever a client refuses to follow your advice, get it in writing, print it out and put it in a file folder so you can access it quickly if and when the you know what hits the fan, and they don't remember that wonderful conversation where the accountant said that he was going to be doing it.

  Return client calls and emails as promptly as possible. The biggest complaint that people have when they file ethical grievances against lawyers is, "My lawyer isn't returning my phone calls or email messages." You have to respond to things as quickly as possible, and I know it's difficult.

  For those of you who are interested, I have a YouTube video on how to manage your time. It's not just for lawyers. It does not qualify for CLE credits. But if you go to youtube.com and search for Cliff Ennico time management, you will see this program. It's about half an hour, 45 minutes. Listen to it. It's the way in which I deal with things like my cluttered email inbox, and all of that kind of stuff. It's what I do. I'm not saying it's the best stuff that's out there, but it tells you at least what I do. Now, keep in mind, this does not qualify for CLE credits, anything on YouTube does not.

  Don't get too close to your clients. We talked about this a little bit earlier. It's okay to be friendly, in fact it's essential. I use my sense of humor a lot when talking to clients, and it's okay to be friendly in your communications, in fact you should be.

  A point I made in part one of this program is, in doing your marketing, it's very important that you make yourself accessible, that you let clients know they can talk to you, they can let their hair down, they can share their deepest, darkest secrets with you, that you're not going to be judging them because they're being audited by the IRS. People are afraid of dealing with attorneys, because they're ashamed to admit that they did something wrong or something bad. Anything you can do to help alleviate that fear will make you a much more popular attorney, and will help you greatly in your marketing.

  To be honest with you, I would rather be known as being approachable than as being super competent. Now that's an extreme statement. Obviously, people have to know that I can do the work, but I would rather be known as approachable. That gets me a lot more business than, "Well, here's all my degrees. And here's all the articles that I've written on the double jeopardy clause of the US Constitution." Clients are not impressed by stuff like that, they're not. If you're approachable, you will get business.

  But, you need to maintain a professional distance. Friends can impose on one another. Friends can borrow money from each other. Friends don't pay their bills on time. Friends do stuff for each other for free. If you find yourself getting too close to a client, especially romantically, consider referring them to another professional.

  When clients are dissatisfied, I always take the view that the customer is always right. Whenever you argue with a client, you lose, regardless of the outcome. If things are at the point where you are fighting with a client, you have already lost this war.

  My goal in dealing with clients is to make absolutely sure that we don't get to the point where we're arguing over something. But if it does happen, and it does happen, some people have short fuses, they like to fight for whatever reason, don't cower and hide. Address the situation quickly and honestly, and offer to make things right. Just address it quickly saying, "Okay, you're right, I was a little bit late getting this done. Let's talk about what we can do here." Make it a positive conversation. Don't cower and hide.

  If you do have to defend yourself against a client, have backup for anything you tell your client. Remember that email that I sent that client whose accountant didn't do the sub S filings with the IRS, have backup for anything you tell your client. "Well, just so you know, I can understand you're really upset here, but your accountant said he was going to do that. Here's the email where he told me it was going to be his responsibility. I would've done this for you, and it would've gotten done if he hadn't insisted on it."

  Consider a fee reduction. Never charge for correcting a problem if it truly was your fault. That goes without saying, you should eat that. But don't admit liability, especially in writing, or in an email. Your malpractice insurer won't like that. Very often, when something bad happens and you think the client is right, you do have some defenses to that, and your malpractice insurer does not want you waving those defenses by saying, "Well, yeah, you were right, I did kind of screw that up there."

  Don't admit liability. Just say, "Well, okay, I can understand you're really unhappy. Let's try to make this a win-win, let's try to work through this." But try not to say, "Yes, you are right, I screwed up there." Try not to do that, because there may be defenses you're not aware of, and by saying that, you've totally eviscerated them. Your malpractice insurer will not like that you admitted liability before you involve them. If anyone's going to admit liability, it's going to be them and their attorneys.

  And then lastly, if there's a problem with an invoice, deal with it before you send the invoice to a client. We'll talk about this when we get to the billing and collections segment of the program.

  What happens when a client posts a negative review online? Always remember, revenge is a dish best served cold. It's an old Spanish saying. Stay cool, don't overreact. Don't go crazy. Don't let your emotions get involved. Wait at least 24 or 48 hours before preparing any kind of response.

  If the review demonstrates that the client is a raving lunatic, which in my experience, a lot of them do ... When someone is really angry or upset, they really do crazy things. They misspell words, they use poor grammar, you can't even understand what the person is trying to say. The best response to those, is no response at all. Because by responding to them at all, you are dignifying a response that shouldn't be. If the email is such that anybody looking at it would say, "Wow, this person is really cracked," responding to it only gives them credibility. Let those lie.

  If not though, if the email was well thought through and shows that the person was intelligent, the best response is, "I am sorry to hear you are not satisfied with my services. Please contact me offline, and I'll do whatever I can do to make things right." Do not get into an online argument with a reviewer, or get overly defensive. Even if you're right, you will scare off potential new clients.

  Remember, the key to marketing yourself, especially as an attorney, you got to be accessible and approachable. And if they see that you're beating up on all these people who posted negative reviews, you will scare clients off.

  Also too, there is a real risk that you will disclose confidential information of the client. "Well, wait a minute, Joe, that's not the way it occurred at all. You know darn well. Here's exactly what you told me. Here's what you said you had done, you had done this, and this, and this and this." You're disclosing confidential information in violation of the model rules, and that will get you into trouble. At that point, you've given this crazy person an ethical grievance against you, because you violated his or her confidential information. Don't do that.

  Never get into an argument with a reviewer, just post a response saying, "I'm sorry to hear you were not satisfied. Please contact me. I'll do whatever I can to make things right." That makes you look like you occupy the high ground. What did someone say, "When somebody goes low, you got to go high," and that's what you have to do there.

  And by the way, let's talk about other things. Let's say a client is really satisfied with your service. Always ask satisfied clients to post positive reviews on social media. If a client says, "Cliff, you did a great job for me." "Great. Could you just do me a favor? Could you just go on social media, go on yelp.com, and just say some nice things about me, because that would really help me and what I'm doing right now." Take advantage of positive reviews, and always get the client's permission to post positive reviews on your website. People look for reviews.

  Now, I'll give you one more thing before we leave the subject of reviews. This is one of the things that really bugs me about the way solo lawyers market themselves. A lot of lawyers have not taken the time to create a website of their own, and we'll talk more about websites a little bit later on. This is a bad mistake, because when someone searches for a lawyer, whatever reviews have been posted show up at the very top of the search engine listings.

  So if I'm looking for you, and you don't have a website, the first thing I'm going to see about you are the Yelp reviews, and the AVO reviews, and the other reviews on findlaw.com, and some of the other places where people post reviews of attorneys. And most of those reviews are going to be negative, because it's five times more likely that people will post a negative review than a positive one. There's sociological studies that show this.

  It feels horrible when I'm looking for an attorney and all I'm seeing are these negative reviews, and I'm not seeing the lawyer's own website where you control the narrative. If you have a solo practice, spend $1,000 and get a good website put together.

  It doesn't have to win any awards, it can just be a marketing brochure, or a business card type of website, but make sure to get something up there that is the first thing that people see when they search for Cliff Ennico. If you search for Cliff Ennico, the first thing you see is cliffennico.com. And then if you read lower, you might see some reviews. But always make sure that your website is up there, because that's how you control the narrative. Otherwise, you're letting your disgruntled clients control the narrative, and that is never a good thing.

  Let's talk about firing a client. Some clients are not worth having. You do not have to work for everybody. Nowhere in the model rules do I see anything that says that you must take on everything that comes in the door.

  Trust your gut. If a client comes on like a flake or a jerk, send them somewhere else. Do not take them on. Send them to your worst competitor, send them to the attorney you hate most in the local Bar Association. Let that person have the crazy client, not you.

  Some clients are not worth having. Here are some of the people that cause me to terminate them. Repeat offenders. There's an old saying, "Fool me once, shame on you. Fool me twice, shame on me." If I let a client write off a portion of their bill, and then it happens again where they're late paying me, well, at that point, this is a person who doesn't believe in paying their bills on time, and I want them gone out of my life.

  Clients whose conduct suggests moral turpitude. Obviously, as attorneys we sometimes have to, by law, represent people who are, shall we say unsavory in the way that they do business, or conduct their lives. But always keep in mind that there are certain people who deal with the world a certain way, and they're going to deal with you the same way. If you are representing a sleazy client, keep in mind that you will be the target of the sleaze sooner or later.

  Clients you would not accept an invitation to LinkedIn from. That's one of my first questions whenever another attorney says, "Hey, Cliff, I like this client, it's an interesting matter, but they're coming on to me like a little bit of a flake." My first question is, would you accept an invitation to LinkedIn from this person? If the answer is no, that is somebody you probably shouldn't be dealing with.

  Clients you don't like. Now don't get me wrong, I'm not saying you have to be too buddy-buddy with them, because that can lead you into trouble. But sooner or later, if you don't like your clients, you're going to want to take it out on them in some way. And the way you're going to take it out on them is not giving them the service that they deserve and that they're paying for. And that can lead to a malpractice action if you are not careful.

  And then just trust your gut. If a client is keeping you awake at night, finish their matter, get paid, and then just don't take on any more business from that person. Send them somewhere else, say you're too busy, say you're working on your next book, whatever, it works.

  Now, if you do terminate a client, you are required by the rules of ethics to send a formal termination letter in writing. Always send it by certified mail, or some way in which you get confirmation of receipt.

  One of the thorniest questions, if a client owes you money, can you hold onto their files? The laws in every state are slightly different on this. In most states, the rule is, you do have a lien on the file, but you must disclose information if it's necessary to preserve the client's case in court.

  So for example, you cannot withhold files containing vital evidence that an attorney needs to defend himself or herself in court. There are certain situations where the rules require that you disclose certain information. But other than that, you can hold onto your files as collateral to get paid. But just again, look at the rules in your state, especially if you're a litigator. Those are the basic rules of client handling.

  Now, let's drill down a little bit and talk about billing and collection. The billing process, one of my favorite topics, by the way, I love talking about billing. There's a local bar association, I do an annual program for them on ninja strategies for billing clients. It's great.

  First rule, bill early, and often. Years ago, I used to have a landscaper who worked on my property, and he was a good landscaper, he did a great job, did wonderful work, his people were nice too, but I couldn't get him to send me a bill, at all. Every month I would call him, I would say, "Would you really send me a bill? Send me a bill. I want to make sure we stay on top of things." "Oh, no, no, I don't have time. I'm busy. I'm too busy. I got too many customers, yada yada."

  And then what he would do is, in December, a week before Christmas, he would send a bill for the entire year's service, like a $15,000 bill, with a note saying, "Payable upon receipt." The week before Christmas, he did this every year. After three years, I decided, I just can't work with this person. I'm sorry. This is creating too much of a havoc with my finances here. I need to know where I stand with people.

  Clients are more likely to pay frequent small bills than a single massive one. Always send your bills out at least monthly. Pick a day, it can be the last day of the month, it can be the anniversary of your birthday, the monthly anniversary of your birthday. Pick a day, shut down your office for at least a few hours, do your bills and get them out.

  If you don't send bills regularly, you do not get paid regularly, and clients will delay. There are a lot of clients who think that there's a federal law somewhere saying that you always have 30 days to pay a bill. Let me assure you, after 40 years of practicing law, there is no such statute anywhere. If you don't send out your bills though, clients will think they have the right to hold payment back for 30, 45 days. Do not give them that opportunity. Send the bills out promptly every month at least.

  More often, whenever I do any kind of like an M&A deal ... I do a lot of practice in the M&A field, buying and selling small businesses. I always render a final bill at the closing. When the client gets their check, I get mine, and that's how I work. I don't let things sit. Because if you let bills sit, you're opening up a Pandora's box that will open the door to a dispute with a client. Always, always, always get some money up front. Always.

  Never let a client hold back billing until the work is done. Because once you do the work, you can't take it back. Once the work is done, those are hours of your life that you will never get back.

  Get some money up front. Let the client know this is a business relationship, you expect to be paid on time.

  Never, ever, ever send a client a bill they are not expecting. I made this point in the last hour, and I will make it as well here too. Never, ever. This is the surest way to get a client angry with you, is to send them a bill they are not expecting.

  I over communicate how much things are costing, how much I'm running up. Some clients, I will actually send them a weekly tab showing them, "Just so you know, I put in another four hours this week." I do this because if you warn the client in advance, you almost always get paid on time. It's the surprise bills that the client will always dispute.

  Always send a detailed bill. I never send a bill to a client for services rendered $5,000. I never do that. I always send a detailed bill. "On Friday, I spent an hour, this is what I did. On Saturday, I spent a half an hour, this is what I did."

  The client never has to ask for that, I send it to him anyway, because they're less likely to contest the bill if they see what I've done. Because let's face it, clients don't remember, and they often don't know how much time you've spent on their matter. So by showing them up front, they're more likely to say, "oh, this is great. Well, Cliffy, I guess he must have had to do that. Okay. I'm not going to fight this. I'm going to pay this." That's what you want them thinking.

  And also too, it's a great way for you to catch if you did spend too much time on something too. It's always good to catch that in advance. If you did spend too much time on a project, and legitimately you just spun wheels, here's what I do. What I do is I bill the whole thing, but at the very end, I give the client a courtesy reduction, and I show it on the invoice. What that does is it diffuses the argument that Cliff spun his wheels.

  When the client sees that, he goes, "Oh, okay. Wait, he spent 10 hours on this? Oh my God. Oh, wait a minute though, okay, he realizes it. Cliff realizes he put in too much. That's why he's giving me this hour off at the end. Okay. No, he's okay. I'll pay this." That's the way you want them to respond. It diffuses the argument.

  If you send them a bill for the full 10 hours, that gives rise to the argument, "Cliff, you're gouging me here. There's no way that you spent 10 hours on this. You should have only spent about five or six hours on this." By giving the client a little bit of a courtesy upfront, you diffuse that argument. And it shows that you're basically a good person, who is taking care to manage his or her time. That's a ninja trick, by the way, but it's one I use a lot. Try it, and you'll find it'll work for you.

  Last but not least, this is also another ninja trick of billing bill, bill the most amount of time on the activities clients find most distasteful. Now, I call myself a small business attorney, what does that mean in the real world? What it means in the real world is I draft contracts. That is what I spend most of my time doing, is drafting contracts.

  Why? Because, let's face it, people don't pay their attorneys to do things that are fun and fulfilling. They want their attorneys to do the things that are dull, boring, technical, and scary. Drafting a contract meets all of those rules. These contracts have to be perfect. They have to. If I make a mistake in a contract, it can be a small mistake, if I say, "Thou shalt, instead of thou shalt not," that could be a malpractice action. And it's scary. People don't like it. They pay me lots of money to do contracts for them.

  So when I send a bill out to a client, what do I bill the most time for? Drafting contracts. Because I find when I do that, I get less pushback from the client. The clients are so happy that I took that awful chore off their plate, that they're less likely to dispute the bill.

  Whereas, if I bill for telephone time, "Well, wait a minute, Cliff, we weren't on the phone for 20 minutes. We were only on the phone for five minutes, man. You're gouging me on that." Or if I do research time, "Well, why am I billing for your education, Cliff? Why am I paying for that? You're a small business attorney, you're supposed to know this. Why did you have to research the law? I don't want to pay for your research time." But when I bill for drafting, often the bills are paid early, they're paid before the due date, because people detest that chore. It's a great little ninja trick.

  Don't be afraid to suggest alternative fee arrangements. Clients love flat fees. They do. But, there are rules. Do not sell yourself short. A flat fee should not be a discounted fee.

  My little rule of thumb is that the flat fee should be at least 20 to 25% more of what you think the bill would be if you billed by the hour. So if you think that a matter is going to cost $500 to bill by the hour, send them a bill, quote the flat fee at 600 or 650. Why? Because circumstances happen where you end up spending more time, but also too, what you want is for these things to average out.

  Whenever you quote a flat fee, you're taking a risk that you're going to be spending more hours than necessary. On some of your flat fee quotes, you will spend less hours than necessary. In some of your flat fee quotes, you will bill more hours than necessary. And you want those two things to average out. That's why you always should quote a little bit more of what you think the hourly rate would be.

  Also, make sure you state the carve outs clearly. "You're getting a flat fee for this, but it doesn't include that. I'm forming a corporation for you for a flat fee, but if you want a shareholder's agreement, that is an additional fee." That's a good example from my practice.

  If you are charging contingency fees, the Model Rules in every state have very specific rules about contingency fees. Also, state law. For example, New York has a very detailed law, which is not in the Model Rules, it's in the judiciary law that specifies how contingency fees are charged in medical malpractice cases. Every state has some weird statutes like that, so make sure that you know your state's laws on contingency fees.

  I do have a YouTube video on this topic, if you are interested. If you go to youtube.com and search for Cliff Ennico client handling, you will see this video. Keep in mind though that none of my YouTube videos qualify for MCLE credits. These are not for lawyers, these are for the general public, and you won't be able to get CLE credits for anything that I do on YouTube. You will get CLE credits for listening to this program.

  Let's talk for a minute about collecting overdue bills. There are six steps to collecting overdue bills. Number one, stop working the minute a bill is past due. In my experience, big accounts receivable almost always start out as small ones that get out of control. The minute the client starts going late, you stop. You call the client, "Hey, Joe, what's up? What's up here? What's happening? Are you having more trouble than I think you're having? Let's talk about this. Let's work something out." Clients always appreciate when you do that.

  Always contact the client immediately. Ask what's up? Try to negotiate a solution, either a payment schedule, or a fee reduction. Get it in writing. Get it in writing. Always. "This is it, you owe me $1,500. It's $500 a month for the next three months."

  Make sure you get this in an email. Email is a tricky tool. I know a lot of attorneys still don't like email, because there are lots of ways to get into trouble, but this is one of the ways in which email can save your butt. When a client owes you money, and you agree to a payment schedule, get it in writing, because it makes it clear. So if the client defaults on that, it's much more likely that the client is playing a game with you. Start building your evidence against this person if, God forbid, you do have to sue them.

  If the client stonewalls, have your attorney, don't do this yourself, get another attorney to send a formal demand letter. In the last hour, I talked about the importance of having an attorney network of other attorneys that will help you out, and that will do little things for you when you need them. This is one area where you want to go to your network and say, "Hey, Joe, you're a litigator, can you do me a favor? I got this client that owes me 3,000. He's not returning my phone calls. I need to send the fear of God into him. Can you please send him a nasty letter? When he sees that I've lawyered up, he'll be much more likely to come to the table and settle with me."

  Which is true by the way. If it's a letter from you, well, that's just the same as all the emails you send to the client. But when another attorney sends an email on your behalf, that is very, very powerful stuff.

  Don't let it go. Keep up the pressure and make a nuisance of yourself. If necessary, consider filing a claim in small claims court. I have a YouTube video, which is one of the more popular ones, I think I've got six figures now of people who've looked at it. It's called Dealing with Deadbeats. If you go to youtube.com and search for Cliff Ennico dealing with dead beats, or just Cliff Ennico, you will probably see it. It's one of the more popular videos that I've done.

  And one of the things I tell you is that if you're too nice, you go to the bottom of the pile. Whenever somebody owes somebody money, there's always enough money to pay somebody. The people who get paid first are the people who must be paid or else the person will die or go out of business, whatever. And then after that, the people who make a nuisance of themselves tend to get paid, because the debtor wants to get rid of them. Everybody else goes into the, I will pay this someday pile. If you are too nice to your deadbeats, you will end up at the bottom of the pile. Sometimes the only way to get money out of a deadbeat is to find your inner jerk. And I talk about how to do this on the YouTube video.

  Now let's talk about ethics. We have one more topic to talk about and then we're done. And the ethics rules we're going to talk about are the Rule Seven rules, 7.1 to 7.5. These are the rules that deal with marketing a solo practice.

  You will recall that in the very first hour, we talked about the five pillars of a solo practice marketing plan, and I'll just go through them very quickly again. Your firm name, your firm address, business cards, and stationary. The documents that identify your firm, and how you do business.

  Number two, your involvement in organizations and community activities.

  Number three, your personal interaction with potential clients and referral sources, and your elevator pitch. How you interact with other human beings.

  Number four, your public speaking strategy.

  And number five, your law firm website, your LinkedIn profile, your directory listings. The web presence, your internet presence of your law practice.

  Let's take all five of these and talk about the ethics rules that apply to them. Let's talk about your firm name, address, business cards and stationary. This is primarily Rule 7.4 and 7.5.

  You cannot use offices if it's only you. You cannot use associates if it's only you. Your cat or dog, while they're very nice, do not qualify as associates. Law offices of Joe Blow is misleading if it's only you, it should be law office. Unless, of course, you do have more than one office. So for example, if you have an office in New York and an office in Connecticut, like I do, it's okay to say law offices of whatever.

  Trade names. Can you use a trade name? You don't like calling yourself Cliff Ennico, Attorney at Law, because let's say you have a long and difficult last name that's difficult to pronounce or remember, you may want to do a trade name. CliffTheLLCGuy.com is a little bit more easier to remember than CliffordEnnico.com is.

  The rules on trade names vary from state to state. California allows them, New York does not. You have to look at the rules in the states where you are admitted to practice. There's also a very good New York State Bar Ethics opinion, 1179, that talks about how you deal with interstate practices. Let's face it, if you have a website, you're broadcasting your message to all 50 states, so how do you deal with that? There's no way you can comply with all 50 rules. It's a nice ethics opinion that gives you some very practical advice on how you deal with that. It's Ethics Opinion 1179.

  You can sponsor events and hand out customized tchotchkes at trade shows. Anything that you do that helps build your brand is key. You can do that, and the rules almost always allow that. So if you want to hand out a pen that says Law Office of Clifford Ennico, absolutely okay. You want to sponsor a baseball game and hang the thing out over the outfield, you can certainly do stuff like that, by all means. Give out a free will to charitable organizations, and have it be a silent auction item, someone wants a will for free or something like that. Do stuff like that to get your name out.

  If all you're doing is just branding and name recognition, the rules of ethics basically allow you to do just about anything you want, as long as it's not misleading. So don't say things like, "We win more cases than anybody else." There's absolutely no way you can prove that. Personal injury attorneys are the biggest offenders here. But be careful, don't make promises that you can't keep.

  My saying that I'm a Wall Street lawyer for your smaller growing business, that doesn't say anything about how good I am or anything like that. It just is a nice way to remember what I do. Keep that in mind. If it's just brand recognition, it's okay. If you're making promises you can't keep, well, not only does that violate the Rules of Ethics, it may also violate federal and state advertising laws as well, which prohibit false or misleading advertising.

  Joining organizations and community activities. You can belong to all the bar associations you want, but you're not going to get a whole lot of business out of them. Your goal in organizations is to join organizations where there are a lot of potential clients, that is the key, and relatively few attorneys.

  If you're joining organizations where 99% of the members are attorneys, i.e. a bar association, that's not the best place to be. If you're a computer lawyer, and you're doing work with startup software companies, an organization of software developers, or an inventor's association is probably a better place for you to be. There's likely to be a lot more clients there, and relatively few other attorneys.

  The state rules will prohibit you from paying referral fees to non-lawyers, by the way, keep that very much clear. In most states that I'm aware of, while it's okay for attorneys to share fees, or pay referral fees to each other, you are not allowed to pay referral fees to non-lawyers for business. That's rule 7.2.

  You also cannot go into partnership with non-lawyers. So years ago, I had a friend who was an accountant, and he was getting a lot of business from companies in the UK that wanted to set up US operations. And he said, "Cliff, lets you and I team up. Let's put up a website specifically for UK companies, we'll put it on a lot of UK websites saying, you want to do business in the US? We'll do everything from soup to nuts. We'll do the accounting, we'll do the lawyering, we'll do the marketing and all that."

  Under the Rules of Ethics, you cannot do that. You are not allowed to go into partnership with non-lawyers, in virtually all states that I'm aware of. That's rule 5.8 of the rules. You can get involved in something like that, but only if the client retains you separately, and only pays you for the legal services that are done. In other words, if it's a situation where the client pays you for the lawyering, the accountant for the accounting, and the marketing person for the marketing, that is okay, but you can't have any blending there.

  Keep in mind that your personal interactions, your elevator pitch, cannot be an improper solicitation. It's okay to tell the world about what you do, but it's not okay to say, "And I really want you to hire me. And if you hire me, I'll give you a 20% discount off the first several hours." Unless, of course, you're offering that generally, just as a way of getting new business. Beware the hard sell. If it feels sleazy to you, it probably violates rule 7.3.

  Let's talk about your public speaking strategy. You should get out there and do public speaking. This is probably the most effective way for you to get business for a solo practice. Let people see who you are. People don't want to hire an attorney, they want to hire you. They want to get a sense of who you are.

  If you like doing videos, by the way ... I personally don't do this, because I don't have time. Do little snippets of videos and put them up on your website. Have some video up there. "Hi, I'm Cliff Ennico, and I just want to talk to you a bit about employee versus independent contractor. Everybody's confused about this, but here's what it really boils down to." That humanizes you. Again, it makes you accessible. People can hear what you look like, what you sound like. People want that from their attorneys. Get out there, get speaking out there.

  And just make sure you keep up your gym membership, by the way, because you're going to get treated to a lot of free lunches and you got to watch your weight. That was a problem that I had. I did a lot of public speaking my first couple of years in practice, and I gained like 30 pounds, because everybody was feeding me. Let's face it, country clubs have very good food, by the way, much better than diners.

  There's a very big difference between giving out legal information and giving out legal advice. Make sure you disclaim that. You have to have a disclaimer slide. I do it, usually, at the beginning of all my programs. Obviously this is a CLE program, I don't have to do it as much. But for lay audiences, I always make it clear that I cannot give legal advice out to people, they have to pay for that. So if they do listen to something that I say, and they take it as advice, and it doesn't work out for them, they can't sue me if their life falls apart and they're living in a diaper box under the Brooklyn Bridge. Be very careful to make that.

  Also, be very careful about divulging client confidentiality when giving examples. I had this situation in my practice. Make sure when you do this, you disguise it in some way, because Murphy's Law being what it is, there might be a person in that audience who knows the client. And when they hear this, they're going to say, "Oh my God, he's talking about Joe. I better tell Joe, this lawyer's going AWOL here. He's going around telling everybody about Joe's thing." And that could create an ethical issue for you.

  There are little tricks you do here. I always change irrelevant details. Whenever I give a story about a client, I'll say that, "I went into his office and the furniture was Danish modern," when it was really something else. I'll change irrelevant details only so that, on the off chance that there is somebody else there, they'll say, "Wait a minute, no, that can't be Joe, because I know Joe's office, he doesn't have that kind of furniture." Do little things like that to make it ... It doesn't take away from the validity of the story, but it does help protect you from lawsuits. And make sure you don't disclose their confidentiality.

  Now let's talk about your law firm website, your LinkedIn profile, and your directory listings. Number one, you are not allowed to say that you are a specialist, unless you have a specialist degree in a certain area. This means that you cannot fill out the specialty section on LinkedIn. There's a section of LinkedIn where you can say what your specialty is, you cannot do that as a lawyer, unless you have a specific credential in that area. When a bar association ethics committee calls you out on your advertising, it's almost always because you said that you were a specialist without having the necessary qualifications. You can't do it on LinkedIn either.

  Make a copy of your profile at least once a year, and your website. Most states require that you hold onto a copy, a screenshot, of your website for a period of time. It's usually like three to five years. So if you do put your fee schedule up on your website, which I encourage you to do by the way, clients want to know how much you charge. So rather than that being an awkward conversation, just put it up on your website.

  But if you do change your fees, make sure that you take a screenshot, and date stamp it, before you change the fee, so that you can document, "Wait a minute, this guy said that he was 400, but I can prove to you that I didn't quote that fee until July 1st. He wants the cheaper fee, but I wasn't using that fee. I had already increased my fee when he reached out to me." You may be asked to justify that at some point.

  And then at the bottom of the homepage, or someplace where it's clearly visible, there has to be a disclaimer that says, "In some states, website or LinkedIn content is considered advertising. Prior results do not guarantee a similar outcome. Online conversations do not create attorney-client privilege." Those are three very specific ...

  "In some states, website or LinkedIn content is considered advertising. Prior results do not guarantee a similar outcome. Online conversations do not create attorney-client privilege." Those disclaimers you'll see, if you're looking at my PowerPoint slide, you'll see exactly what it is that has to be in your website. Make sure those disclaimers are there, because many states require them.

  Now what about lawyer referral networks? Should you join lawyer referral networks as a way of generating business for your practice? The short answer is yes, but there are rules. In 2017, the New York State Bar Association issued two Ethics Opinions back to back, 1131 and 1132, they handed them down the same day. And they both dealt with lawyer referral networks. In one case, the attorney was allowed to participate in the network. And in the other case, he was not allowed to participate in the network. And they are good opinions to sort of read side by side.

  The bottom line is, you can pay for a listing, but what you can't do is you cannot pay for a recommendation. Anything that the referral network is doing to put you at the top of the pile is something you cannot pay for. If you are paying for a recommendation, that violates the rules.

  If all you're doing is paying a monthly fee to be listed on the database under the letter E, you have to ask, whenever you're dealing with a referral network, when someone asks for a left-handed divorce attorney in the 01234 zip code, what do they see? Make sure that you look at it. If it's just a random listing of attorneys, or an alphabetical order, that's okay.

  But if there are five listings, and yours appears in purple, and at the top of the listing, where it's much more likely that the client is going to call you as opposed to the other four who show up on the search results, that's something you have to call the network out on and ask, are you paying for that? Because if you're paying for that, if you're paying for something that sets you apart from just random organic search results, you may be violating the ethical rules on that.

  My final thoughts here. We're at the end now of a two hour program. Thank you very much, all of you who listened to both hours. I know this is a very long program, but hopefully I've kept you at least somewhat entertained for the last two hours.

  The key points you have to remember here. Number one, when you create a new law firm, you are starting a new business. Start managing it like a business from the get-go. Yes, it's a profession, but it's also a business. Find out how to make money, and follow your own rules.

  Number two, your goal should be to create something that will live and thrive for successive generations. If not, why are you bothering? At some point, you are going to have to leave the practice of law, you'll have to retire, you'll have to quit. What do you want your legacy to be? What is that going to look like? Start planning your business. Just like any entrepreneur does, plan your business with your exit strategy in mind.

  Number three, always market the hell out of your practice. Learn how to do it ethically. Learn how to do it professionally. Commit the rules 7.1 to 7.5 of the Model Rules, commit those to memory. But do it, get out there marketing. Businesses that are not consistently marketing, sooner or later fail.

  That is the lesson of my 40 years of working with small businesses throughout the country is, if you don't market effectively, you are on a path to disaster. And never get so caught up in your client work that you stop marketing. Always find time.

  When you're first starting out, you should spend at least 20 to 25% of your total time on marketing related activities. If you are not spending that much time on marketing, you are not giving marketing the attention it deserves. And even today, after 40 years, I still spend about 10 to 15% of my total time on marketing. Doing this program, for example, counts as marketing. Many of you have heard my name for the first time on this program, and hopefully you're curious about learning more. This is a part of my marketing outreach.

  When you stop marketing, your firm starts dying. Never get so busy dealing with client deadlines that you stop marketing, because when you stop marketing, sooner or later the phone stops ringing, the emails don't come in the inbox.

  Plan to spend about 3,000 hours a year, for five years, to get a firm off the ground. It takes about three to five years, and about 3,000 total hours, not all billable hours, but total hours a year, a 60 hour week, which is probably much less than what you'd be spending working for a law firm probably.

  Never ever send a client a bill that they're not expecting. Always over-communicate with clients. Whenever you have gone a week without speaking to a client on a particular matter, it's probably too long. Stop what you are doing, pick up the phone, send an email, "Hey, Joe, how are you? What's going on?" 90% of ethical complaints have to do with nonresponsive attorneys. Stay on top of your clients, that also keeps deadbeats and accounts receivable under control as well. The more you communicate about your bills, the more likely it is you will get paid on time all the time.

  That is all I have to say. These are the secrets of the ninja masters. You do have a couple of handouts there with additional information, and you also have my YouTube videos, which I encourage you to listen to. If you go to youtube.com, search for Cliff Ennico, you will see I have over 50 one hour videos on all aspects of running a small business. Keep in mind, these do not qualify for CLE credits, they do not, but it may give you some more general insight into how at least one 40 year business attorney in Fairfield, Connecticut looks at the world.

  Thank you for listening. It's been a pleasure to do these programs for you, and for Quimbee. Thanks to the Quimbee folks for making this happen. I'm Cliff Ennico. Thanks for listening.

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