DOs AND DON’Ts OF BILLING OR HOW TO GET PAID, STAY PAID, AND REMAIN LICENSED ANDREW D. WEISBLATT THE WEISBLATT LAW FIRM, L.L.C St. James Place, Suite 105 Houston, Texas HOUSTON BAR ASSOCIATION 2015 NEW LICENSEE INSTITUTE June 5,

This paper has two main sections: The Mechanics: Engagement Letters IOLTA Accounts The Anecdotes: The Dos The Don’ts

Always have a written engagement letter! DO: Identify your client Identify the scope of the project Identify potential conflicts Describe the deal points: Hourly v. Contingent Hourly Rate Contingency % Billing Increment Minimum deposit State Bar Disclosures DON’T Charge impermissible contingent fees such as: Criminal Cases Inappropriate domestic cases Confuse “retainers” and “deposits against fees and/or expenses” Charge impermissible flat fees (more on this later) Charge fees that violate the law or are unconscionable.

IOLTA accounts (Page 1 of 3) Part 1 – putting money IN. Your IOLTA account is your friend! IOLTA stands for Interest on Lawyer’s Trust Accounts. The interest on these accounts goes to fund State Bar programs for providing legal services to indigent persons. You can establish special “single client” non-IOLTA trust accounts if you anticipate holding very large amounts of other people’s money for long periods of time. It’s hard to get into trouble for putting money into an IOLTA account, but easy to get in trouble for putting money into your operating account. – DO NOT COMINGLE YOUR FUNDS AND OTHER’S FUNDS! Credit Cards and credit card fees.

IOLTA accounts (Page 2 of 3) Part 1 – Taking money out – the fun part! You can remove funds from the IOLTA account that are earned. Special issues with “retainers” and “flat fees.” See Cluck v. Comm’n for Lawyer Discipline; 247 S.W.3d 434 (Tex.App.-Dallas 2008, pet. denied) - The “non-refundable retainer” case. Ethics Opinion 611 – “non-refundable retainer which includes services opinion. Settlement Statements are cheap insurance! Settlement Statements are cheap insurance Payments that are partially A/R and partially unearned – IOLTA ONLY! Never remove disputed funds! Joe Marr Wilson v. Comm’n for Lawyer Discipline; BODA Case. No ; (January 28, 2011). – Money deposited for non-fee purpose used for fees. How “available funds” versus “collected funds” can ruin your life.life

IOLTA accounts (Page 3 of 3) Part 3 – Accounting and Compliance Everyone who has an IOLTA account must provide an annual report to the State Bar of Texas. TRDP – 5 year record retention requirement! Abandoned Funds – Ethics Opinion 602 or “It’s STILL not your money, dang it!”

Careful of Conflicts – they do exist Conflicts are not hypothetical law school constructs. Conflicts can keep you from being paid! Ethics Opinion 500 Can you represent two passengers in a car crash case? What if one of the passengers has bruises and the other becomes a paraplegic – and there’s only a minimal policy limits? Whenever there is a potential conflict, please re-read TDRPC If there is an actual or potential conflict which is waivable, and you determine to represent multiple clients, get the waiver in writing which explains not only the conflict, but also the importance of the waiver and what happens if the conflict becomes such that continued representation of the multiple parties is not possible. If your clients are feuding over division of settlement funds – you cannot disburse these funds. It is also risky to try to act as “mediator” between the clients. It is best to anticipate these potential problems in your engagement letter. If this situation arises, you may have to withdraw and let the clients resolve it through legal or other means. In the meantime, you cannot disburse funds (unless all clients agree in writing to the disbursement).

Tips to increase the likelihood of payment Require an adequate deposit against fees and expenses – if they can’t pay you NOW they wont be able to pay you LATER! Ask for what you’re worth. Assess your hourly rate at least yearly. Bill ALL of your time. Clients like to see “no charge” items on the invoices. Even if you do a two minute task – “Called and left message for opposing counsel” – best practice is to bill the time and then “no charge” it on your invoice. Draft detailed time entries. Which would you rather pay: Research, s with co-counsel, opposing counsel and client, check State incorporation records – 1.75 hours. OR Online legal research regarding opposed motions for entry upon and inspection of real estate under Rule 196.7; draft and revise to ADW re same. Review from ADW re XXXX’s conversation. Review follow- up from client reacting to same. Draft and revise extensive to client regarding issues relating to effective date of proposed partnership dissolution and YYYY’s likely positions re same; confirm current status of limited partnership registration with Texas Secretary of State's office online. – 1.75 hours. Clients hate surprises. Keep them informed. Bill twice a month in very active months.

Tips to increase the likelihood of payment Page 2 Take credit cards – but be careful of the IOLTA issues. Consider a credit card “backup.” Ethics Opinion 582 Withdraw early and often. Decide in advance which clients are pro-bono. Remember – “No good deed goes unpunished.”

Some notes on “expenses.” You may only charge the client more than the amount of expense you pay after disclosure and agreement. In some cases, this rule applies to “contract lawyers!” See Ethics Opinion 577. Trying to track expenses can be an unproductive. Evaluate it carefully. Really…I mean, really? Don’t charge clients for gifts that you buy other lawyers in your firm. Don’t expense lavish meals. Don’t expense anything that you wouldn’t want to explain to a judge in open court.

Final thoughts…. Your invoices are written to many audiences: Client Judge and/or Jury of the dispute Judge and/or Jury of the malpractice claim against you. Disciplinary board It’s better to not do the work and not get paid than to do the work and not get paid. (Foonberg – How to Start and Build a Law Office) Invoices are one of the few documents which your clients will actually read – make sure they say things you want them to see. People want effort almost as much as results.