AVOIDING GRIEVANCES. State Bar of Texas 16 TH ANNUAL STATE BAR COLLEGE SUMMER SCHOOL COURSE July 17 19, 2014 Galveston Island CHAPTER 12

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1 AVOIDING GRIEVANCES CLAUDE E. DUCLOUX Hill Ducloux Carnes & De La Garza 400 W. 15 th Street, Suite 808 Austin, Texas Ph: Fax: State Bar of Texas 16 TH ANNUAL STATE BAR COLLEGE SUMMER SCHOOL COURSE July 17 19, 2014 Galveston Island CHAPTER 12

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3 CLAUDE E. DUCLOUX 400 W. 15 th Street, Suite 808 Austin, Texas Telephone: (512) Telecopier: (512) EDUCATION University of Texas, Austin, B.A., 1972 St. Mary's University, San Antonio, J.D., December 1976 BAR ADMISSIONS Texas1977; California 1978, Colorado 2003 Various US District Courts and Circuit Courts of Appeal EMPLOYMENT Assistant General Counsel, State Bar of Texas: Robinson, Felts, Starnes, Angenend & Mashburn; Civil Trial Attorney, Wood, Lucksinger & Epstein; Civil Trial Attorney, Present: Hill, Ducloux, Carnes & de la Garza, Association of Practices: Civil Trial Attorney, Business Formation, Transactions, Trials and Appeals, Mediation and Arbitration; PROFESSIONAL ACTIVITIES President, Travis County Bar Association (now, Austin Bar Association); ; (All officer positions: Pres.-Elect; Comptroller, Treasurer, Secretary '95-96; Director) Chair, Texas Board of Legal Specialization, Board Certified: Civil Trial Law, 1984; Civil Appellate Law, l987 Chair, Texas Bar Foundation ; Secretary-Treasurer (04-05); Trustee Chair, Texas Center for Legal Ethics and Professionalism: , Trustee Chair, College of the State Bar of Texas; ; Vice-Chair ; Director, , Chair, State Bar of Texas Annual Meeting (Texas Bar Convention), 2001 Chair, United States Fifth Circuit Judicial Conference, Austin 2004 President, St. Mary=s Law Alumni Association, , Trustee, Associate, American Board of Trial Advocates, pres. Director, State Bar of Texas; District 9, ; Executive Committee (Outstanding 3 rd Year Director Award ) Director, Austin Lawyers Care (now: Volunteer Legal Services of Central Texas), Director, Austin Young Lawyers Association, Editor, Travis County Practice Handbook, 1984, 1986 Trustee; St Mary=s University, San Antonio, Texas Member and Founder ABar & Grill Singers,@ Lawyer Group performing musical parody across the country, and raising (through Jan 2008) $400,000 for pro bono causes. Member, Supreme Court Advisory Committee on Court-Annexed Mediation, Distinguished Mediator, Texas Mediator Credentialing Association, 2010 PROFESSIONAL HONORS Gene Cavin Award for Excellence in CLE, State Bar of Texas, 2011 (Statewide Award) Annual Professionalism Award, College of the State Bar of Texas, 2002 (Statewide Award) Outstanding Young Lawyer Award, 1987 (Awarded by Austin Young Lawyers Association) Presidential Citation; State Bar of Texas, 2001 and 2006 Pro Bono Award, Volunteer Legal Services of Central Texas, 1991, 1993, 1997, 1999 W. Frank Newton Award (Statewide Annual Pro Bono Award given by State Bar of Texas), 2000 Professionalism Award, Austin Bar Association, 2007 Outstanding Mentor of the Year Award, Austin Young Lawyers Association, 2007 MILITARY SERVICE U.S. Army; 1st Cavalry Division, (Awarded Army Commendation Medal, 1974)

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5 TABLE OF CONTENTS I. THE TOP 5 PROBLEMS... 1 II. PART I: THE POTENTIAL CLIENT... 1 A. Intake: Assess the Client What Does Your Client Want?... 2 B. The Family Law Speeches Objectives in Contested Matters The Speeches... 4 III. PART II: DOCUMENTING YOUR REPRESENTATION... 4 A. Never Underestimate Fees... 5 B. Who s Paying Me? Documenting the Fee Arrangement... 6 C. The Ongoing Relationship Handling Billing Controversies Avoid Suing Clients Crazy and Difficult Clients... 9 IV. PART III: CONFLICTS OF INTEREST... 9 A. The Law B. The Four Situations Which Prohibit Representation Litigation Business Other Duties Past Matter C. Rothermel s 3 Questions Between Parties: Will My Representation of A be Materially and Directly Adverse to the Interest of B? To Third Parties: Do I Have Any Duties to Third Parties Which Will Limit My Representation of Either A or B? My Own or My Firm s Interests: Is My Representation of A or B Adversely Limited by My Own Interests D. Rights and Duties The Lawyer Doing Business with the Client V. PART IV: RUNNING YOUR OFFICE A. Financial Control B. Office Systems Getting Future Referrals: Do Your Share of the Work C. Billing: The Lifeblood of Success VI. PART V: USING YOUR TRUST ACCOUNT A. What Belongs in IOLTA Account? B. What Doesn t Belong in There? C. What Checks/Transfers Should Come Out of Iolta Account? D. What Checks/Transfers Should NOT Come Out of IOLTA Account? E. Bad Things Happen: Handling a Grievance F. The Client TRIUMVIRATE aka Claude s 3 Rules VII. FINAL THOUGHTS A. Be a Success! B. Your Ethical Responsibilities C. What Clients Want D. Improve and Defend Your Profession i

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7 The Top 5 Problems 1. Communication keeping in touch and responding 2. Neglect usually results in #1 above. 3. Handling the Attorney Client Relationship proper contracts, disclosures and conflicts whose file is it? 4. Attorney Fees 5. Misuse of Retainers/IOLTA accounts Part I: The Potential Client You can t succeed with bad clients. 1

8 INTAKE: ASSESS THE CLIENT FIRST determine: Is there a conflict? Take a thorough history Is this a prudent piece of business for you to handle? Do you have the skills? Do you have the desire? Do you have the technology? WHAT DOES YOUR CLIENT WANT? Discuss with your client: Find Out: What they really hope to achieve, and is that realistic? Inform: What they can expect in accomplishing their goals: Time line Cost Alternatives 2

9 THE FAMILY LAW SPEECHES The 5% Rule It s as simple or as difficult as the parties want it to be. OBJECTIVES in Contested Matters Discuss their most important objective: is it to win or delay the inevitable. If they say it s the principle, that rarely results in a good outcome (and raise your rate). 3

10 THE SPEECHES Discuss conflicts up front. Make sure they know whom (which entity) you will represent. Are there other entities involved? Part II: Documenting Your Representation 4

11 NEVER UNDERESTIMATE FEES. The client will remember the lowest fee you quote. WHO S PAYING ME? Discuss how the client plans to pay you. Does this client have the money? Don t even get started without a payment plan. 5

12 DOCUMENTING THE FEE ARRANGEMENT Communicate early what your fee arrangement will be: Put it in writing Discuss the scope of work. Make it clear who will be working on it and when the client may contact you. DOCUMENTING THE FEE ARRANGEMENT Other issues include: Any additional legal matters you will be required to handle How you are going to reimburse expenses The client s rights Termination/withdrawal by attorney 6

13 THE ONGOING RELATIONSHIP NEVER LOSE YOUR COOL: Never write a letter you d hate to see on a poster. NEVER THREATEN, even passively. TAKE A BREATH when you want to respond emotionally. THE ONGOING RELATIONSHIP HANDLING BILLING CONTROVERSIES. Always ask these questions: Would you be embarrassed to have your fees reviewed? What is the timing of the controversy, i.e. how far are you through the case? Ask yourself is it likely that this client will ever pay you? 7

14 THE ONGOING RELATIONSHIP HANDLING BILLING CONTROVERSIES. Always ask these questions: How badly do you need the money? Referral to ADR Fee Dispute Committee And remember, counterclaims are compulsory. AVOID SUING CLIENTS. You will make more money with new business. If you overcharge a client, that breaches fiduciary duty. You risk disgorgement of some or all of your fee. 8

15 CRAZY AND DIFFICULT CLIENTS: Just because your client is a jerk/crazy or unreasonably emotional does not give you the right to be the same way. Observe your duties under the Lawyer s Creed, and ensure your client understands your duty to do so. Part III: Conflicts of Interest 9

16 The Rules: TDRPC Rules , 2.01, 2.02, and 3.08 Texas Case law The Law The Opinions of the Professional Ethics Committee of the State Bar of Texas The Four Situations Which Prohibit Representation Litigation: Representing parties in the same litigation. Hint: Get outside counsel for multi party litigation. 10

17 The Four Situations Which Prohibit Representation Business: Representing someone in a Substantially Related matter where interests are Materially and Directly Adverse. The Four Situations Which Prohibit Representation Other Duties: Representation when it Reasonably Appears your duties to another client, third party or to your firm conflict. 11

18 The Four Situations Which Prohibit Representation Past Matter Previous client s interest conflict when a dispute arises with same matter/ same parties. Rothermel s 3 Questions Between Parties: Will my representation of A be materially and directly adverse to the interest of B? 12

19 Rothermel s 3 Questions To Third Parties: Do I have any duties to third parties which will limit my representation of either A or B? Rothermel s 3 Questions My own or my firm s interests: Is my representation of of A or B adversely limited by my own interests?? 13

20 Rights and Duties The Lawyer has the duty to: a. Disclose b. Secure permission, and c. Withdraw when appropriate. Watch out for EXCEPTIONS! Complete Disclosure AND Permission Mere disclosure is not sufficient Lawyer must still reasonably believe that their interests will not be affected by joint representation DISCLOSURE MUST MEET RULE 1.06 STANDARDS 14

21 Complete Disclosure The existence of the conflict The nature of the conflict The implications of the conflict Possible adverse consequences of common representation Advantages of common representation DANGEROUS SITUATIONS Member of Organization/Counsel to same Agency Inconsistent Positions Representing both Officers and Organization Representing Organization and Employee Imputed Disqualification: If partner can t, your associate can t. 15

22 DANGEROUS SITUATIONS Representing both Employee and Company or Agency (multiple representation) Imputed Disqualification (Partner/Assoc) Must be fair to client Must have full disclosure Doing Business with the Client Must have a writing to protect yourself Give client the right to seek independent advice GET THE CONSENT IN WRITING! 16

23 Part IV: Running Your Office Financial Control How often do you review statements and checks? Who is allowed access to your checking accounts? 17

24 Office Systems Office systems must be geared to accommodate your strengths and weaknesses GETTING FUTURE REFERRALS: DO YOUR SHARE OF THE WORK. If you have promised opposing counsel you are going to do something (respond or draft some Contract, pleading or order) do it timely. (Don t get that reputation.) Don t make excuses. Work late if necessary. And always reply to opposing counsel. 18

25 Billing: The Lifeblood of Success My Best Advice: Make sure your bills go out timely The client satisfaction curve declines steeply after 30 days. Make it a priority to mail/send monthly bills immediately on the 1 st day of the month. Follow up with s to clients religiously if invoice is not paid. Part V: Using Your Trust Account 19

26 What Belongs In IOLTA Acct? Client funds which have not been earned by you Client funds being held in escrow for an event or contract or Costs. What Doesn t Belong In There? 1.Your Money!! When you earn it, take it out and transfer to your operating account. 2. Non refundable retainers, absent agreement to contrary (nonrefundables are similar to Flat Fee) What checks/transfers should come out of IOLTA account? Payment directly to Attorney of Earned Fees (Have a billing to back that up!). Payment of Costs on Behalf of client from client s retainer. Refunds to Client in appropriate circumstances (e.g., fee for matter completed is less than retainer). 20

27 What checks/transfers should NOT come out of IOLTA Account LAWYER S personal bills, overhead, costs, etc. Lawyer s Payroll, dues, fines, sanctions, etc. (even if it s from a non refundable retainer ). Bad Things Happen: Handling a Grievance Always respond timely and completely. Never respond pro se; always have someone respond for you. 21

28 Bad Things Happen: Handling a Grievance If a grievance committee finds just cause, know your deadline. Election must be made within 20 days of receipt. THE CLIENT TRIUMVIRATE aka Claude s 3 Rules Remember to treat that client like you are going to live next door to them. Always tell the truth. There is far less paperwork when you do. Never sue your client. 22

29 Final Thoughts Be A Success!! Look Professional: Inspire Confidence Do your share of the work. Don t make excuses. Get involved in your profession: people will think of you. Communicate Often with Everyone! Use the World s Greatest Research Tool: The Telephone! 23

30 Your Ethical Responsibilities The 4 competing duties: To your client To your fellow lawyer To the administration of justice To yourself Don t take work you can t handle. Don t sue if you get burned. It s all part of doing business. Use ADR when available. 24

31 What Clients Want The Six Concepts: Competence Communication Accessibility Accountability Collaboration Respect & courtesy Survey Says-- 1 Collaboration 2 Accessibility 3 Communicator 4 Accountability 5 Respect & courtesy 6 Competence Improve and Defend Your Profession Support the fair administration of justice. Make sure people understand the judiciary is the third branch of government. Speak out as a true professional when you see undue criticism. 25

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