Practical Law Office Management

Instructor’s Manual to Accompany PRACTICAL LAW OFFICE MANAGEMENT

2ND EDITION

Brent Roper

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Instructor’s Manual to Accompany Practical Law Office Management, 2E by Brent D. Roper

COPYRIGHT © 2002 Delmar West Legal Studies is an ALL RIGHTS RESERVED. No part of this work covered by imprint of Delmar, a division of Thomson Learning, Inc. the copyright hereon may be reproduced or used in any Thomson Learning™ is a trademark used herein under form or by any means—graphic, electronic, or mechani- license. cal, including photocopying, recording, taping, Web distribution or information storage and retrieval systems— Printed in the United States without written permission of the publisher. 12345XXX0504030201 For permission to use material from this text or product, For more information contact Delmar, contact us by 3 Columbia Circle, PO Box 15015, Tel (800) 730-2214 Albany, NY 12212-5015. Fax (800) 730-2215 www.thomsonrights.com Or find us on the World Wide Web at www.thomsonlearning.com or Library of Congress Cataloging-in-Publication Data www.westlegalstudies.com ISBN 0-7668-2855-7 Catalog Card Number: 2001026285

NOTICE TO THE READER

Publisher does not warrant or guarantee any of the products described herein or perform any independent analysis in connection with any of the product information contained herein. Publisher does not assume, and expressly disclaims, any obligation to obtain and include information other than that provided to it by the manufacturer.

The reader is notified that this text is an educational tool, not a practice book. Since the law is in constant change, no rule or statement of law in this book should be relied upon for any service to any client. The reader should always refer to standard legal sources for the current rule or law. If legal advice or other expert assistance is required, the services of the appropriate professional should be sought.

The Publisher makes no representation or warranties of any kind, including but not limited to, the warranties of fitness for particular purpose or merchantability, nor are any such representations implied with respect to the material set forth herein, and the publisher takes no responsibility with respect to such material. The publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or part, from the readers’ use of, or reliance upon, this material. CONTENTS

PREFACE ...... v

SAMPLE SYLLABUS ...... vi

CHAPTER 1INTRODUCTION TO LAW OFFICE MANAGEMENT ...... 1

CHAPTER 2ETHICS AND MALPRACTICE...... 10

CHAPTER 3STAFF MANUALS, QUALITY, MARKETING, AND PLANNING ...... 18

CHAPTER 4 CLIENTS AND COMMUNICATION SKILLS ...... 25

CHAPTER 5TIMEKEEPING AND BILLING ...... 31

CHAPTER 6CLIENT TRUST FUNDS AND LAW OFFICE ACCOUNTING...... 40

CHAPTER 7 CALENDARING, DOCKET CONTROL, AND CASE MANAGEMENT ...... 46

CHAPTER 8HUMAN RESOURCE MANAGEMENT ...... 51

CHAPTER 9FILE AND LAW LIBRARY MANAGEMENT ...... 58

CHAPTER 10 LAW OFFICE EQUIPMENT, TECHNOLOGY, SPACE MANAGEMENT, SECURITY, AND LEASES ...... 63

PROJECTS ...... 67

TEST BANK ...... 75

TRANSPARENCY MASTERS...... 111

iii iv Contents

TM 1 FIGURE 1–1 THE LEGAL TEAM ...... 113

TM 2 FIGURE 1–2 DEFINITIONS OF A LEGAL ASSISTANT/PARALEGAL ...... 114

TM 3 FIGURE 1–4 DAILY FUNCTIONS AND DUTIES OF LEGAL ASSISTANTS ...... 115

TM 4 FIGURE 1–5 LEGAL ASSISTANT SPECIALTY AREAS OF PRACTICE ...... 116

TM 5 FIGURE 1–6 LEGAL ASSISTANT EMPLOYMENT ...... 117

TM 6 FIGURE 1–9 NUMBER OF ATTORNEYS BY PRACTICE ...... 118

TM 7 FIGURE 1–11 ORGANIZATIONAL CHARTS ...... 119

TM 8 FIGURE 1–13 LAW FIRM MANAGEMENT RESPONSIBILITIES ...... 120

TM 9 FIGURE 2–3 NATIONAL ASSOCIATION OF LEGAL ASSISTANTS, INC. CODE OF ETHICS AND PROFESSIONAL RESPONSIBILITY ...... 122

TM 10 FIGURE 2–4 NFPA MODULE CODE OF ETHICS AND PROFESSIONAL RESPONSIBILITY...... 123

TM 11 FIGURE 2–17 MALPRACTICE CLAIMS BY TYPE OF ALLEGED ERROR, 1990–1995...... 124

TM 12 FIGURE 4–3 FOSTERING POSITIVE RELATIONSHIPS WITH CLIENTS...... 125

TM 13 FIGURE 4–6 HOW PROFESSIONALS SPEND THEIR TIME...... 127

TM 14 FIGURE 4–7 COMMUNICATION DIAGRAM ...... 128

TM 15 FIGURE 5–3 CONTINGENCY FEE EXAMPLE...... 129

TM 16 FIGURE 5–5 COMPARISON LEGAL FEES TO PREPARE A WILL ...... 130

TM 17 FIGURE 6–2 TRUST ACCOUNT LEDGERS ...... 131

TM 18 FIGURE 6–4 LAW FIRM BUDGET—MASTER BUDGET ...... 132

TM 19 FIGURE 7–2 COMMON DOCKET CONTROL ENTRIES...... 134

TM 20 FIGURE 7–3 CALENDAR FOR CALCULATING CALENDAR DAYS AND WORKDAYS EXAMPLE...... 135

TM 21 FIGURE 7–14 CASE MANAGEMENT FOR COLLECTION CASES ...... 136

TM 22 FIGURE 8–12 WHO ARE EXEMPT EMPLOYEES?...... 137

TM 23 FIGURE 8–13 PARTIAL LIST OF FEDERAL EMPLOYMENT RELATED LAWS ...... 138 PREFACE

This manual provides the instructor with useful information to use in the classroom and to assist with test preparation. This is not an armchair style text. Theoretical information is kept to an absolute minimum. The text is practical in nature and focuses on the law office management skills legal assistants need to succeed in a legal organization. The text covers a broad range of subjects but includes a heavy emphasis on ethics, quality, clients, customer services, communications, and timekeeping/billing. Practical suggestions and insights are contained throughout the book. The second edition has some significant changes including the following: • Internet sites for each chapter have been added. • The ethics of law office management has been greatly increased throughout the text. Nearly every chapter now includes an ethical-related case as well. • References to the American Bar Association’s Ethics 2000 Commission are included. • Expanded coverage regarding clients and communication are contained in Chapter 4. •A“Suggested Reading” list is included for each chapter. • Coverage of technology issues such as the Internet, e-mail, and others has been added. • Updated law office software has been included. Appendix A contains an article “Successful Strategies for the New Legal Assistant.” It is excellent for students who have never worked in a law office. It contains experiential knowledge and advice that new legal assistants will find helpful. Because the article may not be applicable to more advanced students, it is not included as a formal chapter in the text, but it is still a good resource. Appendix B to the main text contains a listing of law office related associations. The text includes two computer tutorials (and software). Educational versions of Timeslips for Windows and Abacus Law (a docket control/case management program) are available for instructors adopting the text. The tutorials simulate the law office of Wallace and Sanders. The tutorials, like the text, have a practical orientation. I believe it is in the best interest of the student to include as many projects, exercises, field trips, and special speakers as possible for this class. I have devoted a section of this Instructor’s Manual to projects. For example, there is an excellent detailed project on trust accounts that requires the student to complete a trust check register and a trust client register, and then to reconcile the trust account at the end of the project. I have included a Lecture Outline in each chapter. The outlines are fairly detailed so instructors can lecture right from the outline or use it to quickly refresh their memory the night before a class. If you have suggestions on how to improve the text, need something special developed, need additional help or information, or just have a question, please feel free to give me a call.

Best Wishes, Brent D. Roper [email protected] (e-mail)

v SAMPLE SYLLABUS

A sample syllabus for a 15-week semester and a 10-week quarter are included. Instructors teach law office management in many different ways. Each chapter stands on its own and does not require or rely on the chap- ters before it. So, an instructor is free to skip around and present the course in the order he or she feels is best.

COURSE DESCRIPTION This course will cover the fundamentals of law office management. It is designed to familiarize the legal assistant with the practical inner workings of a law office including understanding law office procedures. Law office management goes beyond mere efficiency and productivity and includes being sensitive to ethical concerns and providing quality legal services to clients in an affordable manner.

COURSE OBJECTIVES 1. Introduce the student to the behind the scenes workings and management of a law office. 2. Prepare the student on what a legal assistant is expected to accomplish administratively once on the job. 3. Review the types of law offices, staff positions, and possible office structures in different types of law offices. 4. Educate the student on common ethical and malpractice problems for attorneys and legal assistants and how to avoid or handle the concerns/problems. 5. Explain the importance of timekeeping, billing, and client trust funds in a law office. 6. Introduce the concept of total quality management and the importance of providing quality legal services to clients. 7. Explain the importance of docket control/case management and its relationship to malpractice, ethics, and providing quality services to clients. 8. Introduce the student to law library management, file management, law office equipment, and space management/leases. 9. Introduce and explain the fundamental aspects of management. 10. Explain law office marketing concepts and techniques.

FIFTEEN-WEEK SEMESTER SYLLABUS Week Topic 1 Chapter 1—Introduction to Law Office Management 2 Chapter 2—Ethics and Malpractice 3Wrap up Ethics and Malpractice 4 Chapter 3—Staff Manuals, Quality, Marketing, and Planning 5 Chapter 4—Clients and Communication Skills 6 Chapter 5—Timekeeping and Billing 7 Hands-on Exercises—Timeslips for Windows Wrap up Timekeeping and Billing 8 Chapter 6—Client Trust Funds and Law Office Accounting vi Preface vii

9 Chapter 7—Calendaring, Docket Control, and Case Management 10 Hands-on Exercises - Abacus Law Docket Control 11 Chapter 8—Human Resource Management 12 Chapter 9—File and Law Library Management 13 Chapter 10—Law Office Equipment, Technology, Space Management, Security and Leases 14 Project 15 Project Appendix A—Successful Strategies for the New Legal Assistant

TEN-WEEK QUARTER SYLLABUS This text can be covered in 10 weeks. Your students will need to do some independent reading and some work outside of class. Week Topic 1 Chapter 1—Introduction to Law Office Management 2 Chapter 2—Ethics and Malpractice 3 Chapter 3—Staff Manuals, Quality, Marketing, and Planning 4 Chapter 4—Clients and Communication Skills 5 Chapter 5—Timekeeping and Billing Hands-on Exercises—Timeslips for Windows 6 Chapter 6—Client Trust Funds and Law Office Accounting 7 Chapter 7—Calendaring, Docket Control, and Case Management Hands-on-Exercises—Abacus Law Docket Control 8 Chapter 8—Human Resource Management 9 Chapter 9—File and Law Library Management 10 Chapter 10—Law Office Equipment, Technology, Space Management, and Leases Project Appendix A—Successful Strategies for the New Legal Assistant CHAPTER 1

INTRODUCTION TO LAW OFFICE MANAGEMENT

PURPOSE Chapter 1 is an overview of the legal team, the different types of law offices, law office organizational structures, and law office management in general. The chapter provides a framework for the rest of the text.

LEARNING OBJECTIVES After this chapter, the student should be able to: • Discuss the titles and duties of each member of the legal team. • Explain the trends in legal assistant salaries. • Identify alternate law office organization structures. • Identify the functions of law office management. • Explain the “systems view” of management.

LECTURE OUTLINE I. The Legal Team

The legal team consists of attorneys, administrators, law clerks, librarians, legal assistants, secretaries, clerks, and other parties. A. Attorneys Attorneys counsel clients regarding their legal rights, represent clients in litigation, and negotiate agreements between clients and others. 1. Partner/Shareholder—A partner or shareholder is an owner in a private law practice who shares in its profits and losses. 2. Managing Partner—A managing partner is chosen by the partnership to run the firm and make administrative decisions and set policies.

1 2 Chapter 1

3. Associate Attorney—An associate attorney does not have an ownership interest in the law firm and does not share in the profits. The associate is an employee of the firm who receives a salary and has no vote regarding management decisions. 4. Lateral Hire—A lateral hire is an associate who is hired from another firm. 5. Nonequity Partner—A nonequity partner does not share in the profits or losses of the business but may be included in some aspects of the management of the firm and may be entitled to other benefits not given to associates. 6. Staff Attorney—A staff attorney is an attorney hired by a firm with the knowledge and understanding that he or she will never be considered for partnership. 7. Contract Attorney—A contract attorney is an associate attorney who is temporarily hired by the law office for a specific job or time period. When it is finished, the relationship with the firm is over. 8. ”Of Counsel”—The “of counsel” position is a flexible concept but generally means that the attorney is affiliated with the firm in some way, such as a retired or semi-retired partner. “Of counsel” attorneys lend their names to a firm for goodwill and prestige purposes to attract additional clients and business to the firm. B. Administrators Law office administrators are responsible for some types of law office administrative systems such as general management, finance and accounting, human resources, marketing, or computer systems. Administrators typically have college degrees in business, accounting, or related fields. C. Legal Assistants Legal assistants are a distinguishable group of persons who assist attorneys in the delivery of legal services. Through formal education, training, and experience, legal assistants gain knowledge and expertise regarding the legal system, and substantive and procedural law, which qualifies them to do work of a legal nature under the supervision of an attorney. The American Bar Association recently stated in its Guidelines for the Approval of Legal Assistant Education Programs, “as we approach [and enter] the twenty-first century, one of the highest priority goals of the American Bar Association is to increase access to legal services . . . One of the most effective ways to improve access to legal services is through the expanded utilization of well- qualified legal assistants who, with proper training and supervision, can be delegated work that would otherwise have to be done by a lawyer.” 1. Legal Assistant Manager—A legal assistant manager supervises, recruits, trains, distributes assignments, sets priorities, and directs the overall management of a group of legal assistants. 2. Freelance or Contract Legal Assistant—A freelance or contract legal assistant works as an independent contractor with supervision by and/or accountability to an attorney. 3. Independent Legal Assistant or Legal Technician—Independent legal assistants or legal technicians provide services to clients regarding processes in which the law is involved and for whose work no lawyer is accountable. Legal technicians assist in providing “self-help services to the public.” 4. Legal Assistant Manager—In larger legal organizations a legal assistant manager may oversee the legal assistant program for the organization, including hiring, supervising, training, and evaluating legal assistants. 5. Fair Labor Standard Act (FLSA)—The FLSA is a federal law that sets minimum wage and overtime pay requirements for employees. Employees do not need to be paid overtime if they fall into one of the four white-collar exemptions: executive, administrative, professional, or outside sales. If an employee is exempt it means that he or she is not required to be paid overtime wages (e.g., time spent in excess of 40 hours in a week). The issue of whether legal assistants are classified as “exempt” is hotly debated. The United States Department of Labor, which administers the FLSA, has long taken the position that legal assistants are “non-exempt” and are entitled to overtime pay for more than 40 hours a week because their “duties do not involve the exercise of discretion and independent judgment required by the regulations.” The Department of Labor’s position has been widely Introduction to Law Office Management 3

criticized because it fails to take into account recent practice and utilization of recognized status of the profession, advanced education, continuing legal education, substantive duties performed, and the degree to which a legal assistant exercises discretion and independent judgment in the performance of the job. In one 1994 case, Reich v. Page & Addison, P.C., (Case No. 3:91-CV-2655) in the United States District Court, Northern District of Texas, Dallas Division) a jury found that legal assistants at the Page & Addison law firm were exempt from overtime requirements; nevertheless, the Department of Labor did not change its general position on the matter. 6. In Missouri v. Jenkins, the United States Supreme Court allowed the plaintiff to recover legal assistant fees from the defendant at the prevailing market rate for legal assistants in the area. Because the Court was interpreting a federal statute, courts under a different statute may reach a different conclusion. Since Missouri v. Jenkins, many federal and state courts have allowed for recovery of legal assistant billable hours. 7. Legal assistants are profitable to law offices because the law office is allowed to charge for the legal assistant’s time. Clients are willing to pay for legal assistant time, since their billing rate is substantially lower than what an attorney’s rate would be for the same work. D. Office Manager Office managers are found in smaller firms and handle the day-to-day operations of the law office, including such activities as timekeeping and billing, supervision of the clerical support staff, assisting the managing partner in preparing a budget, and making recommendations with regard to changes in systems and purchases. Office managers typically do not have degrees in business. E. Law Clerks A law clerk is usually a student who works for a law firm on a part-time basis while he or she is finishing a law degree. Law clerk duties revolve around legal research and writing. F. Law Librarian A law librarian is responsible for maintaining a law library. Maintenance includes purchasing new books and periodicals; classifying, storing, and indexing books; updating the holdings; and coordinating computer-assisted legal research (i.e., WESTLAW, LEXIS, and other services). G. Secretaries Secretaries provide assistance and support to other law office staff by taking dictation, performing word processing and filing functions, and aiding in scheduling appointments. Competent legal secretaries have highly specialized skills and perform many services to law firms. H. Clerks Clerks provide support to other staff positions in a variety of miscellaneous functions. Law offices have many kinds of clerks including mail clerks, copy clerks, file clerks, calendar clerks, and billing clerks. I. Other Legal Team Members 1. Expert Witness—An expert witness is a person who has technical expertise in a specific field and agrees to give opinions and testimony at trial. 2. Investigator—Investigators are hired to gather facts and evidence regarding a case. 3. Consultants—Law offices use consultants to give them advice on how to run their business efficiently. 4. Temporary/Permanent Staffing Firms—Law offices may use temporary or permanent staffing firms and may outsource projects or services as needed including copying, mailing, records management, and others.

II. Types of Law Practices A. Corporate Law Practice 1. Some businesses have their own in-house law department. These businesses include large corporations, banks, retailers, manufacturers, transportation companies, publishers, insurance companies, and hospitals. 4 Chapter 1

2. Corporate law departments handle a variety of legal concerns in such areas as labor relations, federal tax law, environmental law, Security Exchange Commission filings, general litigation, employee benefits, real estate law, and workers’ compensation claims. 3. The general counsel is the chief attorney for the corporate legal department. B. Government Practice 1. There are many types of government law practices including law departments for agencies, district attorneys, city attorneys, attorneys general, and United States attorneys to name a few. C. Legal Aid Office (Legal Clinic or Public Law Office) 1. A legal aid/clinic office is a not-for-profit law office that receives grants from the government and private donations to pay for representation of disadvantaged persons who otherwise could not afford legal services. 2. Legal aid offices typically represent persons in cases relating to child support, child custody, disability claims, bankruptcies, landlord disputes, and mental health problems. D. Private Law Practice 1. Sole Practitioner—A sole practitioner is an attorney who individually owns and manages a practice. Sole practitioners are typically generalists, meaning they handle a wide variety of cases such as probate, family law, criminal law, and personal injury. 2. Small Law Firms a. A small firm has fewer than 20 attorneys. b. A small law office that specializes in only one or two areas of the law is sometimes called a boutique firm. 3. Medium-size Firms a. A medium-size firm usually has from 20 to 75 attorneys. b. Medium-size firms are usually organized into subject-area departments and have professional administrators. 4. Large Firms a. A large firm has from 75 to several hundred attorneys. b. Large firms have practice groups or departments such as antitrust, bankruptcy, environmental, estate planning, intellectual property, international, labor/employment, litigation, patents/trademarks/copyright, property, and tax. c. The internal structure of large firms is more similar to the structure of business corporations than to other types of law firms. d. Large firms usually employ a large number of legal assistants. 5. Megafirms—Megafirms can have a thousand or more attorneys. 6. Plaintiff/Defense firms a. Many private law practices categorize themselves as either plaintiff or defense firms. b. Plaintiff-oriented firms represent clients who bring claims against others. They tend to be smaller than defense-oriented firms, are generally not as well funded as defense firms, and have fewer employees. c. Defense-oriented firms have the luxury of billing defendants who are typically businesses. This gives defense-oriented firms a more stable cash flow, enabling them to hire more personnel, purchase advanced equipment, and spend more on litigation services such as hiring expert witnesses and taking as many depositions as needed.

III. Law Practice Organization Structures A. Legal Forms of Private Law Firms 1. Sole Proprietorship—In a sole proprietorship, the proprietor—in this case an attorney—runs the business, personally receives all profits, and is personally responsible for all losses and liabilities of the law offices. A sole proprietorship is a legal structure and should not be confused with a Introduction to Law Office Management 5

sole practitioner. A sole practitioner, for instance, does not have to use the sole proprietorship form of legal structure. 2. Partnership—The partnership legal structure allows two or more attorneys to associate themselves together and to share in the profits or losses of the business. All the partners are jointly and severally liable for the actions of the firm and for the debts of the partnership. 3. Professional Corporation—The professional corporation legal structure allows a single shareholder or group of shareholders from the same profession, such as attorneys, to share in the outcomes of a business. Unlike a partnership in which partners are liable for the debts of the partnership, shareholders are not personally liable for the debts of the corporation. 4. Limited Liability Company—The limited liability company is a legal structure recognized by 30 states. It allows for limited personal liability of company debts for owners but is treated like a partnership for tax purposes. B. Private Law Firm Management Structures 1. Powerful Managing Partner—The powerful managing partner management structure is one in which a single partner is responsible for managing the firm. The managing partner is responsible for day-to-day operations of the partnership, but partners vote on major firm decisions. The powerful managing partner structure is autocratic in that power rests with one person. 2. Rule by All Partners/Shareholders—Rule by all partners/shareholders is a management structure in which all partners/shareholders are included in decisions that affect the firm. This is a democratic structure. 3. Rule by Management Committee/Board—The rule by management committee/board uses a committee structure to make management decisions for the firm. Common committees include the library committee, automation committee, finance committee, and personnel committee. C. Corporate, Government, and Legal Aid Organization Structures 1. Corporate law departments are either centralized, meaning the office is located in the corporate headquarters and provides services to the whole company, or are decentralized with separate attorneys located throughout the organization. 2. Many government practices are decentralized, with each agency having its own legal department. 3. Legal aid practices, because they are usually nonprofit corporations, are overseen by a board of directors. The board of directors hires an executive director to operate the organization. IV. Law Office Management A. Law Office Management Principles 1. Law office management was once viewed as unimportant but is now considered to be a very important part of law practices. 2. Good management skills are necessary for any size or type of law office. 3. Recently, an automation revolution has changed law office management. This automation includes computers, word processors, the Internet, computerized accounting and billing, state- of-the art copiers, fax machines, and more. Law offices have spent millions of dollars purchasing this technology. 4. A myth is that attorneys automatically make good managers. In truth, it is generally agreed that many lawyers are not very good managers. 5. An old adage says: “The best system for law office management is the system that involves the lawyers the least.” B. Practice Management v. Administrative Management 1. Practice Management (i.e., Substantive or Case Management) refers to management decisions about how a law office will practice law and handle its cases. Practice management includes decisions about the types of cases to specialize in, how many cases to accept, and which cases to accept or reject. 6 Chapter 1

2. Administrative Management (i.e., Office Management or “Plant” Management) refers to management decisions relating to operating or managing a law office, including financial and personnel matters. C. Functions of Law Office Management 1. Management—Management is the administration of people and other resources to accomplish objectives. In private law practices the primary objective of management is to provide efficient, high-quality legal services that please clients while earning a reasonable profit for the firm. 2. Financial Management—Financial management is the oversight of a firm’s financial assets and profitability to ensure overall financial health. This includes budgeting and tracking firm expenses, revenue, and profitability; making payments (accounts payable); tracking firm receipts (accounts receivable); and more. 3. Practice Management—defined earlier. 4. Human Resource Management—Human resource management refers to recruiting, hiring, training, evaluating, maintaining, and directing the personnel who will provide quality legal services to clients. 5. Planning—Planning is the process of setting objectives, assessing future needs, and developing a course of action to achieve the objectives. Planning is the road map for meeting the firm’s goals. 6. Organization and Effective Systems—Organizing is the process of arranging people and physical resources to carry out plans and accomplish objectives. A system is a consistent or organized way of doing something. 7. Marketing Management—Marketing is the process of educating consumers about the legal services the law office provides. 8. Controlling—Controlling is the process of determining whether the law practice is achieving its objectives. 9. Leadership—Leadership is the act of motivating or causing others to perform and achieve objectives. D. The Systems View of Management 1. A system is a consistent or organized way of doing something. 2. A system allows the user to create a set procedure for doing something as opposed to dealing with activities or problems in an ad hoc manner. 3. Without a system, each time a legal service or an administrative function is performed, the person performing the task must rely solely on his or her memory to complete the task. 4. By developing a system, staff members can take advantage of the experience and expertise of others in the law office. 5. Systems guarantee quality because the same mistakes are not made twice. 6. Systems can be used for both substantive and administrative tasks. 7. Substantive systems include using form files, checklists, and detailed instructions to standardize many types of legal tasks. 8. Administrative tasks such as docket control, timekeeping and billing, purchasing, and human resource management can also be set up using an established system of procedures.

TEACHING SUGGESTIONS For students who are new to law offices this is a particularly important chapter because it introduces them to all of the players in the legal team. At first, all of the terminology in the chapter may seem confusing to the student, so it is in the best interest of the newer legal assistant students to go slowly through this chapter. If possible, give personal examples of what an “of counsel” is, how associates are used in law offices, and how legal assistants are used. The more personal your examples, the more interest your students will have in the lectures. This chapter sets the stage for the remainder of the book. It touches on important topics such as the roles and responsibilities of the legal assistant. It also introduces the student to the systems view of management that this text stresses from beginning to end. The systems view of management is important because taking Introduction to Law Office Management 7 the time to set up and use systems, whether they are form files or computers systems, allows the legal assistant to be more productive and to produce high-quality work. The chapter introduces different types of law practices. Many students will be unfamiliar with corporate, government, and legal aid practices, so give examples of some of these in your area that you have had experience with. Finally, the chapter introduces management concepts to students. Some students will question the “myth” that some attorneys do not necessarily make good managers so you might want to relate some of your own experiences in this area.

DISCUSSION QUESTIONS/IDEAS 1. Use the opening example at the beginning of the chapter to discuss the fierce competition that law firms of all sizes are currently faced with and the need for firms to focus on client satisfaction and provide high- quality legal services to clients. The example also shows that good management is necessary for the sur- vival of any legal organization and that even when there are problems there are management solutions available to solve them. 2. Discuss the legal team concept, how important each member of the legal team is to providing quality legal services to clients, and how no one individual or person is greater than the team. 3. Discuss the concept of administrators and how they differ from office managers. Give examples of the millions of dollars that law offices are spending on marketing efforts, management consultants, technology, and human resource development to better manage and promote their firms. Administrators have had a substantial impact on the legal professional and have made the management side of a law office almost as important as the substantive side of practicing law. 4. Students will be interested in your legal assistant background, what your roles and responsibilities have been as a legal professional, and how you generally view the legal assistant profession. Let them know about yourself by providing personal insight and stories. 5. Some students will inquire about the difference between secretaries and legal assistants. It might be helpful to point out the “team concept” here and to stress that each have their own roles and responsibilities and that they are different from each other. 6. Point out the differences from your own unique view among private practice, corporate practice, government practice, and legal aid/clinic practices as a legal assistant. An alternative would be to invite a corporate, government, or legal aid/clinic legal assistant to talk to your class to discuss how their office operates and how it is different from a private law office. Another alternative would be to require that each student interview a corporate legal assistant, government legal assistant, or a legal assistant in a different specialty. You could also have your students interview attorneys regarding how their law offices use legal assistants and the type of management structure they use. 7. Discuss the internal and cultural differences among how small firms, medium-size firms, and large law firms operate from your own experience. You may also want to distinguish the different types of internal and management structures regarding how decisions are made by them. Finally, you may want to discuss the difference between plaintiff- and defense-oriented firms from your experience. 8. Administrative management is stressed throughout this text, but equally important to the success of the law office is practice management. Give examples of how the different firms you have worked with han- dled practice management problems and the different philosophies they had regarding clients, accepting cases, getting referrals, and so forth. 9. Discuss your own philosophies regarding law office management, including what the function of management is.

ANSWERS TO QUESTIONS AND EXERCISES 1. The problems the firm has are not just in one management area but in many. These include the following: • Financial problems (being heavily in debt, possibly poor budgeting). • Practice management (“feeling the effects of increased competition” may mean their legal services were not keeping up with the services other firms were providing and their clients were leaving because they were not satisfied). 8 Chapter 1

• Human resource management (employee turnover—employees were leaving and taking with them their organizational knowledge). •Planning (becoming dependent on only two large clients). •Organization, policies, systems (one of the two major clients leaving due to the client not being pleased). It is not necessarily a question of who is at “fault,” although this is a question that would undoubtedly be raised. The real question is what can be done to correct the problem. When a firm is in as serious a condition as this one, there is usually more than enough fault to go around. As noted earlier, the problem is usually not with just one person, one leader, one system, or one area. Other things the firm could do include the following: a “rainmaker” could be hired for the purpose of bringing in new clients, layoffs could be announced to cut expenses, the firm could move out of the high- rent area to cut expenses, timekeeping reports could be instituted to monitor billing and productivity, an employee attitude survey could be implemented to find out why employees were leaving, and a plan could be instituted to try to retain them. 2. They are both equally important. A firm does not make money, operate at a profit, and earn money for its partners/shareholders without providing quality legal services to clients. It is definitely important for a law firm to make money—if it does not, it cannot retain its employees and it cannot retain its partners/shareholders. On the other hand, the lifeblood of a law firm is its ability to attract and retain its clients in a very competitive marketplace where clients can go to competing law firms because of one bad experience. 3. Some options include the following: ask for a transfer, leave the firm, when being given assignments make a special point of clarifying any information that is inadequate or vague, seek out another legal assistant you trust (who may have knowledge of this attorney) or a law office administrator/human resources representative to give you advice, or learn as much as possible about the attorney’s practices and try to anticipate his or her needs and nuances to provide the services the attorney needs. 4. American Bar Association (ABA)—This definition makes it clear that the legal assistant is employed or retained by the lawyer and that the lawyer is directly responsible for the legal assistant’s work. The ABA wants to be sure that the lawyer is responsible for the legal assistant and that the legal assistant is not operating on his or her own. National Federation of Paralegal Associations (NFPA) and National Association of Legal Assistants (NALA)—The NFPA/NALAwant the concept of legal assistants having their own knowledge, education, training, and work experience in the definition to establish that they are professionals and have a body of knowledge available to help clients. Their interest is in protecting their legal assistant members and pre- serving the legal assistant profession. American Association for Paralegal Education (AAfPE)—This definition, like NFPA and NALA, stresses the need for education (which they are justifiably interested in providing). 5. It should be quite easy for the student to do research on the Internet regarding the white-collar exemptions to the Fair Labor Standards Act and the appropriate definition and standards for each. The four exemptions are executive, administrative, professional, and outside sales. Typically the administrative or the professional exemptions are the categories where it is argued that a legal assistant should be classified as exempt. 6. This is a fairly common scenario. The important thing is to be patient with the new associate, help when and where you can, and not overreact to things he or she may say. Given time, many new associates will come to value the opinion of a good legal assistant. When communicating with the new associate try to be non-threatening, professional, and factual about whatever you are communicating and do not offer advice if it is not wanted (except in cases where the new associate may be harming the client). If the new associate is seriously mishandling a client’s case, the legal assistant may seek out the advice of a senior attorney for assistance. 7. In Joerger v. Gordon Food Services, Inc., 224 Mich.App. 167, 568 N.W.2d 365 (Mich.App., Jun 13, 1997) the court was interpreting a specific state statute regarding what types of legal fees were recoverable. The court found that neither statute nor court rule specifically allowed for the recovery of legal assistant fees (even though there was recovery for attorneys fees) so the court did not allow recovery. It is an interesting case and even though the court found against recovery, the court does a nice job of stating both sides of the argument and recognizing that many other courts and states allow for recovery. Introduction to Law Office Management 9

8. The legal assistant should approach Pat privately at a time when she is not swamped with other work (if possible). The legal assistant should explain that his/her supervising attorney has specifically instructed him/her not to do administrative/clerical work and that these tasks are to be given to her. The legal assistant should try to negotiate a mutually convenient time for the work to be finished by as well. In addition, the legal assistant should tell Pat that he/she wants to be a team player and that if Pat has something that she needs help with from time to time and as long as it does not interfere with a major deadline for him/her that he/she will be happy to assist Pat when she has a difficult deadline. 9. One recommendation might be to approach the managing partner with the facts regarding the items that are being backed up and suggest a greater role or responsibility for yourself in terms of what decisions you can make (maybe more of an administrator’s role), or suggest that another partner take over the managing partner role. 10. a. Office supplies not being ordered is an administrative problem. b. The ability to practice law more efficiently is probably a practice management issue, but there is some degree of administrative management as well. c. Hiring a good expert witness is probably a practice management issue. d. What cases the firm takes is a practice management issue. e. Having cases not organized and/or filed correctly is a practice management problem, but if staff are not performing their duties well it might also be an administrative problem. f. A billing problem over a client’s account is an administrative problem, but if the problem is not fixed it may turn into a practice management problem if the client leaves and takes other clients with him or her. 11. This is a personal decision that each legal assistant has to make.

CASE REVIEW William Dowsing Davis III v. Alabama State Bar, 676 So.2d 306 (1996). This is a truly interesting case, and I highly recommend that you assign it to your students. The court spends a great deal of time discussing the management practices of the firm and the ethical concerns that are raised because of them. Since this is a management book, I think it is important to tie management practices and ethics together. The law firm in the case was overzealous regarding the business side of making money and squeezing each dollar of profit possible out of the law business. The end result of this one-sided strategy was that the firm neglected its clients and failed to provide them with competent, ethical legal services. 1. The court noted that the firm spent $500,000 on advertising, primarily television advertising, for the purpose of attracting large numbers of clients. The business strategy of the firm was to minimize expenses and maximize profits by having many clients; providing legal services, in part, by using inexpensive nonlawyers; and by completely overloading the attorneys they did have. This business strategy and practice clearly shocked and offended the conscience of the court because clients could not be given adequate representation using these practices. 2. The firm violated most of the practices of good management shown in Figure 1–13. 3. The firm could have corrected their strategy by being much more selective in the types of cases they took (instead of taking them all) and focusing on those areas where they were the most experienced and the cases that were the most profitable. 4. The facts of the case clearly established that competent legal services were not being provided to clients and that many of the management practices of the firm were unconscionable. This led the court not to believe the “witch-hunt” theory. 5. No, probably not. The number of cases any one staff member takes on depends on the experience of the person, the types of cases being dealt with and their subject matter, how long the cases take to complete, and much more. In any instance, 600 active cases is typically more than anyone can handle. 6. The court stated that the secretaries interviewed clients, prepared legal filings (including bankruptcy pe- titions), and gave legal advice to clients regarding the differences between Chapter 7 and Chapter 13 bankruptcies. The court clearly believed that the secretaries had overstepped their bounds and were in fact not “informing” clients but were in fact providing legal services that an attorney should be handling. CHAPTER 2

ETHICS AND MALPRACTICE

PURPOSE Chapter 2 introduces the important topics of ethics and malpractice. Having a high ethical standard is critical to providing quality legal services to clients. In addition, avoiding malpractice by having a high degree of competence is important to providing quality services to clients. The chapter introduces common ethical problems encountered by legal assistants and prepares them to handle the problems. Practical tips on avoiding malpractice problems are also provided. Even if your institution has a separate ethics class, I recommend that you still cover this chapter. I do not think that new legal assistants can ever have too much instruction in ethics. The student understands the topic a little more clearly each time it is addressed.

LEARNING OBJECTIVES After this chapter, the student should be able to: • Define what the unauthorized practice of law is and list factors that are used to determine whether a legal assistant is “practicing law.” • Discuss the voluntary ethical codes established by national legal assistant associations. • Explain the attorney-client privilege and to whom it applies. •List guidelines that will prevent legal assistants from accidentally revealing confidential client information. • Explain what a conflict of interest is and what a law office can do to limit conflict of interest problems. • Discuss what the “Chinese Wall” is and when it applies.

LECTURE OUTLINE

I. Why Are Ethics and Malpractice Important to the Legal Assistant? A. Clients and attorneys must have total confidence that a legal assistant understands ethical problems and that the legal assistant’s ethical judgment is clear. B. A legal assistant must perform careful, high-quality work in everything he or she does. An error by a legal assistant can be very costly and can subject an attorney or law office to a malpractice claim. 10 Ethics and Malpractice 11

II. Legal Ethics and Professional Responsibility A. Ethical Standards for Attorneys 1. An ethical rule is a minimal standard of conduct. An attorney’s conduct cannot fall below the standard without losing his or her good standing with the state bar. 2. Attorneys that violate the ethical standards may be subject to discipline including permanent disbarment, temporary suspension, public censure, private censure, or an informal reprimand. 3. The ABA Model Rules of Professional Conduct, or a form of it, is used in two-thirds of the states. Some states also use the older ABA Model Code of Professional Responsibility (1969). The ABA convened the Ethics 2000 Commission on the Evaluation of the Rules of Professional Conduct to review the Model Rules and recommend changes to them. 4. States are free to create their own rules of conduct for attorneys, but many simply modify one of the ABA’s ethical rules. B. Attorney Ethical Rules Do Not Apply Directly to Legal Assistants 1. Neither a state’s canons of ethics nor the ABA’s ethical rules apply directly to legal assistants. 2. Attorneys can be disciplined for the acts of their staff members, including legal assistants, because attorneys have the duty to adequately supervise their staffs. ABA Model Rule 5.3(b) states “a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer.” 3. Attorneys cannot avoid ethical rules and accomplish an unethical act by delegating or allowing a staff member to do the act. 4. Although a legal assistant cannot be disciplined by state regulatory bodies for violating state ethical rules, he or she would be held accountable by the attorney who hired or supervised him or her. So, it is in the best interest of the legal assistant to understand and abide by any ethical rules governing the conduct of attorneys. C. Voluntary Ethical Codes Established by Legal Assistant Associations 1. Legal assistants have self-imposed voluntary ethical standards set out by national or local legal assistant associations including the National Association of Legal Assistants (NALA) and the National Federation of Paralegal Associations (NFPA). D. Criminal Statutes Regarding the Unauthorized Practice of Law 1. Nearly every state has criminal statutes that prevent nonlawyers from practicing law. These laws place criminal sanctions on nonlawyers, including legal assistants, who are found to be practicing law. E. The Unauthorized Practice of Law Ethical Problem 1. Legal assistants may assist a licensed attorney in practicing law, but they cannot practice law themselves. 2. The following questions are used by courts to determine if a legal assistant is practicing law: • Has the legal assistant represented clients in court proceedings? • Has the legal assistant prepared legal documents without the direct supervision of a licensed attorney? • Has the legal assistant given legal advice to a client? • Did the legal assistant accept a client case, reject a case, or select a course of action alone? • Did the legal assistant set the fee for handling the client’s case? • Is the activity one that is traditionally performed by lawyers? F. Legal Technicians, Freelance Legal Assistants, and the Unauthorized Practice of Law 1. A legal technician markets his or her services directly to the public and does not work under the supervision of attorneys. 2. Legal technicians have experienced a considerable number of problems with unauthorized practice of law statutes because they are not supervised by an attorney. 12 Chapter 2

3. Freelance legal assistants are self-employed legal assistants who market their services to law offices. Because freelance legal assistants are supposed to be acting under the supervision of an attorney, they do not have much trouble with unauthorized practice of law problems unless they are completely removed from attorney supervision and their work is not approved by an attorney. 4. Legal assistants can avoid unauthorized practice of law problems by doing the following: • Always have their work approved by a supervising attorney. • Never let clients talk them into giving the client legal advice. • Do not start sentences with “you should” or “I think.” • Always clearly identify yourself as a legal assistant. • Do not set the fees in a case by yourself. • Do not accept a case by yourself. • Do not appear in court or represent a client before a court alone (unless specifically allowed to by the rules of the jurisdiction). G. Competence and Diligence 1. Legal assistants and attorneys must perform legal services in a competent manner. ABA Model Rule 1.1 states, “Competence: A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” 2. Legal assistants and attorneys must perform legal services in a diligent manner. ABA Model Rules 1.3 states, “Diligence: A lawyer shall act with reasonable diligence and promptness in representing a client.” H. Confidentiality and the Attorney-Client Privilege 1. Client confidentiality refers to the need to keep information confidential that is exchanged between a client and law office staff, including attorneys and legal assistants. 2. The attorney-client privilege is a rule of evidence that precludes the disclosure of confidential communication between a lawyer and a client by the lawyer. For the privilege to be invoked, the communication must have been made in confidence between the client and the attorney for the purpose of obtaining legal advice. I. Ethical Prohibitions on Revealing Client Communications 1. Ethical rules prohibit lawyers from revealing confidential information about clients. ABA Model Rule 1.6(a) states, “A lawyer shall not reveal information relating to representation of a client unless the client consents after consultation....” ABAModel Code DR 4-101(D) states, “A lawyer shall exercise reasonable care to prevent his employees, associates, and others whose services are utilized by him from disclosing or using confidences or secrets of a client.... ” 2. Legal assistants have a duty to preserve the confidences and communications of clients. 3. Ways to protect client confidences include the following: • Resist the temptation to talk about what goes on in the law office whether or not it is client related. • Only talk about client matters to other law office personnel on a need-to-know basis. •Never discuss the specific facts or circumstances of a client’s case to anyone, not even friends or relatives. The statement “I promise I won’t tell anyone” does not work. • Always clear your desk of other case files when meeting with a client. • Do not take phone calls from other clients when meeting with a client. • Do not talk about cases in public places such as elevators or public hallways. • Be careful when responding to discovery requests so as not to produce confidential client information. • Be careful when using fax machines, e-mail, mobile telephones, and so forth to not disclose confidential information. J. Conflict of Interest 1. Conflict of Interest Problems Ethics and Malpractice 13

a. A conflict of interest occurs when an attorney or legal assistant has competing personal or professional interests in a client’s case that would preclude him or her from acting impartially toward the client. b. Conflict of interest problems occur when • An attorney or legal assistant has a personal, financial, or other interest in a case. • An attorney or legal assistant represented a client sometime in the past who is an adverse party in a current case. • An attorney and a client enter into business together. c. Rule 1.7 of the ABA Model Rules states the following: (a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless: (1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and (2) each client consents after consultation. . . . d. Rule 1.8 of the ABA Model Rules states: (a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessor, security or other pecuniary interest adverse to a client unless.... (b) A lawyer shall not use information relating to representation of a client to the disadvantage of the client unless the client consents after consultation.... 2. Conflict Checking a. Conflict checking should be done whenever a new case is accepted. The conflict check should ensure that the law office does not have a potential conflict with the case the law office is getting ready to accept. b. Some insurance companies writing professional malpractice insurance for attorneys require that the law office have and use a conflict checking system. 3. The Chinese Wall a. The general rule is that courts tend to disqualify a whole firm when a conflict of interest problem arises. However, some courts have carved out an alternative to disqualification. The alternative is called the Chinese Wall theory. b. The Chinese Wall alternative occurs when a firm effectively isolates the legal assistant or attorney who has the conflict of interest from having anything whatsoever to do with the case, creating a Chinese Wall around him or her. c. A Chinese Wall is put in place by instructing staff members not to talk to the person with the conflict about the case and by limiting the person’s access to the files (including computer files) of the case. 4. Legal Assistant Conflicts of Interests a. Conflict of interest problems for legal assistants usually occur when a legal assistant changes employment. b. Legal assistants can avoid conflict of interest problems when changing employment by doing the following: • Bring up the issue of potential conflicts in the job interview. • Be absolutely honest about his/her past. • If a potential conflict is discovered, the legal assistant should immediately tell the supervisor about it. K. Resolving Ethical Problems 1. When resolving ethical problems, do the following: •Talk to your legal assistant manager or supervising attorney regarding the ethical problem. •Talk to another attorney or legal assistant in the firm regarding the ethical problem. •Join a professional legal assistant association that covers ethical issues. 14 Chapter 2

• Be familiar with the ethical rules of your state. • Subscribe to legal assistant periodicals that deal with ethical issues. • Report ethical violations to the state bar association if necessary. • When considering ethical questions, think conservatively and do not take chances. • Do not ignore the ethical problem or procrastinate regarding it. L. Answers to Common Legal Assistant Ethical Questions 1. Legal assistants in many states may have business cards and some states allow for a legal assistant’s name to be on law office letterhead, but the legal assistant’s name should be set apart from the lawyer’s names. 2. A legal assistant may sign letters prepared on law office letterhead in most states as long as they sign their name “legal assistant” or “legal assistant to X”. 3. Legal assistants should not discuss fee issues with clients even on a preliminary basis, such as discussing a fee range. III. Malpractice and Malpractice Prevention A. Introduction to Malpractice 1. Legal malpractice occurs when an attorney’s or law office’s conduct in representing a client falls below the standard skill, prudence, and diligence that an ordinary lawyer would possess or that is commonly available in the legal community. 2. The most common causes of legal malpractice include the following: • poor or no communication with client • neglected legal work • fee disputes • conflicts of interest • incompetence • miscommunication regarding representation 3. Ways to avoid malpractice problems: • Return client phone calls immediately. • Send clients status reports about their cases. • Contact clients regularly and ask them for their opinion about how to proceed with the case. • Always reduce fee agreements to writing. •Always send regular billings to clients so they do not get “sticker shock.” • Resolve fee disputes if possible. • Do not work on cases that you are not qualified to handle. • When a case is accepted, always send an engagement letter. • When a case is rejected or a case is closed, always send a disengagement letter.

TEACHING SUGGESTIONS Ethics is a very important topic that is stressed both in this chapter and throughout the text. The objective of this chapter is to prepare the student for how to resolve common ethical problems. If students know what ethical problems to look out for and how to handle them, they will not be taken by surprise and make a costly ethical mistake. In my experience, client confidentiality is the ethical problem that new legal assistants fail to completely understand, including how important it is not to talk about cases to persons outside the office. Many law offices have no tolerance for this, so it is important they understand that this can cost them their job. It is important for legal assistants to understand how important ethics is to the attorney, the client, and the integrity of the attorney-client relationship. Whenever possible, give examples from your own experience regarding the ethical topic being covered. I have tried to give tips for avoiding the ethical problems covered. Be sure to include your own tips and, when possible, to cover the specific ethical rules of your state. Ethics and Malpractice 15

Stress to your students that ethics is rarely black and white. Real-life ethical problems are usually in gray areas that are sometimes hard to resolve. In addition, a tip I have usually found helpful is to bounce ethical problems off of others. Sometimes legal assistants may be taking counsel only with themselves and simply lack the experience or perspective they need to make a correct choice. You may want to bring in an experienced legal assistant to talk about his/her ethical experiences or to invite a representative from the state bar, disciplinary administrator, or legal assistant association to talk about ethics. You may also ask the students to draft a policy or a plan of action to implement ethical procedures in a law office, or a plan to stress the importance of ethical issues in the law office such as setting an ethical review committee of firm members that includes both attorneys and legal assistants. Malpractice is also a topic that should be stressed. It is easy to make mistakes, but sometimes the mistakes injure clients. Therefore, it is important to stress the need for high-quality work.

DISCUSSION QUESTIONS/IDEAS 1. Use the ethical case example in Figure 2–1 to discuss how ethical rules are enforced in your state and whose duty it is to enforce those rules. 2. Figure 2–2 is a good case for showing legal assistants exactly what they should never do under any circumstances. In this one example, the legal assistant violated almost every factor that courts use to determine if a lay person is engaging in the unauthorized practice of law. 3. Discuss the fact that management has a duty to insure that people in the law office understand that ethics is very important and will not be comprised. If management does not reinforce a strong ethical air about the firm, unethical behavior may begin to be commonplace. 4. As discussed earlier, students can benefit from your experience and knowledge of legal ethics. They need real life examples of how you resolved ethical problems, so tell anecdotes or give examples of ethics cases in your state. 5. I have included quite a few ethical problems in the “Problem Solving Questions” portion of the text. The questions are not the black and white type usually found in text books. Assign some of the questions if possible.

ANSWERS TO QUESTIONS AND EXERCISES 1. The “this is the way it has always been done” statement is never appropriate when discussing ethical or quality issues. It may have always been done wrong is an accurate response to this. The description of the property is an important piece of information that should be confirmed, especially when the law department has thousands of pieces of property being leased or purchased. Also, note that all that has to be done is to pull other documents already in the file, so it really is not hard or inconvenient to do. Getting an accurate description of the property is especially important when purchasing property (i.e., in the contract), filing deeds, and getting titles searched. The consequences of property not being described correctly can be quite harmful to clients, so it makes sense to take a little extra time to do the job right. In addition, the attorney may assume that the legal assistant is checking the description of the property. If a description of the property comes back in the way of a lawsuit or other problem, you can be sure the legal assistant will hear about it from the attorney if the attorney believed the legal assistant was checking it, whether or not the attorney actually told the legal assistant to do it. 2. Legal assistants should not talk to others about things done at the office regardless of whether it is about cases. If the legal assistant talks about office matters, no matter what they are, it makes it that much easier to talk about cases. The legal assistant in this example had no business telling his/her father about the merger. The fact that it was inadvertent means nothing. The legal assistant should handle the matter by immediately giving the money back and explaining the situation to the supervising attorney. The supervising attorney can then inform the client, the Securities Exchange Commission, or another proper regulatory body. 3. First of all, most cases are far more complicated than a single document “winning” the case for the other side. While a legal assistant may believe this is the case, there may be a reasonable explanation for the document or mitigating circumstances regarding it. However, assuming you do find such a document, you should bring it to the attention of your supervising attorney so the attorney can contact the client and begin to devise ways to mitigate the damage that producing the document may have. What an attorney fears more than anything is being in front of a judge or jury and then seeing the incriminating document for the first time. 16 Chapter 2

Assuming the attorney says that he or she is going to take care of producing the document and then does not, you have a couple of options. The first option is to simply ask the attorney in a nonjudgmental way if the document was produced since the other side acts like they have not seen it. If the attorney says the document was produced you probably have no duty to look behind the answer. It may be that the other side simply does not recognize its significance. If the attorney states that he/she did not produce the document and is not going to, then the matter is really out of your control. You have the options of asking the attorney if that is ethically a good thing to do, doing nothing, going to a partner or other attorney in the firm, or going to the state bar. You must use your own good judgment, do what you think is right, and then live with the consequences. Granted, this is a worst-case scenario. 4. The best way to handle this situation is to contact your supervising attorney about the matter and to call the client and simply ask the client if it is okay to release the information. Do not assume you can release the information simply because you have worked with the accountant before. The question does not say that you have worked with this accountant for this particular client, only that you have worked with the accountant before. If there is any question in your mind, contact the client to be sure before you release information. Another way to handle it is to require that the client sign a written release of information. This is probably the safest way to handle the matter. 5. Your answer should be “I have no comment” or “I am a legal assistant. Would you like to talk to an attorney for the firm?” The fact that a person is a client is confidential information. 6. You should immediately tell your supervising attorney that you worked for the first firm and that you left it off your Employment Application Form because you thought it would hurt your chances of getting hired by his/her firm. It is always better to admit your mistake. You may still get terminated, but then again they may decide not to terminate you if you admit the mistake. 7. Do not accept the “everyone does it” line. The problem is that not everyone does do it and people do get fired for using company resources for personal use. If there is any question in your mind about it or if you need to use firm resources, ask first. Some firms will still say “no” but it is better than doing it and then getting caught. Be honest. 8. The best way to resolve the situation is to tell the client that you are a legal assistant and cannot give legal advice but that you will immediately contact the attorney and get an answer to his legal problem or that another attorney in the firm will immediately contact him. Be courteous, do not get defensive, and try to contact the attorney or get someone else in the firm to call the client. 9. It is crucial when a firm is not going to represent a new client that the firm writes a letter putting that fact in writing. A law office should always send an engagement letter when accepting a case or a disengagement letter when they are declining a case or when a case has been concluded and the file is being closed. 10. This is a tough question. This may or may not be unlawful. If a legal assistant is representing him/herself to be a government agency or holding him/herself to be somebody or something he/she is not to get confidential information, this may be fraud. The point is why risk it? If you can accomplish the same end without making a misrepresentation, you should always be honest and not misrepresent things. Under NALA’s Code of Ethics, Canon 8 states that legal assistants should avoid conduct that would cause the lawyer to be unethical or even appear to be unethical. In addition, Canon 9 says that legal assistants should work to continually maintain integrity. Misrepresenting who you are does not seem to comply with either of these canons. Under NFPA’s Code, Canon 2 states that a paralegal shall maintain a high level of personal and professional integrity, and Canon 3 states that a paralegal shall maintain a high standard of professional conduct. Again, this does not seem to comply with either of these canons. 11.You should tactfully hand the motion back to the attorney and ask him/her to please read it. You can tell the attorney that you can still get the motion filed in time but that your work needs to be reviewed and that you do not feel comfortable with him/her not reading it. You could say that it is in the client’s best interest to read the document and that you do not want to be responsible for the client’s case being com- promised. While this is hard to do, insist that your work is reviewed because this relieves you of responsibility if there is something wrong in the motion, and because it is ethically required. 12. Asphalt Engineers contends that the legal assistant, Robert Walston, represented that he was an attorney when in fact he was not. This is unethical. The supervising attorney, Galusha, should not have allowed his legal assistant to represent himself as an attorney. Walston should not have been the one requesting a re- Ethics and Malpractice 17

tainer payment or accepting a case, since this is practicing law and violates the ethical and criminal statutes regarding the unauthorized practice of law. Galusha should have seen that the two other liens were filed. This is unethical since the client’s case is being neglected. Walston should not have requested a second retainer fee and should not have openly lied to the clients about the liens being filed. This is unethical and the attorney had a duty to supervise Walston. Walston should not have accepted the fourth lien or given any legal advice to the clients. Again, the attorney did not adequately supervise Walston. 13. This is a self-study exercise. 14. This is a self-study exercise. 15. This is a self-study exercise. 16. This is a self-study exercise

CASE REVIEWS Both of the cases are excellent at establishing the boundaries for what a legal assistant can and cannot do. It is recommended that these cases be assigned to students. In the Pickens case, the legal assistants clearly violated unauthorized practice of law statutes. In the subsequent Malony case, the legal assistant did nothing wrong and acted appropriately. So, the two cases are effective at comparing and contrasting what the role of a legal assistant should be. In re: Pickins, 213 B.R. 818 (Bankr.E.D. Mich. 1997). 1. The legal assistant conducted new case interviews, decided what bankruptcy chapter to file under, prepared the bankruptcy filings, and generally was the only one who had contact with the client until the meeting with the creditors. 2. The argument, while factual, does not excuse a legal assistant for giving legal advice. The fact is that when a client comes to a law office, the client expects to receive competent legal services and receive specific legal advice about his or her case. If clients did not want this, they could turn to books or the Internet. Once a client comes to an attorney’s office, the client expects and deserves to get competent legal advice from an attorney. 3. The court spent two sentences on this argument. “This argument misses the point. Legal assistants are not authorized to practice law.” 4. The court found that since the legal assistant was, in most cases, the only person having contact with the client that the legal assistant could not help but give legal advice. The fact that the legal assistant may have actually had an attorney read a document before it was filed was not enough since all, or most, of the contact between clients and the firm was by legal assistants. 5. The court found that client retention letters should not be signed by a nonlawyer. At the crux of the argument is that the attorney-client relationship must be established by an attorney, and only an attorney can rightfully make the decision to accept a case. 6. The policy or policies should include that an attorney should be present at some point during new client interviews, that they are the only ones who can give advice to clients regarding what bankruptcy chapter to file under, that they must sign all retention letters, and that they be generally available to clients to give them legal advice. Maloney v. Schwab, 249 B.R. 71 (M.D. Pa. 2000). 1. • The legal assistant did not hold himself out as an attorney but clearly identified himself as a nonlawyer. • The legal assistant did not instruct a client on the law. • The legal assistant did not prepare documents, not even routine ones. • The creditor meeting was not a “public tribunal” under state law and the court found that it was in fact only an informal, fact-finding meeting. 2. There are virtually no similarities between the two.

PROJECTS FOR USE WITH THIS CHAPTER Aproject regarding a review of ethical and malpractice cases arising out of law practice management problems is included in the project section of this manual. CHAPTER 3

STAFF MANUALS, QUALITY, MARKETING, AND PLANNING

PURPOSE The purpose of Chapter 3 is to introduce a variety of management topics to the student including staff manuals, total quality management, marketing, and planning. Staff manuals are an important part of the systems view of management. Total quality management, which puts an emphasis on providing quality services to clients, is important in the competitive legal environment. Marketing the quality legal services a law office provides is important in maintaining a growing client base. Finally, planning is presented, including mission statements, and short and long range plans. Planning gives law offices a “vision” of where they are and where they are trying to go.

LEARNING OBJECTIVES After this chapter, the student should be able to: • Discuss what a staff manual is and why it is important. • Differentiate between a policy and a procedure. •Discuss why providing quality services is important. • Explain marketing and various marketing options that are available. • Identify ethical problems that may arise in carrying out a marketing plan. • Define “mission statement.” • Explain the planning process.

LECTURE OUTLINE

I. Policies and Procedures—The Staff Manual

One of the ultimate types of systems in a law office is a staff manual. The staff manual sets out the policies and procedures of a law office. The policies can range from personnel policies, to how case files should be organized, to how letters and pleadings should be formatted. 18 Staff Manuals, Quality, Marketing, and Planning 19

A. Systems and Subjects Included in the Staff Manual Following is a short list of subjects/systems usually covered in a law office staff manual: •office personnel policies • confidentiality policy •departments and committees • checking out case files • opening a new file • closing files • docket control and calendaring • use of the library • use of form files • timekeeping and billing • check request and use of the trust account B. Drafting Policies and Procedures 1. A policy is a specific statement that sets out what is or is not acceptable. 2. A procedure is a series of steps that must be followed to accomplish a task. Procedures should set out what steps are required, who is to complete the steps, and when the steps are to be completed. C. Assembling or Revising a Staff Manual The following are practical tips about putting together a staff manual: 1. Use three-ring notebooks so pages can be taken out and updated or maintained electronically, such as on an Intranet. 2. Policies should be accurate, complete, and clear. 3. List steps involved and appropriate time frames. 4. Prototype law office staff manuals are available from the ABA and others. 5. Include a table of contents and index. 6. Keep the manual up-to-date. 7. Have everyone in the office review the manual in draft form. 8. Distribute the finished staff manual to all employees. D. Staff Manuals and Ethics Staff manuals are excellent tools for setting ethical policies and for creating procedures that take into account common ethical problems.

II. Total Quality Management A. Introduction to Total Quality Management 1. Total quality management (TQM) is a management philosophy that is based upon knowing the needs of each client and allowing those needs to drive the legal organization at all levels of activity, from the receptionist to the senior partner. 2. The focus of TQM is for businesses to compete on quality. 3. Management has a duty to ensure that the firm provides quality legal services. Management must measure all decisions made on how the decision will affect the quality of the legal services being provided. 4. Quality service involves every person in the firm, and everyone must be involved and committed. 5. Quality services are not based on management’s own perception of quality but on the perceptions of the client. For a TQM policy to be effective, the firm must be willing to listen to the client and to institute change to meet the needs of the client. 20 Chapter 3

6. Quality service depends on individual, team, and ultimately the organization’s performance. TQM eliminates the “we” v. “they” mentality and rewards all members of the team who contribute. 7. TQM seeks to constantly improve systems. B. Benefits of the Total Quality Management Philosophy The benefits of TQM include the following: 1. Increased client satisfaction. 2. Unity among management, attorneys, and all staff members. 3. Continuously seeking to improve performance and productivity. C. How to Implement Total Quality Management 1. TQM can be implemented by hiring professional consultants to develop systems for obtaining feedback and for educating staff members on TQM techniques. 2. To a lesser degree, TQM can be implemented by reading about it and accepting the principles, by being responsive to client needs, and by recognizing the effect management decisions have on the quality of legal services being provided. D. How Total Quality Management Applies to Legal Assistants 1. From a TQM standpoint legal assistants serve two “clients,” the attorney who is an internal client, and the end client who is an external client. For a legal assistant to succeed, it is necessary that he or she provide high-quality service that satisfies both of these clients. III. Marketing

Marketing is the process of educating consumers on quality legal services that a law office can provide. The landmark Supreme Court case of Bates v. State Bar of Arizona, 433 U.S. 350 (1977) held that a ban on attorney advertising was a violation of the First Amendment right to commercial free speech and that it was a restraint on trade. In that case, the State Bar of Arizona sought to discipline two attorneys for a newspaper ad that said “Do you need a lawyer? Legal services at very reasonable fees.” A. Why Is Marketing Important to Legal Assistants? 1. A legal assistant’s job depends on the law office’s ability to find and serve additional clients. 2. When legal assistants market their firms, they establish an interest and loyalty to the law office and to some degree a little more job security. B. Marketing Goals 1. Marketing is not just advertising. Advertising is getting your name out. Marketing includes advertising, but it also includes providing quality services to clients, gaining insight and feedback from clients, having a good reputation in the community, and having good public relations. 2. The goals of marketing include the following: • educating clients and potential clients regarding the firm’s array of services • educating clients and potential clients as to the particular expertise of the firm in certain areas •creating goodwill and interest in the firm •creating positive name recognition for the firm •creating an image of honesty, ethics, and sincere interest in clients • publicizing the firm’s accomplishments to the profession and community • educating clients on changes in the law, thus creating client confidence in the firm • improving the firm’s competitive position in the marketplace • obtaining referrals from other attorneys •maintaining communication with existing clients Staff Manuals, Quality, Marketing, and Planning 21

• increasing client loyalty and client retention • increasing staff morale and reinforcing your firm’s self-image 3. All law firm marketing must not be false or misleading. C. Typical Law Practice Marketing Options 1. Law office marketing options include the following: • law firm Internet site •providing quality legal services to clients because many clients refer new clients to law offices • firm brochure/resume • firm newsletter •informational brochures • public relations • firm open house • business cards, letterhead, announcement cards • public advertising • firm seminars • direct mail •involvement in legal associations • sending information to clients that you know will be of interest to them •marketing services to existing clients (cross-selling) D. The Role of the Rainmaker 1. Rainmaking refers to the ability to bring in new clients to a law office. 2. What makes a good “rainmaker” is helping clients achieve their business goals and dreams. E. The Marketing Plan A marketing plan specifies the exact goals that the marketing program is to accomplish and establishes a detailed strategy of how the goals will be achieved. 1. The overall goals of the marketing program. 2. The strategies and activities to obtain the goals including who, what, when, and how. 3. The estimated cost of the marketing program. 4. The estimated profit the marketing program will generate. F. Marketing—An Ethics Perspective 1. No false or misleading statement. ABA Model Rule 7.1 states A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services. A communication is false or misleading if it: (a) contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading; (b) is likely to create an unjustified expectation about results the lawyer can achieve or states or implies that the lawyer can achieve results by means that violate the Rules of Professional Conduct or other law; or (c) compares the lawyer’s services with other lawyers’ services, unless the comparison can be factually substantiated. 2. No direct solicitation of client. Model Rule 7.3 states Rule 7.3 Direct Contact With Prospective Clients (a) A lawyer shall not by in-person or live telephone contact solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship when a significant motive for the lawyer’s doing so is the lawyer’s pecuniary gain. 22 Chapter 3

3. Lawyers cannot state he/she is a specialist. Rule 7.4 Communication of Fields of Practice A lawyer may communicate the fact that the lawyer does or does not practice in particular fields of law. A lawyer shall not state or imply that the lawyer is a specialist.... IV. Planning

Planning is the process of setting objectives, assessing the future, and developing courses of action to achieve these objectives. A. Why Legal Assistants Need to Learn to Develop Plans 1. Legal assistants prepare many plans including operating budgets, case budgets, case plans, career plans, plans for special law office projects such as development and implementation of staff manuals, and others. B. The Mission Statement and Strategic Plans 1. A mission statement is a general, enduring statement that says what the purpose and intent of the law practice is. It sets the “vision” of the law practice. 2. Strategic planning is the process of determining the major goals of a firm and then adopting the courses of action and allocating resources necessary to achieve those goals. C. The Planning Process 1. Gathering facts and opinions. 2. Assessing and organizing information. 3. Developing goals. 4. Assessing strengths and weaknesses of each goal. 5. Developing objectives and strategies for obtaining the goal. 6. Considering the resources necessary to achieve the objectives. 7. Developing an action plan. 8. Monitoring, reevaluating, and making corrections in the plan. D. Ideas on How to Plan Effectively 1. Gather timely, relevant information. 2. Put plans in writing. 3. Involve everyone from the top of the organization to the bottom in the planning process (ownership). 4. Stick to the plan. 5. Remember that planning is a continuous process. 6. Monitor the plan and communicate the results to others.

TEACHING SUGGESTIONS This is an important chapter that combines some miscellaneous, yet very fundamental, law office management topics. Stress the importance of staff manuals and how they can set out important policy and procedures for controlling the firm and controlling the quality of the legal work going out of the firm. If possible, bring in staff manuals from law offices in your area as examples. Providing quality legal services is one of the most important topics in this text. While TQM is now getting somewhat dated as a management concept, providing quality services is never outdated. Many new legal assistants fail to understand the level of completeness and the high quality of work that many law offices absolutely demand. The new legal assistant must understand how very important it is to do thorough, accurate, and complete work and that if they do not, they may find themselves without a job. The TQM philosophy un- derscores this commitment to quality that many law offices demand. Use Figure 3–5 to introduce TQM to your students and to compare and contrast a TQM-type philosophy with a normal business-type philosophy. Law offices in your area may also subscribe to this philosophy so you might want to ask a legal assistant from one of those offices to speak about the realities of TQM in an actual law office. Staff Manuals, Quality, Marketing, and Planning 23

Stress to students the importance of marketing and how quality legal services and marketing go hand in hand. It is very difficult to market poor services no matter how great the TV commercial or brochure might be. Also, point out that legal assistants can market their firm’s services to relatives, other legal assistants, businesses, and the public in general that they come in contact with. Also, point out the problem with poor lawyer marketing such as tacky attorney advertisements on TV. Ask students who are working in law offices to bring samples of their firm’s brochures, newsletters, printouts from Internet site, and other marketing pieces. Stress the importance of planning. Planning, organizing, and staying on top of many projects at the same time is so important in the legal assistant profession.

DISCUSSION QUESTIONS/IDEAS 1. If possible bring in examples of staff manuals from law offices you have worked at or staff manuals of law offices in your area. In addition, many state bar associations or legal secretary associations publish “form file” notebooks or books for their states. These books list steps for completing pleadings, contracts, wills, and other legal documents. Legal assistants need to know that this practical information exists. 2. It is also a good exercise to have students draft policies and procedures so they understand how they are done and the pitfalls involved with drafting them. Some of the pitfalls include having too many details so the procedures become bureaucratic or too few details so that no one understands exactly what the policy is. 3. Bring in an attorney, practicing legal assistant, or human resource director from a local law office to discuss the importance of quality in the legal environment. 4. If possible, bring in a marketing director for a law office or a “rainmaker” for a law office in your area. Ask the marketing director what types of marketing options he/she uses, ask for a copy of their marketing plan and how it was developed, ask for the price tag of the marketing program, and ask how many new clients the marketing program has brought in. 5. Ask your students to look in the newspaper, on the Internet, in yellow page ads, and on television and radio for attorney ads. Have them list the ones they like and the ones they do not like and why. Ask them to think about the ethical rules and whether the ads comply with them, and whether, if they were clients looking for legal services, they would go to the attorneys making the advertisements and why.

ANSWERS TO QUESTIONS AND EXERCISES 1. A total quality management program could help the legal assistants focus their attention on meeting the needs of the attorneys they serve. Legal assistants have two clients: the attorney(s) they work for and the end client. In this example, it is not the end clients who are complaining but the attorneys. The legal assistants might also want to have meetings on how to coordinate their services better and how they can serve the needs of the attorneys better. The legal assistant coordinator could also take more authority, such as setting priorities and calling for regular meetings of the department to solve the lack of communication problem. 2. Your next move should be to immediately begin working with the other legal assistants and other staff persons in the law department on developing the manual. By talking with them and getting their input and feedback, you will eliminate their fears that you are taking over or that they will not have any say in the development of the manual. This will also make it easier at the implementation stage since it will be important to get other staff members’ input as they begin to actually use the manual. 3. TQM focuses on meeting the needs of the client and letting client needs drive the law firm. While being respected in the community and earning a profit is important, client services should not be allowed to suffer to meet these goals. 4. This advertisement is probably unethical since it is “likely to create an unjustified expectation about the results the lawyer can achieve.” The problem is that potential clients might assume that because the attorneys won that case, they can win their case as well, even though the facts and circumstances will be different. You should respond by citing Model Rule 7.1 as set out above. You should tell the client “thank you” for the offer but that the television commercial is not a good idea for the same reason mentioned. 5. The staff manual is the proper place for stating what the law office’s positions are on ethical problems and how to deal with them in addition to specifically stating how ethical problems can be avoided by developing systems and procedures to minimize them. 24 Chapter 3

6. To convince the partners, you will need to (a) find out if other firms in the area are concentrating services in this area or plan to; (b) if they are providing services in this area, find out how they are doing it and whether it is profitable; (c) analyze what your firm’s chances are at breaking into this area and whether you already know potential or current clients that you can get business from; and (d) determine the cost of getting into the market and how much profit can be generated and when. You can do this research by calling the local bar association and asking them questions, by having your firm join the environmental section of the bar association and receive their newsletter or journal, and by contacting people at other firms that you know are already in this area. You should also do legal research to discover what local firms have litigation currently going in this area, who the clients are, and what the laws are in this area. 7. The receptionists will go to the post office box every morning by 9:00 A.M. The mail will be stamped “received” by the receptionists no later than 9:30 A.M. The receptionists will distribute the mail to the attorney’s secretary who is handling the matter or to the attorney’s legal assistant. Any appointments or deadlines will be recorded in the attorney’s docket schedule by the secretary or legal assistant receiving the attorney’s mail. After deadlines have been recorded, the mail will be given to the attorneys. Staff members will be responsible for placing their outgoing mail in the “outgoing mail” box by 4:30 P.M. The receptionists will deliver the mail to the post office no later than 5:30 P.M. Overnight mail will be used whenever it is absolutely necessary and will be billed to the client for reimbursement. 8. There is no right answer here. Different ads will appeal to different people. 9. Again, this is a question of “taste” and will be different for each person. 10. This is a self-study exercise. 11. This is a self-study exercise. 12. This is a self-study exercise.

CASE REVIEW Doe v. Condon, 2000 WL 718448 (S.C.). 1. The court believed that the very structure of educational legal seminars suggested that the presenter will actually be giving legal advice on legal matters and therefore a legal assistant could not present the seminar. 2. The court focused on the fact that legal advice would be given out at the seminar and therefore it was not proper for a legal assistant to present it even if it was a “good deed”—though in reality most educational seminars are done for the purpose of marketing and attracting new clients and not as a service to the community. 3. The court may not have reached the same conclusion since the legal assistant could have referred all legal questions to the attorney. 4. Yes, the content of the seminar played a part in the decision. Given the detailed nature of the subject presented, the court concluded that it would be difficult to imagine such subjects eliciting “general” questions in which the exercise of legal judgment would not be involved. 5. Yes, the decision was fair. The legal assistant was to present the topics from a legal perspective and not from a financial planning perspective. 6. The court was disturbed that the attorney would allow the legal assistant to present the seminar alone. Based on this, the Court concluded that it was the intention of the attorney all along for the legal assistant to perform responsibilities that he or she should not.

PROJECTS FOR USE WITH THIS CHAPTER There are three projects that specifically target this chapter. They are found in the “Project” section of this In- structor’s Manual and include the following: 1. A Law Office Staff Manual Preparation Project. 2. A Project to Prepare a Detailed Marketing Plan for a New Law Office. CHAPTER 4

CLIENTS AND COMMUNICATION SKILLS

PURPOSE Chapter 4 introduces students to the importance of having good communication skills and provides tips on how to communicate more effectively with clients and with people in general.

LEARNING OBJECTIVES After this chapter, the student should be able to: • Discuss factors that will promote effective client relationships. • Discuss ways to communicate effectively. •Identify communication barriers. • Explain the importance of good listening skills. • Identify the pros and cons of using groups to make decisions. • Discuss the characteristics of a leader.

LECTURE OUTLINE

I. Client Relationships A. There is an ethical duty for attorneys to communicate with clients. Model Rule 1.4 states “Communication: (a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable request for information. (b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” Generally an attorney must do the following: • Inform a client on the status of his/her case. • Respond to a client’s request for information in a timely manner. 25 26 Chapter 4

• Inform clients promptly about important information. • Not cover up a matter if he/she failed to carry out the client’s instructions. • Notify a client if the attorney is leaving a firm or quitting the practice of law. • Notify a client if he/she is going to stop working on a client’s case. • Explain the law and benefits and risks of alternative courses of action. • Notify and communicate settlement offers to clients. B. Fostering good relationships with clients is critical as a legal assistant. C. Clients like simple things such as having access to a legal assistant or attorney at all times. Access means getting phone calls returned immediately and correspondence answered promptly. Clients may not recognize the quality of the legal arguments or documents being produced by the law firm, but they do know whether their documents have typographical errors in them, whether deadlines are being missed, and whether they are treated with respect. All of these things factor into the legal assistant and client relationship. D. Following are some ways to foster good client relationships: •Treat each client as if he or she is your only client. • Send copies of all documents produced for the client’s case to the client. • Do not use legalese. • Return client phone calls immediately. • Be courteous, empathetic, and professional at all times. • Respond to client requests in a timely fashion and keep your promises. • Give clients routine, periodic status reports on their case. • Do not share personal or office problems with clients. •Preserve client confidences. • Use client surveys to gain insight into client needs. • Publish a client manual. E. Following are some strategies for resolving client dissatisfaction: • Listen to the complaint; do not interrupt and do not argue. • Listen empathically. • Do not overstep your bounds or promise something you cannot deliver. •Take notes. • Forward serious complaints to your supervising attorney and be honest. • Do not ignore the complaint. • Realize that some clients will always complain. • Realize you may have personality conflicts with some clients.

II. Communication Skills

Having good communication skills is very important as a legal assistant since nearly all of a legal assistant’s time is spent communicating either orally or in writing. A. Communication Generally 1. Professionals such as legal assistants, spend about 79% of their time communicating, according to a recent survey. 2. A communication barrier inhibits or prevents the receiver from obtaining the correct message from the sender. Barriers include • different cultural backgrounds between sender and receiver • different perceptions • different understandings Clients and Communication Skills 27

• different ages • noise 3. Noise refers to any situation that interferes with or distorts the message being communicated from a sender to a receiver. 4. Feedback is information sent in response to the sender’s message. This is the only way the sender knows whether his or her information was received as intended. B. Nonverbal Communication 1. Communication is much more than just speech or writing. Nonverbal communicators include • eye contact • facial expressions • posture • appearance • clothing •tone of voice • gestures C. Improving Your Communication Skills 1. There are many ways to improve your communication skills including the following: • Listening is one of the most important aspects of communicating, but many people do not do it well. Most people forget 50% of what was said after only a few minutes. As a legal assistant you do not want to be a lazy listener. • Keep it simple and to the point. • Consider your nonverbal signals such as how you are dressed, whether you are fidgeting, or if you have your hands in your pockets. • Do not become emotional. • Make eye contact. • Be precise and clear so nothing is left to the imagination. •Tailor the content of your communication for your audience. • Consider the timing and context of your communication. • Do not be judgmental and avoid negatives. •Ask questions. • Rephrase by telling the sender what your understanding of the communication or conversation is. It allows the sender to clarify information that might not have been understood clearly. • Use good telephone techniques. • Be businesslike and use a professional tone at all times. • Put the caller at ease. • Refer to the caller by name. • When taking messages, always get the telephone number of the person. • Repeat the message back. • Identify yourself as a legal assistant. • Find out the subject matter of the call. • Be careful talking about sensitive matters on mobile phones. •Try to answer your phone personally (when not with a client). • Only put callers on hold for a short period. D. Leadership and Communication 1. Leadership is the act of motivating or causing others to perform and achieve objectives. Leaders give us direction, vision, and motivation. 28 Chapter 4

2. The latest research shows that leaders are made, not born, which means we can learn to be better leaders. 3. Below are some suggestions for how to become a better leader. • Be an expert on what you are talking out. People around you will develop confidence in your abilities and rely upon your judgment and knowledge. • Be honest. Develop a reputation for honesty and integrity. • Stay calm. Good leaders stay calm under fire. •Trust and support subordinates. •Take risks and do not be afraid to fail. • Encourage honest opinions from others. • Set goals and visions. • Be respectful. E. Group Communication 1. Communicating with groups involves a whole different set of variables than communicating one on one. Legal assistants must be able to work well in groups. 2. Advantages of groups include the following: •Groups tend to make more accurate decisions because they have a greater perspective. • When a group makes a decision, it can be implemented easier than if it is made alone. •Group members can explain the group’s decision since they were included in the process. 3. Disadvantages of groups include the following: • Decisions by groups take up to 50% longer than decisions by individuals. •Group decisions are often compromises rather than the most appropriate decisions. •Groupthink can occur. Groupthink is where group cohesiveness and consensus becomes stronger than the desire for the best possible decision. •Groups sometimes make more risky decisions than individuals. •Groups can be dominated by one or more individuals. F. Communication in Interviewing Clients 1. Interviewing clients is a different communication skill. 2. Suggestions for better client interviews include the following: •Prepare for the interview. •Break the ice. • Always inform the person you are interviewing that you are a legal assistant. • Listen carefully. • Communicate sincerity. •Be empathetic. •Organize the information. •Ask questions. • Do not be judgmental. • Never say “You have a great case.” • Leave fee discussions to the attorney.

TEACHING SUGGESTIONS At the beginning of the chapter is a good example of why good client relationships are so important. Whether the law office wins or loses a case, the client needs to know that they received good, ethical lawyering at all stages. Discuss this example with your students. Give examples of your own where you have developed professional relationships with clients and more importantly how you were able to do it. Clients and Communication Skills 29

This is a very practical chapter. There are few definitions in it, yet it is full of good practical information. This chapter may be more difficult to teach because of this fact. The best way to handle this chapter is to use as many examples as possible and to bring in an outside speaker, such as a practicing legal assistant, to discuss client relationships. Clients can be very demanding sometimes and a practicing legal assistant might be able to make these points quite well and from a different perspective than your own. Stress listening as an important communication skill. It is as important as talking, yet many people do not do it very well. In the interviewing section you might want to do a class interview so that students can see how clients are interviewed. You could either do it yourself with the help of another person or student, or bring in a speaker. An example will help here greatly.

DISCUSSION QUESTIONS/IDEAS 1. Role playing works very well in this chapter. Have students break up into groups of two. Have one be a legal assistant interviewing a new client and have the other be a new client, such as someone coming in to file for bankruptcy. In addition, have the student who is the client analyze the verbal and nonverbal communication style of the other person. What impressions would they have if they were an actual client of the person and the law office? 2. Give an example of how litigation sometimes works. Cases sometimes take years to be fully litigated and if clients are not kept informed of what is happening on the case they feel out of touch and as if they have no control of it. Do a role-playing exercise where the students are clients and you are the legal assistant. Tell the students that they were all seriously injured in an accident, that they all have permanent injuries, and that they will have to deal with their injuries for the rest of their lives on a daily basis. You are a legal assistant for the firm representing the students and the case has dragged on for a year and a half. No recovery has been made and the case has still not been set for trial yet. The attorney has not contacted the clients in over three months to let them know the status of the case. Ask them how they feel and have them analyze the situation.

ANSWERS TO QUESTIONS AND EXERCISES 1. Tell the general counsel that you are a legal assistant and that you will refer the call to the supervising attorney of the case. If the attorney is not available, briefly state why the attorney cannot take the call (e.g., the attorney is in court), and tell the general counsel that the attorney will return the call and, if possible, when. 2. The attorney may have already violated disciplinary rules. The legal assistant should try to talk to the attorney again. If this is unsuccessful, the legal assistant must decide whether this is the proper place of employment for him/her and if he/she should forward it to the disciplinary administrator’s office. 3. A short-term solution is for the person in charge of the legal assistants to take control of the situation and tell them that clients will be treated with respect and courtesy at all times and that any deviation in this could result in discipline. A long-term solution is for office policies to be drafted about client contacts. For example, client phone calls will be returned within one hour or they will be returned by someone else in the office if the person being called is not there. 4. You should tell the client that it has been your pleasure to work on his case and that, although you are flat- tered, he does not need to contact the attorney. The point is that you do not want clients intervening for you with your supervisor. In addition, the client is here to get help from you. The client does not need the extra baggage of trying to help you. You are getting paid to help him or her. It is always best to not bring up office problems with clients or to complain in any way. 5. Always consider voluntary and new assignments. Legal assistants wanting to move up should consider the risk of each situation. If the legal assistants think that they can successfully complete the assignment even with some degree of risk, they should do so. This is leadership. Employers look for people who take on additional duties and can “get the job done.” The text indicates that a client manual was published in an ABA magazine, so the legal assistant could start there. In addition, the legal assistant could talk to other legal assistants and attorneys in the office to get their ideas on what should be in the manual. Key sections in the manual might include possible billing arrangements, what discovery is and how long it can last, how to give a deposition, and what happens in a trial. 30 Chapter 4

6. Attorneys have an ethical duty to keep clients reasonably informed about their cases. It would be hard for a client to argue that this was not being done if the law office routinely sent copies of all documents and correspondence to the client. From an ethics perspective, this is a great way to keep clients informed. 7. If you fail to pass critical information on to your attorney, you could find yourself without a job. In addition, the law office and attorney might be in ethical and malpractice cases over it. It is very important that you not forget critical things and that you stay focused on your job. Leave notes for yourself or do whatever it takes, but you must communicate well as a legal assistant or client cases will suffer. 8. This is a self-study exercise. 9. This is a self-study exercise.

CASE REVIEW In re J. Gregory Caver, 97-0823 (La. 5/1/97, 693 So. 2d 150). 1. The attorney has violated nearly all aspects of Rule 1.4, failure to keep the client reasonably informed: • Duty to inform a client on the status of his/her case. • Duty to timely respond to a client’s request for information. • Duty to not cover up a matter if he/she failed to carry out the client’s instructions. • Duty to notify a client if he/she is stopping working on a client’s case. 2. Stipulating to the gross misconduct in footnote 2 would surprise just about anyone.

PROJECTS FOR USE WITH THIS CHAPTER There are no specific projects for use with this chapter. CHAPTER 5

TIMEKEEPING AND BILLING

PURPOSE Timekeeping and billing is extremely important for most law offices. Chapter 5 introduces the student to the many types of fee agreements, how the billing process works, and ethical considerations regarding both timekeeping and billing.

LEARNING OBJECTIVES After this chapter, the student should be able to: • Differentiate between timekeeping and billing. • Recognize major types of legal fee agreements. • Know the difference between billable and nonbillable time. • Explain the concept of value billing. •Discuss how the billing process works and what it entails. • Differentiate between an earned and an unearned retainer.

LECTURE OUTLINE

I. Kinds of Fee Agreements

Legal fees can be structured in many different ways depending on the type of case, the specific circumstances of each client, and the law office’s preferences. A. Hourly Rate Fees An hourly rate fee is a fee for legal services that is billed to the client by the hour, at an agreed- upon rate. There are several specific types of hourly rate agreements. 1. Attorney/Legal Assistant Hourly Rate—The attorney/legal assistant hourly rate is based on the attorney’s or legal assistant’s level of expertise and experience in a particular area. The hourly rate depends on what attorney or legal assistant is working on the case.

31 32 Chapter 5

2. Client Hourly Rate—The client hourly rate method is based on only one hourly charge for the client, regardless of which attorney works on the case and what he or she does on the case. 3. Blended Hourly Rate—A blended hourly rate fee is one hourly rate that takes into account the blend or mix of law office staff working on the matter. The mix may include associates, partners, and sometimes legal assistants. 4. Activity Hourly Rate—An activity hourly rate is based on the type of service or activity being performed. Court appearances are usually billed at substantially higher rates than taking telephone calls for instance. B. Contingency Fees 1. A contingency fee is only collected if the attorney successfully represents the client. The attorney is entitled to a certain percentage of the total amount of money awarded to the client. If the client’s case is not won, and no money is recovered, the attorney collects no legal fees but is still entitled to be reimbursed for all expenses incurred. 2. Contingency fees are typically used in representing plaintiffs in personal injury cases, workers’ compensation cases, civil rights cases, and medical malpractice cases. 3. Contingency fee agreements must be in writing. 4. Some states limit how high contingency fee agreements can be. C. Flat Fees 1. A flat fee for legal services is billed as a flat or fixed amount. 2. Flat fees are used in preparing wills, uncontested divorces, and bankruptcies. They are used when the legal matter is simple, straightforward, and involves few risks. D. Retainer Fees 1. Earned Retainer—An earned retainer means that the law office or attorney has earned the money and is entitled to deposit the money in the office’s or attorney’s own bank account and can use it to pay the attorney’s or law office’s operating expenses, such as salaries. 2. Unearned Retainer—An unearned retainer is monies that are paid up front by the client as an advance against the attorney’s future fees and expenses, as a kind of down payment. Until the monies are actually earned by the attorney or law office, they belong to the client. According to ethical rules, unearned retainers may not be deposited in the attorney’s or law office’s normal operating checking account. Unearned retainers must be deposited into a separate trust account and can be transferred into the firm account as it is earned. a. The written fee agreement should state what kind of retainer is being required. b. When a fee agreement refers to paying a “nonrefundable” retainer this usually means it is an earned retainer. c. Flat fee rates are also usually an earned retainer. 3. Trust or Escrow Account—A trust or escrow account is a separate bank account, apart from a law office’s or attorney’s operating checking account, where unearned client funds are deposited. 4. Cash Advance Retainer—A cash advance retainer is unearned monies and is an advance against the attorney’s future fees and expenses. Until the cash advance is earned by the attorney, it actually belongs to the client. The cash advance is a typical type of unearned retainer. 5. Retainer for General Representation—A retainer for general representation is used when a client such as a corporation or entity requires continuing legal services throughout the year. The client pays a sum of money and receives services for the rest of the year. This is usually an earned retainer. 6. Case Retainer—A case retainer is a fee that is billed at the beginning of a matter, is nonrefundable, and is usually paid to the office at the beginning of the case as an incentive for the office to take the case. This is an earned retainer. 7. Pure Retainer—A pure retainer is paid up front and obligates the law office to be available to represent the client (usually a corporation) throughout the time period agreed upon and the firm also agrees not to represent any of its competitors. Timekeeping and Billing 33

E. Court Awarded Fees 1. In certain federal and state statutes, the prevailing party (i.e., the party that wins the case) is given the right to recover from the opposing side reasonable attorney’s fees. The amount of the attorney’s fees are decided by the court. 2. Court-awarded fees are provided for in federal civil rights law, antitrust, and civil racketeering statutes to name a few. F. Prepaid Legal Services 1. Prepaid legal services are plans that entitle a person to receive legal services (as set out in the plan) either free or at a greatly reduced rate. G. Value Billing 1. The value billing concept represents a type of fee agreement that is based not just on the time required to perform the work but also on the complexity of the matter and the expertise required to perform it. Value billing typically provides that the attorney and client reach a consensus on the amount of fees to be charged. II. Ethics of Timekeeping and Billing A. Ethical Consideration for Legal Fee Agreements There are more timekeeping and billing-related ethical complaints filed against attorneys and law offices than all other types of complaints. 1. Fee Agreement in Writing—All fee agreements should be in writing. The Model Rules at 1.5(b) states (b) When the lawyer has not regularly represented the client [i.e., the lawyer has never represented the client before], the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation. a. If the fee agreement is not in writing the attorney and client may (will) forget what the exact fee agreement is. b. If there is a factual dispute regarding a fee between a client and an attorney, the evidence is typically construed in the light most favorable to the client. 2. Contingency Fee Agreement Required to be in Writing a. Contingency fee agreements must be in writing according to the Model Rules. 3. No Contingency Fees in Criminal/Domestic Relations Cases a. Contingency fees cannot be used in criminal and domestic-relation proceedings. B. Only a Reasonable Fee Can be Collected 1. No matter what the fee agreement says, only a “reasonable” fee can be collected. 2. Factors that courts use to determine “reasonableness” include the following: • the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly •the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer •the fee customarily charged in the locality for similar legal services • the amount involved and the results obtained • the time limitations imposed by the client or by the circumstances • the nature and length of the professional relationship with the client • the experience, reputation, and ability of the lawyer or lawyers performing the services •whether the fee is fixed or contingent C. State Bar Oversight of Fee Issues 1. Many state bar association and courts provide for immediate and informal review/arbitration of fee disputes. 34 Chapter 5

D. Fraud and Criminal Charges 1. Charging an unreasonable fee may rise to the level of fraud. 2. Criminal fraud is a false representation of a present or past fact made by the defendant, upon which the victim relies, resulting in the victim suffering damages. E. Ethical Problems Hard ethical billing problems that come up include the following: 1. Billing two clients for the same time, or double billing, happens when the timekeeper is traveling for one client and works on another client’s case during the travel, for instance. The prudent thing to do is to bill one client or the other client for the time, or to split the time between the cases, but it is not prudent to bill both cases as full time. 2. When billing by the hour is there an ethical obligation to be efficient? Law offices should not “milk” their clients. Law offices and timekeepers should work efficiently. If the attorney or legal assistant works so inefficiently that the fee is no longer reasonable a violation of the ethical rules will have taken place. 3. Should legal assistants bill for clerical or secretarial duties? Legal assistants cannot bill clients for clerical duties. 4. Should the client pay for the mistakes of the law office? The prudent thing is to not bill clients for mistakes. The reason clients come to attorneys is that attorneys are the experts. 5. Should a task be assigned to less expensive staff when possible? Yes, clients should not have to pay for attorney time when the job can be provided by a legal assistant. III. Legal Expenses A. In addition to recovering for legal fees, law practices are also entitled to recover from clients the reasonable expenses that are incurred by the office in representing the client. B. Copying costs, postage, long-distance phone calls, court fees, and travel are common expenses that clients reimburse law offices for. C. In cases involving litigation, expenses alone can exceed tens of thousands of dollars. IV. Timekeeping

Timekeeping is the process of tracking what attorneys and legal assistants do with their time. A timesheet or timeslip is where legal professionals record information about the legal services they provide to each client. A. Manual Timekeeping and Computerized Timekeeping 1. There are several different types of manual timekeeping systems. Most systems allow timekeepers to record their time chronologically and then separate the sheets and file them with each case. 2. Some timekeeping and billing programs provide assistance in keeping track of time. This usually consists of telling the computer what case you are going to work on, to turn the “meter” on, and turn it off when you are done. B. Billable v. Nonbillable Time 1. Billable time is actual time that a legal assistant or attorney spends working on a case. It is billed directly to a client’s account. 2. Nonbillable time is time that cannot be billed directly to a paying client, such as general or administrative activities for the firm, personal time, breaks, and pro bono work. 3. Pro bono work is legal services that are provided free of charge to a client who is not able to pay for the services. C. Minimum Billable Hours 1. Most law offices have a minimum number of hours that legal assistants must bill a year. Billable hours may be as high as 1,600 to 1,800 hours annually. Timekeeping and Billing 35

2. Legal assistants should always track how much time they are billing to see if they are complying with the minimum number of hours. They should not wait until the last month of the year to find out they have not billed enough time. D. Recording Time 1. Time is usually billed in either 6 minute intervals or in quarters. Six Minutes Intervals 0–6 minutes .1 hour 31–36 minutes .6 hour 7–12 minutes .2 hour 37–42 minutes .7 hour 13–15 minutes .25 hour 43–45 minutes .75 hour 16–18 minutes .3 hour 46–48 minutes .8 hour 19–24 minutes .4 hour 49–54 minutes .9 hour 25–30 minutes .5 hour 55–60 minutes 1.0 hour Quarter Intervals 0–15 minutes .25 hour 16–30 minutes .50 hour 31–45 minutes .75 hour 46–60 minutes 1.0 hour E. Timekeeping Practices 1. Tips on timekeeping include the following: • Find out how many hours you must bill annually, monthly, and weekly up front and track where you are in relationship to the quota. •Find out when timesheets are due. • Keep copies of your timesheets. • Record your time contemporaneously on a daily basis. • Record your actual time spent; do not discount your time. • Be aware if billable hours are related to bonuses or merit increases. •Be ethical. • Be aware of things that keep you from billing time. V. Billing A. Legal Assistant Profitability 1. It is profitable for law offices to hire legal assistants because their time can be charged to clients, they do not earn a share of the law office profits, and they are less expensive to employ than associate attorneys. 2. Clients like legal assistants to work on their cases, as well, because their fees are much less than attorneys’ fees. 3. The U.S. Supreme Court case of Missouri v. Jenkins (1989) allowed a law firm to recover the market value of their legal assistants’ time when receiving “attorneys fees” under a federal civil rights statute. Because the case was specific to a federal civil rights statute, other courts using other statutes and circumstances may not follow this ruling. However, it is the trend to allow recovery for legal assistant time. B. Leveraging and Setting Hourly Rates 1. Leveraging is the process of earning a profit from legal services that are provided by law office personnel including partners, associates, and legal assistants. 2. Leveraging allows the law office not only to recover the cost of an attorney or legal assistant’s salary but also to pay overhead expenses and make a profit on each person billing. 36 Chapter 5

C. Manual Billing Systems 1. Manual billing systems usually include typing billings on typewriters or word processors. The problem with manual systems is that it takes a lot of time to bill manually. When invoices are late going out, the payments are late coming in, and the office may experience cash flow problems. D. Computerized Billing Systems 1. Computerized billing systems are widely available. Many are very inexpensive and can produce invoices very quickly. They help to solve cash flow problems in many offices. E. Timekeeping and Billing Cycle 1. The timekeeping and billing cycle in many offices is as follows: a. Client and attorney reach an agreement on legal fees. b. Attorneys and legal assistants perform legal services and prepare manual timeslips. c. Timeslips and out-of-pocket expense slips are entered into the computer. d. Prebilling report is generated and reviewed by managing attorney. e. Client billings are generated and mailed. f. Management reports are generated. g. Client payments are entered in computer. F. Bill Formats 1. There are many different billing formats that invoices can take. The bill format used should be the one that the client wants and that meets his or her needs. G. Management Reports 1. Management reports are used to help management analyze whether the timekeeper and the office are operating in an efficient and effective manner. Many different management reports can be generated in most computerized billing programs, including the following: • case/client list (list of all cases) • aged accounts receivable report (list of balances due and how long they have been due) • timekeeper productivity report (how much billable/nonbillable time billed by each timekeeper) • case type productivity report (shows what types of cases are the most profitable). H. Billing from the Corporate and Government Perspective 1. Some corporate and government practices that use outside counsel (i.e., private law firms) set rules on how much attorneys can bill for time and expenses. The corporation or government practice then has some control over the amount of the bills they receive and how much they will spend on legal services.

TEACHING SUGGESTIONS Chapter 5 contains a lot of information. I suggest going relatively slow through the material, especially the sections on fee agreements, retainers, and ethics. I have included some examples of fee agreements but if you have some of your own or have access to others you might want to bring them in as well for your students to look at. Also, review the “close-up” insert article on successful billing practices. It includes some good examples and practical information on how to bill correctly. Review the contingency fee example in Figure 5–3 with your class. This figure walks students through the process of calculating a contingency fee matter. Also, discuss Fig- ure 5–5 with your class, which compares different types of fee agreements using the same facts. The example helps students understand the different fee agreements, how to calculate them, and the ability to compare the different agreements. Stress the importance of billing ethically. Students sometimes do not realize the pressure they will have to meet their minimum billable hours. Some will be lured into padding their time. The results of padding can be very severe. Review Figure 5–8 with them regarding examples of legal assistant and attorney billing practices. The movie “The Firm” also does a good job of showing that attorneys who fraudulently bill their clients for hours not worked can be subjected to federal criminal charges. Timekeeping and Billing 37

Review Figure 5–21 with your class. That figure reviews some of the most common reasons bills are not paid. I have included a number of practical exercises in the text including timekeeping exercises where students are told what they spent their time on and then must complete a timesheet. There is also a project in which students complete a timesheet for a week for all of their time and then prepare a bill for all time spent on educational matters.

DISCUSSION QUESTIONS/IDEAS 1. Discuss with your students the pros and cons of different types of fee arrangements. Discuss which type of agreement might be the best for the following types of cases: Family law (simple divorce, adoption, etc.)—flat fee Personal injury (where the client has limited funds but has a good case)—contingency Corporate law (where a company needs regular, substantial legal services)—retainer and hourly Criminal law (a typical case of driving under the influence)—fixed fee or hourly A case with major litigation where attorneys with different degrees of experience will be working the case—attorney hourly basis charge. 2. I have included a section on “Ethical Problems” that contains very tough ethical problems. Reasonable people can differ on how they resolve these timekeeping and billing ethical problems. I suggest covering these examples in class and explaining how you would resolve these situations. The process for handling the problems and your reasons for your decisions are very important so let your students know what your opinions in these areas are.

ANSWERS TO QUESTIONS AND EXERCISES 1. The answer to this problem is to never, never pad your time no matter how much pressure you are under, not even when you make a mistake and get behind on your minimum billable hours. The answer is to work hard and fix the problem without padding your time. The way to avoid the problem is, of course, to track how much time you need to bill every week and then bill it or at least be aware of where you are. 2. Be courteous to Mr. Myers and do not argue with him over the complaints. Listen to the complaints he is making to see if there is merit to them. Tell him that you will have the attorney in charge of the case contact him to try to resolve the matter. Thank him for the call and hang up. Tell the supervising attorney what happened and let the attorney handle it. 3. One of the options here is to make an arrangement with the plant or the plant’s union for a prepaid legal service plan that would allow the plant or union to provide certain legal services to their employees free or at greatly reduced prices. Your office would, of course, be compensated by the union, the plant, or the pre-paid legal service plan. 4. MEMO: On x date, a new client, Y, came into our office. She would like to purchase a small business. The business owner’s selling price is $20,000. Y is willing to pay this amount if need be but would like an attorney to handle the negotiations and any resulting contract. Y is uncomfortable with law offices and thinks they will bill her too much. She states that she does not want to be billed by the hour. When you talk with her you might want to bring up the possibility of some kind of value billing agreement for the fees or negotiate a flat fee amount. 5. The problem with this arrangement is that it may depend on your state and might violate or appear to violate the rule prohibiting contingency fee agreements on domestic relation cases. You would need to do specific research in your state, but it is a valid question. 6. This is a real-life problem for some law offices and the legal assistants who work there. The “squeeze” is that the law office may not have enough business or enough work for you to do to meet a large minimum billable hours amount. It needs the money so badly to meet current bills and current payrolls (including your payroll check) that you are being asked to make up work that was not done to bill the good paying clients the firm does have. If you do not, you may have a paycheck that bounces. If you go to the attorneys and they really have no work for you to do then you cannot bill for it. It is that simple. As hard as it is, you may need to move to a firm that is more stable. 38 Chapter 5

7. One way to handle the matter is to see when Jonathan comes into the office, when he leaves, and when he takes breaks. If it appears he is padding his time, you might want to ask him about it. You may also talk to your supervising attorney about it since the supervising attorney probably sees the timesheets at some point. 8. The ethical rules state that only a reasonable fee can be charged for legal services. One factor used to determine if the fee is reasonable is the customary fee charged for this type of service. If the client’s case is routine and has no special circumstances, then the fee might be unreasonable. One reason fee schedules are kept is to establish a customary fee for all clients for the same services, so, the client may have an argument that this is unreasonable. Bring this to the attorney’s attention without being judgmental. It may be that the attorney simply made a mistake. 9. If you bill the client for hours not worked you have committed fraud. If the firm takes money out of the trust account and pays the firm for the hours not worked, the firm has stolen the client’s money. Both of these things violate ethical rules and criminal statutes. 10. Below is an answer to this exercise. I included the “Time of Day” since these were not numbered, so you can tell what entries go where. You may not agree with some of my entries. I included some hard situations on purpose to force students to deal with real-life situations. Go through these entries to see how you would complete them and then discuss them in class.

Case Services Rendered Time of Day Time Billable/ Spent Nonbillable

None Cup of coffee 8:00–8:12 AM .2 Nonbillable Johnson v. Cuttingham Discussion w/ atty re: Mot. 8:13–8:25 AM .1 Billable Dismiss Halvert v. Shawnee Discussion w/ atty re: 8:13–8:25 AM .1 Billable bankruptcy statute None Phone call re: legal asst. assoc. mtg 8:26–8:37 AM .2 Nonbillable John Hamilton’s case Phone call from client re: when 8:38–8:40 AM .1 Billable office appoint is (I marked this as billable, but the attorney should decide if this should be nonbillable) Johnson v. Cuttingham Legal research re: motion to 8:40–8:50 AM .2 Billable dismiss Menly v. Menly Phone call with witness, and 8:55–9:30 AM .6 Billable memo to file re: conversation with witness Glass v. Huron Phone call to counsel re: discov- 9:30–9:54 AM .4 Billable ery question Richard Sherman New client interview regarding 10:00–10:45 AM .75 Billable/ adoption and incorporation of a New Client small business None Covered secretary desk and made 10:45–10:54 AM .2 Nonbillable a fax Ranking v. Siefkin Organization of exhibits 10:55–12:00 1.1 Billable (noon) None Attended legal assistant assoc. 12:00–1:00 PM 1.0 Nonbillable luncheon Pro bono case Read trial transcripts 1:00–2:00 PM 1.0 Nonbillable New case from Ms. Discussion with attorney, read 2:00–5:30 PM 3.30 Billable Mitchell petition and client file, and draft IG’s Timekeeping and Billing 39

11. The office is having cash flow problems and should immediately make changes in their billing and office procedures. Staff members should be disciplined for failing to complete expense slips on items that should be billed back to the client. A clear policy should be written stating that clients will be billed for copying expenses, postage, and other such reimbursable expenses. The office should go to a weekly or biweekly billing schedule to bring money into the firm faster. A quarterly billing schedule is not acceptable for most law offices. 12. All law offices doing work for us will not be reimbursed for more than $200 per hour for attorney time. Legal assistants will not be reimbursed for more than $85 an hour. We will reimburse computer-assisted legal research services (WESTLAW/LEXIS) at cost and will not pay any markup by the law office. A copy of the billing from WESTLAW/LEXIS must be attached. We will pay not more than .25 per copy for machine copying costs. 13. This is a self-study exercise. 14. This is a difficult situation and may be resolved differently in different jurisdictions. The core issue is whether or not the $480,000 fee is “reasonable” when the firm only met with the client a few times and prepared a demand letter. Assuming the firm has spent 10 hours on the case, the hourly rate the client would be paying is $48,000 an hour.

CASE REVIEW Committee for Public Counsel Services v. Lookner, 47 Mass.App.Ct. 833, 716 N.E. 2d 690 (1999). This is an extremely interesting case and raises the issue that some clients routinely conduct audits of legal services/bills. 1. No, it is fairly clear that he did not expect an audit. 2. Yes, there is no question that a court would be very concerned that an attorney who was supposed to be representing indigent clients would be attempting to defraud the public in such a gross way. In the Matter of Lloyd Clareman, 219 A.D. 2d 195 640 N.Y.S. 2d 84 (1996). This is an interesting case as well and is completely opposite to that of the Lookner case. In this case the attorney became entangled in a fraudulent billing scheme but tried to maintain honesty and integrity throughout. The attorney did the “right thing” and suffered for it. It is clear that the court had respect for the attorney and instead of a disbarment they only gave him a public censure.

PROJECTS FOR USE WITH THIS CHAPTER One project is included for this chapter in which students track their time and submit a billing based on the amount of time they spent doing education related work. It is an expanded project similar to Practice Exercise 6 and is included in the Project section of this Instructor’s Manual. CHAPTER 6

CLIENT TRUST FUNDS AND LAW OFFICE ACCOUNTING

PURPOSE Chapter 6 introduces the student to client funds and law office accounting. Every year hundreds, if not thousands, of attorneys are disciplined because they do not take care of client funds properly. This chapter provides examples of how to properly account for client funds and introduces the student to law office budgeting.

LEARNING OBJECTIVES After this chapter, the student should be able to: • Understand the purpose and importance of trust/escrow accounts. •Discuss the ethics rules regarding safeguarding client funds. • Explain the budgeting process.

LECTURE OUTLINE

I. Client Funds A. Trust/Escrow Account 1. A trust or escrow account is a bank account, separate from a law office’s or attorney’s business or operating checking account, where unearned client funds are deposited. B. No Commingling of Client and Law Office Funds 1. Ethical rules prohibit the commingling of client funds and law office funds in the same account. 2. The reason for the rule is that if client funds were commingled and kept in the same bank account with general law practice funds, creditors could seize these funds to repay debts of the law practice. 40 Client Trust Funds and Law Office Accounting 41

3. In addition, if attorneys could hide law office funds in the trust account, law office creditors would be unable to reach those funds, even though they otherwise would be able to. Only client funds can be kept in the trust account. C. Trust Account Examples 1. Unearned retainers such as cash advances are deposited in the trust account to apply against future fees and expenses. When the law office has earned the monies, the part that has been earned can be transferred to the law office’s operating checking account. This is usually done by issuing a trust check made payable to the law office itself. 2. The trust account is also used in distributing settlement funds for instance. If a firm settled a case for $10,000 the opposing party would issue a $10,000 check payable to the law office and the client. The law office would deposit the $10,000 in the trust account. If the law office was entitled to $2,000 of the money, a trust check would be written to the client for $8,000 and a $2,000 check would be written to the law office itself (to deposit in their operating account). D. Ethics and Trust Accounts 1. Ethical Rule Regarding Commingling of Client and Law Office Funds Rule 1.15 of the Model Rules of Professional Conduct states: (a) A lawyer shall hold property of their client or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be kept in a separate account . . . Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation (emphasis added). 2. Trust Account Not Used to Pay Law Office/Personal Expenses Ethical rules prohibit attorneys from using trust funds to pay for general office expenses such as rent and payroll. Law offices are also prohibited from “borrowing” monies from the trust account. However, trust checks can be written to cover client expenses. For instance, if a client had monies in trust and the firm needed to issue a check to a court reporter to pay for a deposition transcript for the case, the office would write a check to the court reporter from the trust account. This is perfectly acceptable as long as the expense is for the client’s case. 3. One Trust Account Acceptable For All Client Funds Law offices may have one trust account where all clients’ funds are deposited. Law offices do not have to have a separate bank account for each client, as long as proper records are maintained showing how much each client has in the account. 4. Attorney Must Promptly Deliver Client Funds Back to the Client Attorneys have an ethical responsibility to immediately turn over to clients any funds that they are entitled to. Rule 1.15(b) of the Model Rules of Professional Conduct states: (b) . . . [A] lawyer shall promptly deliver to the client or third person any funds or other property the client or third person is entitled to receive . . . and, shall promptly render a full accounting regarding such property. 5. Commingling of Client Funds is a Common Problem Commingling of client funds is a common problem. Literally hundreds of attorneys are suspended or disbarred every year for commingling client funds. II. Budgeting 1. A budget is a projected plan of income and expenses for a set period of time, usually a year. 2. Budgets are a planning tool. They allow the firm to plan for the future; to anticipate problems, needs, and goals for the firm; and to allocate and manage resources. 3. Steps in the budget process: a. Prepare an Income Budget. An income budget estimates how many partners, associates, legal assistants, and others will bill for their time; what the rate or hourly charge will be; and the number of billable hours each timekeeper will be responsible for billing. 42 Chapter 6

• The time-to-billing percentage adjusts downward the actual number of hours the office will bill to clients, taking into account the fact that timekeepers are not always able to bill at their budgeted levels due to sickness and unforeseen events. • Realization is what a firm actually receives in income as opposed to the amount it bills for. •Prepare a Staffing Plan. A staffing plan estimates how many employees will be hired or funded by the firm, what positions or capacities they will serve, what positions will need to be added or deleted, and how much the compensation will be. • Estimating Overhead Expenses. The law office must make a budget of all expected overhead expenses such as rent, utilities, and equipment. •Profit Margin. The last step is to set a target profit margin that the firm would like to achieve. 4. Budgeting Tips: • Budgets should be communicated to everyone involved. • Budgets must be tracked year-round. • Document budget assumptions. • Use zero-based budgeting. A zero-based budget means last year’s budget or actual expenses are not used in figuring the coming years’ budget. Each year the budget figures stand on their own merit and must be justified.

III. Internal Controls A. Internal control refers to procedures that an organization establishes to set up checks and balances so that no one individual in the organization has exclusive control over any part of the accounting system. B. Good internal controls prevent or make it much harder for employees to embezzle money. Embezzlement by law office staff has recently been a problem in many law offices. C. Internal control procedures include the following: • Never allow a bookkeeper or person preparing the checks to sign checks or to sign on the account. • Have careful, unannounced, routine examinations of the books. • Partners should routinely read and examine all financial reports. •All checks should be stored in a locked cabinet. •Never let the person signing the checks reconcile the account. • Use check request forms. • Have guidelines for how the mail is opened and for how checks will be deposited. •Use non-accounting personnel to help with internal controls. • Require two signatures on checks over $10,000. • Stamp invoices “canceled.” • Have an audit prepared by a CPA every year.

VI. Financial Management and Ethics A. Lawyers cannot share legal fees with a nonlawyer or practice with a nonlawyer. Model Rule 5.4(a) states: “A lawyer or law firm shall not share legal fees with a nonlawyer....”

TEACHING SUGGESTIONS Stress the importance of trust accounts and accounting properly for client funds. Figure 6–2 is an excellent example of how even manual systems can be developed to properly account for client trust funds. There is an excellent trust account project in the Projects section of this Instructor’s Manual. Figure 6–3 does a good job of showing a few ways that trust accounts are abused. Client Trust Funds and Law Office Accounting 43

DISCUSSION QUESTIONS/IDEAS 1. Go to your state bar journal and look in the discipline section of it. Almost every month you can find several examples of attorneys being disciplined for trust account violations. Show these to the students to show how prevalent this problem is. 2. Have a chief financial officer or a managing partner from one of your local firms come in to talk to the class about trust accounts, budgeting, and internal control.

ANSWERS TO QUESTIONS AND EXERCISES 1. This is how some law offices still operate with virtually no internal controls at all. Here are the problems: • If the office manager is the one who primarily writes the checks, he/she should not sign the checks, since he/she could write him/herself a huge check and skip town. • The checkbook should be locked up, especially when no one is there. • The attorney should never sign a check without carefully determining what the check is for. • The office manager should never be allowed to receive payments or make deposits by him/herself. Otherwise the office manager could simply take one of the payments, endorse it to him/herself and/or take the cash if the payment was made in cash and no one would ever know. • The office manager should not receive the bank statement and return checks or be allowed to reconcile the account if he/she is preparing or writing checks. He/she could write him/herself a check, sign it, and when the check came in the returned check stack, destroy all evidence the check was written. • It absolutely does not matter that the office manager appears trustworthy and has worked there for 20 years. Some “trustworthy” office managers have embezzled for 20 years. Set up good internal controls so no one can embezzle or at least cannot do it easily. 2. Attorneys have an obligation to return client funds to their clients quickly. Two months is more than enough time to write a check. As a legal assistant, you could gently remind the attorney of this ethical rule. 3. The check appears to be a cash advance, has not yet been earned, and should be placed in the trust account until it is earned. Gently remind the attorney that the money has not yet been earned and cannot ethically be put in the firm’s operating account, but should be put in the trust account. 4. This may be unethical since an attorney cannot share in the profits of the business with a nonlawyer. The question states that you will not receive 10% of the money itself but will receive a bonus instead. This is shaky ground; avoid this type of problem as it is not worth the risk. A different incentive policy should be used. 5. This looks like a blatant violation of commingling or of outright stealing from the trust account. The fact that there is no case name is the key. You would not be responsible for the acts, but the attorney certainly would. About the only option you have is to force a confrontation with the attorney or to contact the disciplinary administrator in your state. 6. This is a self-study exercise. 7. INCOME Hours Rate Total Associate 1 1900 $150 $285,000 Associate 2 1900 $150 $285,000 Associate 3 1900 $150 $285,000 Legal Assistant 1 1750 $70 $122,500 Legal Assistant 2 1750 $70 $122,500 SUBTOTAL $1,100,000 Time to Billing Percentage 98% TOTALTO BE BILLED $1,078,000 Realization Rate 92% TOTAL GROSS INCOME $991,760 44 Chapter 6

EXPENSES Rent $61,500 Telephone Costs $48,000 Office Supplies $20,000 Computers $20,000 Salaries Associate 1 $74,200 Associate 2 $74,200 Associate 3 $74,200 Legal Assistant 1 $42,400 Legal Assistant 2 $42,400 Secretary 1 $31,800 Secretary 2 $31,800 Secretary 3 $31,800 TOTAL SALARIES $402,800 Fringe Benefits at 25% $100,700

TOTAL EXPENSES $503,500

INITIAL PROFIT $488,260

INCOME BUDGET Hours Rate Total Legal Assistant 1 (Trial) 720 $70 $50,400 Legal Assistant 1 (Travel) 180 $35 $ 6,300 Legal Assistant 1 (Normal) 900 $60 $54,000 Legal Assistant 2 1710 $52 $88,920 Legal Assistant 3 ($300,000 .25 / 3) $25,000 Legal Assistant 4 1840 $50 $92,000 Legal Assistant 5 1600 $40 $64,000 Legal Assistant 6 1400 $50 $70,000 SUBTOTAL $450,620 Time to Billing Percentage 95% TOTALTO BE BILLED $428,089 Realization Rate 95% TOTAL GROSS INCOME $406,684

CASE REVIEW Iowa Supreme Court Board of Professional Ethics and Conduct v. Sunleaf, 588 N.W.2d 126 (1999). 1. The fact that the attorney had practiced for 37 years without incident and that he had a personal health crisis and alcoholism probably swayed the court to reprimand instead of suspend. 2. The fact that the secretary may be out for revenge and did not have pure motives in alerting the disciplinary administrator’s office is irrelevant to the fact that the attorney acted unethically. 3. It violates the disciplinary code to commingle trust funds with office funds because there is a great temptation for abuse. In the Matter of Hawk, 269 Ga. 165, 496 S.E.2d 261 (1998). Client Trust Funds and Law Office Accounting 45

1. The attorney in Hawk settled the client’s case without telling him/her, forged his client’s name on the settlement check, and then stole the money. In Sunleaf, the attorney never stole from his clients. 2. • The attorney misrepresented to the insurance company that he was still representing the client after the client had fired him. • He negotiated a settlement without the client’s knowledge or permission. • He deposited the settlement money in the firm’s operating account. • He, in fact, stole the money from his client.

PROJECTS FOR USE WITH THIS CHAPTER The following projects are in the Project section of this Instructor’s Manual:

Law Office Budget Project

Trust Account Project (this is an excellent exercise) CHAPTER 7

CALENDARING, DOCKET CONTROL, AND CASE MANAGEMENT

PURPOSE This chapter introduces docket control and case management systems to students. The consequences for miss- ing even one deadline can be absolutely critical, so this point is stressed throughout the chapter.

LEARNING OBJECTIVES After this chapter, the student should be able to: • Explain how to make docketing entries. • Discuss how to calculate court deadlines. • Explain why a poor docket system is harmful to a law office. • Differentiate between manual and computerized docket systems. • Explain how a poor docket control system leads to ethical and malpractice claims.

LECTURE OUTLINE

I. Definitions • Calendaring is typically a generic term used to describe the recording of appointments for any type of business. • Docket control is typically a law office specific term that refers to entering, organizing, and controlling all the appointments, deadlines, and due dates for a legal organization. • Case management is also a law office specific term, but it always means more than just tracking dates. A. Appointments 1. During the course of a case or legal matter there will be many appointments including meetings with clients, co-counsel, and witnesses. 46 Calendaring, Docket Control, and Case Management 47

B. Deadlines and Reminders 1. There are deadlines at practically every stage of a legal matter. 2. A statute of limitations is one of the most important deadlines there is. It is a statute or law that sets a limit on the length of time a party has to file a lawsuit. 3. Reminders are forewarning of a coming deadline. Common reminders include 15, 30, and 45 day reminders of upcoming events. C. Hearings and Court Dates 1. Hearings and court dates are formal proceedings before a court. D. Receiving Documents, Following Court Rules, and Calculating Deadlines 1. It is important when documents come in the mail that response dates and other deadlines are immediately and systematically entered in the law office’s docket control system. 2. It is imperative that legal assistants know the local rules of the court where the cases are filed. The local rules set how dates are calculated and when documents are due. 3. When docketing, calendar days usually mean literal days, counting weekends and holidays. 4. When docketing, workdays usually mean only days when the court is open (i.e, not counting holidays and weekends). 5. When calculating dates it is important to know whether deadlines are calculated on when a document is FILED or when it is received in the law office. For this reason, all documents that come into a law office should be stamped “RECEIVED” with the date it was received. E. Ethical and Malpractice Considerations 1. Ethical Considerations Failing to perform legal work, neglecting cases, and failing to communicate with clients make up a large number of the ethical complaints filed against attorneys. 2. Adequate Preparation and Competence Model Rule 1.1 states: Alawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. 3. Diligence Model Rule 1.3 requires that an attorney act with a reasonable degree of diligence in pursuing the client’s case: A lawyer shall act with reasonable diligence and promptness in representing a client. 4. Communication with Clients Model Rule 1.4 states: (a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information. (b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation. 5. Legal Malpractice Considerations In a legal malpractice claim the plaintiff must prove that an attorney breached an ordinary standard of care applicable to a reasonable attorney under those circumstances. When deadlines and commitments are regularly missed by the attorney it raises malpractice issues. F. Manual Docket Control Systems 1. Manual docket control systems include the following: • using calendars • card systems 48 Chapter 7

G. Computerized Docket Control Systems 1. Computerized docket control systems have the following features: •Display screens to quickly get a glance of your daily, weekly, or monthly calendar. • Perpetual calendars so no matter how far in the future the deadline is, it can be entered. •Recurring entries such as daily, weekly, monthly, or annual meetings or appointments that can be made with one entry. • Conflict alert that immediately lets you know if you have a conflict. • Automatic reminders or warnings that a deadline is approaching. • Per case docket report that shows all docket entries for a single case for any given period of time. • Past due report showing calendar items that are past due.

TEACHING SUGGESTIONS It is imperative to stress with students the importance of docket control. Remind them that it only takes one missed deadline, such as a statute of limitations that runs, for the law office to be subject to ethical and malpractice problems. Use the chapter opening regarding the medical malpractice claim to make this point.

DISCUSSION QUESTIONS/IDEAS 1. Have your students find four ethical cases in your state regarding neglect, lack of diligence, or incompetence due to lack of preparation. 2. Discuss with your students all of the deadlines, appointments, and things to do in a single case that is being litigated. Many students who have not experienced litigation will marvel at the number of deadlines that must be met and work that must be done to get a case ready for trial. They will be surprised when you tell them that some firms will have between 20 and 100 cases like the one described. A typical civil case in litigation will have between 50 and 100 deadlines, including these: • Make appointment with client to draft a complaint or petition to file the case (docket the entry). •File the complaint or petition before any statute of limitations (SOL) runs (be sure to record the SOL). • Serve all parties with the petition or complaint according to the rules of the court within the specified time periods (docket entry). • Record the time of when the opposing party’s answer is due (docket entry). • Make a note to file any preliminary motions with the court for injunctions or other immediate relief (docket entry optional). • At this point the opposing party may file one or more motions to dismiss the case. You must make a docket entry to respond to each motion within the allotted time. • Once a case has survived a motion to dismiss, and sometimes before, it will be set for a discovery conference (docket entry). • At a discovery conference, the court will set many discovery deadlines, establishing when depositions must be completed, when written discovery must be completed (interrogatories, request for production, request for admissions), when witness and exhibit lists are due and when a follow-up conference will be held. • When you set depositions you must docket when you take depositions (docket entry) and when answers to your discovery documents will be due (docket entries). If discovery documents are sent to you by the opposing party you must make docket entries for when your client’s answers are due. • Any discovery disputes that must be settled by the court must be set for hearing and docketed. • After discovery has closed, motions for summary judgment will be filed. These motions must be docketed and answered by a specific date. • After the motions for summary judgment are resolved, a court will set a time for the parties to exchange pretrial orders (docket entries) and a date when a pretrial hearing will take place (docket entry). Calendaring, Docket Control, and Case Management 49

•After a pretrial hearing, a trial date will be set (docket entries) and several other types of deadlines set. • During a trial there will be several docket entries. • Near the end of the trial, both parties are given a deadline to submit their proposed jury instructions (docket entry). •After a verdict has been rendered there are specific deadlines for post-trial motions such as a Motion for New Trial, Motion to Set Aside the Verdict, Motion for Judgment Not Withstanding the Verdict (multiple docket entries). • After these post-trial motions have been ruled on, the parties then have a certain time period to appeal (docket entry).

ANSWERS TO QUESTIONS & EXERCISES 1. From a productivity standpoint, a computerized system is probably more efficient and can give both clients and attorneys better quality information than a manual system. The law office should consider going to a computerized system. 2. Model Rule 1.3 states that a lawyer shall act with reasonable diligence and promptness in representing a client. Given the facts presented herein, it certainly can be argued that the attorney is not acting with promptness here in representing his client. The attorney should gently be reminded concerning the circumstances and this ethical rule. 3. You should tell the attorney that if the office is not going to take the case that he/she should immediately send the client a letter stating that the firm is not going to represent the client and to immediately look for another attorney since the statute of limitations will run in a month. 4. “Doing the best we can” is not ethical. The ethical rules require that a lawyer act competently when representing a client including being reasonably prepared to handle the client’s case. This does not appear to be the case. The attorney should ask for a continuance and spend the time getting ready for trial. 5. The attorney should contact an attorney that he or she knows who will be co-counsel on the case. The attorney can then learn from the more experienced attorney without having to jeopardize the client’s rights. The attorneys will of course have to share the fee but this may not be a problem. 6. a. 8/18/03 b. 3/17/03 c. 6/26/03 d. 12/24/04 7. This is a self-study exercise. 8. This is a self-study exercise. 9. This is a self-study exercise. 10. This is a self-study exercise.

CASE REVIEW In the Matter of Riva, 157 N.J. 34, 722 A.2d 933 (N.J. 1999). 1. • The attorney did not file an answer or a counterclaim. • The attorney lied to the client in that he told the client that an answer had been filed. • The attorney did not return the phone calls of the client. • The attorney denied receiving a copy of the default judgment but it appears it was correctly mailed. If so, the attorney lied about this as well. • The attorney misrepresented what he had done regarding vacating the default judgment. 2. The client probably felt utterly helpless. 3. Primarily because the misconduct only applied to one case/transaction. 50 Chapter 7

4. Given the gross misconduct involved, it seems that a three-month suspension of the attorney or making the attorney pay the client’s fees for the new attorney might have been a more suitable punishment.

PROJECTS FOR USE WITH THIS CHAPTER Aproject that has the students record their classes and class assignments like a docket control system is in the “Project” section of this Instructor’s Manual. CHAPTER 8

HUMAN RESOURCE MANAGEMENT

PURPOSE One of the best resources a law office has is, of course, its human resources or staff. Chapter 8 introduces human resource concepts to students including good human resource tips and techniques and a review of human resources related laws.

LEARNING OBJECTIVES After this chapter, the student should be able to: •Define and discuss the term employment-at-will. •Discuss the Americans with Disabilities Act. • Define what sexually harassing conduct is. • List questions that cannot lawfully be asked in an employment interview. • List questions that should be covered when performing reference checks. •Explain the coaching technique. •Discuss when terminating an employee is appropriate. • Explain what positive discipline is.

LECTURE OUTLINE

I. The Hiring Process

Human resource management is the process of recruiting, hiring, training, evaluating, maintaining, and directing the human resources that will provide quality legal services to clients. Making poor hiring decisions can waste time and thousands of dollars so it is important that the right person is hired. A. Writing Job Descriptions 1. The first step in the hiring process is writing a detailed job description.

51 52 Chapter 8

2. A job description should explain the job’s essential function and should include job duties or tasks that are necessary for the completion of the job and that will take up a significant part of the employee’s time. B. Advertising and Recruiting 1. One method of recruiting job candidates is placing a newspaper advertisement, but there are also many other forms of recruiting. C. Interviewing 1. Screen applicants before giving interviews by calling them and asking questions about their resume. This saves time by not interviewing people who are not qualified. 2. All interviews must be consistently done. Always ask the same questions in each interview. 3. Talk less and listen more. 4. Ask open-ended questions that require concrete examples relating to the person’s personality, job history, and education. 5. Involve others on the interview team including people with culturally diverse backgrounds. 6. Do not ask questions that are inappropriate, such as personal questions that relate to a person’s race, color, religion, sex, national origin, age, or disability. D. Reference Checks 1. Checking references is an important part of the hiring process and should never be left out. 2. Some researchers have found that nearly 30 percent of all resumes contain exaggerated or untrue statements about education or employment history. 3. Recently, employers have been held liable for negligent hiring. Negligent hiring is when an employer hires an employee without sufficiently and reasonably checking the employee’s background. 4. Tips for calling references include the following: • Call past employers/supervisors. • Be prepared and know what to ask. • Call institutions and schools. • Be friendly. • Call character references last since candidates will only give names of people who will give them a good reference.

II. Performance Evaluations A. Performance Evaluations Generally 1. Timely performance evaluations are a strong human resource development technique. 2. General tips on performance evaluations include the following: • Evaluations should be done regularly. • Evaluations should be objective and should match ratings with performance. • Evaluation methods should be consistent. • Evaluations should elicit open communication and set mutual goals for improvement. • Evaluation methods should allow employees to respond to the comments made. B. Coaching Techniques—On-Going Evaluation 1. One way to help an employee succeed in his or her job is to coach and counsel the employee on a daily or ongoing basis. 2. The coaching technique focuses on the positive aspects of the employee’s performance and explores alternative ways to improve his or her performance. 3. The coaching technique is borrowed from sports where a coach works with an individual to overcome his or her deficiencies by counseling and explaining problems to the person. Human Resource Management 53

C. Evaluation Forms and Techniques 1. Evaluation forms and techniques include the following: •General performance evaluation forms. • Job-specific form based on the job description. • Goal Setting and Management By Objectives (MBO)—In an MBO performance program, the employee and employer agree at the beginning of the evaluation period what the goals for the employee will be. Also included will be target dates for reviewing the employee’s progress toward the goals and a determination on how it will be decided whether the goal was achieved or not. D. Employee Attitude Surveys 1. If employers are willing to evaluate the performance of their staff, they should also be prepared to allow their staff to evaluate them. 2. An employee attitude survey given to the employees of an organization asks them to rate the effectiveness of the organization in many specific areas. Management can gain a great deal of information from its employees about how the organization can be run more effectively. III. Termination A. When Can an Employee be Terminated? 1. In many states an employer is allowed to terminate an employee for any reason as long as it is nondiscriminatory and does not violate a public policy. This is called employment-at- will. 2. Always avoid terminating an employee for arbitrary reasons. Legitimate reasons for dismissal include the following: • Disciplinary Causes—This includes violating company policies or known company rules, such as acting dishonestly or unethically, falsifying records, fighting, and intoxication or substance abuse. • Poor Job Performance—This includes failing to perform work, poor attitude, uncooperative behavior, excessive absenteeism, insubordination, and others. • Economic Conditions—This includes layoffs and cutbacks due to poor economic conditions for the organization. IV. Personnel Policies A. Personnel Policies 1. A personnel handbook lists the formal personnel policies of an organization. 2. Personnel handbooks do the following: • establish formal policies on personnel matters, so staff members will know what to expect of management and what management expects of them regarding personnel issues • establish a standard so that all employees are treated fairly and uniformly • help to protect the law office if it is involved in litigation regarding personnel matters and to avoid government compliance problems V. Current Personnel Law Issues A. Employment-At-Will Doctrine 1. The employment-at-will doctrine states that an employer and employee freely enter into an employment relationship and that either party has the right to sever the relationship any time without reason. 2. Employment-at-will typically happens when an employee works for an employer without any type of written agreement or reference to how long the employee will work for the employer. Some states do not accept the employment-at-will doctrine. 54 Chapter 8

3. Organizations should be careful when drafting their personnel handbook to state that the policies in the handbook are not a “contract” or that employees will be retained for a certain amount of time. 4. The employment-at-will doctrine does, of course, have limitations. Courts have found that at- will employees may have legal rights against employers, even though the employer is supposed to be able to terminate the employee without any reason at all. Instances include the following: • violating public policies, such as firing an employee for filing a worker’s compensation claim, firing an employee for refusing to commit perjury, or terminating an employee to avoid paying retirement benefits or sales commissions • terminating an employee based on discrimination or terminating an employee when the employer promised to retain the employee as long as the employee did a good job 5. Some states by statute limit the employment-at-will doctrine, so any organization should know their own state laws as well. When employment-at-will is not in effect or if there is an employment contract in place the typical standard is “just cause.” “Just cause” means that before an employer can terminate an employee, the employer must have “just cause” or reasonable cause to do so. “Just cause” can include many things such as violating the company’s rules and regulations, insubordination, and dishonesty to name a few. B. Family and Medical Leave Act of 1993 1. The Family and Medical Leave Act of 1993 (FMLA) applies to employers with 50 or more employees (and any public agency and any private elementary or secondary school) and provides that eligible employees be allowed up to 12 work weeks of unpaid leave within any 12-month period for: (a) the birth, adoption, or placement of a child for foster care; (b) the care of a child, spouse, or parent with a serious health condition; and (c) the employee’s own serious health condition. 2. The FMLA requires that an employee granted leave under the act must be returned to the same position held prior to the leave, or one that is equivalent in pay, benefits, privileges, and other terms and conditions of employment. C. Fair Labor Standards Act 1. The Fair Labor Standards Act sets minimum wage and maximum hours of work for employees. It also requires that overtime pay (one and one-half times their normal rate) be paid to employees who work in excess of 40 hours a week. 2. Employees do not need to be paid overtime if they fall into one of the four “white collar” exemptions: executive, administrative, professional, or outside sales. D. Equal Employment Opportunity 1. Equal employment opportunity means that employers make employment related decisions without arbitrarily discriminating against an individual. 2. Federal laws, including the Civil Rights Act of 1964, prohibit employers from discriminating against employees or applicants on the basis of race, color, national origin, religion, or gender. 3. The Americans with Disabilities Act of 1990 (ADA) prohibits employers from discrimination against employees or applicants with disabilities. a. The ADA also requires that employers “reasonably accommodate” persons with disabilities. An employer must make “reasonable accommodation” for a person with a disability, which may include making existing facilities readily accessible, restructuring the job, or modifying work schedules. b. The ADA provides that individuals with disabilities have the same rights and privileges in employment as employees without disabilities. 4. The Age Discrimination in Employment Act of 1967 prohibits employers from discriminating against employees and applicants on the basis of age where the individual is 40 or older. 5. The Equal Pay Act of 1963 prohibits employers from paying workers of one sex less than the rate paid an employee of the opposite sex for work on jobs that require equal skill, effort, and responsibility and that are performed under the same working conditions. Human Resource Management 55

6. An exception to equal employment opportunity is when age, sex, or religion is a bona fide occupational qualification (BFOQ). A BFOQ means that to perform a specific job adequately, an employee must be of a certain age, sex, or religion. A BFOQ does not apply to race or color. E. Sexual Harassment 1. Sexual harassment means unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature that creates an intimidating, hostile, or offensive working environment. 2. Federal guidelines make it clear that an employer is responsible for the acts of its supervisory employees, regardless of whether the specific acts complained of were authorized or even forbidden by the employer and regardless of whether the employer knew or should have known of their occurrence. 3. It is the responsibility of the employer to take immediate and appropriate corrective action. 4. Law offices should have a policy prohibiting sexual harassment. 5. Federal guidelines state that employers can be liable if they did not have a written policy prohibiting sexual harassment at the time an employee filed charges of harassment. If the firm receives a complaint of sexual harassment, it has a legal duty to immediately investigate the situation, to initiate corrective action, and to reprimand or discharge the employee involved if warranted. VI. Managing Stress A. Identify areas of conflict and possible solutions, and take appropriate action. B. Take counsel with others and identify a support system. C. Exercise regularly. D. Eat healthy. E. Be organized and delegate work when appropriate. F. Take vacations. G. Participate in relaxing activities. H. Accept things you cannot change.

TEACHING SUGGESTIONS Stress the use of performance evaluations, especially the job-specific ones that evaluate the employee on the tasks and duties included in the job description. If possible, have a human resource director from a local law office come in and speak to the class or have a legal assistant manager talk about his or her human resource tasks.

DISCUSSION QUESTIONS/IDEAS 1. Role playing exercises work very well in this chapter. Have students role play as partners, administrators, and legal assistants in the following situations: a. The administrator reports that the legal assistant is not performing his job duties adequately. He admits that he is having a rough time going through a divorce, but is doing the best he can to get through it. The legal assistant has been with the firm two years, is familiar with the law office and how it works, and has been an average performer. b. The legal assistant is frustrated because the firm is not being adequately managed. Recently, there has been a high degree of staff turnover, no COLAs or salary increases were given to employees last year, and no bonuses were given out even though the legal assistant worked very hard. c. A secretary in the firm constantly keeps the firm “stirred up” with rumors and problems. The partner usually allows the administrator to handle this type of problem but the administrator has not done anything about it. The legal assistant believes the secretary is hurting the whole office’s morale. d. The legal assistant was caught making a few copies of personal documents. The administrator wants to fire the legal assistant. The legal assistant needs the job. The partner wants the firm to run smoothly without incident. 56 Chapter 8

2. Have students do mock interviews of each other. Some students should pose as the interview team and other students should act as job candidates for a legal assistant position. The interview team should make a list of questions to ask each candidate using the suggestions in the text. The interviews could be video- taped so the students can see how they did. The rest of the class should evaluate both the applicants and the interview team(s) and make suggestions on how they can improve their performance.

ANSWERS TO QUESTIONS AND EXERCISES 1. The problem is that the Equal Pay Act of 1963 prohibits employers from paying workers of one sex less than the rate paid an employee of the opposite sex for work on jobs that require equal skill, effort, and responsibility and that are performed under the same working conditions. This does pose a potential problem for the firm if it is true. The other information you might want to know is how much seniority the people involved have. If the males simply have more seniority than the females this might explain the higher wages, but it does warrant looking into. 2. The legal assistant should take action, because doing nothing rarely stops the behavior. One way would be to publicly confront the attorney when propositioned. Another way would be to report the problem to the administrator or a senior partner. 3. While you may know someone for the job, go ahead and advertise the job so people know you are interested in equal employment opportunities. When placing the job description, do not state that you would like someone “young and aggressive” since this could be interpreted as discriminating against persons who are older. Instead, state in the ad that you are looking for a “motivated, self-starter.” 4. Under the Americans With Disabilities Act you have an obligation to not discriminate or treat people who are disabled differently from nondisabled people with respect to employment. You also have a responsibility to “reasonably accommodate” persons with disabilities. If the office is somewhat accessible, you could phase in the improvements over time instead of incurring the cost all at one time. It is a good idea to make the improvement anyway because you may have clients who are disabled as well. 5. Issue an employee attitude survey to your staff. This will let them know that you mean business about making the necessary changes so that people like coming to work again. 6. You should always check references closely and look for gaps in employment. Even if you do check references you may not make a connection in a person’s past, but you should try. 7. Attorneys have a duty to adequately supervise their staff. If this is not being done, the office may be headed for ethical and malpractice problems. The legal assistant may need to be disciplined and the attorney may also need to be disciplined for inadequately supervising his or her staff. 8. No, the office did not act prudently. When a person is terminated, his/her keys should immediately be taken or if this is not possible the locks must be changed. Protecting client confidences and confidential information and documents is absolutely crucial. If the documents are released, the law office might be liable to the client for malpractice as well. 9. You should immediately take one of the legal assistants off of the case. They should not be working together while this is investigated. A full investigation should immediately be instituted. Both legal assistants as well as anyone else in the law office that has knowledge about this should be interviewed. If there is not credible evidence to take action against either of them (i.e., you cannot establish that the female was sexually harassed by using other sources or that the female made the story up) you should separate them, write a memo stating that neither allegation could be resolved to your satisfaction, then continue to monitor the situation and have others in the law office monitor the situation. It is important to be fair to both parties. 10. The first step would be to ask the employee if she is having problems. You should tell her that you, as well as others including clients, have noticed that her quality of work is going down. If your law office has an employee assistance program you could suggest that she use it to get help. 11. Legal assistant manager. This position will supervise, recruit, train, and evaluate staff legal assistants and distribute assignments to them. The position will be responsible for managing the legal assistant department, will prepare annual budgets for the departments, and will also be responsible for carrying a case- load. Other job duties are as assigned. Human Resource Management 57

12. a. Do you have reliable transportation? b. How long do you plan to stay in this position if hired? What are your short-term and long-term employment goals? c. Do you understand that our office policy is that personal phone calls may only be taken in cases of emergency? Is this a problem for you? d. Are you active in your community and concerned about its well-being? e. The position may require you to work Saturdays. Would this be a problem for you? f. The position will be very demanding during the first six months. Do you foresee any leaves of absence that you might need to take? g. What kinds of relationships have you had with your co-workers? 13. Performance evaluations will be performed every six months by position supervisors. The performance evaluations will be specific to each position and will be judged against the position’s job description. The employee being evaluated will be encouraged to respond to the evaluation, and the comments will be contained in the evaluation itself. The evaluation will specifically set forth goals to be accomplished by the next evaluation. 14. You might want to suspend the employee with pay—positive discipline. These are serious charges. The secretary should not have taken money out of petty cash without approval. The secretary also should not have broken the confidentiality policy once, let alone twice. The employee should be counseled on exactly what she/he did wrong and how the conduct should be changed, and should be reevaluated in 30 days.

CASE REVIEW Smith v. Chysler Financial Corporation, 101 F.Supp.2d 534 (E.D. Mich. 2000). 1. Yes 2. The reason seems suspect or at least a jury question. 3. Yes 4. Yes

PROJECTS FOR USE WITH THIS CHAPTER There are no projects specifically for this chapter. CHAPTER 9

FILE AND LAW LIBRARY MANAGEMENT

PURPOSE Chapter 9 introduces the student to file and law library management. Working with and organizing files is a major part of being a legal assistant. Law libraries are also an important part of a law office, so an introduction to library management is also covered.

LEARNING OBJECTIVES After this chapter, the student should be able to: • Discuss why file management is important. • Explain centralized and decentralized filing systems. •Discuss the importance of closing and purging files. • Explain why library ordering should be centralized. • Give examples of how law library costs can be reduced.

LECTURE OUTLINE

I. Introduction to File Management

Law offices of all types need a file system that allows the office to store, track, and retrieve information about cases in a logical, efficient, and expeditious manner.

A poor file system typically has some or all of the following problems: • files are lost and cannot be found • files are messy and disorganized •office staff is unclear about how the filing system works • attorneys and legal assistants do not trust the file system and keep their own files or keep the office’s files in their possession • staff is constantly aggravated and frustrated over the file system 58 File and Law Library Management 59

• large amounts of time and money are wasted trying to find the file and information • poor quality legal services are given to clients due to the poor filing system II. Filing Methods and Techniques A. Each Legal Matter Maintained Separately 1. Even if one client has several legal matters pending with the office, each case/legal matter should have its own separate file and should be given its own file number. B. Alphabetic Systems 1. In an alphabetic filing system, cases are stored based on the last name of the client or name of the organization. 2. In offices with a large number of cases, an alphabetic system may not be the best kind of filing system. 3. Alphabetic systems are difficult to expand and can mean constantly shifting files to make room for more. C. Numerical Systems 1. In a numerical filing system, each case or legal matter is given a separate file number. 2. Numerical systems solve some of the problems of alphabetical ones such as constantly shifting files and having multiple files with the same name (i.e., John Smith). D. Bar Coding 1. Bar coding is a file management technique in which each file is tracked according to the file’s bar code. Each time a user takes a file, the file’s bar code and user’s bar code is scanned into a computer. E. Corporate, Government, and Legal Aid Filing Methods 1. Corporate law departments and government departments may arrange their matters differently. They may file matters by subject, by department, or by other means that suits their particular industry or need. Legal aid offices typically file cases alphabetically or even geographically, by city or county. F. Centralized v. Decentralized 1. A centralized file system is where a file department or file clerk stores and manages all active law office files in one or more file rooms. 2. In a decentralized file system files are kept in various locations throughout the law office; for example, each department stores its own files or each attorney keeps his or her own files. G. Opening Files 1. When a new or existing client comes into the office with a new legal matter, a new file should be immediately opened. 2. The opening of a new file should be standardized and require certain information about the legal matter. 3. A file opening form (sometimes called a new client/matter form or case sheet) is customarily completed when opening a new file. 4. The file opening form is used for a variety of purposes including to check potential conflicts of interest, to assign a new case number and attorney to the matter, to track the area or specialty of the case, to set forth the type of fee agreement and billing frequency in the case, to enter the case in the timekeeping and billing system, to make docketing entries such as when the statute of limitations in the matter might run, and to find out how the client was referred to the law office. H. File Format/Internal File Rules 1. Many offices use separate manila files as subdivisions in the same case to differentiate information such as “Accounting,” “Discovery,” “Pleadings,” “Client Correspondence,” and others. The individual manila files are typically stored in one or more expanding files, so that all of the files for one case are kept together. 60 Chapter 9

2. Also, many offices use metal fasteners in the manila files to hold the papers securely in place. The exception to this is that original documents should not be punched. Instead, they should be maintained separately and a copy put in the regular file. 3. Information in each manila file is placed in chronological order with the oldest on the bottom and the newest on top. This gives the user a systematic way of finding information. I. Color Coding 1. Color coding files is a simple but effective way of reducing the number of misfiled documents. Files can be color coded in a variety of ways, such as determining that red labeled files are probate, green files are criminal matters, and so forth. J. Checking Files Out 1. In some law offices where many people have access to files, they are required to complete checkout cards similar to those in a library. They state the file number, who is checking the file out, how long the file is expected to be needed, and other like information. This is similar to most court systems where the original documents are filed with the court clerk but the file can be checked out by anyone. III. Closing, Storing, and Purging Files A. After a legal matter has come to a complete conclusion and after the final bill has been paid, the file is typically closed and taken out of the file storage area of active files, boxed up, and kept in the office’s basement or an off-site storage facility for a certain number of years until it is destroyed. B. A closed file is sometimes called a “dead file” or a “retired file.” When a case is closed, some offices give the case a new number to differentiate it from active cases. IV. File Management and Ethics A. Conflict of Interest Checks 1. It is important when a new case is being considered that a conflict of interest check is made immediately to ensure that the law office has not represented an adverse party or has another type of conflict. B. Client Property 1. Offices should be careful when closing files and especially in destroying files where documents or other information were given to the attorney by a client. Rule 1.15 of the Model Rules of Professional Conduct states: Rule 1.15 Safekeeping Property (a) A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property . . . Other property shall be identified as such and appropriately safeguarded.... C. Duty to Turn Over Client Files When Client Dismisses Attorney 1. In many states, an attorney also has a duty to turn over to a client his or her file when the client decides to fire an attorney and to hire another attorney to represent him or her. What must be turned over to the client depends on the ethical rules and case law in each state. D. Destruction of Records of Account 1. Rule 1.15 (a) of the Model Rules of Professional Conduct states the minimum rules for how long attorneys should keep client account/fund information: Complete records of . . . account funds and other property shall be kept by the lawyer and shall be preserved for a period of [five years] after termination of the representation. Law offices should carefully maintain accurate and complete records of the lawyer’s receipt and disbursement of trust funds in every case. E. Confidentiality 1. An attorney’s duty to maintain the confidentiality of client related matters should be a factor when considering a law office file management system. Files must be maintained so that sensitive information about a case or client is maintained. Also, the confidentiality rule does not File and Law Library Management 61

stop once the case is closed. Law offices should be careful to destroy or dispose of files in a manner consistent with the confidentiality requirements. V. Introduction to Law Library Management A. Developing a Library Collection CD-ROM Currently, state statutes, federal statutes, state reporters, bankruptcy reporters, tax reporters, federal reporters, and many other legal publications are available on CD-ROM. A single CD-ROM is able to hold about 300,000 typed pages. They take up almost no space on the bookshelf and can be searched using keywords, just like WESTLAW or LEXIS. B. Cataloging and Classifying the Collection Cataloging is the process of listing and organizing the inventory of a library. This usually includes giving each book a separate call number and listing the book’s author, title, publisher, subject, publication date, and so forth. Some offices classify and catalog their collections according to the Library of Congress classification system or the Dewey Decimal system. The Library of Congress system uses the alphabet as its general divisions. Other offices may simply group materials together so they have a tax section, labor section, real property section, and so forth. This is sometimes called a “neighborhood” classification system.

TEACHING SUGGESTIONS Students sometimes discount file management. Stress with students how important it is to be able to organize and maintain files. Many new legal assistants will be responsible for these types of tasks. You may want to schedule a law office librarian or an administrator that has record management duties.

DISCUSSION QUESTIONS/IDEAS 1. Discuss this example. A hearing is coming in an important case in two days. The senior partner asks for the file to be brought to him to begin preparing for the hearing. A major piece of the file containing all of the evidence in the case cannot be found. The senior partner is beside himself. Without the evidence in the file, the client’s case will suffer greatly. The senior partner does not want to tell the client since the client intrusted the evidence to the law firm. The office does not maintain a checkout procedure so no one knows where the file is. Assume that several hours before the hearing the file is found. Apparently, the file fell off the desk and was lodged between the wall and desk. Unfortunately, there is not much time to prepare now. How important do you think files are in a law office?

ANSWERS TO QUESTIONS AND EXERCISES 1. Internet use, CD-ROM libraries, etc. 2. The problem is that the client is coming to the office with two distinct and separate cases, yet the law office is treating it as one. This will not work without disaster. The files must be maintained separately, worked separated, and tracked separately. If the office is not going to pursue the medical malpractice case, then they should immediately write a letter stating that and return any evidence or client documents to the client. 3. The first problem is that an attorney has a duty to return client materials to the client. All of the clients should be contacted and asked whether they want anything in the file before it is destroyed. Secondly, the law office still has a duty of confidentiality. Putting the documents in the dumpster is not enough to protect confidentiality; the records need to be shredded or burned. 4. The answer to this question will depend upon the ethical rules and decisions in your state. In many states, the attorney must turn over much of what is in the file including the depositions, expert witness files, etc. The law office is of course free to file a lien in the matter to protect their investment of $30,000, but the office probably has to hand over the documents. 62 Chapter 9

5. A poor filing system will almost always produce ethical and malpractice complaints. It is very important that documents are not lost, that deadlines are not missed, and that evidence is not misplaced. If any of these things happen, the law office is subject to ethical and malpractice complaints. 6. The tax attorneys may want to keep their files in the basement with them (i.e., a decentralized system) where they will have access to them instead of keeping them in a centralized system. Staff employees must be warned about leaving files in poor condition and must be told that they will be subject to discipline if this continues to be a problem. When a case is opened, small manila files should be opened with different file labels such as “pleadings” and “correspondence,” and all the manila files should be kept in an expanding file folder. If documents fall out of the file, metal prongs should be placed in the manila files and documents poked with holes so the documents stay in the file. A policy should be implemented in which all new files must be approved through the accounting department before any services can be rendered. The office should color code the files by the color of the responsible partner or by type of case. 7. All ordering should be done through one person and marked “completed” when the order is received. All books must be checked out and returned promptly. The library should be weeded out so there is room for the collection. A library budget should be prepared. WESTLAW and LEXIS charges should be charged back to the client. The library needs a desktop computer with Internet access.

CASE REVIEW In re Cameron, 270 Ga. 512, 511 S.E. 2d 514 (Ga. 1999). 1. • The attorney failed to return the client’s documents to the client (both cases). • The attorney failed to return the client’s phone calls (both cases). • The attorney failed to notify the client of his new office address (both cases). 2. No 3. He had a duty to notify them that his office was closing and to return their documents and hand over his file. 4. He should have immediately notified his clients. 5. Yes, the conduct was quite gross.

PROJECTS FOR USE WITH THIS CHAPTER There are no projects specifically for this chapter. CHAPTER 10

LAW OFFICE EQUIPMENT, TECHNOLOGY, SPACE MANAGEMENT, SECURITY, AND LEASES

PURPOSE Chapter 10 introduces the student to a variety of topics including law office equipment, technology, office layout, space management, security, and leases.

LEARNING OBJECTIVES After this chapter, the students should be able to: •Discuss ethical considerations regarding faxes and e-mail. • Explain which equipment should be rented instead of purchased. • Discuss why just-in-time inventory allows businesses to maximize cash flow. • Distinguish between usable and rentable office space.

LECTURE OUTLINE

I. Law Office Equipment and Technology

Law offices of all types have discovered the benefits of technology. Nearly all law offices include a variety of sophisticated equipment including copy machines, computers, and facsimile (FAX) machines to name a few. Using technology, law office staff can increase productivity. A. Copy Machines Copy machines are a staple in any size law office. It is not uncommon, even in a solo practitioner’s office, to make tens of thousands of copies a year. 63 64 Chapter 10

B. Postage Machines Law offices typically use U.S. mail quite heavily. Given this large usage, most offices use a postage machine in lieu of stamps. C. Telecommunications Telecommunications is a rapidly evolving area whose importance to law offices includes telephone systems, voice mail, facsimile equipment, modems, electronic mail, bulletin boards, computer- assisted legal research, telex machines and more. D. Voice Mail Voice mail is a computerized telecommunication system that stores and delivers voice messages. E. Fax Machines Fax machines allow a user to electronically transmit a document’s image through telephone lines to a receiving fax machine at a remote location, which prints the document that was sent. Faxes should be sent very carefully because an improper or misdirected fax transmission can lead to breach of client confidentiality, loss of attorney-client privilege, and legal malpractice. All fax cover pages for law offices should have some kind of confidentiality disclaimer. F. E-mail E-mail is also a staple of most law offices. G. Paper shredders Paper shredders are a necessity in most law offices to insure that client confidences are maintained. II. Purchasing Equipment and Supplies A. Making the Purchase Decision Careful thought and consideration should be made when making a purchase decision. Whenever possible try to project what your needs will be in three to four years. Obsolescence, especially when considering computers, can be a significant factor. B. Financing Decisions Once a law office has established what equipment to purchase, it must then decide how to pay for it. The major alternatives for acquiring equipment include outright purchase, lease, and rental. C. Inventory Records and Insurance It is important to maintain inventory records of all equipment purchases including information about the vendor, records of purchase/lease, serial number of the equipment, maintenance and service agreements, warranty information, installation instructions, and manuals. Inventory records are important for tax purposes and for establishing insurance losses in the case of theft or fire. D. Office Supplies Law offices must maintain an adequate level of office supplies including everything from paper clips and pencils, to legal pads, copy paper, staples, and envelopes. Just-in-time inventory promotes the idea that offices should maintain minimum inventory levels. This allows the office to maximize their cash flow (i.e., so it is not tied up in large inventories leading to higher financing charges, etc.). Just-in-time also promotes the idea that offices should build relationships with suppliers so that inventories can be ordered and received within a day or two when they are needed. Thus, just-in-time allows offices to have the supplies they need, when they are needed, without shortages, while still maximizing cash flow. III. Law Office Layout, Space Management, Security, and Leases

Facility management refers to law office management’s responsibility to manage, plan, design, and control a law office’s own building or office space effectively. A. Considerations in Selecting New Facilities Law Office Equipment, Technology, Space Management, Security, and Leases 65

1. Remodeling v. Moving—Consideration should be given to remodeling the office or expanding existing facilities versus moving the office entirely. 2. Building Location—Consideration should be given to the physical location of the law office including whether the new building is located on public transportation routes, is accessible from major highways, is convenient for existing clients to get to, is reasonably close or accessible to the courthouse(s) and law libraries, and whether the new location and surrounding area maintain and support the office’s image. 3. Parking—Adequate parking for both employees and clients should be taken into consideration when choosing office space. Poor parking is a common complaint of law offices located in downtown business districts. 4. Space Planning—It is important that the office facility is functional and practical, and works for the particular law office’s structure and needs. 5. Usable v. Rentable Space a. Usable space, as the name implies, refers to space that is actually available for offices, equipment, or furniture but does not include hallways, stairwells, and like areas. b. Rentable space is what rent is based on and includes usable space plus the tenant’s pro rata share of all common space on the floor including hallways, stairwells, restrooms, etc., whether or not the space is occupiable. The tenant’s pro rata share of common space is called a loss factor (also called a load factor). B. Environmental Considerations Consider environmental factors such as lighting, noise, climate control, color, image/appearance, elevators, electrical requirements, accessibility for persons with disabilities, and accessibility of the building itself to clients, employees, and others. C. Space Management for the Legal Assistant When setting up an office resist the urge to throw everything in. Take the time to set it up right; do it in the evening or early in the morning before work if you have to. Think about your work habits and how the office can be laid out to be as functional and efficient as possible for your particular needs. D. Security and Safety Security is a topic that has previously not been taken very seriously by law offices. Unfortunately and tragically, violence to attorneys, legal assistants, legal secretaries, and court personnel has increased at a dramatic and alarming rate in recent years. It is crucial that security be taken seriously by all types of law offices. Disgruntled litigants assault all kinds of law offices all over the country from the rural solo practitioner to large firms in downtown skyscrapers. E. Law Office Lease 1. The workletter is the part of the lease that states what construction the landlord must perform before the tenant occupies the space. An adequate workletter will set out the specifications of the office space that the landlord will be required to supply before the tenant takes possession. A workletter will cover the following: • Heating, ventilation, and air conditioning • Flooring/wallcovering • Ceiling •Window covering • Electrical • Doors/hardware •Walls 2. Types of Leases a. In a net lease the tenant pays a base rent plus real estate taxes (either in whole or in part). b. In a gross lease the tenant pays only for base rent and the landlord covers all other building related expenses (this may or may not include cleaning services, utilities, etc.). 66 Chapter 10

F. Moving Considerations The keys to a successful move are to plan thoroughly well in advance and to organize the moving process by leaving little to chance.

TEACHING SUGGESTIONS This is a straightforward chapter that can probably be covered fairly rapidly. Stress the importance of security and safety. It is an important topic that should not be overlooked. Invite a law office administrator or office manager to come in and talk about leasing or purchasing office space and equipment, and about some of the other topics in this chapter.

ANSWERS TO QUESTIONS AND EXERCISES 1. Opportunity cost is the cost of foregoing or passing up other alternatives. The office wasted time and the use of its money. 2. If the office is really going to expand you might want to hold off a year. If you need the new office space to help your image, you might want to go ahead or try to sign a one-year lease. 3. Purchase $7,500 outright cost. Will hurt cash flow. Rental $250 a month. If rented for the useful life it would cost $15,000. This is twice as expensive as purchasing, but it is easy on cash flow, which is important in a legal aid office. Lease-to-purchase $200 a month. Total cost $8,000 $800 buy out. This might be the best option. You might also have to buy a maintenance contract or maintenance may be figured into the cost of rental. 4. Just-in-time inventory helps with cash flow so the partners’ money is not tied up in office supplies sitting on the shelf. The way to avoid shortages is to find and maintain a good relationship with your office supply vendor. 5. People do not like to work in uncomfortable environments. These environmental factors may be causing the secretaries to take extended time off, which costs the law office money. If the office fixes the environmental factors, the office may save money on leave time. 6. Only one door should be used by clients. Limiting access is a key to security. The waiting area should be secure and have a door between the receptionist’s area and the waiting room with a sliding window, if possible. Staff should of course lock their doors and the landlord should be asked to install lights in the parking lot. 7. Confidentiality can be a problem with mobile phones since many radio scanners can pick up these fre- quencies. Office staff should be careful regarding what they say when talking on these phones. 8. From a confidentiality perspective this should not happen. The staff member should be paged and then pick up the call for the message. 9. Confidential communications can be accidentally faxed, so it is very important that this does not happen. 10. Law offices have a duty to protect client confidences. The papers should be shredded. 11. How fast should the copier make copies is the question you need answered. The slower the machine, the cheaper it will be. The copier should be rated for 15,000 copies a month and have a 20-bin sorter, duplex- ing and an ADF, a full maintenance contract, and a large letter-size paper tray. 12. Issue an RFP, accept the bids, research the purchase with BLI or other services, and research references. 13. Building 1 2,000 1.07 2,140 sq. ft. $17.00 $36,380 annual. Building 2 2,000 1.12 2,240 sq. ft. $22.00 $49,280 annual. Building 2 is less expensive. 14. See Figure 10–7. 15. This is a self-study exercise.

PROJECTS FOR USE WITH THIS CHAPTER An extensive project on moving a law office is included in the “Project” section of this Instructor’s Manual. PROJECTS

This section contains projects that can be assigned to students.

A. General Projects

1. Researching Law Office Management Articles on WESTLAW WESTLAW contains a specific database on law office management related topics. The name of the database is LAWPRAC. Students can access articles on many different law office management subjects including law office hiring and training, law office automation, law practice management, court automation, timekeeping and billing, docket control, and many others. Below are some searches I have run that have had good results: Docket /s malpractice Billing /s ethics Paralegals /s corporate Malpractice /s prevention “Library management” “Total quality management” “Marketing plan” “Docket control” There are excellent articles on every subject covered in this text in this database. 2. Law Office Visit Project/Report Requiring students to visit a law office is an excellent way for them to understand how law offices work. One way to assure that the project is actually completed is to require a written report regarding the visit. Below are some suggestions regarding the project. a. Ask students to visit any kind of law office such as a private law office, corporate law department, governmental agency, or legal aid office. b. Require the students to answer the following questions: name of law office, type of practice, office culture or philosophies of the firm, type of clients, internal management structure, organizational chart or listing of staff/personnel positions, type of equipment/facilities, floor plan, and overall impressions of the law office. The report should focus on what they saw, whom they talked to, and what they learned about law office management. 67 68 Projects

c. Ask the students to attach a floor plan, a basic organizational chart, and the law office’s marketing pieces (newsletters or brochures). d. Give the students the option of taking pictures of the law office. They must have permission of the law office before doing so. e. Recommend that the student send a thank you letter to the law office when the visit is completed. 3. Group Field Trip/Report Agroup field trip to different law offices, such as a small firm and a large firm or a corporate law department and a governmental agency, can be very beneficial to students. This allows the students to compare and contrast the different organizations, their structures, efficiencies, staff, etc. Another good idea is for a legal assistant (even past students) at the law office to conduct the tour. The legal assistant can provide information to the students that is invaluable and that might be missed if someone else conducted the tour. In addition, you can also ask questions and make comments about important office procedures that you want the students to remember. Require the students to submit a report about each office. 4. Group Project—Opening a Law Office Many law office management instructors have their students complete a group project. The group project usually consists of an exercise related to opening a new law office that requires the students to find office space, prepare budgets, research office equipment, and so forth. Following is such a project. The project puts some parameters on exactly what is required as well as some facts to build the project on. I recommend the group project as opposed to individual projects since it allows the students to work in teams, which is how many will work when they get on the job.

Group Project Instructions Your group will act as the Law Practice Management Committee of the Brayton and James Attorneys At Law, which is a new firm specializing in corporate and insurance law that expects to begin practicing law this year. Your job as the Law Practice Management Committee is to put together a Strategic Management Plan for the first year of operation. Great care should be taken in preparing the Strategic Management Plan since this will guide your firm for the first year of operation and will also be given to your bank to secure financing. You are to submit one copy of the plan, which will be reviewed for accuracy, completeness, and logic. Each member of your group will receive a grade. You will also evaluate each other regarding the work done on the project. The Brayton and James law office will have two partners and two associate attorneys. The partners expect to make $100,000 a year and associates expect to make $45,000 per year. You must determine what other staff will need to be hired and at what pay rate. You have no budgetary constraints. Your Strategic Management Plan should include the following sections: 5. Physical Location of the Building—You must choose an actual site for the office. You will need private offices for each of the attorneys and appropriate office space for the number of other staff. You will also need a reception area, library, and conference room. You must give a narrative description of the office site and include justification as to why this site was chosen and the cost (either leased or purchased). 6. Layout of the Office and Furniture—A layout of the office interior should be provided including a narrative description of each office and accompanying furniture, and an explanation as to why the office was laid out in the particular manner. 7. Equipment—Appropriate equipment should be purchased. Assume the attorneys want to purchase all new equipment typically found in a law office including computers, software, Internet access, fax machine, copier, and so forth. A narrative description of the items to be purchased and the cost should be included, as well as an explanation for the purchase. 8. Staff Employment—Explain what additional staff positions will be needed to support the two partners and two associates. Draft job descriptions for each of the positions. 9. Law Library—An appropriate library for insurance and corporate law must be purchased. Explain what will be purchased, why, and the cost. Projects 69

10. Budget—A detailed budget should be included for both income and expenses. Indicate the billing rates and hours to be billed for the partners, associates, and any legal assistants hired. The rates and hours should reflect the common market rates and hours for your area. When considering expenses do not forget to add 25% to associates and staff salaries to cover fringe benefits. The budget should provide the partners with the income they expect and include the typical expenses found in most law offices.

B. Chapter 2—Ethics and Malpractice 1. Review of Ethical and Malpractice Cases Arising Out of Law Practice Management Problems Students sometimes do not understand the connection between ethics and law practice management. A project that addresses this problem is to have your students find and give an analyses of four ethical cases in your state arising out of a law practice management problem such as cases where action was taken against an attorney for a timekeeping, billing, docket control, or other related deficiency. Alternatively, you could have your students conduct an analysis of legal malpractice claims in your state including a review of several major cases.

C. Chapter 3—Staff Manuals, Quality, Marketing, and Planning 1. Law Office Staff Manual Having students prepare a law office staff manual is another common project for law office management courses. A sample project is included: Preparation of a Staff Manual You are to prepare a staff manual for the law firm of Haynes and Forrest. The staff manual should set forth policies in the following areas: •Office hours •Dress code • Holidays •Equal opportunity • Sexual harassment in the workplace • Overtime • Discipline • Lunch hour • Personal use of office equipment •Probation period • Outside employment •Conflict checking on new files • Docket control procedure The policies should be clearly written so there will be little, if any, confusion regarding what the policy of the firm is. 2. Preparation of a Marketing Plan Following is a sample marketing plan project: Several attorneys you currently work with are considering starting their own practice in your particular area. The practice will have five attorneys and other staff as needed. They would like to have three practice groups. The attorneys trust your business judgment and would like you to develop a detailed marketing plan for the first year of their practice. The attorneys agree that you cannot spend more than $20,000 for this first year. Your plan should be well thought out and specific to your area. You will need to do research, get actual prices of what your marketing plan will cost, and attach examples or give narrative explanations of what the marketing will be (i.e., if you will have a TV commercial you will need to develop a script; if you will have an Internet site you will need to attach an example). 70 Projects

Your plan should cover the following topics: a. Practice Groups • What practice areas do you recommend in your area and why? • Consider whether you think the new firm will be able to get into this market. • What firms are currently in the market (i.e., who will your competitors be)? • What services will the practice groups provide? •How will the services differ from services currently being provided by existing firms? • Who will be the targeted clients? Be very specific. •How profitable are these areas? •How will existing firms react to your firm getting in the market? • How will you compete with existing firms on quality, price, location, and so forth? b. Marketing Options • What marketing options will you use and why? Be specific. List the timing of your marketing options (i.e., 1st month mailing announcing firm, 2nd month newspaper advertising). • How long will each marketing option last? • How will your marketing options reach your targeted clients? • How many people will your marketing options reach? You can obtain some of this information from the vendors you would use—newspaper subscription numbers, TV and radio ratings figures, etc. • Attach examples or explanations of the content of all your marketing options. c. Budget • Get bids and/or estimates of how much your marketing plan will cost and include a detailed cost projection. d. New Client Business Projections • Based on your marketing plan, how many new clients do you project you can bring into the firm?

D. Chapter 5—Timekeeping and Billing Timekeeping and billing are two of the most important topics in the book. Many law office management instructors have their students record how all of their time is spent over a period of a week or two. The students are then required to turn in the timesheets and to issue bills for only the hours spent on education activities, such as attending class and studying. Following is a sample project. A blank timesheet is included as Trans- parency Master 1 in this manual. School Timekeeping and Billing Project For the next seven days you will record all of your activities on a timesheet. The timesheet will have columns for the date, time, type of activity, billable/non-billable, and amount of time spent on the activity. You should keep track of your time in six-minute intervals (do not record time for sleeping). At the end of the week, you will need to turn in your timesheets. In addition, at the end of the week you will need to prepare an invoice. You may charge $50 an hour for all activities directly related to your education such as attending class and studying for classes. All other activities should be recorded on your timesheet but not billed. Please use a standard billing format in the invoice.

E. Chapter 6—Client Trust Funds and Law Office Accounting 1. Law Office Budget Budgeting is fairly straightforward after you have done it a few times. Have your students complete a budget exercise similar to the following: Your supervising attorney, Tiffany Michaels has decided that she would like to open her own law office. She asked you, her legal assistant, to come with her. You have agreed. She asks you to prepare an annual budget including expected income and expenses for the new office based on the following facts: Projects 71

•Tiffany believes she can bill 1500 hours at $100 an hour the first year and that you, as her legal assistant, can bill 1000 hours at $50. Tiffany believes she can bill all of these hours and collect everything she bills, so do not include a “time to billing percentage” or a “realization rate.” • Expenses will be as follows: Tiffany Michaels’ annual salary and benefits, $60,000; legal assistant salary and benefits, $35,000; secretary salary and benefits, $22,000; rent, $3,000 a month; office supplies, $5,000 for the year; copier/computer/equipment, $15,000 annually; furniture, $7,000 for the year; telephone- related costs, $5,000 for the year; professional liability insurance, $8,000 annually; and miscellaneous costs, $7,000 for the year. Budget Answer: LAW OFFICES OF TIFFANY MICHAELS—ANNUAL BUDGET INCOME BUDGET: Item: Hours Rate TOTAL Tiffany Michaels, Attorney 1500 $100 $150,000 Legal Assistant 1000 $50 $ 50,000 TOTAL INCOME $200,000

EXPENSE BUDGET: Tiffany Michaels Salary and Benefits $ 60,000 Legal Assistant $ 35,000 Secretary $ 22,000 Rent and Utilities $ 36,000 Office Supplies $ 5,000 Copier, Computer, and Equipment $ 15,000 Furniture $ 7,000 Telephone-Related Costs $ 5,000 Professional Insurance $ 8,000 Miscellaneous $ 7,000 TOTAL EXPENSES $200,000 NET INCOME $ 0 2. Trust Account Exercise It is crucial that students understand what trust accounts are and how they are to be used. One way of in- suring this is to require them to complete a trust account exercise. This project is really fairly simple and should not take the students too long to complete. Below is an example of a trust exercise. a. Please complete a “Trust Account Checkbook Register” and “Trust Account Client Subsidiary Ledger” for each client, and a “Trust Account Client Summary Ledger Page” for the following transactions for the Briggs and Johnson Law Firm. An example of these ledgers is contained in your text in Figure 6–2. You may use either a computer spreadsheet or white paper with the proper columns drawn, whichever you would like. Please record each transaction in the “Trust Account Checkbook Register.” After all transactions have been recorded, transfer each transaction to the “Trust Account Subsidiary Ledger” for the given client. A separate “Trust Account Subsidiary Ledger” must be opened for each client. With this completed, transfer the final amount in trust for each client into the “Trust Account Client Summary Ledger Page” and confirm that the balance in the “Trust Account Checkbook Register” is the same as the “Trust Account Client Summary Ledger Page.” Only ethical transactions are to be completed. The firm is of course allowed to bill for proper attorneys’ fees. b. The Briggs and Johnson Law Firm opened the Trust Account on January 1 with a balance of zero in the account. Please record the following transactions: i. January 2, deposit for $1,000 from Jim Woods regarding Woods v. Smith. ii. January 4, check number 1001 in the amount of $50.00 to Clerk of the Court in Woods v. Smith for a filing fee. 72 Projects

iii. The managing partner asks you to write him a trust check for $500 because he needs his car fixed. iv. January 5, check number 1002 in the amount of $250 to AAA Process Serving in Woods v. Smith for serving process. v. January 8, deposit for $1,000 from Metro National for incorporation work. vi. January 10, check number 1003 in the amount of $200 to the Secretary of State for the incorporation fee in the Metro National matter. vii. January 14, check number 1004 in the amount of $500 to Briggs and Johnson Law Firm for attorneys fees incurred in Metro National incorporation matter. viii. January 18, check number 1005 in the amount of $700 to Dr. Jones in Woods v. Smith for an expert witness fee. ix. January 20, deposit from Jim Woods (Woods v. Smith) $1,000. x. January 23, check number 1006 in the amount of $100 to Copy Center, regarding copying charges for Metro National incorporation. xi. January 27, check number 1007 in the amount of $500 to Briggs and Johnson Law Firm for attorneys’ fees incurred in Woods v. Smith. ANSWERS:

BRIGGS AND JOHNSON LAW FIRM—TRUST ACCOUNT CHECKBOOK REGISTER

Check Check Deposit No. Date Payee/Deposit Source Amt. Amt. Balance 1/2 Jim Woods Deposit (Woods v. Smith) $1,000 $1,000 1001 1/4 Clerk of the Court (Woods v. Smith) File Fee $ 50 $ 950 1002 1/5 AAA Process Serving (Woods v. Smith) service $250 $ 700 1/8 Metro National Deposit $1,000 $1,700 1003 1/10 Sec. of St. (Metro National) incorporation fee $200 $1,500 1004 1/14 Briggs and Johnson, Metro National (atty fees) $500 $1,000 1005 1/18 Dr. Jones, Woods v. Smith (Expert fee) $700 $ 300 1/20 Jim Woods Deposit (Woods v. Smith) $1,000 $1,300 1006 1/23 Copy Center (Metro National) copying $ 100 $1,200 1007 1/27 Briggs and Johnson, Woods v. Smith (atty fees) $ 500 $ 700

BRIGGS AND JOHNSON LAW FIRM—TRUST ACCOUNT CLIENT SUBSIDIARY LEDGER WOODS V. SMITH Check Funds Funds No. Date Description of Transaction Paid Received Balance 1/2 Jim Woods Deposit (Woods v. Smith) $1,000 $1,000 1001 1/4 Clerk of the Court (Woods v. Smith) File Fee $50 $ 950 1002 1/5 AAA Process Serving (Woods v. Smith) $250 $ 700 1005 1/18 Dr. Jones, Woods v. Smith (Expert fee) $700 $ 0 1/20 Jim Woods Deposit (Woods v. Smith) $1,000 $1,000 1007 1/27 Briggs and Johnson, Woods v. Smith (atty fees) $ 500 $ 500

BRIGGS AND JOHNSON LAW FIRM—TRUST ACCOUNT CLIENT SUBSIDIARY LEDGER METRO NATIONAL INCORPORATION WORK Check Funds Funds No. Date Description of Transaction Paid Received Balance 1/8 Metro National Deposit $1,000 $1,000 Projects 73

1003 1/10 Sec. of St. (Metro National) $ 200 $ 800 1004 1/14 Briggs and Johnson, Metro National (fees) $ 500 $ 300 1006 1/23 Copy Center (Metro National) copying $ 100 $ 200

BRIGGS AND JOHNSON LAW FIRM—TRUST ACCOUNT CLIENT SUMMARY LEDGER PAGE Balance as of 1/31

Client Balance as of 1/31 Woods v. Smith $500 Metro National Incorporation $200 TOTAL BALANCE IN TRUST ACCOUNT $700

F. Chapter 7—Calendaring, Docket Control, and Case Management Docket control is an extremely important subject especially when ethics and malpractice are concerned. The following project requires students to create docketing slips for all of their classes and assignments for one week. School Docket Control Project During the next week you will prepare docket control slips for all of your classes, assignments, and school related projects. Each docket control slip should be categorized as either a “Things To Do Item,” such as a project or assignment, or an appointment, such as attending class. The docket control slips should also show the name of the class, the date of the item, the time of the item (if an appointment), a description of the item, the location of the item (if an appointment), and the priority of the item (1 being the most important and 10 being the least important).

G. Chapter 10—Law Office Equipment, Technology, Space Management, Security, and Leases 1. Law Office Move Organizational Plan and Timetable An assignment requiring students to plan a law office move will demonstrate how complicated such a move is, even for a small firm, and also show how well organized the planners of the move must be for the move to be successful. Following are some suggestions regarding the project: a. Give the students a fact pattern. Jones and Haynes is a small law office moving two attorneys, two legal assistants, and two secretaries to a downtown office building from an office several miles away. It is currently January 1. The firm must be out of their current offices no later than June 30. The earliest they may move into their new office is June 20. A new phone system must be purchased and installed in the new offices (the old system is out of date and needs replacing). b. Require the students to complete a timetable for the move and to set a date for each item that has to be accomplished. Have them include a small narrative about the item. Make the students plan out exactly how all of the details will come together on time. Because it is complicated, list some of the details that will need to be considered, including the following: • dates of the move • selecting a moving company • assigning office space to the staff • assigning parking spaces • purchasing the new phone system •ordering new letterhead, envelopes, checks, rubber stamps • making special considerations for copiers and computers • sending out notices to clients, vendors, attorneys and others about the change of address 74 Projects

• establishing when staff will stop working on client matters and begin moving • securing boxes and packing materials • determining the order of the move (what gets moved first) • establishing policies on what is moved and what gets thrown away c. An optional item is to create a budget for the move to determine how much it is expected to cost. The cost of the move will probably surprise students. Moves can be very expensive. TEST BANK

CHAPTER 1 Introduction to Law Office Management

Multiple Choice 1. The legal team consists of _____. a. clerks b. legal assistants c. expert witnesses d. attorneys e. all of the above ANS: E 2. Types of nonowner attorneys in a private law practice include _____. a. contract attorney b. staff attorney c. associate d. a, b, and c e. partner ANS: D 3. An attorney that shares in the profits or losses of a law firm that is a professional corporation is called a _____. a. nonequity partner b. partner c. shareholder d. “of counsel” e. contract attorney ANS: C 4. A self-employed legal assistant that markets and sells his or her services to law offices on a per job basis is called a(n) _____. a. legal assistant manager b. independent legal assistant c. paralegal d. freelance/contract legal assistant e. none of the above ANS: D 5. A position found in larger firms that usually requires a college business degree and is responsible for some kind of law office system is called a _____. a. partner b. law office administrator c. office manager d. expert witness e. legal assistant manager ANS: B

77 78 Test Bank

6. A small firm that primarily accepts only cases in one or two areas of the law is sometimes called a _____. a. small law firm b. rooming together c. office sharing d. boutique firm e. b and c ANS: D 7. A law firm that has 75 to several hundred attorneys is called a _____. a. large firm b. corporate firm c. legal aid firm d. megafirm e. b and d ANS: A 8. A law firm management structure in which sub-groups of partners/shareholders make management decisions for the firm is called _____. a. rule by management committee/board b. powerful managing partner c. limited liability company d. rule by all partners/shareholders e. partnership ANS: A 9. Management decisions regarding how a law office operates its office/operations (nonlegal functions) is called _____. a. case management b. administrative management c. practice management d. personnel management e. none of the above ANS: B 10. The process of educating consumers about the legal services a law office provides is called _____. a. controlling b. leadership c. organization d. planning e. marketing ANS: E 11. The Fair Labor Standards Act _____. a. sets standards regarding who can be hired by employers b. sets minimum wage and overtime pay requirements c. identifies standards regarding unions d. establishes fairness standards regarding how employers must treat employees e. none of the above ANS: B 12. An associate is usually with a firm from _____ before being considered for a partnership. a. three to six months b. six months to one year Test Bank 79

c. three to ten years depending on the size of the firm d. more than fifteen years e. none of the above ANS: C 13. Managing partners are _____ by the partnership to serve a set amount of time such as one or two years. a. hired b. elected c. paid d. a and c e. none of the above ANS: B 14. An associate that is hired temporarily for a specific job is called a _____. a. lateral hire b. staff attorney c. contract attorney d. nonequity partner e. partner ANS: C 15. A position that supervises, recruits, trains, distributes assignments, and sets priorities for a group of legal assistants is called a _____. a. legal assistant b. law office administrator c. office manager d. paralegal e. legal assistant manager ANS: E 16. Financial management of a law firm includes _____. a. budgeting b. timekeeping and billing c. purchasing d. tracking firm assets e. all of the above ANS: E 17. According to the text, legal assistants are _____ for law offices. a. unprofitable b. profitable c. a break even proposition d. a and c e. none of the above ANS: B 18. File, calendar, billing, mail, and copy _____ are found in many law offices. a. managers b. clerks c. attorneys d. legal assistants e. none of the above ANS: B 80 Test Bank

19. _____ handle a variety of legal matters/cases in such areas as labor relations, federal tax law, environmental law, workers compensation claims, and real estate law. a. Legal aid/clinics b. Boutique firms c. Corporate law departments d. a and b e. none of the above ANS: C 20. _____ handle a variety of matters/cases in such areas as child support, child custody, disability claims, bankruptcies, and landlord/tenant. a. legal aid/clinics b. boutique firms c. corporate law departments d. government law practices e. none of the above ANS: A

True/False 21. A legal assistant is ultimately responsible for the activities and outcome of a case. ANS: T 22. Partners usually receive a draw and do not receive a salary. ANS: T 23. An associate passed over for partnership may or may not leave the firm to practice elsewhere. ANS: T 24. In 1968 the House of Delegates of the American Bar Association created a committee dedicated to legal assistants. ANS: T 25. Although legal assistants may perform many tasks, they are prohibited from giving legal advice to clients. ANS: T 26. More then 75% of all legal assistants work in large law firms. ANS: F 27. According to a survey in the text, half of all practicing legal assistants list “civil litigation” as one of their specialities. ANS: T 28. Legal secretaries have highly specialized skills and perform many services to law firms. ANS: T 29. For a sole practitioner, it is important that overhead costs be as high as possible. ANS: F 30. A sole proprietorship combines the benefits of both a partnership and a professional corporation. ANS: F

Short Answer 31. What is the difference between a partner, a shareholder, and an associate attorney? ANS: A partner is an owner of a private law practice that is formed as a partnership. A shareholder is an owner of a private law practice when the firm is formed as a corporation or professional corporation. An Test Bank 81

associate is an attorney that does not have an ownership interest in the firm no matter what type of legal structure the law firm is. 32. List and describe three persons/occupations that make up the legal team. ANS: Attorneys counsel clients regarding their rights. Administrators are responsible for some type of administrative system of the law office. Legal assistants assist attorneys in the delivery of legal services. Law clerks perform legal research and writing for the law office. Secretaries provide assistance and support to other law office staff. Clerks provide support to other staff positions in a variety of miscellaneous functions. 33. Compare and contrast a law office administrator with an office manager. ANS: Administrators are usually found in medium and large firms, have degrees in business, and have a broad range of power to make management decisions. Office managers are usually found in small firms, do not have degrees, and do not have as much authority as administrators do. They usually report to a managing partner that makes many management decisions. 34. Discuss why legal assistants are profitable for law offices. ANS: Law offices are allowed to charge clients for legal assistant time, but they do not have to pay them a share of the profits. Legal assistants are less expensive to employ than attorneys, but they can still do many duties. 35. List three types of law offices that are not private law practices. ANS: Corporate law department, government practices, and legal aid/clinic practices. 36. Explain the difference between a “powerful managing partner” management structure and a “rule by all partners/shareholders” structure. ANS: The “powerful managing partner” structure is autocratic; one partner is responsible for the day-to- day operations of the firm. A “rule by all partners/shareholders” is a democratic structure where all the partners/shareholders are included in decisions that affect the firm.

Essay Questions 37. Discuss the Missouri v. Jenkins case and explain why it was important for the legal assistant profession. ANS: Missouri v. Jenkins was a United States Supreme Court case that allowed a law firm to recover legal assistant time under a civil rights statute that allowed for the prevailing party to receive “attorney’s fees.” The Court recognized legal assistants as legitimate professionals and allowed the firm to recover legal assistant time at the prevailing rate, as opposed to not allowing them to recover anything or allowing the firm to only recover the overhead expense of legal assistants. 38. Explain the importance of both practice management and administrative management and discuss which type of management is more important. ANS: Both practice and administrative management concepts are equally important to the long term success of a law office. Practice management concerns substantive or case management, including what types of cases are to be accepted or rejected, how cases will be organized, and what types of cases should be focused on. Administrative management concerns the operation of the law office including financial and personnel matters. 39. List four functions of law office management. ANS: Financial management is the oversight of a firm’s financial assets. Practice management refers to managing the law office’s cases. Human resource management refers to recruiting, hiring, training, and evaluating law office personnel. Planning is the process of setting objectives, assessing the future needs, and developing a court of action to achieve the objectives. Organizing is arranging people and physical resources to carry out plans and accomplish objectives. Marketing is educating consumers. Controlling means determining whether the law practice is achieving its objectives. Leadership is the act of motivating or causing others to perform and achieve objectives. 82 Test Bank

CHAPTER 2 Ethics and Malpractice

Multiple Choice 1. Unethical behavior on the part of a legal assistant _____. a. is usually overlooked since they are not covered by attorney ethical rules b. hardly ever leads to serious problems c. usually does not injure a client d. cannot cause the legal assistant to lose his/her job e. none of the above ANS: E 2. Legal ethics is important because _____. a. it can result in discipline against attorneys in a law office b. it bears on whether quality legal services are being provided c. it is directly related to the attorney-client relationship d. unethical behavior can effect the firm’s reputation e. all of the above ANS: E 3. When a client loses confidence in a firm, the client may _____. a. take their business elsewhere causing a short-term negative effect on the firm b. take their business elsewhere causing a long-term negative effect on the firm c. send more of their business to the firm d. a and b e. all of the above ANS: D 4. An ethical rule is a _____. a. maximum standard of conduct b. minimal standard of conduct attorneys may not fall below c. rule mandated by the American Bar Association to all states d. a and b e. all of the above ANS: B 5. The ABA Model Rules of Professional Conduct _____. a. are mandated ethical rules that must be adopted by every state b. are handed down by the United States Supreme Court c. are voluntary rules for ABA members but may also be adopted by state bar associations d. all of the above e. b and d ANS: C 6. State ethical rules that regulate attorney conduct _____. a. also apply directly to legal assistants b. do not apply directly to legal assistants, but legal assistant association code of ethics do apply c. apply directly to legal assistants in certain situations d. do not apply directly to legal assistants e. none of the above ANS: D Test Bank 83

7. Under the ABA Model Rules a lawyer having direct supervisory authority over a nonlawyer _____. a. is not responsible for the nonlawyer’s conduct b. has no duty to take reasonable efforts to ensure the nonlawyer’s conduct is ethical c. shall make reasonable efforts to ensure that the nonlawyer’s conduct is ethical d. a and c e. none of the above ANS: C 8. National legal assistant association codes of ethics are _____. a. mandated for all legal assistants b. enforced by state bar associations c. enforceable in a court of law d. enforced by the courts e. none of the above ANS: E 9. Regarding the unauthorized practice of law, what factors do courts NOT consider when determining if a legal assistant was “practicing law?” a. Did the legal assistant represent a client in a court proceeding? b. Did the legal assistant prepare documents without attorney supervision? c. Did the legal assistant give legal advice to a client? d. Did the legal assistant at some point talk to the client without a lawyer present? e. None of the above. ANS: D 10. What type of legal assistants are more prone to unauthorized practice of law problems? a. legal assistant managers b. government legal assistants c. corporate legal assistants d. legal technicians e. none of the above ANS: D 11. Legal assistants _____. a. cannot draft wills b. cannot draft motions c. cannot draft briefs d. all of the above e. can draft all documents under the supervision of an attorney ANS: E 12. Legal advice may be _____. a. telling a client what they can do b. telling a client what they cannot do c. answering a legal question d. telling the client what defense or legal argument to make e. all of the above ANS: E 13. The attorney-client privilege _____. a. is an ethical rule and a rule of evidence b. is an ethical rule c. is a rule of evidence 84 Test Bank

d. is neither an ethical rule nor a rule of evidence e. none of the above ANS: C 14. An attorney or legal assistant _____. a. can never reveal a client confidence b. can reveal a client confidence if the client consents after a consultation c. can never reveal a client confidence unless directed to by the Supreme Court d. can reveal client confidence whenever they wish if it benefits the client e. none of the above ANS: B 15. A conflict of interest occurs when _____. a. an attorney or legal assistant dislikes the client b. an attorney or legal assistant is a substantial witness in a case c. an attorney or legal assistant has a personal or financial interest in the case d. b and c e. all of the above ANS: D 16. Before accepting a case, a law office should always _____. a. perform a conflict check b. check with the attorneys and legal assistants to make sure no conflict exists c. review past cases to see if the firm was ever on a case regarding potential clients d. a and c e. all of the above ANS: E 17. An exception to disqualifying a whole firm when a conflict of interest problem arises is _____. a. an ethical violation b. called Chinese torture c. called a Chinese Wall d. up to the court e. a and d ANS: C 18. The best way to handle ethical problems is to _____. a. contact your supervising attorney b. wait and see if the problem resolves itself c. cover up the problem d. be familiar with the state’s ethical rules and think conservatively e. a and d ANS: E 19. Attorneys have a duty to _____. a. competently represent a client b. conveniently represent a client c. diligently represent a client d. a and c e. b and c ANS: D Test Bank 85

20. If an attorney ignores a client matter the attorney has violated the duty of _____. a. competence b. diligence c. client confidentiality d. attorney-client privilege e. none of the above ANS: B

True/False 21. A common cause of legal malpractice is poor communication with the client. ANS: T 22. Law offices should not send out letters when they have decided to decline to represent a potential client. ANS: F 23. Legal assistants do not typically experience conflict of interest problems when switching employment. ANS: F 24. When an attorney or legal assistant in a law office has a conflict of interest, the whole firm must be disqualified. ANS: F 25. The attorney-client privilege extends to legal assistants. ANS: T 26. For the attorney-client privilege to be invoked, the communication must be made in confidence for the purpose of obtaining legal advice. ANS: T

Short Answer 27. What is an ethical rule and who is it applicable to? ANS: An ethical rule is a minimal standard of conduct that an attorney may not fall below. Ethical rules only apply to attorneys. 28. What is the purpose behind protecting attorney-client communications? ANS: The purpose is to encourage clients to tell their attorneys the truth without it being used against them in court. 29. When do legal assistants usually have conflict of interest problems? ANS: When they switch employers and the old and new employers have common cases and the legal assistant worked on one of them for the old employer. 30. What is a legal technician? ANS: A legal technician is a person who markets his/her services directly to the public, but the person is not an attorney and does work under the supervision of an attorney.

Essay Questions 31. What questions do courts ask when deciding whether a lay person has “practiced law?” ANS: Did the person represent clients in court proceedings? Did the person prepare legal documents without the direct supervision of a licensed attorney? Did the person give legal advice to a client? Did the person accept a client case alone? Did the person set the fee for handling the client’s case? 86 Test Bank

32. Explain situations in which a conflict of interest arises. ANS: An attorney/legal assistant has a personal or financial interest in a case. An attorney/legal assistant is a substantial witness in a case. A law office, attorney, or legal assistant sometime in the past represented a client who is now an adverse party. An attorney and a client enter into business together.

CHAPTER 3 Staff Manuals, Quality, Marketing, and Planning

Multiple Choice 1. The goals of a law office staff manual are to _____. a. increase productivity b. increase bureaucracy c. insure high quality work is done every time d. save time e. a, c, and d ANS: E 2. Staff manuals are particularly useful at helping _____ get accustomed to the policies of the law office. a. legal assistants b. new employees c. clerks d. legal secretaries e. partners ANS: B 3. Only _____ benefit from using a staff manual. a. corporate law departments b. private law practices c. corporate law departments and private law departments d. private and legal aid practices e. all law offices ANS: E 4. A _____ is a specific statement that sets out what is or is not acceptable. a. policy b. policy and procedure c. staff manual d. procedure e. none of the above ANS: A 5. A _____ is a series of steps that must be followed to accomplish a task. a. policy b. policy and procedure c. staff manual d. procedure e. none of the above ANS: D 6. All policies and procedures should be _____. a. wordy b. clear and succinct Test Bank 87

c. ambiguous d. a and b e. none of the above ANS: B 7. Procedures should include _____. a. who is responsible for the activity b. what the procedure(s) are, step by step c. when the procedure(s) should be accomplished d. a and c e. all of the above ANS: E 8. Staff manuals are _____ from an ethical point of view. a. important b. irrelevant c. unimportant d. ambiguous e. none of the above ANS: A 9. Total quality management is based on knowing _____. a. the needs of staff members b. the needs of the law office c. the needs of each client d. the needs of the administrators e. all of the above ANS: C 10. The focus of total quality management is for the business to compete on _____. a. price b. convenience c. features d. quality e. all of the above ANS: D 11. What statement is associated with total quality management? a. Management has a duty to ensure that the law offices focus on quality. b. Quality services involve only the attorneys. c. Quality is based on the firm’s perception. d. The law office should focus on constant improvement. e. A and d. ANS: E 12. For a total quality management program to be effective, the firm must be willing to _____. a. listen to the client and make necessary changes to meet changing client needs b. talk to the client and tell them what services they need c. talk to the client and tell them what services the firm is going to provide d. a and b e. none of the above ANS: A 88 Test Bank

13. According to the total quality management philosophy, quality service depends on _____. a. each individual in the firm b. the team c. the organization’s end performance d. a and c e. all of the above ANS: E 14. According to the total quality management philosophy, who shares in the financial or other types of benefits the firm receives? a. everyone in the firm b. management c. partners d. attorneys and legal assistants e. none of the above ANS: A 15. _____ is the process of educating consumers on quality legal services that a law office can provide. a. Public relations b. Advertising c. Marketing and advertising d. Marketing e. a and d ANS: D 16. The goals of marketing are to _____. a. increase client loyalty b. improve the firm’s competitiveness in the marketplace c. create goodwill and interest in the firm d. create positive name recognition e. all of the above ANS: E 17. Cross-selling refers to _____. a. selling services to clients across different industries b. selling additional services to existing clients c. selling services to friends and relatives d. a and c e. none of the above ANS: B 18. The ability to bring in new clients to a law office is called _____. a. advertising b. rainmaking c. cross-selling d. cross-marketing e. none of the above ANS: B 19. Planning is the process of _____. a. setting objectives b. assessing the future c. developing courses of action to achieve objectives Test Bank 89

d. a and b e. all of the above ANS: E 20. What is NOT a part of the planning process? a. gathering facts b. assessing and organizing information c. developing goals d. developing an action plan e. none of the above ANS: E

True/False 21. A mission statement is an enduring statement of what the purpose of the law office is. ANS: T 22. A Gantt chart can be used when creating a plan to set begin and end dates and to create a timeline. ANS: T 23. The planning process should include only high-ranking administrators. ANS: F 24. Staff manuals are needed more in larger law offices than in smaller law offices. ANS: F 25. Staff manuals are out of the reach of most legal assistants to develop. ANS: F 26. Total Quality Management insists that every person in the firm must take pride in their work. ANS: T 27. Total Quality Management stresses the “we” v. “they” philosophy. ANS: F 28. Twenty years ago marketing was prominent in most law offices. ANS: F 29. Marketing is the job of only the rainmakers in the law office. ANS: F 30. Attorneys are free to use misleading language in marketing pieces as long as they are not fraudulent. ANS: F

Short Answer 31. Why should firms consider Total Quality Management? ANS: Law practices are extremely competitive. A law firm should consider using a TQM approach if they want to compete in this competitive environment. 32. Why can’t attorneys publicize the fact that they have won particular types of cases in the past? ANS: This may create an unjustified expectation that because they won before they can win again even though the facts and the law might be completely different. 33. What are some marketing options for law offices? ANS: Television, radio, newspapers, brochures, pamphlets, seminars, public relations, open houses, etc. 34. Explain the purpose of a mission statement. ANS: A mission statement is an enduring statement of what the purpose or intent of the business or law practice is. It is the “vision” that guides the firm into the future. 90 Test Bank

Essay Question 35. Describe what Total Quality Management is and what its philosophies are in detail. ANS: Businesses compete on quality. Management has a duty to ensure quality services are being provided. Quality services involve everyone in the firm from the top to the bottom. Quality is based on the client’s perspective and depends on individual, team, and ultimately the organization’s performance. The firm should be constantly improving.

CHAPTER 4 Clients and Communication Skills

Multiple Choice 1. Clients can tell they are receiving good service because _____. a. most clients have a legal background and can tell whether they are getting good legal services b. the documents they receive from the firm look good, have good grammar, and have no typos c. their phone calls are returned quickly d. while the law firm breaks promises to them regularly, they expect this e. b and c ANS: E 2. Clients should be treated _____. a. like a herd of cattle, get them in and get them out b. as if each client was your only client c. with respect and courtesy d. like anyone else in the office e. b and c ANS: E 3. To keep clients informed of their case you should _____. a. accidentally run into them on the street and let them know what is going on with their case b. do nothing, because if they want to know something they can call you c. ignore their phone calls and take the calls only as a last resort d. every couple of years send them a short summary of what has gone on with their case e. none of the above ANS: E 4. Communication _____. a. inhibits or prevents the receiver from obtaining the correct message from the sender b. refers to any situation that interferes with or distorts the message being communicated c. is information sent in response to the sender’s message d. is the transfer of a message from a sender to a receiver e. none of the above ANS: D 5. Communication barrier _____. a. inhibits or prevents the receiver from obtaining the correct message from the sender b. refers to any situation that interferes with or distorts the message being communicated c. is information sent in response to the sender’s message d. is the transfer of a message from a sender to a receiver e. none of the above ANS: A Test Bank 91

6. Noise _____. a. inhibits or prevents the receiver from obtaining the correct message from the sender b. refers to any situation that interferes with or distorts the message being communicated c. is information sent in response to the sender’s message d. is the transfer of a message from a sender to a receiver e. none of the above ANS: B 7. Feedback _____. a. inhibits or prevents the receiver from obtaining the correct message from the sender b. refers to any situation that interferes with or distorts the message being communicated c. is information sent in response to the sender’s message d. is the transfer of a message from a sender to a receiver e. none of the above ANS: C 8. One of the most important, but overlooked, aspects of communicating effectively is _____. a. listening b. thinking c. talking d. preparing your response e. none of the above ANS: A 9. What are the signs of being a “lazy listener?” a. day dreaming b. preparing your response c. thinking d. not paying attention e. all of the above ANS: E 10. _____ is the technique of telling the sender what your understanding of the conversation is. a. Feedback b. Communication barrier c. Rephrasing d. Noise e. None of the above ANS: C 11. According to the text, which of the answers below is NOT a quality of a leader? a. honest b. respectful c. visionary d. acting conservative and avoiding risks e. trustworthy ANS: D 12. _____ occurs when the desire for group cohesiveness and consensus becomes stronger than the desire for the best possible decision. a. Group decision making b. Group cohesiveness 92 Test Bank

c. Groupthink d. a and b e. none of the above ANS: C 13. The advantages of group decision making includes _____. a. decisions taker a shorter amount of time b. no compromises take place, the best decision is accepted c. more conservative decisions are made d. more accurate decisions are made than when individuals make the decision themselves e. all of the above ANS: D

True/False 14. Interviewing clients is easy and most legal assistants can do it naturally. ANS: F 15. Do not be judgmental when interviewing clients since it might make them defensive. ANS: T 16. Close client interviews as soon as you can; you can always get other information later. ANS: F 17. When talking with clients use legalese since it will impress them. ANS: F 18. Be courteous and empathetic to clients even if you are having a bad day. ANS: T 19. Clients are interested in you, so share office politics with them; they will think it is interesting. ANS: F 20. Professionals such as legal assistants spend about 20% of their time communicating. ANS: F

Short Answer 21. Diagram what communication looks like. ANS: Look at Figure 4–6. 22. What is a communication barrier? ANS: A communication barrier inhibits or prevents the receiver from obtaining the correct message from the sender. 23. What is rephrasing? ANS: Rephrasing is the technique of telling the sender what your understanding of the conversation is. This allows the sender to clarify information that might not have been understood clearly.

Essay Questions 24. Discuss ways to better communicate with clients. ANS: - Treat each client as if he or she was your only client. - Send copies of all documents produced for the client’s case to the client. - Do not use legalese. Test Bank 93

- Return client phone calls immediately. - Be courteous, empathetic, and professional at all times. - Respond to client requests in a timely fashion and keep your promises. - Give clients routine, periodic status reports on their case. - Do not share personal or office problems with clients. - Preserve client confidences. - Use client surveys to gain insight into client needs. - Publish a client manual. 25. Discuss what characteristics are important in order to be a good leader. ANS: - Be an expert on what you are talking about. People around you will develop confidence in your abilities and rely upon your judgment and knowledge. - Be honest. Develop a reputation for honesty and integrity. - Stay calm. Good leaders stay calm under fire. - Trust and support subordinates. - Take risks and do not be afraid to fail. - Encourage honest opinions from others. - Set goals and visions. - Be respectful.

CHAPTER 5 Timekeeping and Billing

Multiple Choice 1. _____ is the process of issuing invoices for the purpose of collecting monies for legal services performed and being reimbursed for expenses. a. Timekeeping and billing b. Timekeeping c. Record keeping d. Billing e. None of the above ANS: D 2. _____ is the process of tracking how attorneys and legal assistants use their time. a. Timekeeping and billing b. Timekeeping c. Record keeping d. Billing e. None of the above ANS: B 3. Client, blended, activity, and attorney/legal assistant rates are all forms of this type of fee agreement. a. contingency b. flat fee c. hourly rate d. retainer e. value billing ANS: C 94 Test Bank

4. The _____ is based on the attorney’s/legal assistant’s experience in a particular area. a. client hourly rate b. blended hourly rate c. contingency fee d. activity hourly rate e. none of the above ANS: E 5. The _____ is based on a single hourly rate for the case. a. client hourly rate b. retainer agreement c. attorney/legal assistant hourly rate d. activity hourly rate e. contingency fee ANS: A 6. The _____ is one hourly rate that takes into account the mix of law office staff working on the matter. a. blended hourly rate b. client hourly rate c. attorney/legal assistant hourly rate d. activity hourly rate e. contingency fee ANS: A 7. The _____ is based on different hourly rates depending on what type of service is performed. a. client hourly rate b. blended hourly rate c. activity hourly rate d. attorney/legal assistant hourly rate e. contingency fee ANS: C 8. A(n) _____ is a fee that is collected if the attorney successfully represents the client. The attorney receives a percentage of the amount recovered. a. case advance fee b. retainer fee c. earned retainer fee d. unearned retainer fee e. contingency fee ANS: E 9. A fee agreement used in representing plaintiffs in personal injury cases, worker’s compensation cases, and medical malpractice cases is called a(n) _____. a. case advance fee b. retainer fee c. earned retainer fee d. unearned retainer fee e. contingency fee ANS: E 10. A contingency fee agreement cannot be used in the following types of cases according to many ethical rules. a. personal injury b. domestic relations Test Bank 95

c. workers’ compensation d. criminal e. b and d ANS: E 11. This type of fee is used most often when preparing wills or in uncontested divorces. a. contingency b. flat fee c. hourly rate d. retainer e. all of the above ANS: B 12. A(n) _____ is a bank account where unearned client funds are deposited. a. trust account b. escrow account c. savings account d. retainer account e. a and b ANS: E 13. A cash advance is an example of a(n) _____. a. case advance fee b. retainer for general representation c. earned retainer fee d. unearned retainer fee e. pure retainer ANS: D 14. A nonrefundable retainer usually means the retainer is a(n) _____. a. case advance fee b. retainer for general representation c. earned retainer fee d. unearned retainer fee e. pure retainer ANS: C 15. A case retainer is a(n) _____. a. case advance fee b. retainer for general representation c. earned retainer fee d. unearned retainer fee e. pure retainer ANS: C 16. Fees given to a prevailing party under a statute are called _____. a. case advance fees b. retainers for general representation c. earned retainer fees d. unearned retainer fees e. court awarded fees ANS: E 96 Test Bank

17. A fee agreement where the attorney and client reach a consensus on the amount of the fee to be charged is called a(n) _____. a. cash retainer b. hourly rate agreement c. activity hourly rate agreement d. court awarded fee e. none of the above ANS: E 18. Factors to determine if a fee is reasonable include _____. a. what attorneys across the county charge for the service b. how wealthy the client is c. the fees customarily charged in the locality for similar services d. the experience and reputation of the attorney e. c and d ANS: E 19. _____ is time that a legal assistant spends working on a case. a. Chargeable time b. Nonbillable time c. Nonchargeable time d. Legal assistant time e. None of the above ANS: E 20. _____ is time that a legal assistant cannot bill to a client. a. Chargeable time b. Nonbillable time c. Nonchargeable time d. Billable time e. None of the above ANS: B

True/False 21. Pro bono is legal services charged to a client who is low income. ANS: F 22. Overhead refers to a building. ANS: F 23. A legal assistant should always record the actual amount of time spent on a project and should not discount time. ANS: T 24. Some clients now routinely order audits of law firm bills. ANS: T 25. Timekeeping is the process of billing for time. ANS: F 26. In some states, contingency fee percentages are regulated. ANS: T 27. A retainer is either an earned or an unearned retainer. ANS: T Test Bank 97

28. A pure retainer is used to secure a law firm for an agreed upon time, and the firm agrees not to represent the business’s competitors. ANS: T 29. Prepaid legal services are used by law firms as a type of retainer. ANS: F 30. All fee agreements should be in writing. ANS: T Short Answer 31. What type of fee agreements must be in writing? ANS: Contingency fees 32. Define criminal fraud and how it applies to timekeeping and billing? ANS: Criminal fraud is a false representation of a present or past fact that is made by a person and that the victim relies on, resulting in the victim suffering damage. 33. Distinguish an activity hourly rate and a blended hourly rate charge. ANS: An activity hourly rate is based on the activity or service being provided. The more difficult the service, the higher the hourly rate. A blended hourly rate charge on the other hand is a single rate that is charged to the client, based on the experience and mix of all of the timekeepers who are working on the case. 34. Distinguish an earned and unearned retainer. ANS: An earned retainer has been earned by the firm. It is nonrefundable and can be deposited in the firm’s operating bank account. An unearned retainer has not been earned and must be put in the trust/escrow account until it has been earned.

Essay Question 35. List and describe three types of fee agreements and state when they are the most appropriate to use. ANS: Contingency—Plaintiff oriented suits such as medical malpractice, civil rights, or personal injury where the person may have a good case but has no money to pay fees. Flat Rate—Used when the matter is simple and straightforward such as wills and uncontested divorces. Hourly Rate—Used when the client can pay for the services by the hour. Value Billing and prepaid legal services—Used when appropriate or applicable. CHAPTER 6 Client Trust Funds and Law Office Accounting Multiple Choice 1. If a law office receives client funds, it must have a _____. a. savings account b. checking account c. trust account d. money market account e. all of the above ANS: C 2. The following statement is true: a. Law office operating funds may be deposited in the trust account. b. Client funds may be deposited in the law office operating account. 98 Test Bank

c. Client funds may be deposited in either the law office operating account or the trust account. d. Client funds may be deposited in the trust account. e. None of the above. ANS: D 3. When parties agree to resolve a case it is called a(n) _____. a. compromise b. annulment c. agreement d. dismissal e. none of the above ANS: E 4. In addition to having a trust account, a law office must also _____. a. keep complete records of the trust account b. have a savings account c. be able to reconcile the trust account down to how much each client has in the account d. have a separate trust account for each client e. a and c ANS: E 5. Trust account funds can be used to _____. a. pay for law office rent b. pay the law office for fees that have now been earned c. pay for staff payroll if the staff persons worked on the client’s case d. make a deposit into the law office operating account if the funds will be repaid e. none of the above ANS: B 6. Law offices must return clients’ funds _____. a. promptly and must render a full accounting of the funds b. when the law office gets around to it c. when the client calls the disciplinary administrator d. when there are funds in the law office operating account to repay the trust account e. none of the above ANS: A 7. Law offices can protect client funds by having its accounting staff _____. a. bonded b. trained c. finger-printed d. b and c e. none of the above ANS: A 8. When building a law office budget, the _____ adjusts downward the actual amount that will be billed to the client, taking into account the fact that timekeepers are not always able to bill at their optimum levels. a. income budget b. realization c. staffing plan d. time to billing percentage e. none of the above ANS: D Test Bank 99

9. _____ is what a firm actually receives in income as opposed to the amount it bills. a. Realization b. Income budget c. Time to billing percentage d. Staffing plan e. None of the above ANS: A 10. Estimates of how many employees will be hired or funded by the firm and compensation levels is referred to as a(n) _____. a. income budget b. realization c. time to billing percentage d. long range plan e. none of the above ANS: E 11. When drafting an income budget such as estimating the number of billable hours a timekeeper will bill, it is recommended that you use a _____ estimate, since you do not want to overestimate income. a. liberal b. conservative c. total guess d. last year’s e. none of the above ANS: B 12. When drafting an expense budget such as estimating overhead expenses, it is recommended that you use a _____ estimate, since you do not want to underestimate expenses. a. liberal b. conservative c. total guess d. last year’s e. none of the above ANS: A

True/False 13. You should always use last year’s budget or actual figures to estimate the coming year’s budget. ANS: F 14. A draw refers to partners receiving a monthly check as an anticipated share of profits. ANS: T 15. Whoever writes and signs the checks should always reconcile the bank account. ANS: F 16. The bookkeeper should always receive, deposit, and track all client payments themselves. ANS: F 17. Lawyers may share fees with other professionals such as CPAs. ANS: F 100 Test Bank

Short Answer 18. What is an internal control? ANS: This refers to internal procedures that are in place so no one person has complete control over the accounting system. 19. What is a trust account? ANS: A trust account is used to deposit unearned client funds only.

Essay Question 20. List four examples of acceptable internal controls. ANS: - Never allow a bookkeeper or person preparing the checks to sign checks or to sign on the account - Have careful, unannounced, routine examinations of the books - Partners should routinely read and examine all financial reports - All checks should be stored in a locked cabinet - Never let the person signing the checks reconcile the account - Use check request forms - Have guidelines for how the mail is opened and for how checks will be deposited - Use non-accounting personnel to help with internal controls - Require two signatures on checks over $5,000 - Stamp invoices “canceled” - Have an audit prepared by a CPA every year CHAPTER 7 Calendaring, Docket Control and Case Management Multiple Choice 1. A _____ is a scheduling system that tracks and organizes appointments, deadlines, and commitments. a. statute of limitations b. docket c. docket clerk d. a and b e. none of the above ANS: B 2. When an appointment or a deadline has been rescheduled, it is called getting a _____ in the legal environment. a. continuing b. reminder c. continual d. continuance e. none of the above ANS: D 3. A law that indicates the maximum amount of time parties can wait before they must file a case is called a _____. a. limitation date b. file date c. statute of limitations d. a and c e. none of the above ANS: C Test Bank 101

4. The purpose of reminder dates is to _____. a. warn the timekeeper that a deadline has been passed b. warn the timekeeper that a deadline is approaching c. warn the timekeeper that the case is about to be dismissed d. b and c e. none of the above ANS: B 5. Local court rules _____. a. are rules that can be followed or ignored b. are rules that must be followed only when bringing a case c. create procedural and/or automatic deadlines d. are rules in effect for any given court e. b, c, and d ANS: C 6. Attorneys who miss important deadlines can be subjected to _____. a. disbarment and suspension b. fines and admonishments c. malpractice suits d. a and b e. all of the above ANS: E 7. According to the text, manual docket systems for law offices may include _____. a. card systems b. calendars c. legal pads d. a and b e. all of the above ANS: D 8. A meeting that happens every Thursday morning is an example of a(n) _____. a. automatic meeting b. recurring entry c. perpetual entry d. b and c e. none of the above ANS: B 9. When court documents such as motions, pleadings, and discovery documents are received they should be immediately _____. a. entered in the docket control system b. put in the file c. lost and forgotten d. discarded e. none of the above ANS: A 10. _____ means counting literal days including weekends and holidays. a. Work days b. Calendar days c. Weekend days 102 Test Bank

d. Holidays e. None of the above ANS: B

True/False 11.AFILED stamp should be used to stamp all documents to establish when the law office came in possession of the document. ANS: F 12. A received date is the date a court officially received the document. ANS: F 13. An attorney has a duty to keep a client reasonably informed about the status of a matter. ANS: T 14. A perpetual calendar is an entry that happens over and over again, typically daily, weekly, monthly, or annually. ANS: F

Short Answer 15. Distinguish calendar and work days. ANS: Calendar days count literal days including holidays and weekends. Work days only count days that courts are open. 16. What is a statute of limitations? ANS: A statute of limitations states the maximum amount of time a person has to file a legal claim. Once the time period is gone, a claim cannot be filed. 17. What ethical duties does an attorney have regarding docket control? ANS: Attorneys must be adequately prepared to represent clients so they must know when client matters are coming up so they can prepare for them. Attorneys must act with reasonable diligence and promptness in representing clients so again an attorney must have information that tells him or her when client matters are coming up. An attorney has a duty to communicate regularly with clients about the status of their case.

CHAPTER 8 Human Resource Management

Multiple Choice 1. Recruiting, hiring, training, evaluating, maintaining, and directing the staff personnel is called _____. a. controlling b. employee assistance c. leadership d. management e. none of the above ANS: E 2. A poor hiring decision can result in _____. a. wasted salary b. wasted training expenses c. downtime Test Bank 103

d. decreased employee morale e. all of the above ANS: E 3. Only essential job functions should be put in job descriptions because _____. a. if you do not you may have a problem concerning the Americans With Disabilities Act b. if you do not you may have a problem concerning the Civil Rights Act of 1964 c. if you do not you may have a problem concerning the Equal Pay Act of 1963 d. a and c e. all of the above ANS: A 4. When revising job descriptions that are already filled you should _____. a. “think people, not positions” b. “think positions, not people” c. not base the job description on the person currently holding the position d. base the job description of the person currently holding the position e. b and c ANS: E 5. You should always include a catchall phrase in a position description that states the employees will perform other duties as assigned in that _____. a. it is easy to forget tasks when writing job description b. this prevents the “I will not do that because it is not in my job description” excuse c. jobs change quite frequently and it is not possible to update the job description each time d. none of the above e. all of the above ANS: E 6. You should avoid stating in a job advertisement that you are guaranteeing long-term and dependable employment because _____. a. this may or may not be true b. it may create an implied contract c. this is illegal d. a and b e. all of the above ANS: D 7. When interviewing candidates the interviewer should _____. a. control the conversation b. tailor each interview to each applicant c. give every applicant an interview d. only involve him/herself in the process e. none of the above ANS: E 8. Gaps in employment _____. a. are fine and do not need to be questioned since this is normal b. may show that the person travelled a lot c. may indicate problems the law office should at least be aware of d. should be asked about in the interview e. c and d ANS: E 104 Test Bank

9. If interviews are not conducted consistently _____. a. you have violated a law b. a candidate may claim you gave special treatment to another candidate c. a candidate may claim you discriminated against him or her d. you may not be fairly comparing candidates with each other e. b, c, and e ANS: E 10. You can ask questions in an interview regarding _____. a. race, color, and religion b. ancestry c. past job experiences d. whether the applicant has taken bankruptcy e. a, b, and d ANS: C 11. It is recommended that the interview team have multiple members on it and that its members be culturally diverse _____. a. because one person may not get a complete perspective b. to ensure candidates of all types are being equally considered c. to allow the new employee to join the team easier when hired d. all of the above e. none of the above ANS: D 12. When an employer hires an employee without sufficiently checking the employee’s background and the employee subsequently harms someone or something that could have been discovered in the background check it is called _____. a. negligence b. mistaken hiring c. negligent selection d. all of the above e. none of the above ANS: E 13. _____ focuses on the positive aspects of the employee’s performance and explores alternative ways to improve the employee’s performance. a. Counseling b. Coaching c. Positive discipline d. Progressive discipline e. None of the above ANS: B 14. An MBO program _____. a. is similar to positive discipline b. sets goals at the beginning of the evaluation period c. is an evaluation technique d. is part of an employee attitude survey e. b and c ANS: D Test Bank 105

15. The law that allows eligible employees up to twelve weeks of unpaid leave is called the _____. a. Civil Rights Act of 1964 b. Fair Labor Standards Act c. Equal Pay Act of 1963 d. Family and Medical Leave Act e. Americans with Disabilities Act ANS: D 16. The law that sets minimum wage for workers as well as maximum number of hours that can be worked is called the _____. a. Civil Rights Act of 1964 b. Americans with Disabilities Act c. Family and Medical Leave Act d. Equal Pay Act of 1963 e. Fair Labor Standards Act ANS: E 17. Proper reasons to terminate an employee include _____. a. they were late once b. economic conditions are such that layoffs are necessary c. poor job performance d. dishonesty e. b, c, and d ANS: E 18. Which statement(s) about human resources is/are correct? a. Consistency is not necessarily suggested in all situations involving termination. b. There is little benefit to following your own procedures since they can be changed at anytime and are not law. c. It does not matter whether or not you document personnel related matters. d. All of the above. e. None of the above. ANS: E

True/False 19. Putting decisions off regarding a problem employee is beneficial sometimes and is suggested. ANS: F 20. A personnel handbook establishes formal policies on personnel-related matters. ANS: T 21. In an employment-at-will situation you can fire an employee for any reason. ANS: F 22. The Fair Labor Standards Act states that any person working more than 40 hours a week is entitled to overtime pay. ANS: F 23. When an employer makes existing facilities readily accessible or modifies work schedules to accommodate an employee with a disability it is called reasonable facility management. ANS: F 106 Test Bank

24. Sexual harassment must be physical conduct that is of a sexual nature that creates an intimidating, hostile, or offensive working environment. ANS: F 25. Signs of a troubled employee include sudden and extreme changes in behavior. ANS: T

Short Answer 26. List three suggestions when conducting an interview. ANS: Be consistent, let the person being interviewed do the talking, ask open-ended questions, and avoid unlawful questions. 27. What is a good way to avoid interviewing people who are not qualified for the position being hired? ANS: Write a tight newspaper advertisement for the position asking for specific objective characteristics. Screen applicants by calling them before interviewing them if you have questions about their resume. 28. Why should employers always perform reference checks? ANS: To avoid negligent hiring claims and to select the best applicant.

Essay Question 29. List and explain three federal employment laws. ANS: The Americans with Disabilities Act of 1990 (ADA) prohibits employers from discriminating against employees or applicants with disabilities. The Age Discrimination in Employment Act of 1967 prohibits employers from discriminating against employees and applicants on the basis of age where the individual is 40 or older. The Equal Pay Act of 1963 prohibits employers from paying workers of one sex less than the rate paid an employee of the opposite sex for work on jobs that require equal skill, effort, and responsibility and that are performed under the same working conditions.

CHAPTER 9 File and Law Library Management

Multiple Choice 1. Legal assistants _____. a. rarely work with files b. work with file clerks that mainly handle the case files c. work with files every single day d. are often responsible for organizing files and the information in the files e. c and d ANS: E 2. A poor filing system has the following characteristics—_____. a. files are lost and cannot be found b. attorneys and legal assistants do not trust the file system c. large amounts of time and money are lost and wasted d. files are messy and disorganized e. all of the above ANS: E Test Bank 107

3. The larger the number of cases, the more problems the office will experience with a(n) _____ filing system. a. numerical b. bar coding c. alphabetic d. a and c e. none of the above ANS: C 4. A filing system that can handle an infinite number of cases without having to reshuffle the file drawers is a(n) _____ filing system. a. centralized b. bar coding c. alphabetic d. a and c e. none of the above ANS: E 5. A filing rule states that the _____ the case number, the more misfiling and other types of errors will occur. a. longer b. combination of letters and number in c. wider d. a and b e. none of the above ANS: A 6. In a _____file system a file department manages all active files. a. decentralized b. centralized c. combination decentralized and centralized d. all of the above e. none of the above ANS: B 7. Which statement is false? a. Each client must have a separate file opened. b. Multiple legal matters for the same client may be kept together in the same file. c. Alphabetic systems require the shuffling of files. d. Alphabetic systems break down when the office has different clients with the same name. e. None of the above. ANS: B 8. In a _____ file system, files are kept in various locations throughout the law office. a. decentralized b. centralized c. combination decentralized and centralized d. all of the above e. none of the above ANS: A 108 Test Bank

9. A _____ is used to check for conflicts, to assign a case number, to easily track the type of fee agreement, and to track how the client was referred to the office. a. docket form b. file opening form c. confidentiality form d. a and d e. none of the above ANS: B

True/False 10. Law offices have an ethical duty to return client materials to the client. ANS: T 11. Law offices do not have to give case files to clients when the client has not paid for the services. ANS: F 12. Bar-coding is a file management technique. ANS: T 13. Color coding is an effective way to reduce the number of misfiled documents. ANS: T

Short Answer 14. When is centralized or decentralized the best filing systems? ANS: Centralized works best when all offices are located close together and many people need access to the files. Decentralized works best when offices are spread out and when files are only needed by the person working on the case. 15. Does the law office have a duty to return client property to the client? Explain. ANS: Yes, law offices have an ethical obligation to make sure client property is returned to clients.

Essay Question 16. Discuss the advantages and disadvantages of alphabetic and numerical filing systems. ANS: Alphabetic is easy to start but there is the shuffling of case files and it breaks down when there are multiple clients with the same name. Numerical filing systems require the user to remember a file number but there is no shuffling of case files and no breakdown regarding clients with the same name.

CHAPTER 10 Law Office Equipment, Technology, Space Management, Security, and Leases

Multiple Choice 1. Technology gives law offices benefits including _____. a. greater productivity b. increased efficiency c. better quality services Test Bank 109

d. all of the above e. none of the above ANS: E 2. A _____ should be included in a law office fax cover page. a. logo b. confidentiality notice c. disclaimer d. liquidated damage clause e. none of the above ANS: B 3. The costs of foregoing or passing up an alternative option is called _____. a. opportunity cost b. oversight cost c. a mistake d. alternative cost e. none of the above ANS: A 4. When financing equipment you should _____. a. purchase b. rent c. lease d. determine which alternative is best in the long run given your specific situation e. none of the above ANS: D 5. An agreement where a monthly fee is paid, but the vendor retains title to the equipment is called a _____. a. lease to purchase b. purchase c. rental d. a and b e. none of the above ANS: C 6. An inventory method that reduces inventory levels and increases cash flow is called _____. a. pilferage b. stock pile inventory c. out-of-time d. a and b e. none of the above ANS: E

True/False 7. Facility management refers to managing, planning, designing, and controlling a law firm’s building or office space effectively. ANS: T 8. Rentable space refers to space that is available for offices and equipment, and does not include hallways or bathrooms. ANS: F 110 Test Bank

9. Usable space refers to all spaces including common space such as hallways, stairwells, and rest rooms. ANS: F 10. There is an indirect correlation or relationship between the amount of space needed and cost. ANS: F 11.Atenant’s pro rata share of common space is called opportunity cost. ANS: F 12. Foregoing or passing up alternatives is called a loss factor. ANS: F

Short Answer 13. Explain why security is important in all types of law offices and what can be done to make a law office secure. ANS: Tragedies can happen anywhere. To make an office more secure, limit client access to the building, issue security badges, monitor entrances, and remind and train staff about security issues. 14. Distinguish between a net lease and a gross lease. ANS: In a net lease, the tenant pays a base rent plus real estate taxes. In a gross lease, the tenant pays only for base rent. 15. Compare and contrast usable and rentable office space. ANS: Usable refers to space that is actually available for the tenant to use while rentable space is space such as common areas that the tenant has to pay a portion of but cannot actually move into. TRANSPARENCY MASTERS

Transparency 1

THE LEGAL TEAM (Figure 1–1)

Attorneys Partner/Shareholders -Managing partner (Large Firms) Other -Associates Administrators -Lateral hires -Expert Witness -Legal Administrator -Nonequity partner -Investigator -Chief Financial Officer -Staff attorney -Litigation Support -Human Resources Mgr. -Contact attorney Bureau -Director of Marketing -Of Counsel -Consultant -Chief Information Officer

Clerks Legal -File Clerk Assistants -Calendar Clerk -Legal Assistant -Copy Clerk -Managing Legal Assistant -Mail Clerk -Freelance Legal Assistant

LEGAL TEAM

Secretaries (Small Firms) -Legal Secretary Office -Receptionist Manager -Word Processor

Law Law Librarian Clerk

113 114 Transparency Masters

Transparency 2

DEFINITIONS OF A LEGAL ASSISTANT/PARALEGAL (Figure 1–2)

Organization Definition of “Legal Assistant or Paralegal” American Bar “A legal assistant or paralegal is a person, qualified Association by education, training or work experience who is employed or retained by a lawyer, law office, corporation, governmental agency, or other entity and who performs specifically delegated substantive legal work for which a lawyer is responsible.” ABA Standing Committee on Legal Assistants. National Federation of “A paralegal/legal assistant is a person qualified Paralegal Associations through education, training or work experience to (NFPA) perform substantive legal work that requires knowledge of legal concepts and is customarily, but not exclusively, performed by a lawyer. This person may be retained or employed by a lawyer, law office, governmental agency or other entity or may be authorized by administrative, statutory or court authority to perform this work. “ National Association “Legal assistants, also known as paralegals, are of Legal Assistants a distinguishable group of persons who assist (NALA) attorneys in the delivery of legal services. Through formal education, training and experience, legal assistants have knowledge and expertise regarding the legal system and substantive and procedural law which qualify them to do work of a legal nature under the supervision of an attorney.” American Association “Paralegals perform substantive and procedural for Paralegal legal work as authorized by law, which work, in the Education (AAfPE) absence of the paralegal, would be performed by an attorney. Paralegals have knowledge of the law gained through education, or education and work experience, which qualifies them to perform legal work.Paralegals adhere to recognized ethical standards and rules of professional responsibility.” Transparency Masters 115

Transparency 3

DAILY FUNCTIONS AND DUTIES OF LEGAL ASSISTANTS (Figure 1–4)

Duty Percentage of Survey Respondents That Daily Perform This Duty

Draft correspondence 80% Case management 69% Calendaring deadlines 63% Automation systems/computers 54% Draft pleadings 50% Office matters 45% Assist with client contact 42% Court filings 31% Document analysis/summary 31% General, factual research 26% Investigation 17% Client/witness interviews 15% Legal research 8% Deposition summaries 4% Assist at trial 2%

Source: National Association of Legal Assistants, 2000 National Utilization and Compensation Survey 116 Transparency Masters

Transparency 4

LEGAL ASSISTANT SPECIALTY AREAS OF PRACTICE (Figure 1–5)

Specialty Areas Percent of Respondents Selecting the Speciality

Civil litigation 51% Personal injury 34% Corporate 33% Real estate 30% Probate/estates 26% Contracts 26% Administrative/Government/Public 25% Tr usts & estates 23% Insurance 21% Family Law 21% Office Management 21% Medical Malpractice 21% Employment/Labor Law 20% Bankruptcy 19% Worker’s Compensation 17% Criminal 17%

Source: National Association of Legal Assistants, 2000 National Utilization and Compensation Survey Transparency Masters 117

Transparency 5

LEGAL ASSISTANT EMPLOYMENT (Figure 1–6)

Employer Percent

Private law firm 74% Corporation 10% Public Sector/Government 8% Insurance Company 2% Self Employed 2% Health/Medical 1% Bank 1% Other 2%

Number of Attorneys Percent

1 (sole practitioner) 12% 2–5 30% 6–10 17% 11–20 14% 21–50 14% Over 50 13%

Source: National Association of Legal Assistants, 2000 National Utilization and Compensation Survey 118 Transparency Masters

Transparency 6

NUMBER OF ATTORNEYS BY PRACTICE SETTING (Figure 1–9)

Approximate Practice Setting Size Percent Number

Private Practice Solo Practitioner 297,724 Private Practice Firms of 2–5 Attorneys 95,263 Private Practice Firms of 6–20 Attorneys 90,218 Private Practice Firms of 21–50 Attorneys 45,954 Private Practice Firms of 51–100 Attorneys 28,823 Private Practice Firms of 101 or more Attorneys 76,493 Private Industry/ 76,842 Private Association Judiciary/Government/ 95,754 Public Service/Military Retired/Inactive 42,673 Education 8,186 TOTAL 857,930*

*Because of rounding the column of figures does not add up to the total shown. The Lawyer Statistical Report, “ The U.S. Legal Profession in 1995, Clara N. Carson, American Bar Foundation, 1999 Source: 1994 Supplement to the American Bar Association Lawyer Statistical Report (see also, www.abanet.org/solo/stats. html). Transparency Masters 119

Transparency 7

ORGANIZATIONAL CHARTS (Figure 1–11) manager Law library Docket clerks Legal assistant Legal assistants Litigation department counsel General (Centralized) CORPORATE LAW DEPARTMENT Regulatory department B C Corporate department Partner Associate Legal assistant B B B Office manager Partner

Partners Associate

Associates Small Law Firm Legal assistants Legal Clerk assistant A A A Secretaries LEGAL AID Partner Legal assistant(s) Board of directors Executive director Associate RULE BY ALL PARTNERS/SHAREHOLDERS and interns B Associate attorney Secretary

Clerk Clerk Library

Secretaries committee A Office manager Office manager Secretary Marketing committee systems Finance Information committee Legal committee Large Firm administrator Management Collection committee Library Personnel Systems committee MANAGEMENT COMMITTEE/BOARD Partners Administrator/ office manager Managing partner Medium Size Firm Personnel committee Finance Space POWERFUL MANAGING PARTNER Marketing committee Source: Legal Assistant Management Association 120 Transparency Masters

Transparency 8

LAW FIRM MANAGEMENT RESPONSIBILITIES (Figure 1–13)

Financial Management

Practice Management

Human Resources Management

Planning

Organization, Policies and Creating Effective Internal Systems Transparency Masters 121

Marketing Management

Controlling and Determining the Effectiveness of the Firm

Leadership 122 Transparency Masters

Transparency 9

NATIONAL ASSOCIATION OF LEGAL ASSISTANTS, INC. CODE OF ETHICS AND PROFESSIONAL RESPONSIBILITY (Figure 2–3)

NALA Code of Ethics and Professional Responsibility A legal assistant must adhere strictly to the accepted standards of legal ethics and to the general principles of proper conduct. The performance of the duties of the legal assistant shall be governed by specific canons as defined herein so that justice will be served and goals of the profession attained. (See Model Standards and Guidelines for Utilization of Legal Assistants, Section II.) The canons of ethics set forth hereafter are adopted by the National Association of Legal Assistants, Inc., as a general guide intended to aid legal assistants and attorneys. The enumeration of these rules does not mean there are not others of equal importance although not specifically mentioned. Court rules, agency rules and statutes must be taken into consideration when interpreting the canons. Definition: Legal assistants, also known as paralegals, are a distinguishable group of persons who assist attorneys in the delivery of legal services. Through formal education, training and experience, legal assistants have knowledge and expertise regarding the legal system and substantive and procedural law which qualify them to do work of a legal nature under the supervision of an attorney. Canon 1. A legal assistant must not perform any of the duties that attorneys only may perform nor take any actions that attorneys may not take. Canon 2. A legal assistant may perform any task which is properly delegated and supervised by an attorney, as long as the attorney is ultimately responsible to the client, maintains a direct relationship with the client, and assumes professional responsibility for the work product. Canon 3. A legal assistant must not: (a) engage in, encourage, or contribute to any act which could constitute the unauthorized practice of law; and (b) establish attorney-client relationships, set fees, give legal opinions or advice or represent a client before a court or agency unless so authorized by that court or agency; and (c) engage in conduct or take any action which would assist or involve the attorney in a violation of professional ethics or give the appearance of professional impropriety. Canon 4. A legal assistant must use discretion and professional judgment commensurate with knowledge and experience but must not render independent legal judgment in place of an attorney. The services of an attorney are essential in the public interest whenever such legal judgment is required. Canon 5. A legal assistant must disclose his or her status as a legal assistant at the outset of any professional relationship with a client, attorney, a court or administrative agency or personnel thereof, or a member of the general public. A legal assistant must act prudently in determining the extent to which a client may be assisted without the presence of an attorney. Canon 6. A legal assistant must strive to maintain integrity and a high degree of competency through education and training with respect to professional responsibility, local rules and practice, and through continuing education in substantive areas of law to better assist the legal profession in fulfilling its duty to provide legal service. Canon 7. A legal assistant must protect the confidences of a client and must not violate any rule or statute now in effect or hereafter enacted controlling the doctrine of privileged communications between a client and an attorney. Canon 8. A legal assistant must do all other things incidental, necessary, or expedient for the attainment of the ethics and responsibilities as defined by statute or rule of court. Canon 9. A legal assistant’s conduct is guided by bar associations’ codes of professional responsibility and rules of professional conduct.

Transparency 10

NFPA MODEL CODE OF ETHICS AND PROFESSIONAL RESPONSIBILITY (Figure 2–4)

NATIONAL FEDERATION OF PARALEGAL ASSOCIATIONS, INC. MODEL CODE OF ETHICS AND PROFESSIONAL RESPONSIBILITY AND GUIDELINES FOR ENFORCEMENT PREAMBLE The National Federation of Paralegal Associations, Inc. (“NFPA”) is a professional organization comprised of paralegal associations and individual paralegals throughout the United States and Canada. Members of NFPA have varying backgrounds, experiences, education and job responsibilities that reflect the diversity of the paralegal profession. NFPA promotes the growth, development and recognition of the paralegal profession as an integral partner in the delivery of legal services. In May 1993 NFPA adopted its Model Code of Ethics and Professional Responsibility (“Model Code”) to delineate the principles for ethics and conduct to which every paralegal should aspire. Many paralegal associations throughout the United States have endorsed the concept and content of NFPA’s Model Code through the adoption of their own ethical codes. In doing so, paralegals have confirmed the profession’s commitment to increase the quality and efficiency of legal services, as well as recognized its responsibilities to the public, the legal community, and colleagues. Paralegals have recognized, and will continue to recognize, that the profession must continue to evolve to enhance their roles in the delivery of legal services. With increased levels of responsibility comes the need to define and enforce mandatory rules of professional conduct. Enforcement of codes of paralegal conduct is a logical and necessary step to enhance and ensure the confidence of the legal community and the public in the integrity and professional responsibility of paralegals. In April 1997 NFPA adopted the Model Disciplinary Rules (“Model Rules”) to make possible the enforcement of the Canons and Ethical Considerations contained in the NFPA Model Code. A concurrent determination was made that the Model Code of Ethics and Professional Responsibility, formerly aspirational in nature, should be recognized as setting forth the enforceable obligations of all paralegals. The Model Code and Model Rules offer a framework for professional discipline, either voluntarily or through formal regulatory programs. §1. NFPA MODEL DISCIPLINARY RULES AND ETHICAL CONSIDERATIONS 1.1 A PARALEGAL SHALL ACHIEVE AND MAINTAIN A HIGH LEVEL OF COMPETENCE. 1.2 A PARALEGAL SHALL MAINTAIN A HIGH LEVEL OF PERSONAL AND PROFESSIONAL INTEGRITY. 1.3 A PARALEGAL SHALL MAINTAIN A HIGH STANDARD OF PROFESSIONAL CONDUCT. 1.4 A PARALEGAL SHALL SERVE THE PUBLIC INTEREST BY CONTRIBUTING TO THE IMPROVEMENT OF THE LEGAL SYSTEM AND DELIVERY OF QUALITY LEGAL SERVICES, INCLUDING PRO BONO PUBLICO SERVICES. 1.5 A PARALEGAL SHALL PRESERVE ALL CONFIDENTIAL INFORMATION PROVIDED BY THE CLIENT OR ACQUIRED FROM OTHER SOURCES BEFORE, DURING, AND AFTER THE COURSE OF THE PROFESSIONAL RELATIONSHIP. 1.6 A PARALEGAL SHALL AVOID CONFLICTS OF INTEREST AND SHALL DISCLOSE ANY POSSIBLE CONFLICT TO THE EMPLOYER OR CLIENT, AS WELL AS TO THE PROSPECTIVE EMPLOYERS OR CLIENTS. 1.7 A PARALEGAL’S TITLE SHALL BE FULLY DISCLOSED. 1.8 A PARALEGAL SHALL NOT ENGAGE IN THE UNAUTHORIZED PRACTICE OF LAW.

Courtesy of National Federation of Paralegal Associations. 124 Transparency Masters

Transparency 11

MALPRACTICE CLAIMS BY TYPE OF ALLEGED ERROR, 1990–1995 (Figure 2–17)

Type of Alleged Error 1990–95 ERROR Total 1990–95 GROUPING ALLEGED ERROR Number Percent ADMINISTRATIVE Procrastination in Performance, Follow-Up 981 8.68 Failure to Calendar Properly 763 6.75 Failure to React to Calendar 717 6.35 Failure to File Document-No Deadline 304 2.69 Clerical Error 242 2.14 Lost File-Document Evidence 64 0.57 Subtotal 3071 27.18 SUBSTANTIVE Failure to Know/Properly Apply Law 1248 11.05 Planning Error-Procedure Choice 1228 10.87 Inadequate Discovery/Investigation 1157 10.24 Failure to Know/Ascertain Deadline 788 6.97 Conflict of Interest 428 3.79 Failure Understand/Anticipate Tax 221 1.96 Error in Public Record Search 140 1.24 Error Mathematical Calculation 50 0.44 Subtotal 5260 46.56 CLIENT RELATIONS Failure to Obtain Consent/Inform Client 1104 9.77 Failure to Follow Client’s Instruction 572 5.06 Improper Withdrawal of Representation 242 2.14 Subtotal 1918 16.97 INTENTIONAL WRONG Malicious Prosecution, Abuse of Process 418 3.70 Fraud 361 3.19 Violation of Civil Rights 146 1.29 Libel or Slander 125 1.11 Subtotal 1050 9.29 TOTAL 11299 100.00 DESK GUIDE LEGAL MALPRACTICE

Source: The Lawyer’s Desk Guide to Preventing Malpractice, American Bar Association, 1999, p. 30. Reprinted by permission. Transparency Masters 125

Transparency 12

FOSTERING POSITIVE RELATIONSHIPS WITH CLIENTS (Figure 4–3)

Description Behavior Know Your Client ■ When dealing with the client, take into account his or her emotional/mental/ physical state (consider how you would feel in the same circumstances) and based on this, respond and ask questions appropriately. ■ Establish basic trust in the relationship at every opportunity by listening to the client’s needs, being honest, and being respectful. ■ Ask your client what his or her concerns are about the matter. ■ Ask your client what his or her business is about. ■ Do research on your own about the client’s business or industry. ■ Ask how the client prefers to be communicated with (in-person, e-mail, telephone, voice mail). ■ Ask the client how often he or she wants to be communicated with. ■ Ask how you can serve the client better. Treat Each Client as If He or ■ When you meet with a client, only She Is Your Only Client have that client’s file on your desk. ■ Never take another call when meeting with a client and let others know not to disturb you. ■ Never talk to clients about how busy you are or about other cases. Send Copies of All Documents ■ Always send copies of documents to to Clients the client. This lets the client know what you have been working on and keeps him or her informed. If the document is not particularly sensitive, attach the document as an e-mail to the client. Do Not Use Legalese ■ Talk to clients in lay terms and refrain from using jargon or legalese. Return All Phone Calls and ■ Always return phone calls, e-mails, Reply to E-mails and Voice and voice mails as soon as possible, Mails Immediately but at least by the end of the day. (continued) 126 Transparency Masters

Be Courteous and ■ Always be courteous, professional, Professional and empathetic with clients. This is extremely important to most clients. Respond to Clients’ Requests ■ Always respond to client requests in a and Keep Promises timely manner. If you make a promise to get something to a client, do so in a timely manner. Contact the client and let him or her know the status of the matter in question. Give Periodic Updates ■ Be proactive. Periodically give updates to a client on the status of thier case. Never Share Personal ■ Avoid sharing personal problems Problems with Clients with clients. Clients are there to receive a service. Preserve Client Confidences ■ Maintain client confidentiality. This is critical to maintaining the foundation of trust in the relationship. Survey Clients ■ Use formal client surveys to find out what clients think about your services. Management Must Help ■ Work with management to let them Promote Good Client Relations know how better to support positive client relationships. Publish a Client Manual ■ Publish a client manual to help clients understand what to expect from the law office and how the judicial system functions regarding their type of case. Transparency Masters 127

Transparency 13

HOW PROFESSIONALS SPEND THEIR TIME (Figure 4–6)

5% Other COMMUNICATING 9% Writing

16% Reading

COMMUNICATING 30% Talking

COMMUNICATING 40% Listening

Source: Deborah Heller and James M. Hunt, Practicing Law and Managing People (Butterworth, 1988), 210. Courtesy of Heller, Hunt & Cunningham. 128 Transparency Masters

Transparency 14

COMMUNICATION DIAGRAM (Figure 4–7)

BARRIERS

backgrounds differing perceptions amounts/kind of information competency knowledge Message understanding skills

Message aptitudes values objectives personal needs Sender Receiver terminology roles assumptions Feedback

sex

Feedback age race culture status geography

Source: Deborah Heller and James M. Hunt, Practicing Law and Managing People (Butterworth, 1988), 212. Courtesy of Heller, Hunt & Cunningham. Transparency Masters 129

Transparency 15

CONTINGENCY FEE EXAMPLE (Figure 5–3)

Written Contingency Fee Agreement Provisions Attorney receives ■ 20% of any money recovered (plus legal expenses) before case is filed; ■ 25% of any money recovered (plus legal expenses) after case is filed, but before trial; ■ 33% of any money recovered (plus legal expenses) during trial or after appeal. Settlement Case is settled for $10,800 after case is filed, but before trial. Attorney has $800 worth of legal expenses. Calculation of Contingency Fee 1. Legal expenses are paid first. Settlement of $10,800 Minus legal expenses – 800 Balance $10,000 2. Contingency fee is calculated as follows: Total recovery minus legal expenses $10,000 Attorney’s 25% Contingency Fee ($10,000 x 25% = $2,500) – 2,500 TOTAL TO CLIENT $7,500 3. Total fees and expenses to attorney Reimbursement of legal expense $ 800 Contingency fee $ 2,500 TOTAL TO ATTORNEY $ 3,300 130 Transparency Masters

Transparency 16

COMPARISON LEGAL FEES TO PREPARE A WILL (Figure 5–5)

Services Provided 1. Legal Assistant interviews client (office conf.) regarding the law office drafting a will for client. Legal assistant gets background information including financial holdings, heirs, family tree, etc...... 1.50 hours 2. Legal Assistant drafts memo to Attorney itemizing the conference with client ...... 0.25 hours 3. Attorney reads the legal assistant’s memo and talks with client on the telephone ...... 0.25 hours 4. Attorney conducts legal research, prepares a draft of the will which meets the expectations of the client ...... 1.0 hours 5. Client reviews will, office conf. with attorney, attorney discusses client’s changes to the will, makes client’s changes to the will and the will is executed, witnessed and notarized ...... 1.0 hours TOTAL HOURS ...... 4.0 hours ■ CLIENT HOURLY RATE Assume attorneys agree to charge the client to prepare a will for his/her time as follows: • $125.00 an hour for the attorney’s time (the client is not “rich” and would have to go elsewhere if the firm normal hourly rate were charged) • $60.00 an hour for his/her legal assistant’s time TOTAL COST $386.25 (Legal Asst. 1.75 hours $60 $105; Atty 2.25 $125 an hour $281.25; $105 $281.25 $386.25)

■ ATTORNEY/LEGAL ASSISTANT HOURLY RATE • Assume the attorney is an associate attorney and his/her normal hourly rate is $150.00 • Assume the legal assistant assigned to the case has a normal hourly rate of $55.00 TOTAL COST $433.75 (Legal Asst. 1.75 hours $55 $96.25; Atty 2.25 $150 an hour $337.50; $96.25 $337.50 $433.75) ■ BLENDED (Attorneys and Legal Assistant) HOURLY RATE • Assume blended hourly rate for all attorney and legal assistant time is $85 an hour. TOTAL COST $340 (4 hours $85 $340). ACTIVITY HOURLY RATE Assume: • Legal Assistant Office Conference Rate is $40.00 an hour/Atty is $100.00 • Legal Assistant Time for Drafting Memo is $50.00 an hour/Atty is $100.00 • Attorney Time for Phone Conferences $80 an hour • Attorney Time for Drafting Pleadings, Will, etc. $150 an hour TOTAL COST $347.50 1.5 $40 $60.00; .25 $50 $12.50; .25 $100 $25; 1.0 $150; 1.0 $100 Total $347.50 FLAT FEE RATE Assume attorney and client agree on a flat rate of $300.00 to prepare the will. TOTAL COST $300.00 CONTINGENCY RATE: $0.00 (No Monetary Recovery - not applicable) Transparency Masters 131

Transparency 17

TRUST ACCOUNT LEDGERS (Figure 6–2)

Johnson Law Firm Trust Account Checkbook Register

Check Check Deposit No. Date Payee or Deposit Source Amount Amount Balance

01/01/01 Balance from Previous Month $10,000.00 01/02/01 Roger Smith v. Cunningham Steel $2,000.00 $12,000.00 01/16/01 Barbara Jackson Tax Matter $2,000.00 $14,000.00 2001 01/23/01 Dist Ct. – Filing Fee – Smith v. Steel $100.00 $13,900.00 2002 01/23/01 Process Server Inc.– Smith v. Steel $200.00 $13,700.00 2003 01/23/01 Court Reporting Inc.– Smith v. Steel $700.00 $13,000.00 2004 01/24/01 Johnson Law Firm – Fees – Jackson Tax $500.00 $12,500.00 2005 01/25/01 Koehn & Koehn CPAs – Jackson Tax $500.00 $12,000.00 2006 01/31/01 Johnson Law Firm – Fees – Smith v. Steel $500.00 $11,500.00

Trust Account Client Subsidiary Ledger Page Roger Smith v. Cunningham Steel Case No. 00-2342

Check Funds Funds No. Date Description of Transaction Paid Received Balance

01/02/01 Cash Advance Retainer $2,000.00 $2,000.00 2001 01/23/01 Filing Fee $100.00 $1,900.00 2002 01/23/01 Service of Process $200.00 $1,700.00 2003 01/23/01 Court Reporter Fees $700.00 $1,000.00 2006 01/31/01 Attorney's Fees $500.00 $500.00

Trust Account Client Summary Ledger Page Balance as of 1/31/01

Client Balance as of 1/31/01

Roger Smith $500.00 Barbara Jackson $1,000.00 John Shoemaker $5,000.00 Paul Page $5,000.00 TOTAL BALANCE IN TRUST ACCOUNT $11,500.00 132 Transparency Masters

Transparency 18

LAW FIRM BUDGET—MASTER BUDGET (Figure 6–4)

Step 1—Income Budget Hours Rate Total

R. Johnson, Partner 1700 $175 $297,500 C. Beck, Partner 1700 $175 $297,500 J. Taylor, Partner 1700 $175 $297,500 J. B. Ring, Associate 1800 $125 $225,000 H. S. Hendershot, Associate 1800 $125 $225,000 B. D. Smith, Legal Assistant 1750 $50 $87,500 C. A. Sullivan, Legal Assistant 1750 $50 $87,500 Other Income $35,000 SUBTOTAL (Total Billings) 1,552,500 Time to Billing Percentage 95% TOTAL TO BE BILLED $1,474,875 Realization Rate 90% TOTAL GROSS INCOME $1,327,388

Step 2—Staffing Plan

EXPENSE BUDGET Salary Expenses: J. B. Ring, Associate $70,000 H. S. Hendershot, Associate $70,000 B. D. Smith, Legal Assistant $35,000 C. A. Sullivan, Legal Assistant $35,000 M. J. Johnson, Administrator $40,000 J. T. Thomas, Secretary $25,000 J. J. Statzman, Secretary $21,000 H. V. Billingsley, Secretary $20,250 B. J. Wickert, Librarian $24,000 C. M. Hunt, Receptionist $17,000

Step 3—Estimated Expenses

All Other Expenses: Accounting/professional services $3,500 Amortization of leasehold improvements $1,000 Association/Membership Dues $2,500 Client billings written off $10,000 Continuing legal education $13,000 Copying expenses (not billed to clients) $18,000 Depreciation $10,000 Employee benefits & taxes $72,000 Entertainment $2,500 Equipment purchase/computers $50,000 Equipment rental $8,500 Forms & stationery $6,000 General liability & property ins. $3,000

Housekeeping/cleaning services Malpractice/errors & omissions ins. $70,000 Marketing $10,000 Miscellaneous $2,000 (continued) Transparency Masters 133

Office supplies $12,500 Other taxes $2,500 Postage $10,000 Reference materials/subscriptions/library $8,000 Rent expense $94,000 Repairs and maintenance $8,600 Telephone & fax exp. (not billed to clients) $20,000 Travel (not billed to clients) $3,000 Utilities $34,000 TOTAL EXPENSES $835,850

Step 4—Determine Acceptable Profit Goal

NET INCOME TO BE DISTRIBUTED $491,538 134 Transparency Masters

Transparency 19

COMMON DOCKET CONTROL ENTRIES (Figure 7–2)

■ Expiration dates for statutes of limitations ■ Judgment renewal dates ■ Employee-benefit annual filings ■ Renewal dates for copyrights, trademarks, and patents ■ Renewal dates for leases and licenses ■ Renewal dates for insurance coverage ■ Tr ial court appearance dates ■ Due dates for trial court briefs ■ Due dates on various pleadings: answers; depositions; replies to interrogatories and requests for admissions; various motions and notices, etc. ■ Due dates in probate proceedings such as inventory and appraisal dates ■ Appearances in bankruptcy proceedings ■ Action dates in commercial law matters ■ Due dates in corporate or security matters ■ Closing dates for real estate transactions ■ Due dates for appellate briefs and arguments ■ Tax return due dates ■ Due dates in estate matters such as tax return dates, valuation dates, and hearing dates ■ Dates of stockholder meetings ■ Dates of board of directors meetings ■ Review dates for wills ■ Review dates for buy and sell valuations of business interests ■ Review dates for trusts ■ Renewal dates for lease on offices ■ Renewal dates for attorney licenses ■ Expiration dates on notary certificates ■ Renewal dates for malpractice and other insurance ■ Personal property tax return dates ■ Dates for partners (and other recurring and nonrecurring) meetings ■ Review dates for billings and accounts receivable ■ Review dates for work-in-process ■ Review dates for evaluation of associates and staff ■ Review dates for raises and bonuses ■ Quarterly payroll withholding reports due Transparency Masters 135

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CALENDAR FOR CALCULATING CALENDAR DAYS AND WORKDAYS EXAMPLE (Figure 7–3)

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

1 2 3 4 5 6 7 Motion filed

8 9 10 11 12 13 14

15 16 17 18 19 20 21 Response Due if 15 Calendar Days

22 Response Due if 15 Work Days

Sample Event: Number of days: Due Date: Motion filed on 1st 15 Calendar Days Tuesday, 16th Motion filed on 1st 15 Work Days Monday, 22nd 136 Transparency Masters

Transparency 21

CASE MANAGEMENT FOR COLLECTION CASES (Figure 7–14)

CASE DATABASE

Client Name: First National Bank Contact Person– Sam First Name Contact Person– Johnson Last Name Client Address: P.O. Box 1000 Client City: Philadelphia Client State: Pennsylvania Client Zip: 98934 Client Phone: 943/233-9983 Case Number: 2001-9353 Court: Philadelphia Superior Court—District 13, Philadelphia, Pennsylvania

Debtor Name: Philip Jones Debtor Address: 3242 Wilson Ave. SW MERGED DOCUMENT—"Complaint" Debtor City: Philadelphia In the Philadelphia Superior Court – District 13, Debtor State: Pennsylvania Philadelphia, Pennsylvania Debtor Zip: 98984 First National Bank Amount Owed $25,234 Merge Plaintiff to Client: function Case No. 2001-9353 Philip Jones Type of Debt: Mortgage 3242 Wilson Ave. SW Type of Asset: House at 3242 Wilson Ave Philadelphia, Pennsylvania 98984 SW, Philadelphia, Pennsylvania Defendant. COMPLAINT DOCUMENT TEMPLATE 1—"Complaint" Comes now the plaintiff, First National Bank, and states that the Debtor, Philip Jones, is indebted to In the {Court} the plaintiff in the amount of $25,234 on a mortgage {Client name} regarding a house at 3242 Wilson Ave. SW, Philadel- Plaintiff phia, Pennsylvania. Attached to this complaint as Ap- Case No. {Case Number} pendix "A" is a fully executed copy of the mortgage {Debtor Name} above referenced. {Debtor Address} {Debtor City}{Debtor State}{Debtor Zip}

Defendant.

COMPLAINT

Comes now the plaintiff, {Client Name}, and states that the defendant, {Debtor Name}, is indebted to the plaintiff in the amount of {Amount Owed to Client} on a {Type of Debt} regarding a {Type of Asset}. Attached to this complaint as Appendix "A" is a fully executed copy of the mortgage above referenced. Transparency Masters 137

Transparency 22

WHO ARE EXEMPT EMPLOYEES? (Figure 8–12) making sales Customarily and – Employed for the purpose of or obtaining orders contracts for services. – regularly engaged away from his or her employer’s place or places of business typically devoted to retail or service establishment – Telephone sales are not outside. Cannot spend more than 20% of the normal workweek of the employer’s nonexempt employees doing nonexempt wk. None – Commissioned outside sales people. Highly skilled in computer – systems analysis or programming. – “Application of systems analysis techniques and procedures including consulting with users to determine hardware, software, or system functions” – “Design development, documentation, analysis, creation, testing, or modifi- cation of computer systems or programs. – Does not include “trainees, entry level positions, employees engaged in operation of computers, manufacture, repair or maintenance of computer hardware.” Usually 50% or more of time spent in above areas. Salary - Paid not less than $250 a week $13,000 yr. Hourly - Or $27.63 an hr. – Highly skilled, computer systems analysts, software engineers, and computer programmers”. 29 C.F.R. Sect. 541.303 EXEMPTION in a engineers, scientists, – Primarily consist of performing work requiring advanced learning or that is original and creative recognized artistic field or work as a teacher. – Requires the consistent exercise of discretion and judgment or consists of work requiring invention, imagination or talent in a recognized field of artistic endeavor. – Learned professions law, medicine, nursing, teaching, accounting, actuarial, engineering, biology, data processing (computers) – Does NOT including any of the above in entry level positions. – Artistic Professions— music, theatre, creative writing, painters, etc. Usually 50% or more of time spent in above areas. Paid not less than $250 a week $13,000 yr. Doctors, lawyers, dentists, accountants, teachers, professors, registered nurses, composers, painters, soloists. ” of a in signifi- production independent management advising mgmt, actual discretion and 29 C.F.R. Sect. 541.201 29 C.F.R. Sect. 541.301 PROGRAMMING) 29 C.F.R. 541.500 – Primarily performance of office work related to policies or business operations (usually 50% or more of time). – Management policies/business operations planning, negotiating, representing the org, purchasing, research, etc. – Requires independent judgment cant matters choice free from immediate direction; – Not prescribed procedures or prescribed processes in manuals, etc. Person can have skills but not be truly independent. – Cannot be in “ product, must be in management policy or business operations. Usually 50% or more of time spent with management policy/business operations. Paid not less than $250 a week $13,000 yr. Exec. Asst. to President; Manager, Insurance Expert, Tax Expert, Research Senior systems analysts (computer prof. re: business operations). Summary of White-Collar Exemptions Under the FLSA Short Test This includes inter- REQUIREMENTS IN EACH COLUMN managing and (supervising ALL – Primarily manages the agency, department or subdi- vision. (Usually over 50% of the employee’s time must be in people). viewing, selecting, and training employees; setting and adjusting employees rates of pay and hours work; directing employee work; appraising employees of their productivity and efficiency; handling employee complaints; planning employee work; controlling the flow and distribution of work; determining employee techniques to use; and providing for employee safety. – Customarily and regularly directs two or more “full-time” employees (80 hours a week of direct reports). Usually 50% or more of time spent managing employees. Paid not less than $250 a week $13,000 yr. Directors, Managers, Project Managers and Assistant Managers that have two or more people reporting to them. 29 C.F.R. Sect. 541.101 EXEMPTION EXEMPTION (COMPUTER EXEMPTION MUST COMPLY WITH – Exemptions are construed narrowly and against the employer. – Exemptions must be plain and unmistakable. – Each element of an exemption must be proven by substantial evidence the employer. Primary Duties: – Time Requirement Salary Requirement Typical Examples: Description EXECUTIVE EXEMPTION ADMINISTRATIVE PROFESSIONAL PROFESSIONAL OUTSIDE SALES 138 Transparency Masters

Transparency 23

PARTIAL LIST OF FEDERAL EMPLOYMENT RELATED LAWS (Figure 8–13)

Family and Medical Leave Provides that eligible employees be allowed up to twelve workweeks Act of 1993 of unpaid leave within any twelve-month period for: a) the birth or adoption of a child or placement of a child for foster care; b) the care of a child, spouse, or parent with a serious health condition; and c) the employee’s own serious health condition. Civil Rights Act of 1964 Prohibits discrimination against employees on the basis of race, color, religion, sex, or national origin. The Equal Employment Opportunity Commission (EEOC) was established to enforce this law. Equal Pay Act of 1963 Prohibits employers from basing arbitrary wage differences on gender. Age Discrimination in Prohibits employers from discriminating against persons age forty or Employment Act of 1967 more on the basis of their age unless age is a bona fide (ADEA) (Amended 1978) occupational qualification. Pregnancy Discrimination Prohibits discriminating against women because of pregnancy. Act of 1978 Americans with Disabilities Prohibits employers from discriminating against persons with Act of 1990 (ADA) disabilities in several different areas. Civil Rights Act of 1991 Relaxed the burden of proof in discrimination claims and allows for greater recovery of damages. Fair Labor Standards Act Sets minimum wage and maximum basic hours of work for employees, and requires overtime pay for nonexempt employees. Fair Credit Reporting Act Limits and restrains the use of consumer reports (including reference and other employment checks on job applicants).