♫ ♪ Money makes the world go around, the world go round, the world go around ♪ ♫

I don’t usually write about BigLaw stuff, but money matters to SmallLaw also.  Today we’ll look at one BigLaw money story and one SmallLaw legal decision that just came out, and why they both matter.

In the world of Big, Dewey LeBoeuf appears to be imploding because they are deeply in hock to the banks. Why? Due to an exodus of about 70 partners, apparently leaving it close to breaching its loan covenants with the bank.

The problem is that law is not just law, but it’s a business. A business that needs cash to operate. And that cash must come from somewhere.  If the firm uses hourly  billing, the work gets done and the bills go out and then some months after the work is done the money comes in. Hopefully. But in the meantime, the rent must be paid, the secretaries must be paid, the lights need to stay on and the lawyers still need to eat.

It’s a simple of matter of cash flow and the delay between work getting done and cash coming in.

Which brings me to small law. The solos and small firms face the same problem but on a different scale. With a bare bones operation doing contract work for others the issue might not be quite so readily apparent.

Now what happens if business starts coming to the lawyer directly? For some cases a retainer might be taken up front, which is the way many criminal defense attorneys operate. Of course, if you don’t take enough and make an appearance in court, you might find yourself in trouble later when “the rest of the money” fails to come in and the judge won’t let you out of the case.

But the biggest problem is in the personal injury field, where work is done (often for years) without getting paid. Worse yet, the lawyer is expected to finance the case for the clients who, more often than not, would be unable to do so on their own and thereby unable to bring the case.  Even smaller cases can rack up an easy $20,000 in expenses  before a trial even takes place, when you factor in the medical records, reports, experts and depositions.

There are some lawyers, not really thinking about the issue, who pine for a few personal injury cases, not appreciating the fact that a flood of business also means a flood of financial anxiety.

And so lawyers — not just the BigLaw kind but the SmallLaw kind — need financing. This can come from banks, most preferably, or from personal assets, if you have them. It can also from vulture financiers that specialize in this field and charge absurd interest rates.

The vulture companies are a business that “invests” in a case. If the case is lost, they don’t (theoretically) get paid, meaning it isn’t a loan and they can charge interest rates in excess of usury laws. Justice Pines out in Suffolk County wrote about this issue a month ago in Kelly, Grossman & Flanagan v. Quick Cash, laying out all the gory details. This includes the idea that if a case is lost, the lawyer must replace it with another case.  When the borrowing lawyers tried to get the agreements declared to be criminally usurious, it didn’t go so well.

Now this is the part that’s important: The time to think about that financing is not when you need the money, but when you don’t. If you wait until you are financially strapped and then go to the bank and ask for a line of credit, they will see your financial distress. And — this comes as a surprise to many — banks don’t want to lend money to people who really need it. They want to lend the money to those who look comfy and safe. Because the bank would like to get its money  back one day with a little interest. I learned this one the hard way many, many years ago when I was a puppy lawyer.

The time to open that line of credit is: As soon as possible. This is true especially if you don’t need it. Because if you have any success at all as an attorney, one day you will. So open the line, and get occassional increases in it. Five years down the road when the money is truly needed, you’ll be ready.

The last thing a lawyer wants is to be desperate for money.That causes bad legal decisions.  All of a sudden you might find yourself thinking that that  auto case you took in three years ago and worked your butt off on and which you think your client should be entitled to the full 250K in insurance that is available, might be the one to settle now for the 100K offer. And you don’t want to be that lawyer. Ever.

♫ ♪ Money makes the world go around, the world go round, the world go around ♪ ♫

Ekaterina Schoenefeld, who took on the State of New York, and won.

A federal judge has struck down the long-standing rule that out-of-state attorneys licensed in New York must maintain an office here. In a decision dated Wednesday, September 9, Senior Federal Judge Lawrence Kahn, sitting in the Northern District of New York, said that New York Judiciary Law 470 was unconstitutional. The effect of this ruling is that out-of-state lawyers are no longer to hang a shingle here in order to practice here, representing a boon to solo practitioners that work from homes and small offices on shoe-string budgets.

After discussing the long history and changing requirements of New York law over the last 139 years — which started with the requirement that lawyers must actually live in New York in order to practice here — the Court ruled that even with all the changes such that now residency was no longer required, the law could not pass constitutional muster as it violated the Privileges and Immunities Clause of the Constitution. The law, Judge Kahn wrote, provided an extra and discriminatory burden on attorneys that live out of state, and the State did not have a “substantial interest” in having the statute. He wrote that “Section 470’s requirement that nonresident attorneys maintain an office in-state implicates the fundamental right to practice law under the Privileges and Immunities Clause.”

Judiciary Law Rule 470 sets forth:

“A person, regularly admitted to practice as an attorney and counsellor, in the courts of record of this state, whose office for the transaction of law business is within the state, may practice as such attorney or counsellor, although he resides in an adjoining state.”

All of the States defenses were found wanting. This included

The action, brought by Ekaterina Schoenefeld by New Jersey. She persuasively argued that “New York resident attorneys may practice law out of their basements,” while “nonresidents are required to rent offices in New York (no matters how few in number their New York clients may be) in addition to maintaining offices and residences in their home states.”

The action is entitled Schoenefeld v. State of New York, with the decision at that link.

The Court’s conclusion:

Defendants have failed to establish either a substantial state interest advanced by Section 470, or a substantial relationship between the statute and that interest, the Court concludes as a matter of law that it infringes on nonresident attorneys’ right to practice law in violation of the Privileges and Immunities Clause.

In February 2010, Carolyn Elefant discussed the case at My Shingle in its earlier phase when the defendants attempted to have the case dismissed:  Attorneys Defending Bar Requirements Say that Lawyer Must Violate Them To Bring a Challenge. And she has an update yesterday:  A Solo Fought the Law and the Solo Won! NY Jud. Code 470 Found Unconstitutional!

Another guest blog today, this from Patrick Carrajat, an elevator expert in New York that has testified for both plaintiffs and defendants. He writes today from the point of the engineering expert and the needs of the plaintiff’s counsel, but his points and check-lists can be modified for other purposes.
—————————————————
FINDING THE RIGHT EXPERT

There are several ways to locate the technical expert you need. Referral agencies abound, both on-line and traditional and either can serve the purpose of finding a suitable expert. The inherent pitfall with both type agencies is that they often are mere repositories for resumes and have little, if any knowledge of the proficiency of the expert being recommended. A quick internet search will turn up web pages for experts in virtually any field, but again you are simply given the information the expert chooses to post. In both of the above scenarios the onus will be upon you to investigate the background of the expert further, talking to their clients and interviewing the expert to see if they are right for your case. The best way to locate a suitable expert is either the old fashioned way, call a fellow attorney in a firm known for its personal injury practice and get a name or the new fashioned way, post your need to the NYLIST (New York State Trial Lawyers Association) or other such plaintiff oriented forums and see who is most recommended. Now that you located several names by any of the above methods how do you decide if the expert is right for you and your particular case?

INTERVIEWING THE EXPERT

In our hectic times it is virtually impossible to meet with each expert candidate personally so the telephone interview is the prevailing means of selecting your expert. The initial contact with the expert should begin with your disclosing the name and nature of the case since many popular experts may have already been retained by adverse counsel. Presuming that the expert has not been retained by another party and is willing to be retained by you these are questions that you should ask prior to deciding on your choice of expert.

1. How long has the expert been in practice?
2. How often has the expert been retained?
3. How often has the expert testified?
4. What percentage of testimony has been for the plaintiff?
5. What courts has the expert been qualified in?
6. Has the expert ever be dis-qualified as an expert?
7. Does the expert write their own affidavits and 3101(d)(1) or 26B filings?
8. Does the expert have copies of prior trial testimony?
9. Does the expert maintain files on opposing experts?
10. Does the expert maintain files of EBT (deposition) testimony by them?
11. Does the expert maintain files of EBT’s by others?
12. Does the expert maintain files of current appellate decisions pertinent to their field of expertise?
13. Will the expert assist you in preparing discovery items?
14. Will the expert write deposition questions for you?
15. Will the expert write trial questions for himself?
16. Has the expert actually worked on the type of equipment involved in your litigation?
17. Has the expert served on any code committee relating to the subject equipment?
18. Has the expert served on any industry groups?
19. Has the expert participated in seminars in their industry?
20. Has the expert conducted or been a panel member on such seminars?
21. Has the expert published any articles or books on the subject?
22. What professional associations does the expert belong to?
23. Does the expert maintain a library of technical articles and Code books?
24. If the field requires licensing does the expert have a current license?
25. Does the expert have a current CV to fax or e-mail to you?
26. What are the names of the last three attorneys worked for where the case was lost?
27. Does the expert have a client list of references to fax or e-mail to you?

Presuming that the above questions have been answered to your satisfaction proceed to checking selected references paying particular attention to the three cases that were lost. Once you are satisfied that you have found a suitable expert move to retain them at once.

DEALING WITH THE EXPERT

Most experts, like attorneys place a high value on their time and you will be best served by giving all information available to your expert as soon as possible. In virtually all cases involving a malfunctioning piece of equipment an on-site inspection will be required, arrange it as soon as practical after retention. The main purpose of this on-ste inspection is to allow the expert to precisely identify the equipment involved and protect the expert on cross. Any thinking defense attorney will, on cross ask when the on-site inspection was done. If the answer is never the next question will be, “So you are giving opinions today but you were not even interested enough to look at this piece of equipment?”

Give the expert ample time to prepare deposition questions and ask the questions even if you do not understand the reason for them being asked. Have the expert interview the plaintiff in person or over the phone, let the expert hear the plaintiffs story directly, minor details that mean little to a layman can be significant to the expert.

Every expert after jury selection should have an extensive meeting with the trial attorney and it should benefit both the lawyer and expert. The lawyer will have a good picture of the jury and can assist the expert in reaching the jury in a positive sense. Request that the expert dress for the meeting as they will dress at Court, make comments if appropriate.

YOUR OBLIGATIONS TO THE EXPERT

Once you have retained your expert you have certain obligations:

1. Promptly send your signed retainer and check (if requested) to the expert. Many experts are in high demand and will be contacted by multiple parties in a major case. The mere fact that you spoke to the expert does not, in most cases, mean that they cannot accept a retainer from another party if you have not formally retained them. Fax or e-mail your intentions and advise the expert when a signed retainer will be mailed.

2. Keep your expert in the loop. No expert wants to receive records or copies of depositions a week before trial (and yes it happens). No expert wants to be asked at trial if they have reviewed a deposition only to realize the deposition was never given to them (and yes it happens). No expert appreciates a call asking if they can do an on-site tomorrow.

3. Be sure you know what the expert wants you to ask for in discovery. Any qualified expert can give you a list of items they feel they need to properly address the issues in your case.

4. Don’t “paper” the expert. No expert, aside from those testifying to physical injury wants 200 pages of medical records. Most experts do want the original aided report from the police or emergency service responders and possibly the ER reports to see if the injury is consistent with the reported malfunction.

5. Know what your retainer agreement requires of you financially and pay your expert on a timely basis, the only thing they sell is time and their expertise. You will find it difficult to have a relationship with an expert who has been unpaid or waited more than 30-60 days for payment.

6. Don’t attempt to have your expert “shade” their opinion, most will not do it and those that do are violating the ethics of the profession. Your expert will put their opinions in the most favorable light for your client consistent with the admissible evidence reviewed.