By: Bernadette Starzee, Long Island Business News
Attorneys traditionally have operated on a different plane, according to Joseph Campolo, managing partner of Ronkonkoma-based law firm Campolo, Middleton & McCormick.
“Lawyers were always open-ended, billing by the billable hour for as much time as something took, and the customer had to pay,” he said.
But since 2008, that has been changing, as cash-strapped consumers and businesses seeking law firm services have increasingly resisted open-ended billing. They’re demanding itemized budgets upfront, and Campolo says it’s healthy for the industry.
“Historically law firms have been challenged in trying to collect from clients, and clients have always complained that law firms are too expensive,” he said.
But if the scope of work and the cost are determined in advance, and clients are empowered to make a business decision – to say nay or yay – up-front, there will be fewer disputes about fees, Campolo said.
The wealth of legal information available on the Internet has led to a more educated legal services consumer, said Joseph Milizio, managing partner of Vishnick McGovern Milizio in Lake Success.
“As a result, clients are often not taking a back-seat approach to their legal representation,” he said, noting many of them see greater involvement as a cost-cutting opportunity – they figure if they can contribute to a part of the underlying work, their fees can be reduced.
As law firm customers have become savvier, certain legal services have evolved into commodities.
“During the economic downturn, many lawyers and law firms who could not differentiate the value of their services from their competitors discounted their rates and/or wrote off substantial portions of clients’ legal bills to maintain market share,” said Craig Olivo, co-managing member of Bond, Schoeneck & King’s Garden City office. “This resulted in what many refer to as the ‘commoditization’ of some legal services – generally those services that are considered routine in nature and for which the economic risks do not justify engaging outside counsel or an attorney with a higher rate over one with a lower rate.”
More than 2 million people have used the website LegalZoom for everything from incorporating a business to creating a will to transferring real estate deeds. In addition to sites like LegalZoom taking lower-level business away from law firms, consumers are turning to the Internet for free legal advice.
Even Fred Rooney, an attorney who directs the International Justice Center for Post-Graduate Development at Touro College Jacob D. Fuchsberg Law Center in Central Islip, sought free legal advice online after, shortly after moving to Long Island, he was ticketed for making a right-hand-turn at a red light.
“I didn’t understand for the life of me why I was getting ticketed for turning right on red,” he said, noting he received free advice online from a Long Island lawyer, who informed him a full stop was required by law.
People aren’t turning to do-it-yourself websites because it’s the best option, Rooney said, but because they can’t afford legal services. This has engendered a growing trend toward law firms unbundling their services, said Rooney, who until recently was a member of the American Bar Association’sstanding committee on the delivery of legal services, which analyzes the way people access the legal system.
In order to make sure clients can afford the law firm’s services, lawyers are increasingly empowering them to do more on their own, to reduce the overall cost of legal representation, Rooney said.
“We’ll tell clients, ‘If you want us to do this, it’s going to cost you X, and if you want us to do a piece of it, it will cost you Y,’” Campolo said. “It’s no different from a contractor who may charge you $5,000 to rip out the kitchen and put in new cabinets, but if you take them to the dump yourself, you don’t have to pay for that.”
For instance, in uncontested divorce cases, attorneys may instruct clients to secure a custody order and child support order on their own, while the attorneys handle the more complex equitable property distribution piece, Rooney said.
However, when consumers represent themselves – such as in divorce matters – they can make mistakes that wind up costing them more in the long run, said Jerome Wisselman, senior law partner at Wisselman, Harounian & Associates, a Great Neck law firm with a concentration in matrimonial and family law.
“We have seen cases where one spouse is seeking an order of protection, and the other spouse attempted to litigate the matter himself and ended up losing the case and being ordered to vacate his home,” he said. “When that happens, it sets up a difficult framework for the rest of the case.”
Wisselman has noted an increase in inquiries about mediation, and the firm has grown its emphasis on the less costly alternative to litigation.
While some divorces do not lend themselves to mediation – such as in cases of domestic violence or when there are disparate levels of sophistication about the issues among the two parties – it is an effective option in many instances, he said.
It isn’t just consumers that are looking to reduce legal costs.
Although the economy has improved slightly, “businesses have weathered the economic storm of the last several years by cutting costs across the board and reallocating their limited budgets to perceived priority areas, often at the expense of their budgets for legal services,” Olivo said. “So the pressure by general counsel to ‘stay within budget’ continues unabated.”
Like many firms, Bond, Schoeneck & King has begun “on a case-by-case basis to utilize a variety of alternative fee arrangements in an effort to make the cost of legal services for a particular project or matter more predictable for the client,” Olivo said.
The challenge with such arrangements, he noted, is that it is often difficult to accurately predict how much work will be needed to complete a given matter.
Many times, an attorney can break down a matter and fix a fee for part of it, said Lewis Meltzer, managing partner at Meltzer, Lippe, Goldstein & Breitstone in Mineola. In commercial litigation, for instance, “you ought to be able to fix a fee for the complaint, because it’s totally in a firm’s control how much time it spends on it,” he said. “But with depositions, the time spent is dictated by what somebody else does.”
While clients may choose the lowest bidder for low-order legal services, when the more complex, critical or financially imperative matters arise, most clients focus on a law firm’s ability to achieve the desired results, Olivo said.
In those cases, “clients determine value by the effectiveness of the work the lawyer does, not just the hours that are put in,” Meltzer said. “The lawyer has to accomplish something.”