As some of you already know, on Friday, May 29, 2020, I will be hosting a 90-minute webinar on Power Pacts: agreements to promote law firms or to grow careers and unlock new revenue streams (click the link for more) For information or to register, click HERE, but for those of you who cannot participate, I have dedicated this post to some of the red flags that come up when considering a contractual employment agreement or joint venture with another law firm can:
1. Do the lawyers offer the deal licensed and in good condition? It is sad to say that one of the oldest tricks in this book is that a lawyer with a blocking or suspension license involves a lawyer or contract agent to enter and sign pleadings as the disciplinary punishment takes its course. The problem is that most disciplinary regulations prohibit the lawyer from practicing not only directly but also indirectly through others. If you accept a lawyer's or fee sharing agreement in these circumstances, you are assisting or assisting another lawyer in violating a disciplinary code that could also get you in trouble.
2. Is this a situation where you only get paid when I get paid? Some power packages state that the lawyer who provides the services is only paid after the fee has been collected by the customer. This can be a problem because if the lawyer doesn't bill the customer for two or three months, the bag stays in your hand. And even if the bills are on time, what if the customer simply refuses to pay? In many power pact agreements, the acting lawyer agrees to a price below the market price in exchange for security in the form of work processes and payments. If you don't know a lawyer well or have an enormous rate at which the risk of non-payment pays off, make sure the hiring lawyer pays the job after graduation regardless of when the client pays.
3. Is the lawyer trying to keep a problematic client from someone else? The only disciplinary threat I've ever had in my three-decade career came from a client whose attorney had hired me to act as a local attorney. A quick Google search of the colleague would have quickly revealed the type of serial disputes that I routinely avert. Unfortunately, I trusted the lawyer who had kept me and thought that I was not on the hook because of misconduct because I had not signed an agency agreement with the client. Fortunately, the situation never went beyond the threat stage, but lessons were learned.
4. Does the rental company have cover for misconduct? It can't hurt to ask about customer abuse coverage. Although you should always have your own with you, you don't want to get into a situation where your insurer has to pick up the bag for a law firm that practices without insurance coverage.
5. Are you just another pretty face? In theory, power pacts should benefit both parties, but in practice they can be neglected. Often, a company will seek an agreement on a power pact to have another job that bids on a contract or posts a face on the company's website without the intention of submitting work. Make sure you get as much benefit as you give before signing a power pact and making it official with an announcement or website. A uniform agreement is important not only for reasons of justice, but also for ethics: Most jurisdictions state that terms such as "lawyer" or "associations" are properly reserved for good faith, ongoing agreements and are considered misleading in other contexts.
6. Is your power pact agreement too narrow for comfort? On the other side of a loose power pact is one that is too narrow for comfort. Beware of situations that can lead to imputed partnerships that could make you responsible for the hiring agency's misconduct.
For more information on Power Pacts, register HERE for our upcoming webinar on May 29, 2020 at 1:00 p.m. ET