Monday, January 3, 2011

New model for business litigation.

I am thinking of an experiment in business litigation that could save considerable attorneys fees for business owners.  Essentially, teams of contract attorneys would handle cases on an as needed basis.  The client's documents and all documents generated by attorneys would be digitally stored and shared.  The attorneys would be billed at considerably lower rate than prevailing rates. The teams would be managed on a project management basis by the lead attorney.  The client would save considerable monies in attorneys fees. 

My idea comes from a few sources.  One is the fact that there is a lot of legal talent available that is unemployed or underemployed.  My wife has been an attorney for a little more than a year and she knows a lot of attorneys who aren't working or working as contract attorneys.

The other inspiration is technology.  The use of the Internet, including cloud computing and digital vaults make it possible for professionals, especially attorneys, to collaborate on projects without the need to be collocated.  

The idea is to assemble a team of contract attorneys for each lawsuit.  Each attorney would work on a particular project, such as research, drafting a pleading, discovery response, etc. as needed.  Each project would have a deadline and a number of hours allotted to it.  The case would be handled on a project management basis so that the client knows the cost in advance.  The contract attorneys would be billed at a going contract rate plus overhead and a small profit.  The lead attorney would bill at a higher rate.  I am also considering billing the contract attorneys for cost during the course of the case with the client owing the remainder at the end of the case.

The key to the model is payment by the client.  The client would need to make a commitment to pay a certain amount each month since the contract attorneys and the costs of the suit would have to be paid each month.   This amount would be considerably less than the retainers paid monthly to dedicated litigation firms, particularly large firms.  But, the client would need to understand and commit to pay.

Another key is that the contract attorneys would need to have to have strong writing and research skills.  And, they would need to be able to work on a project/limited hours basis with little direct supervision.  They would have to understand that they can't milk the file and, if a project was more difficult and might take longer, they would have to immediately communicate that fact to the lead attorney/project manager.

Documents, including client documents, would be cloud stored or stored in digital vaults.  There is no need a lot of paper or attorneys collocated in a firm.  Everything would be digital. Obviously, the lead attorney/project manager would have to have excellent communication and management skills.  And, frankly, that attorney would have to be ruthless about contract attorneys who couldn't do quality work within a reasonable amount of time.  Those attorneys would have to be cut out or, preferably, not hired in the first place. 

I calculate that in a business litigation case, the project management model might reduce the attorneys fees by as much as 70% over dedicated litigation firms, particularly larger firms.  That is a huge savings.  I have discussed it with a few attorneys and they think it is a great idea.  One even said that he didn't understand why someone wasn't doing it already.

Saturday, January 1, 2011

Change in California Business Entity Reporting

The California Secretary of State reminds California business entities to file their annual Statements of Information.

Statements of Information are filed with the Secretary of State annually by entities such as corporations and limited liability companies. The statements are the public records of those entities. An entity that does not file a statement can be suspended and/or fined $250.00.

In the past, the Secretary of State would, every year, send a Statement of Information and a self-addressed envelope to each entity 90 days before the statement was due. Starting earlier this year, the Secretary of State only sends a postcard reminder to each entity. This is a cost cutting measure.

A corporation or a limited liability company must now either download the Statement of Information from the Secretary of State's website, fill it out and mail it to the Secretary of State, or a corporation can file one electronically through the Secretary of State's website.

I have a few clients who did not timely file their Statements of Information this year because they were waiting for their Statement of Information forms in the mail. They failed to take note of the postcard informing them of the new policy. They were quickly fined $250.00 - much faster than in the past. Since the state is hurting for money, it is cutting costs and enforcing penalties more harshly.

The following is a link to the Secretary of State's website explaining the policy.

If you own a corporation, a limited partnership or a limited liability company, please ensure that your entity's Statement of Information is timely filed. It is a mundane but important chore in keeping your entity in good standing.

If you have any questions about Statements of Information, or anything else, please contact us. Remember, we do not charge for initial consultations.

Please also visit our website.

Happy New Year! 2010 was a difficult year for almost every business owner and professional that I know. I hope that everyone enjoys a more prosperous 2011.