New Hires and Unfinished Business

Thinking of bringing a new person with clients on board or “we like her, she has a nice portfolio of ongoing work.”

As lawyers, we call that having a book of business.  It can be costly for the acquiring firm.  Take the recent case involving the dissolution of Howrey and Simon.  At one time one of the largest firms, it is now a debtor in bankruptcy court in California.  The Trustee sued a large firm that took in some of the departing lawyers claiming the right to its interest in profits realized or to be realized from its work in progress.  Just before voting to dissolve, the Partners adopted into their partnership agreement an “Unfinished Business” provision that said that neither the Partners nor the partnership shall have any claim to clients or matters on-going at the time of dissolution.  Finding this provision to be a fraudulent transfer of assets that could be recovered by its creditors, the bankruptcy judge agreed with the Trustee and wrote that the profits from future unfinished business could be used to satisfy creditors.  In re Howrey LLP, Bkr Case #11-31376 DM (BK ND Cal. Feb. 7, 2014)So let’s assume you have just taken on a new hire who brings on-going work to your firm.  Does he or she, and thereby your firm, have a duty to account for the profits billed to the old firm?  An argument by an extension of Howrey may make you vulnerable.  Shouldn’t your agreement with the new hire have some indemnity or other protection?Otherwise, the initial attractiveness of the new hire may be for naught.

A general counsel whom you have on a monthly retainer primed to think proactively like this may have just saved your firm.

Anger Management in the Workplace

Do you get angry in the workplace?  Are your clients driving you nuts?

Managing anger is a healthy tool and a developing skill for most (yours truly included) – and while the tendency may be to procrastinate on a program of developing healthy approaches, you may be setting a time bomb for a suit over your workplace conditions.

Meditation and candle gazing may work for some, but what about something “practical” during the day while managing stressful projects?  Some things to try include a few deep breaths, imagining the beach or a memory from your last vacation, count to ten (or twenty!!), or walk around the block.  Do I do any of these?  No.Some things more constructive I have found are the following:

a. Sit down with my office policy manual and work at what steps can be taken when this same stressor arises in the future.  If you don’t have such a manual, now is the time to work with your general counsel to develop one.

b. Grade your clients.  That’s right.  Grade them from A to F.  You will find your D and F clients are the source of most of the anger in your firm because of the stress they place on you with unreasonable demands and of course slow or non-payment.Then, draft your letter, with your general counsel’s help, terminating the relationship if possible, or if not, at least setting them on a course for finding your replacement.Your stress will decrease, your happiness will increase, and you will make more money and perform better services for the A and B clients you want to keep.

c. When you do have the most anger – is there a particular time of day, client or type of project?  Any patterns at all can be helpful.  Then spend a few minutes drafting a solution or even a step towards a solution.Deep breathing and proactive measures are not a panacea.  But, if practiced over time, they may provide some improvement.  If not go ahead and yell at us!

A general counsel whom you have on a monthly retainer primed to think proactively like this may have just saved your firm…or your life!

The Benefits of Having a General Counsel

Do you have a general counsel that serves the needs of your design or engineering practice? Do you know what it costs you every year not to have ready access to legal counsel who knows your industry?

Most of us labor under the misunderstanding that a lawyer, like a funeral director, is only to be called upon when absolutely necessary.  If you operate your practice that way, sooner, rather than later, your practice will die.

Good business planning requires legal help.  Some things to think about:

1. What are your thoughts on an ideal design practice?

2. What type of business entity should you have?   LLC? S-Corp? or an LLC choosing subchapter S status for tax purposes?

3. How much capital should the members contribute?

4. How do you bring in new principals?

5. How are profits and (God forbid) losses to be divided?

6. How do you resolve disputes among the principals?

7. Management issues?

8. Technology?

9. Policy and procedures?

10. Should you have employer’s liability insurance?

11. What are the terms and conditions of your contract–should you use AIA forms or some version of your own terms and conditions?

General Counsel whom you have on a monthly retainer primed to think proactively like this may be a lifesaver for your firm or business.