There are two words that are rarely synonymous: “quality” and “cheap.” There are times when quality is irrelevant. But there are other times when it is everything. And no matter what you are looking at, if it is cheap, there always is a reason why it is cheap. Before buying a cheap item, it is often a good idea to first find out why it is cheap. If quality is important, then perhaps cheapness should be less important.
At my law office, I am concerned first with the quality of our service. For that reason, I usually cannot sell the cheapest legal services in town. But I do try to sell quality services at a reasonable quality price. This is our pledge to you.
Perhaps some non-lawyers might not understand what goes into the creation of “quality” legal services. Most simply put, quality legal services consist of very careful and diligent efforts, plus the necessary experience to recognize pitfalls before they become problems, with time to reflect before advising the client or making any decisions on behalf of the client. Mistakes can be made very easily whenever a lawyer becomes overworked. And the inexperienced lawyer without staff has a lot of exposure to professional liability the moment he becomes too busy. In my office, no case is assumed to be simple and straight forward although it might turn out that way. This is because each and every case can have its own surprises that are impossible to see when first getting involved.
Today it is rare that any lawyer “cannot” use modern software. It is not unusual that some lawyers choose NOT to engage some items of software for valid professional reasons. If an inexperienced lawyer wants to jump onto a new bandwagon when older, more experienced lawyers are hesitant to do so, and take his chances in the process, then by all means that is his right to do so. However, it is not a matter of any incompetence when older, more experienced lawyers decline to follow suit.
There is not a single task in my office that I am not personally capable of doing. There is not a single item of software available to lawyers in this area of practice that I am not capable of using.
Years ago, an attorney came to town in Alaska and set up shop by office-sharing with an old army buddy, a very good lawyer who practiced in an unrelated field. Then he began offering bankruptcy services for fees that were less than half of the norm then being charged by other attorneys. As one would expect, the man soon had a long line of expectant clients and an extremely heavy caseload. Eventually he was ordered by a judge not to file any more cases until he could straighten out the ones that he had already filed. Sad as that was from a professional point of view, the story ended with the portly lawyer reportedly being chased through airport corridors by an angry client who hoped to get his money returned. Then there was an F. B. I. investigation and some very uncomfortable experiences in a Mexican jail cell before the offending lawyer could be rescued to serve time in this country.
Not every lawyer who charges less does so intending to hurt anyone. However, I do recall another lawyer who set up shop charging 1/3 the normal rate and told clients that a certain lawyer was over-charging. He loaded up so many cases that he could never perform. Just when it seemed that he had all of the bankruptcies captured, he filed his own Chapter 14 bankruptcy. Then people who relied on him came into my office to my office, complaining that he had taken money and never performed. In the end, he was rewarded with a nice job as a criminal prosecutor elsewhere in Alaska, but soon died a tragic death.
The question that the debtor should be asking is whether such a low price makes good business sense, considering the high cost of advertising and doing business, the high cost of employed paralegal and other staff, and the lawyer’s own need to take home a paycheck. There is a physical limit to how many cases any lawyer can handle without help, and good help can be very expensive to pay for. Does the lawyer have good help in his office? One of the best Bankruptcy lawyers I know has never hired a secretary. He does all of the work himself. But he isn’t the cheapest Bankruptcy lawyer around. In fact, he charges more than anyone else that I know. This is because he is thorough and does quality work. But without help, he gets no economy of scale. That is why he does fewer cases and winds up being very expensive.
Most bankruptcy lawyers charge fees that fall within a certain range to enable them to operate competently and efficiently. Some very good and experienced lawyers actually charge more than others in order to limit their cases to a number that they feel most comfortable handling, and to compensate themselves for their many years of hard-earned experience. In Alaska, the normal price for Chapter 7 bankruptcies ranges from about $1,700 to $3000, depending on the case. Chapter 13 bankruptcies have an official cap set at $3,500, but the lawyer can petition the court for additional compensation when necessary.
Under the new bankruptcy code, lawyers were subjected to many demands not previously borne. Those demands sometimes triple the amount of time needed by lawyers in order to establish “due diligence” in each case. Under the old law, four or five hours normally was sufficient, and the typical flat rate Chapter 7 was about $1000. But under the new law, 10 to 12 hours per case seems more reasonable for a diligent attorney. And at $250 per hour, that translates into nearly $2.500. Who can afford that?
After the law changed in 2005, most lawyers were left not knowing how much to charge new clients. A good friend of mine began asking for $3000, and given the new burdens, I reasoned that $2700 also would be fair. However, the United States Trustee’s office was shocked, and demanded that rates be lowered even below the previous level. The United States trustees represent the creditors-the bankers-and because they are compensated differently, their incentive was to limit the debtor’s lawyer to as low an income as possible, to get as much as possible for the bankers. As a result a brief dispute developed and the issue needed to be resolved by the Bankruptcy Judge. That Judge recognized that the new law had placed considerable burdens on diligent lawyers and ruled that a doubling of the flat-rate fee to $2000 would be appropriate in 2005.
Now, 20 years later, with inflation, $2,500 is commonly charged fee for Chapter 7 bankruptcy.
Our Bankruptcy system is the “pressure relief valve” for our social boiler. Without it, our nation might explode in strife when times are tough. The Bankruptcy Court monitors and oversees the fees that are charged in an effort to maintain quality services that can be available to most everybody in need. It is up to us lawyers to also reach out and help to the extent possible without sacrificing the need of maintaining professional standards of care.
Lawyers are no different than most other people: they equate time with money. If they earn too little in an area they begin to avoid it in preference of other activities. As a result, if fees are too low, the most capable lawyers normally will move on to other types of cases. When any worker is poorly compensated, there also can be a tendency to lower the quality of work, as the worker speeds up on each case in order to increase the bottom line at the end of his work-month. So in the long run, low fees damage the clientele. This is why the Bankruptcy Judge allowed higher fees for Chapter 7 bankruptcies. Debtors need to be represented by capable attorneys in their battle for economic freedom from slavery.
And so, even the most distressed debtor needs to remember that the main goal in bankruptcy is to become totally free from otherwise insurmountable debt. When that means totally wiping out credit card and other debt equal to a year’s salary, a few hundred dollars extra for legal attention can be a very wise investment. The debtor probably would not want to jump out of any airplane with a half-price parachute. And the same principle applies when trying to achieve a soft landing in court. This is because in the courthouse, quality might mean everything.