Power of Attorney - August 2000

A View from the Other Side

by Dennis M. Sponer

Four years ago, I jumped ship. After years of private practice, I became in-house counsel for a Las Vegas based company. The practice of law for a privately held company is worlds apart from practicing for a firm. First, the time spent focused on billable hours moves from every waking minute to an afterthought at best. Second, winning and losing take on a whole different meaning. Jobs are at stake, or should I say, one (my) job is at stake. Also, an in-house counsel must forego specialization in favor of becoming a generalist. Finally, the definitions of winning and losing change.

The most recent issue of Nevada Lawyer published results of a survey of young lawyers in the state, including statistics on billable hours. A billable hour is a period of time, usually broken into six minute increments, for which your trusted counsel’s firm charges you no less than twenty five dollars – for each increment. Many firms establish minimum billing increments of one quarter-hour or greater. The average number of billable hours our state’s young lawyers are expected to bill each year is over 1,850. That’s thirty -seven hours or more per week.

So how can a freshly minted attorney meet the demands of his or her firm and bill thirty-seven hours per week? There are two ways: Balance Billing and Standard Billing guidelines. Balance Billing occurs when your attorney takes a thirty second call from a client (you), then goes to get a cup of coffee and chat with the receptionist for another five minutes or so. Remember those increments? The client is charged for the entire six minutes.

Standard Billing guidelines solve the problem of billing for that standard Breach of Contract complaint that the firm has done a thousand times. The associate attorney (or paralegal) needs only to change the names on the pleading and press the print key. Fifteen minutes of work. Three and one-half hours of billed charges. How? The theory is that it would take three and one-half hours to draft the complaint from scratch. Just because the firm happens to have a template or two on hand (and we all do), the client should not realize the full benefit of the efficiencies of modern document production.

In the face of all of this, what is the business person to do? Well, if you’re hard up enough to really need a good attorney in the first place, and if your attorney is really that good, suck it up - pay her or him gladly. The fees are surely worth getting you out of whatever trouble caused you to hire a lawyer in the first place.

This brings me to my second point. Your attorney, sitting in that big "cushy" office on the umpteenth floor of the Bank of the Millennium building is not going to go bankrupt or go to the big house if the case is lost - you are! This is not to say that your attorney does not care deeply about your cause. It’s just that you are the one who owns the problem. As in-house counsel, losing means not just having to face an angry or disappointed client. Sometimes it means layoffs, public embarrassment, and even termination.

In addition, the outside counsel can ignore issues outside of the one specific issue brought to him or her by the client. In-house counsel date back fifty years to when attorneys were generalists, handling everything from probate to real estate. Having a generalist counsel on board enables a company to be prepared for any legal issue, but becoming a generalist was and is one of the most difficult challenges in my moving from private practice to in-house counsel. No longer can I refer all cases outside my little sphere of expertise to the guy down the hall. I now become the answer guy. Whether it’s an unemployment hearing, a landlord tenant dispute, drafting board resolutions, or any one of a myriad of things, the in-house counsel must be up to speed. Or at least know where to go for help. Fortunately, there are a multitude of excellent specialists in private practice that do "just employment law" or, "just collections." I’m glad to say I use them liberally.

My final point is dear to the hearts of all business owners involved in litigation. The ultimate award in any case does not determine whether one wins or loses. The final award, net of attorneys’ fees and costs is the determining factor. It’s no fun to spend $200,000 in attorneys’ fees only to be awarded $150,000 at trial. And this does not include the inevitable soft costs associated with any litigation such as meetings, document preparation, more meetings, and depositions. Many times, the smartest move for a company to make is to give up, walk away and get back to your business. As a good businessperson, you should always be mindful of the costs of litigation. However, you should always have excellent counsel in reserve.

Dennis M. Sponer
Dennis M. Sponer is licensed to practice law in California and Nevada and serves as the in-house counsel for the AscentrA family of companies, a Las Vegas based group of health care and insurance service companies.