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President’s Column: Rich Lawyers, the Good Old Days, and Other Legends

Fri, 04/22/2016 - 09:11 -- admin25

by Jerry Alexander

This column and next month’s will talk about some legal legends and myths and their basis or lack thereof. First let us examine the legend of “the Rich Lawyer.”

Rich Lawyers

Over the years, I have personally known 56 lawyers who have been owners of, or have invested heavily in, a bar or restaurant that went broke, but only two who have actually gotten “Big Rich” practicing law, especially young enough to retire by, say, 50. There are the “read-about” really rich lawyers, like Joe Jamail and the “Tobacco Lawyers,” but the reason we can read about them is because they are written about, and the reason they are written about is because getting Big Rich practicing law is—well—unusual.

Recently many people have complained that times are harder from a financial standpoint than they have been historically practicing law because of more competition for less good-paying business. I think, perhaps, it has always been that way.

The Suggested Minimum Fee Schedule

In the 1960s, times, apparently, were so hard for lawyers financially that the State Bar of Texas published something called the Suggested Minimum Fee Schedule. It is dated April 1968, and it is very interesting and I think telling. The Schedule was some 80 pages long and contained Suggested Minimum Fees for various “legal products.” On page 1, the Suggested Minimum Fee Schedule states, unapologetically:

Minimum Fees.  The fees suggested in this Schedule represent the minimum compensation which should be received by the lawyer who performs the service with reasonable competence.

It goes on to state, “Nothing herein should be construed as implying that a fee in excess of the minimum prescribed is unreasonable.” It further gives the reason for publishing the Schedule as the public interest, because lawyering was not being chosen as a career by the best and the brightest since practicing law was not as financially rewarding as other endeavors.

Next, the Schedule talks about what these minimum fees should be. The minimum applicable hourly rate in 1968, according to the Schedule, should have been at least $40 per hour. Then there are also many “flat fees” quoted:

Uncontested Adoption

$250

Assignment for Benefit of Creditors (Note: when is the last time someone did that?)

$200

Bankruptcy – uncontested for debtor if assets are not scheduled

$250

Bankruptcy – uncontested for debtor, if assets are scheduled

$350

Incorporation

5% of the first $10,000 in capital contributed (but not less than $300)

Change of Name

$150

Divorce – uncontested with no children

$250

Divorce – uncontested proceeding in which the custody of minor children are involved

$350

Divorce – uncontested proceeding in which minor children are involved and citation is issued

$400

Property Settlements

10% of first $5,000 and 5% of the value of property allocated to the client in excess of $5,000

Estate Planning

Percentages of the amount of property or specified

Partnerships

Percentages of capital, but not less than $150

For litigation, the minimum contingent fee contract would be 33‑1/3 percent if there was no appeal, and 40 percent if an appeal were perfected (again, these were the minimum suggested fees).

When litigation was to be performed on an hourly basis, the minimum suggested fee for filing a Petition or an Answer was $250. Preparation for trial was a minimum of $40 per hour and appearances in Court were a minimum of $250 a day, with a notation that in cases necessitating the use of a senior and junior counsel, $125 a day should be added for junior counsel.

County Courts and the Justice Courts had similar schedules, but the fees were for much less.  At that time, the County Courts at Law had very limited financial jurisdiction, so much less so, in fact, that the Suggested Minimum Fee Schedule made the following comment:

In certain matters arising in the Justice and County Courts, the applicable hourly rate is considerably less.  In such instances, the lawyer performs the service at an economic loss so that the public will not be without counsel in matters involving small amounts.

Thus, even in 1968, the State Bar was concerned about people having access to attorneys in all (even small) civil matters—the 1968 approach to Equal Access to Justice.

The Suggested Minimum Fee Schedule had the following interesting observation about the equality of the importance of trial lawyers and office lawyers: “the service performed by the lawyer in his office partakes of the same quality as that which he performs in Court. If there is to be equal justice under the law, there is no place for friendship, favoritism or discrimination in the fees to be charged for legal services.”

The Suggested Minimum Fee Schedule also had an interesting observation about the financial equality of “city” lawyers and “country” lawyers when it came to law office economics:

The cost of operating a law office in a small town is as much as that in the largest city.  Although in the former rent and salaries are usually lower, these differences are more than offset by the higher cost of office supplies, the lack of efficient help, the distance from the town to the County seat, and the slower pace at which transactions are consummated.

(Note:  How much higher could cost of office supplies be?)

The Good Old Days

Times were different, but the concept of lawyers getting rich at $40 an hour even in 1968, was not a viable one. Inflation calculators tell us that $40 had the same buying power in 1968 as $285 does now, and of course that $40 was a gross amount billed which, after expenses and the usual problems with finding enough paying business to bill and actually collecting what it billed, it would not have made anyone “rich,” or anywhere close to it. I have no idea how many attorneys actually followed the Suggested Minimum Fee Schedule. I doubt very many, and the difference in what they actually billed may surprise you. In my case, when I was first licensed in 1972, my time was billed at $25 an hour. I did not reach the heady $40-per-hour billable rate until 1974 (six years after the Minimum Fee Schedule for $40 per hour was published), and it was 1977 before I attained the lofty plateau of $50 per hour!

Whatever the Suggested Minimum Fee Schedule was or was not in 1968, it obviously came about because lawyers were having difficulty making a good (or any) living practicing law then.

Maybe things were not so different in the “Good Old Days” than they are now.

Next Month   

Next month’s article will talk about the often heard complaint that there are “Too Many Lawyers” and that is why it is more difficult now than in “the Good Old Days.”

In the meantime, take heart, we are all in this together and, apparently, have been for a long time.

See you at the Belo!

Jerry

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