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When I first started my law practice, I often accepted smaller matters from clients. I sometimes struggled to find legal work to handle, and smaller matters were better than handling no matters at all. I also sometimes thought that if I handled smaller matters for clients, and they saw how well I performed, they would consider my law firm for bigger and more lucrative matters in the future. In some instances, I even agreed to favorable fee arrangements on the smaller matters with the hope that this would get my foot in the door with larger clients that could lead to additional work. In my experience, handling smaller matters for clients does not always translate into additional work, and lawyers should be cautious about offering favorable fee terms to handle smaller matters in anticipation that it might lead to more lucrative referrals.
Shortly after starting my law firm, the general counsel of a decently sized outfit reached out to me about a small matter that the company needed a lawyer to handle. The general counsel said that the matter would not take too much time, and that the company preferred a lawyer who would work on the matter on a flat-fee basis as the matter was not worth too much money to the client. I eventually agreed to handle it on a flat-fee basis, and I figured that handling the matter could lead to more work from that client in the future.
As it turns out, the matter required much more work than anticipated. I ended up spending many hours working on it, and my efforts eventually paid off. I was able to solve a problem the client faced for over a year in only a few days. My papers were excellent, and the client achieved a result that was beyond their expectation. I surely thought that this meant the client would consider my firm for bigger matters in the future.
Over the years, this client has contacted my firm about various smaller matters, which usually did not rise to the level of work that my firm eventually handled once our practice started to develop. At one point in speaking with the general counsel of this client a while ago, the lawyer conveyed that she was on the lookout for “small” matters to refer to our firm. This ticked me off since my law firm handles large matters for publicly traded companies and other substantial outfits that dwarf the client for whom this general counsel worked. For whatever reason, this general counsel believed that my firm was a “small matter” law firm instead of a shop to which the general counsel could refer larger matters.
At another point in my career, I was referred a relatively small litigation matter from a source that seemingly had a lot of work. The referral source implied that if we offered a good rate to the client on this matter, the referral source might consider us for additional work. It is not uncommon for lawyers to perform work at a lower billable hour rate in exchange for more volume, so we accepted this deal.
My law firm performed solid legal work on the matter, and it eventually resolved on favorable terms for the client. However, we never received any additional work from that client. The client likely just used the promise of additional work to negotiate lower compensation for the matter we handled, and it is unclear if the client ever planned to refer additional matters to our law firm.
All told, lawyers should try not to think about the potential for future work when negotiating compensation terms, especially if a client refers a smaller matter. Clients may not have any intention of referring larger matters to lawyers, and attorneys should keep this in mind when accepting matters.
Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.
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