July 16, 2024 • 33 mins
On today's episode of the Justice Team Podcast, Bob is joined by one of the top professional liability attorneys in the State of California, Marshall Cole of Nemecek Cole Law Firm. False advertising, wins vs. collections, splitting settlements among clients, and Bob's story about battling Tom Girardi.
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Transcript
Episode Transcript
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(00:00):
Bob:
(00:01):
All right. Welcome to this episode of the Justice Team podcast on the Justice Team Network. And today we are very honored to have Mr. Marshall Cole, who defends most of us lawyers who when we get in trouble or when we have fee disputes, and he is a specialist at League of Malpractice and is going to go over some of the top tips to avoid us getting sued, avoid us getting into sticky situations with our clients. Marshall, thanks for coming on buddy.
Marshall:
Happy to be here. Thanks for having me.
Bob:
Yeah. I think let's just start this out by tell everybody who you are, what you do, what you like to do and that kind of shit.
Marshall:
Sure. Well, I like being a lawyer and I like being a lawyer that defends lawyers. Partner at nanosecond Cole, certified legal malpractice specialist. Been doing it basically my entire legal career. We represent sole practitioners up to national and worldwide law firms handling any type of claim that comes up. Like you mentioned, fee disputes are a big part of our practice. And then also we just do general business litigation too. Like you, I like being in trial. I think my cases are a little harder to get to trial than yours are, but I think that's where my real passion is is hanging out in the courtroom.
Bob:
Yeah. And you also work with a lot of, if we say friends of mine, but literally friends of mine when they get into fee disputes or people filing frivolous claims or lawsuits against them, you're the guy.
Marshall:
I like to think I'm the guy and it's a complicated area and you can be a great lawyer, you can be a new lawyer. You're going to find yourself encountering these problems throughout your practice, especially as you build and become more successful. There's plenty of tips and tricks to learn along the way to keep yourself out of hot water.
Bob:
All right. Let's start, because for those of you that are watching or listening, a lot of young lawyers or maybe you're law school or maybe seasoned lawyers, first of all, let's talk about legal malpractice insurance. What's your best advice in that realm and what do you see?
Marshall:
I mean, you should have it. Start there, you should have it. You should start there. California doesn't require it, which is pretty unbelievable with giving us a state with more lawyers than anywhere in the country. You definitely want to have malpractice insurance and enough that is going to cover you and protect against a realistic loss. If you're in the personal injury space and your last settlement was $5 million, your last verdict was $6 million and you only have a million in coverage, you're way underinsured, absolutely underinsured. I don't think any lawyer should practice in the city of Los Angeles or southern California area and probably all throughout the state with less than a million dollars. I mean they sell a hundred thousand dollars policies, but it is just not adequate.
Bob:
And they also, in California, you're required to put in your retainer if you do not have insurance.
Marshall:
That's correct. And so if you're going to be a lawyer practicing without it, you need to put it in. And I handle claims with lawyers who don't have insurance and it's going to cost a lot more money. And it's so crazy because all the money you've saved for all those years without paying premiums goes out the window right away because you're going to pay me upfront and you're looking at exposure. You're not going to be judgment proof presumably. It is just a risk not worth taking.
Bob:
Well, if there's a claim filed against, for instance, if they file a claim against my law firm for legal malpractice or a fee dispute, your firm would be one of those panel counsels for my insurance too, right?
(00:22):
Marshall:
We're pretty much on panel with almost every insurance carrier, and if we are not, you can and should request us because you want a firm. I think our firm has more certified legal malpractice specialists than any other firm in the state. And so it's a specialty for a reason and you want to go to a firm that knows what they're doing because it is basically our bread and butter.
Bob:
I know we're going to talk about co-counseling and things like this. How does it work? Say I'm a solo practitioner, I refer a personal injury case to another law firm. We have a fee sharing agreement, which we'll talk about. You should have a fee sharing agreement, rule 1.5.1 in California. That's modeled after the big rules. But what happens if there's a malpractice issue and the person I refer the case to didn't have enough or didn't have malpractice insurance, how does that work for me that referred the case to this person and I'm on the fee share agreement?
Marshall:
Well, let's take it in steps. Not only should you have a fee sharing agreement, you have to. Whether you're the referring lawyer or the lawyer who gets the referral, really if you're the referring lawyer. If there is no rule compliant, 1.5.1 agreement as you mentioned, that referral fee cannot be paid to you.
Bob:
Cannot.
Marshall:
Cannot, that would be an ethical violation. You cannot pay it. And it was the former rule 2-200 if you're pre-2018.
Bob:
And those are signed showing the fee split between referring lawyer, referee lawyer and signed by both of them and the client.
Marshall:
Both of them and the client, it also has to identify that the total fee that's going to be paid isn't reducing the recovery that the client was going to receive. It's just strictly dealing with the attorney's fees based on the original agreement that the client had, and it has to be signed by the client contemporaneously at or near the time you enter into that fee sharing agreement. If you enter into an oral agreement with your referring lawyer and two years go by and you say, oh, you know what, shoot, we need that 1.5.1 agreement, and the client signs it then, they've agreed. It still can be determined to be invalid.
Bob:
Wow.
Marshall:
It has to be contemporaneous. There's cases on point that...
Bob:
I know I've seen the cases directly on point. A lot of lawyers don't know that. It's like, hey, I had a handshake agreement or I emailed somebody. It's just bad practice 'cause sometimes lawyers just forget or people change firms and it's like, you have no claim.
Marshall:
(00:43):
We have a case right now where the referring lawyer is suing the law firm that got a great settlement and he's saying, well, we had referral agreements in the past, and so we did it based on the same terms. No. And the firm that got the case said, no, we didn't take this case on a referral. That would be unethical. We didn't do that. We don't have this standard custom and practice. Each one is an individual agreement. They have to be. And so while you may have these ongoing relationships, you can't get casual with them if you expect for your referral fee to be enforced.
Bob:
Yeah. You could reach out to any of us for examples, we all have these sample fee share agreements. You should have it. One of the first things you should do should be your case management software should be on the cloud, but it's paramount that you have this feature. And it's different in different states too. In Florida for instance, you're capped at a 25% referral fee. Other states have what's called co-counseling fees where you have to have actively participation in the case. You can't just refer the case. You have to be an active co-counsel, and there's ways to prove that. Sometimes it's just being the person corresponding with the client or doing things. There's different rules for that. Just pay attention to your jurisdiction. We're going to talk a lot about California specific, but you could reach out for anything on the show to me or to Marshall.
Marshall:
And the last point I would make on the 1.5.1 agreement is you want it to be a standalone document. A lot of times the lawyer gets retained and has a retainer agreement and then they'll build in their referral fee agreement into the retainer agreement for you, the second lawyer in line, to come and sign. And so it's all one document. Well, the problem with that is if you have issues with the retainer agreement or if the referral fee is specifically predicated on the retainer agreement, if that ever gets invalidated, the referring lawyer's fee that he or she could get is going to get invalidated too. [inaudible 00:07:41] case right on point with that.
Bob:
I did not know that. Best practice, and we've always done this, it's just a separate one-page document is our fee share agreement. You say, but I have a few instances I think where we've put the actual fee share in our retainer. Best practice, you want to keep it out.
Marshall:
Keep it out. Separate document that way it's one page. If anything ever happens to your retainer or the first lawyer's retainer, you've got a standalone contract that you can enforce that's compliant. It can mention it, but you definitely don't want it to be specifically predicated on the fees or the terms of the engagement letter, because it's going to be construed against the lawyers and the cases. I believe it's Olson versus Harveson is the case. I may be getting that second name wrong, but I can get it out.
Bob:
I think it's Havrati, cheese.
Marshall:
That's it. Yeah. And so in that case, there was a referral fee agreement in the retainer agreement and a dispute arose later on amongst the lawyers over the fee because the first lawyer who had the retainer agreement was terminated by the client. Well, when they were terminated by the client, what do you think happened to the retainer agreement? It's gone and there went the referral fee too, 'cause it was specifically predicated on that document. If you have a standalone document, then no matter what happens along the way, your referral fee, if you're expecting to get paid one, is going to be locked up in that contract.
Bob:
Yeah. And we also put in ours, sometimes we have different stages where the fee shifts. It's like it's 50/50 if it goes after litigation and then it's 60/40 after experts or 75, whatever. Those are all negotiable and you can put different terms in there. And you should do this even if you're getting brought in on a fee share to do the motion writing or you're coming in as just the trial lawyer, you should always have your fee share agreement done. We also put terms in there and who's carrying the costs.
Marshall:
Yep.
Bob:
What other things should we be putting in those fee share agreements?
Marshall:
I think you just want to make sure you have what the referral fee is, the percentage, okay, it's not increasing. And those are the main components of the fee share. And then it's signed at or near the time by all the parties, those three parties. It can be very short. I mean, this is not a multi-page document we're talking about.
(01:04):
Bob:
Yeah. Ours is very short one page document. But what about indemnification in case there's a malpractice issue that arises? Can you do that?
Marshall:
I don't know that you can put that in there. That's why again, you're going to have your own insurance that's going to cover you. Generally speaking in some policies have an exclusion where you can't sue another insured because it just doesn't end up playing out very well. If you're co-counsel and you remain both people on the caption of the pleading, if you're going to face a legal malpractice claim down the road, you could put an indemnification provision in there. I'm not saying it's going to be upheld, but I don't know why that would necessarily need to be in your referral fee.
Bob:
Gotcha.
Marshall:
You may have a separate document that you create that's going to cover things like that if you want to be indemnified for the work you do.
Bob:
And who are the common practice area clients that you have?
Marshall:
We handle across the board all different types of practices. I think primarily we see a lot of family law, trust and estates matters. We see a lot of personal injury matters underlying personal injury claims. And I think it makes sense given the type of clients we're dealing with that you handle and family law attorneys handle. It's a very emotional time. It's really high stress. I mean any litigation is high stress, generally speaking. When people come to a lawyer, it's not for something fun. It's sometimes the worst scenario area they've ever had in their life.
Bob:
Have you had any situations arise where a consumer hires an attorney that says later on that they were misled by that attorney's attributes or success rates or advertising themselves as a trial lawyer with all these results and the consumer's like, wait, I was duped here. Does that exist?
Marshall:
Not only does it exists, but I am oftentimes surprised to see, and the first thing I look at when I get a claim is the my client's website because I want to see how they advertise. Certainly in the personal injury space, it's really competitive. I mean, you're all trying to talk about your verdicts and I was just thinking about the other day about advertising verdicts. And my first question would be in a deposition, how many of them have you collected, right? It's one thing to say you've got a big verdict and a lay person doesn't understand what the difference is between a verdict and collecting a verdict is, and they don't know to ask that question. But I'm not saying it's wrong to advertise your verdicts, but I am saying I'd ask that question. And if you've only collected, oh, I got a $10 million verdict, did you collect it? No, but you advertised you got a $10 million verdict. Well, I got the verdict. Well, what does that really mean? And it's not just personal injury, by the way. I mean most lawyers advertise and they're selling, we sell ourselves, right? That's what we do. You have to sell yourself on your website or however you're marketing, but just be aware that whatever you put out there is going to be exhibit one when you're a defendant in a deposition.
Bob:
Like what if there's a lawyer that's out there representing that they've tried dozens of cases as lead trial lawyer and gotten big results and the fact is they've never tried a case.
Marshall:
I think that you're going to face an intentional breach of fiduciary duty claim without question, and we can talk about intentional breach of fiduciary duty because that's the cause of action that really [inaudible 00:13:19]-
Bob:
(01:25):
Well, let's talk about that 'cause I want people to realize what they're in for if they play too fast and loose.
Marshall:
If you're playing fast and loose, here's what you're in for. When we defend a legal malpractice claim, it's a negligence claim, it's a jury instruction. And what we love is even if you breach the standard of care, mistakes happen and it's just the cost of doing business. It's not a reflection on you as a lawyer, but in order for the plaintiff to prevail, they have to prove, but for your conduct, they would've done better than the result you got.
Bob:
It's like proving the case within a case.
Marshall:
Case within a case, right? But the second you move outside of just your negligence claim, if you're going to falsely advertise your experience or if you're going to mess around with your trust account or withhold client funds, you're going to walk yourself right into breach of fiduciary duty. And the difference between intentional breach and negligent is a very fine line. And the jury instruction I'm actually looking at right now by coincidence, it doesn't have the word intentional in it. And so basically if you're advertising falsely, that's an intentional breach of fiduciary duty claim. And the biggest problem that we face is that case within the case standard that you have to establish otherwise, it turns into a substantial factor causation standard.
Bob:
Oh, okay.
Marshall:
If you're a plaintiff's lawyer, it's way easier.
Bob:
Easier.
Marshall:
And just the cherry on top of this problem is a plaintiff can recover emotional distress damages in connection with an intentional breach of fiduciary duty claim.
Bob:
Okay. You're looking at the Casey instruction, so educate our listeners what jury instruction it is and you're going to walk us through it.
Marshall:
Sure. It is Casey 4106, breach of fiduciary duty by attorney. Essential factual elements. Plaintiff claims that he or she was harmed because defendant breached an attorney's duty, describe the duty.
Bob:
Like false advertising.
(01:46):
Marshall:
False advertising, conflict of interest. Okay. That's a [inaudible 00:15:19].
Bob:
We'll get into conflict of interest after this [inaudible 00:15:21].
Marshall:
You're going to fall right into this. To establish this claim, plaintiff must prove all the following. One, a defendant breached the duty of an attorney, false advertising or whatever. Two, plaintiff was harmed. Three, defendant's conduct was a substantial factor in causing plaintiff's harm.
Bob:
Wow.
Marshall:
Does the word intentional show up in this?
Bob:
It does not. And the realistically, like any jury that looks at that's going to be like, oh, it's a lawyer, they screwed up. Yeah, I'm going to side against that lawyer.
Marshall:
The problem that we face, and I've faced this jury instruction and anytime I see it coming, I advise the carrier this should resolve because they don't have to prove it's not fraud. You don't have to prove you intended to cause the harm. It's just an intentional act. And again, what we were talking, I was talking about people come to lawyers in the most difficult time of their life, it's not hard to put a plaintiff on the witness stand and say, I came to this lawyer.
Bob:
For help.
Marshall:
They said they were the best. I trusted them. And they don't have to see a therapist to get emotional distress damages. They can testify about the harm that they suffered. And I think any juror can sympathize with that. They're going to understand going to a lawyer isn't fun. And I generally disagree that most juries hate lawyers. I have not found that to be my experience in picking juries. Being in front of a jury does not scare me in defending legal mal claims. And you shouldn't be scared as a lawyer. It's when you get this jury instruction that it becomes a lot more difficult.
Bob:
Wow. Let's pivot and talk about the other category in here, which is the conflict of interest. A lot of lawyers, you should be overly sensitive about it. And I think one big takeaway could be disclosures paramount to getting people to sign off potential waivers. And you can do that various ways and some ones are probably ones you cannot waive.
Marshall:
(02:07):
If you're going to represent multiple clients, you're going to need a conflict waiver. And they may not be an actual conflict, but there's always generally with the new rules, it's going to be a potential conflict. And it could be a father and a son, two friends, you may want to represent them both. It may make sense for you to represent them both. I'm not at all saying don't do it. I'm saying get a signed conflict waiver that gets informed written consent. Tell them they can go see another lawyer to get advice and talk about the conflict. And then the thing that I see come up is people get that signed conflict waiver and then they never think about it again. They think they're good. And conflicts evolve throughout the case. And so just because you got a waiver on day one doesn't mean that that waiver covers a conflict that comes up two years down the road.
Bob:
Yeah. And for people in personal injury, if you're doing, for instance, a wrongful death case or you're doing two passengers in the same car, anytime there's a finite pot of a settlement that has to be split up amongst those parties, you're going to run into a conflict because what happens if mom and son want equal or less amount, right?
Marshall:
MM-hmm.
Bob:
Walk us some best practices. If you do represent multiple errors in a wrongful death case and there is going to be that finite pot, what are some things to help insulate ourselves from malpractice?
Marshall:
Well, as an experienced attorney, if you've handled those types of claims, you're going to know that's going to be an issue on day one. You're going to want to disclose that and discuss that. And you're going to want to talk about attorney-client privilege and client confidences that if someone asks you to keep something secret from your other client, you can't necessarily do that. And so you're going to want to talk about the fact that information can and should be shared, but as many of the conflicts that you can foresee on day one, you should list them. These are potential conflicts. We're not there yet, right? We haven't gotten that million dollars to divvy up and mom's not demanding 900 of the million, but that could happen and so they talk about it. And so that's day one. Let's just say you've represent two friends in an auto accident and you learn down the road that the driver was intoxicated or whatever comes up where now you're saying, okay, friend passenger may have a claim against the driver where they may have been aligned on day one.
You didn't know that. You need to stop, talk with the clients, get a waiver. And that could very well could be an actual conflict that you're going to need to have separate counsel come in, but it may not be that clear. And the point is you just want to have another conversation and get another conflict waiver.
Bob:
Yep. And it also works strategically too. I could think of one case we had where I had both the driver and the passenger and it was a big rig crash into them, and I thought this whole time we had the waiver and everything, but the tractor trailer counsel was blaming the driver and I was like, this is bull. There's no way they're going to carry this. Well, we're going to trial. I'm like, they're really going to put this BS argument in front of the jury. I was like, you know what? Got one of my friends who's now one of our partners at the firm, he's a different firm, to represent the other plaintiff. Strategically, what happens there is when you go to trial, you're getting two bites at every apple. We're getting two separate counsel with two separate issues for two different plaintiffs. He did his own opening, his own closing, and it amplified the verdict. He had a strict PTSD case and the jury gave him $3 million just on that alone. And it was of course 0% on our gals 'cause the jury was really ticked off at this frivolous defense. But that's an example of it got to the point where we cannot go into trial 'cause what if the jury does put a percent? As crazy as we think it is, what if they did on the driver? We would've been in a bad situation.
Marshall:
And it's just a strategic decision. I mean a lot of it is strategy, and that was a great strategy call because also it allows you to focus 100% on your client.
Bob:
Yeah.
Marshall:
Your buddy can focus on that client and for sure it amplifies a verdict. But even if it doesn't get that far, a lot of you attend CLEs, I've attended them where they talk about conflicts, get a conflict waiver and then move on. No, it's not that. It evolves.
Bob:
Yeah. Walk us through some other areas that you see that in the fee sharing space where we're getting these battles with other lawyers, some of the stuff that you're seeing and how we can help insulate ourselves against those other issues.
Marshall:
(02:28):
I think you just want to have an established relationship that's going to help. I know that there's a lot of things out there where people are trying to expand their networks as much as possible. And so if you're trying to get cases, you're going to be taking cases from people you don't know or haven't dealt with before. You want to go into it with your eyes wide open in that scenario to begin with because are they going to remain as co-counsel or is this just a straight referral? They're no longer going to be counsel. You get to run the show. I think if you're going to be in a co-counsel situation that you got to be on guard a little bit more because what work are they going to be doing or are they the interface with the client, right? If you're the trial counsel and they're going to be the ones with the client control, that, again, you need to be concerned about that and just be aware as to what could transpire.
Bob:
You should have clearly defined rules. No one says, well, I thought so-and-so was going to do that, or that firm was going to do that. That's how you run into trouble. I see that all the time. Pick the captain for litigation or pick the captain that's going to be the client control. And I mean, I think that's a very good practice point for our listeners.
Marshall:
Yeah. And if you're referring the cases, I think everyone should just on both sides of that transaction should think about it as a business transaction and don't forget that you have an injured client, right? I mean the goal is to get them compensation for what happened to them. It's not about squeaking out a couple extra percentage points. I think it's about establishing a relationship with a firm that you know and can trust and each time you enter into the same type of deal that's signed, like we've discussed. I think those are all going to keep you out of these issues. I think if you end up in a dispute, liens come into play. And so if you think you're entitled to a fee, you're going to lien the case. You got to do it appropriately.
Bob:
Let's talk about that. There's a situation where you referred a case, you have a fee sharing agreement, but there's situations where one attorney substitutes out another attorney. Client fires them, they come in, they sub in, right? There's some scenarios where the client tries to fire them literally while their settlement's pending, bringing on a new lawyer. The new lawyer tries to reduce the fee and says, hey, I want the full amount of the settlement.
Marshall:
Mm-hmm.
Bob:
First, walk us through how that plays out. Lawyer one has had this case for a year and nine months, client fires them, gets a new attorney, a week later they settle for what was already on the table with a new retainer with this new lawyer for a less amount. How does that play out for this lawyer that lost the case for a year and nine months?
Marshall:
The year and nine month lawyer, he's going to immediately put a lien on the case and you're going to notify the defense counsel who's going to be paying the money and the court, and there's a form you fill out file with court and you're obviously going to notify the second attorney. And there's case law that establishes that lawyer who did all the work and it settles on the courthouse steps and the client presumably tries to get out of paying a big fee. There are protections in place for that lawyer. Now, in certain circumstances, lawyer number one there would be relegated to quantum meruit. But in a situation where it literally settles on the courthouse steps, I think you're going to have a really good argument that you're going to get the full fee. You can't really change the facts of these things, and the timeline is really critical, but it becomes less clear when lawyer one has the case for a year and lawyer two has the case for a year. That's where it becomes a little more difficult. And that's where I know you don't like writing down your time, especially on the plaintiff side. That's one perk I would say of being in that space, but you are in a quantum meruit world if you're lawyer one.
Bob:
Yeah. And that's where quantum meruit is, you get out with the work that you put in, right? That's the value that you added. And there's no real tried and true formula, but it's like how did you drive value to get the resolution? Sometimes it's not a time thing. Some people have had a case for a year, they've done zero.
Marshall:
Correct.
Bob:
New person comes in for four months, they crush it, they do all the work. Well, who really carry the ore under quantum meruit? What's the case, Frecusi or Frecusi? It's the [inaudible 00:25:42].
Marshall:
Oh, Fercasi?
(02:49):
Bob:
Fercasi.
Marshall:
We're probably both pronouncing it wrong.
Bob:
Yeah, whatever. Fercasi. Yeah. It's a quantum meruit.
Marshall:
It's quantum meruit. And if you do end up having to prove it's the reasonable value of your services. You do end up recreating your time. I attended 30 depos, my reasonable hourly rate is $800 an hour, $1,200 an hour, $300 an hour, whatever it might be. You come up with that, a judge will determine it. There are various formulas out there that you can look for to establish what a reasonable hourly rate is. The Laffy Matrix is one of them. We use for anti-SLAPP motions to establish the reasonable hourly rate of our services when we move for fees. You're generally going to be looking to that if you find yourself with an invalid rule 1.5.1 agreement. I mean that's a lot of them. They either didn't have them or they're just not rule compliant. And so the lawyer who's holding the money gets to say, no, I'm not paying you a fee because the agreement's not compliant. And then the lawyer who referred the case is stuck. And by the way, when you file your lawsuit, you have to file it against the client.
Bob:
Mm-hmm.
Marshall:
You're not just suing lawyer number two who went to trial, you're suing your client too. That's just a reality of the situation, as bizarre as it may seem, because your dispute isn't with the client necessarily.
Bob:
Yeah. One of the first cases I had as a young lawyer is Tom Girardi. I've represented an attorney that Tom Girardi stiffed, and I had to sue the client in order to get the money out of Tom Girardi. Funny story, we'll post that letter has been all over the internet that he wrote and told me, I would never work in this town if I didn't drop that lawsuit.
Marshall:
He was wrong about a lot of things.
Bob:
He was wrong about a lot of things. He lost that, by the way. But I think practice pointer here is stand up for your fee, have the value that you added put into it. Just remember though, don't be throwing bad money at good just because of your ego steps in. A lot of times what I do if this situation arises, just get on the phone with somebody and try to be reasonable to work it out.
Marshall:
Mm-hmm.
Bob:
(03:10):
People let their egos get into a lot of these far too often and then it results in terrible situations.
Marshall:
Terrible. There's no other word for it.
Bob:
Yeah. We got about three or four minutes left. Any other valuable advice you want to give?
Marshall:
The other thing that I wanted to talk about that I think is really helpful here that comes up a lot is arbitration provisions, have one or don't have one, and prevailing party fee clauses.
Bob:
This is all within the retainer?
Marshall:
All within the retainer.
Bob:
Okay.
Marshall:
Now, they may be less common for true personal injury attorneys, but it's something that comes up a lot is a question that gets asked in almost every CLA is, should I put an arbitration provision in my retainer agreement? I think maybe eight years ago or so, it was pretty clear arbitration was quicker and cheaper and-
Bob:
Dude, that is not the case.
Marshall:
I know.
Bob:
Dude, realistically, if you're listening, arbitration is a pain in the butt and it's super expensive.
(03:31):
Marshall:
Super expensive I think is the key. Unless you really, really want your dispute to be private, that's the benefit. And by the way, it's not really going to be private because presumably the plaintiff's going to ignore your arbitration provision anyways and file a complaint in the Superior Court. You're going to have to file the petition to compel binding arbitration. But once you're there, it's not necessarily quicker, but I think if privacy is key for you, that would be a reason to have it. The other thing that comes up a lot is should I have a prevailing party fee provision in my retainer agreement in the event you get a dispute with your client, I think nine times out of 10, does it really create leverage? Probably not. And does your client have any money that you're ever going to be able to [inaudible 00:29:28]?
Bob:
That's true. How about putting in a retainer we call the poison pill clause, where it's like if the attorneys recommend strongly a reasonable settlement offer and you refuse that, you have the client that has to carry the cost forward.
Marshall:
That's an interesting provision and I've never dealt with that provision, and it would be interesting to see if it would actually be unconscionable as far as creating a conflict, I think because if you put that pressure... It's the client's decision to settle a case. But if you're saying, look, if you become unreasonable and you just say, no, we're going to make you carry the costs, I don't have any red flags going off, but it's certainly-
Bob:
Well, I think ethically you have to put that, well, you have to put in your retainer that fees are negotiable.
Marshall:
Absolutely. Yeah.
Bob:
And you have to put in there that they're ultimately responsible for the costs, even though realistically, I mean I've never had a client if we lose ever gone back on them for costs, but you have to put that in your retainer.
Marshall:
Yeah, yeah. I don't see a problem with that, but I just try to think like a plaintiff's lawyer. If you can make hay, you can make hay. If there's anything in there that if I can find my way into my breach of fiduciary duty instruction, I'm going to do it on the plaintiff's side, right?
Bob:
Love it.
Marshall:
That's the job.
Bob:
Cool, man. Well, how do people get ahold of you, Marshall? What's the best way?
Marshall:
(03:52):
You can email me or go to our website. My email is M-C-O-L-E, mcole@nemecek, N-E-M-E-C-E-K-cole.com, or give me a call at the office. (818) 788-9500. We do, in addition to handling claims on a regular basis, we serve as outside general counsel. I provide ongoing legal advice to firms throughout the state on a regular basis. All different types of lemon law firms. Just general liability firms.
Bob:
I mean, you guys should almost do a thing where you do audits for people's websites and advertising and tell them what's good.
Marshall:
As long as it's all accurate.
Bob:
I mean, that's the number one thing. Just cite your source and don't mislead.
Marshall:
Don't get out over your skis. There's no need. There's another case out there. You'll get it. There's just no need for it. But I see, especially in your space, you're pushing, you're pushing. Everyone's pushing to get a little more of that market being creative, and it's real easy, I think, to just oversell.
Bob:
Yeah. I had one bar complaint anonymous, of course, that we were bolstering our stuff on our website 'cause we had the winningest law firm in California and we had to prove, I had actually to prove to somebody that verdict search gave us that award because that year we were the winningest firm in California. And they were like, okay, well just put that a little bigger on your website. And that was somebody you actually reported, it was probably a competitor, but we had to solve and had to prove that we had that many verdicts that year.
Marshall:
Yeah.
Bob:
It's so stupid.
Marshall:
Yeah, I've dealt with a lot of states-
Bob:
But it's true. We should be putting your site as to what...
Marshall:
If you have to pay for your award, I don't think you should put that [inaudible 00:32:31].
(04:13):
Bob:
I was going to end this episode, but I don't want to end it now because I want to talk about this. There's a lot of people that buy those SEO badges that say they're the top 10 lawyer in America and they've never even... Top 10 trial lawyer in America, they never tried a case.
Marshall:
Yeah.
Bob:
They're buying an SEO badge.
Marshall:
Yeah.
Bob:
I think that's fraud on the consumer.
Marshall:
I think you run into a violation of the Business and Professions code. I haven't dealt with a purchased ad case, but one's going to come. But again, earn the ad, earn the achievement and advertise and be proud of what you do. If you have to buy the ad, I think, or buy the award, [inaudible 00:33:08].
Bob:
As a consumer, if you're listening and you go to someone's website and they have 30 badges at the bottom of their website, click on them to see if they're real.
Marshall:
[inaudible 00:33:19]. If a real badge is-
Bob:
Or you get an email from somebody and they have all these different things that they bought that they threw on there. It's like, come on, man.
Marshall:
Yeah.
Bob:
(04:34):
But the consumer don't know.
Marshall:
They don't know. And it's unfortunate, but they don't know and they shouldn't have to know. They shouldn't be misled.
Bob:
Yep. Well, all right. Well, Marshall, thank you for coming on.
Marshall:
Thanks for having me.
Bob:
Watch the Justice Team Network. Go to justiceteamnetwork.com or on the Apple Channel or on the YouTube channel. You can find this and other like-minded episodes, but reach out to Marshall directly whenever you fuck up. Thanks for coming on, buddy.
Marshall:
There it is. Thank you.
Bob:
(00:01):
All right. Welcome to this episode of the Justice Team podcast on the Justice Team Network. And today we are very honored to have Mr. Marshall Cole, who defends most of us lawyers who when we get in trouble or when we have fee disputes, and he is a specialist at League of Malpractice and is going to go over some of the top tips to avoid us getting sued, avoid us getting into sticky situations with our clients. Marshall, thanks for coming on buddy.
Marshall:
Happy to be here. Thanks for having me.
Bob:
Yeah. I think let's just start this out by tell everybody who you are, what you do, what you like to do and that kind of shit.
Marshall:
Sure. Well, I like being a lawyer and I like being a lawyer that defends lawyers. Partner at nanosecond Cole, certified legal malpractice specialist. Been doing it basically my entire legal career. We represent sole practitioners up to national and worldwide law firms handling any type of claim that comes up. Like you mentioned, fee disputes are a big part of our practice. And then also we just do general business litigation too. Like you, I like being in trial. I think my cases are a little harder to get to trial than yours are, but I think that's where my real passion is is hanging out in the courtroom.
Bob:
Yeah. And you also work with a lot of, if we say friends of mine, but literally friends of mine when they get into fee disputes or people filing frivolous claims or lawsuits against them, you're the guy.
Marshall:
I like to think I'm the guy and it's a complicated area and you can be a great lawyer, you can be a new lawyer. You're going to find yourself encountering these problems throughout your practice, especially as you build and become more successful. There's plenty of tips and tricks to learn along the way to keep yourself out of hot water.
Bob:
All right. Let's start, because for those of you that are watching or listening, a lot of young lawyers or maybe you're law school or maybe seasoned lawyers, first of all, let's talk about legal malpractice insurance. What's your best advice in that realm and what do you see?
Marshall:
I mean, you should have it. Start there, you should have it. You should start there. California doesn't require it, which is pretty unbelievable with giving us a state with more lawyers than anywhere in the country. You definitely want to have malpractice insurance and enough that is going to cover you and protect against a realistic loss. If you're in the personal injury space and your last settlement was $5 million, your last verdict was $6 million and you only have a million in coverage, you're way underinsured, absolutely underinsured. I don't think any lawyer should practice in the city of Los Angeles or southern California area and probably all throughout the state with less than a million dollars. I mean they sell a hundred thousand dollars policies, but it is just not adequate.
Bob:
And they also, in California, you're required to put in your retainer if you do not have insurance.
Marshall:
That's correct. And so if you're going to be a lawyer practicing without it, you need to put it in. And I handle claims with lawyers who don't have insurance and it's going to cost a lot more money. And it's so crazy because all the money you've saved for all those years without paying premiums goes out the window right away because you're going to pay me upfront and you're looking at exposure. You're not going to be judgment proof presumably. It is just a risk not worth taking.
Bob:
Well, if there's a claim filed against, for instance, if they file a claim against my law firm for legal malpractice or a fee dispute, your firm would be one of those panel counsels for my insurance too, right?
(00:22):
Marshall:
We're pretty much on panel with almost every insurance carrier, and if we are not, you can and should request us because you want a firm. I think our firm has more certified legal malpractice specialists than any other firm in the state. And so it's a specialty for a reason and you want to go to a firm that knows what they're doing because it is basically our bread and butter.
Bob:
I know we're going to talk about co-counseling and things like this. How does it work? Say I'm a solo practitioner, I refer a personal injury case to another law firm. We have a fee sharing agreement, which we'll talk about. You should have a fee sharing agreement, rule 1.5.1 in California. That's modeled after the big rules. But what happens if there's a malpractice issue and the person I refer the case to didn't have enough or didn't have malpractice insurance, how does that work for me that referred the case to this person and I'm on the fee share agreement?
Marshall:
Well, let's take it in steps. Not only should you have a fee sharing agreement, you have to. Whether you're the referring lawyer or the lawyer who gets the referral, really if you're the referring lawyer. If there is no rule compliant, 1.5.1 agreement as you mentioned, that referral fee cannot be paid to you.
Bob:
Cannot.
Marshall:
Cannot, that would be an ethical violation. You cannot pay it. And it was the former rule 2-200 if you're pre-2018.
Bob:
And those are signed showing the fee split between referring lawyer, referee lawyer and signed by both of them and the client.
Marshall:
Both of them and the client, it also has to identify that the total fee that's going to be paid isn't reducing the recovery that the client was going to receive. It's just strictly dealing with the attorney's fees based on the original agreement that the client had, and it has to be signed by the client contemporaneously at or near the time you enter into that fee sharing agreement. If you enter into an oral agreement with your referring lawyer and two years go by and you say, oh, you know what, shoot, we need that 1.5.1 agreement, and the client signs it then, they've agreed. It still can be determined to be invalid.
Bob:
Wow.
Marshall:
It has to be contemporaneous. There's cases on point that...
Bob:
I know I've seen the cases directly on point. A lot of lawyers don't know that. It's like, hey, I had a handshake agreement or I emailed somebody. It's just bad practice 'cause sometimes lawyers just forget or people change firms and it's like, you have no claim.
Marshall:
(00:43):
We have a case right now where the referring lawyer is suing the law firm that got a great settlement and he's saying, well, we had referral agreements in the past, and so we did it based on the same terms. No. And the firm that got the case said, no, we didn't take this case on a referral. That would be unethical. We didn't do that. We don't have this standard custom and practice. Each one is an individual agreement. They have to be. And so while you may have these ongoing relationships, you can't get casual with them if you expect for your referral fee to be enforced.
Bob:
Yeah. You could reach out to any of us for examples, we all have these sample fee share agreements. You should have it. One of the first things you should do should be your case management software should be on the cloud, but it's paramount that you have this feature. And it's different in different states too. In Florida for instance, you're capped at a 25% referral fee. Other states have what's called co-counseling fees where you have to have actively participation in the case. You can't just refer the case. You have to be an active co-counsel, and there's ways to prove that. Sometimes it's just being the person corresponding with the client or doing things. There's different rules for that. Just pay attention to your jurisdiction. We're going to talk a lot about California specific, but you could reach out for anything on the show to me or to Marshall.
Marshall:
And the last point I would make on the 1.5.1 agreement is you want it to be a standalone document. A lot of times the lawyer gets retained and has a retainer agreement and then they'll build in their referral fee agreement into the retainer agreement for you, the second lawyer in line, to come and sign. And so it's all one document. Well, the problem with that is if you have issues with the retainer agreement or if the referral fee is specifically predicated on the retainer agreement, if that ever gets invalidated, the referring lawyer's fee that he or she could get is going to get invalidated too. [inaudible 00:07:41] case right on point with that.
Bob:
I did not know that. Best practice, and we've always done this, it's just a separate one-page document is our fee share agreement. You say, but I have a few instances I think where we've put the actual fee share in our retainer. Best practice, you want to keep it out.
Marshall:
Keep it out. Separate document that way it's one page. If anything ever happens to your retainer or the first lawyer's retainer, you've got a standalone contract that you can enforce that's compliant. It can mention it, but you definitely don't want it to be specifically predicated on the fees or the terms of the engagement letter, because it's going to be construed against the lawyers and the cases. I believe it's Olson versus Harveson is the case. I may be getting that second name wrong, but I can get it out.
Bob:
I think it's Havrati, cheese.
Marshall:
That's it. Yeah. And so in that case, there was a referral fee agreement in the retainer agreement and a dispute arose later on amongst the lawyers over the fee because the first lawyer who had the retainer agreement was terminated by the client. Well, when they were terminated by the client, what do you think happened to the retainer agreement? It's gone and there went the referral fee too, 'cause it was specifically predicated on that document. If you have a standalone document, then no matter what happens along the way, your referral fee, if you're expecting to get paid one, is going to be locked up in that contract.
Bob:
Yeah. And we also put in ours, sometimes we have different stages where the fee shifts. It's like it's 50/50 if it goes after litigation and then it's 60/40 after experts or 75, whatever. Those are all negotiable and you can put different terms in there. And you should do this even if you're getting brought in on a fee share to do the motion writing or you're coming in as just the trial lawyer, you should always have your fee share agreement done. We also put terms in there and who's carrying the costs.
Marshall:
Yep.
Bob:
What other things should we be putting in those fee share agreements?
Marshall:
I think you just want to make sure you have what the referral fee is, the percentage, okay, it's not increasing. And those are the main components of the fee share. And then it's signed at or near the time by all the parties, those three parties. It can be very short. I mean, this is not a multi-page document we're talking about.
(01:04):
Bob:
Yeah. Ours is very short one page document. But what about indemnification in case there's a malpractice issue that arises? Can you do that?
Marshall:
I don't know that you can put that in there. That's why again, you're going to have your own insurance that's going to cover you. Generally speaking in some policies have an exclusion where you can't sue another insured because it just doesn't end up playing out very well. If you're co-counsel and you remain both people on the caption of the pleading, if you're going to face a legal malpractice claim down the road, you could put an indemnification provision in there. I'm not saying it's going to be upheld, but I don't know why that would necessarily need to be in your referral fee.
Bob:
Gotcha.
Marshall:
You may have a separate document that you create that's going to cover things like that if you want to be indemnified for the work you do.
Bob:
And who are the common practice area clients that you have?
Marshall:
We handle across the board all different types of practices. I think primarily we see a lot of family law, trust and estates matters. We see a lot of personal injury matters underlying personal injury claims. And I think it makes sense given the type of clients we're dealing with that you handle and family law attorneys handle. It's a very emotional time. It's really high stress. I mean any litigation is high stress, generally speaking. When people come to a lawyer, it's not for something fun. It's sometimes the worst scenario area they've ever had in their life.
Bob:
Have you had any situations arise where a consumer hires an attorney that says later on that they were misled by that attorney's attributes or success rates or advertising themselves as a trial lawyer with all these results and the consumer's like, wait, I was duped here. Does that exist?
Marshall:
Not only does it exists, but I am oftentimes surprised to see, and the first thing I look at when I get a claim is the my client's website because I want to see how they advertise. Certainly in the personal injury space, it's really competitive. I mean, you're all trying to talk about your verdicts and I was just thinking about the other day about advertising verdicts. And my first question would be in a deposition, how many of them have you collected, right? It's one thing to say you've got a big verdict and a lay person doesn't understand what the difference is between a verdict and collecting a verdict is, and they don't know to ask that question. But I'm not saying it's wrong to advertise your verdicts, but I am saying I'd ask that question. And if you've only collected, oh, I got a $10 million verdict, did you collect it? No, but you advertised you got a $10 million verdict. Well, I got the verdict. Well, what does that really mean? And it's not just personal injury, by the way. I mean most lawyers advertise and they're selling, we sell ourselves, right? That's what we do. You have to sell yourself on your website or however you're marketing, but just be aware that whatever you put out there is going to be exhibit one when you're a defendant in a deposition.
Bob:
Like what if there's a lawyer that's out there representing that they've tried dozens of cases as lead trial lawyer and gotten big results and the fact is they've never tried a case.
Marshall:
I think that you're going to face an intentional breach of fiduciary duty claim without question, and we can talk about intentional breach of fiduciary duty because that's the cause of action that really [inaudible 00:13:19]-
Bob:
(01:25):
Well, let's talk about that 'cause I want people to realize what they're in for if they play too fast and loose.
Marshall:
If you're playing fast and loose, here's what you're in for. When we defend a legal malpractice claim, it's a negligence claim, it's a jury instruction. And what we love is even if you breach the standard of care, mistakes happen and it's just the cost of doing business. It's not a reflection on you as a lawyer, but in order for the plaintiff to prevail, they have to prove, but for your conduct, they would've done better than the result you got.
Bob:
It's like proving the case within a case.
Marshall:
Case within a case, right? But the second you move outside of just your negligence claim, if you're going to falsely advertise your experience or if you're going to mess around with your trust account or withhold client funds, you're going to walk yourself right into breach of fiduciary duty. And the difference between intentional breach and negligent is a very fine line. And the jury instruction I'm actually looking at right now by coincidence, it doesn't have the word intentional in it. And so basically if you're advertising falsely, that's an intentional breach of fiduciary duty claim. And the biggest problem that we face is that case within the case standard that you have to establish otherwise, it turns into a substantial factor causation standard.
Bob:
Oh, okay.
Marshall:
If you're a plaintiff's lawyer, it's way easier.
Bob:
Easier.
Marshall:
And just the cherry on top of this problem is a plaintiff can recover emotional distress damages in connection with an intentional breach of fiduciary duty claim.
Bob:
Okay. You're looking at the Casey instruction, so educate our listeners what jury instruction it is and you're going to walk us through it.
Marshall:
Sure. It is Casey 4106, breach of fiduciary duty by attorney. Essential factual elements. Plaintiff claims that he or she was harmed because defendant breached an attorney's duty, describe the duty.
Bob:
Like false advertising.
(01:46):
Marshall:
False advertising, conflict of interest. Okay. That's a [inaudible 00:15:19].
Bob:
We'll get into conflict of interest after this [inaudible 00:15:21].
Marshall:
You're going to fall right into this. To establish this claim, plaintiff must prove all the following. One, a defendant breached the duty of an attorney, false advertising or whatever. Two, plaintiff was harmed. Three, defendant's conduct was a substantial factor in causing plaintiff's harm.
Bob:
Wow.
Marshall:
Does the word intentional show up in this?
Bob:
It does not. And the realistically, like any jury that looks at that's going to be like, oh, it's a lawyer, they screwed up. Yeah, I'm going to side against that lawyer.
Marshall:
The problem that we face, and I've faced this jury instruction and anytime I see it coming, I advise the carrier this should resolve because they don't have to prove it's not fraud. You don't have to prove you intended to cause the harm. It's just an intentional act. And again, what we were talking, I was talking about people come to lawyers in the most difficult time of their life, it's not hard to put a plaintiff on the witness stand and say, I came to this lawyer.
Bob:
For help.
Marshall:
They said they were the best. I trusted them. And they don't have to see a therapist to get emotional distress damages. They can testify about the harm that they suffered. And I think any juror can sympathize with that. They're going to understand going to a lawyer isn't fun. And I generally disagree that most juries hate lawyers. I have not found that to be my experience in picking juries. Being in front of a jury does not scare me in defending legal mal claims. And you shouldn't be scared as a lawyer. It's when you get this jury instruction that it becomes a lot more difficult.
Bob:
Wow. Let's pivot and talk about the other category in here, which is the conflict of interest. A lot of lawyers, you should be overly sensitive about it. And I think one big takeaway could be disclosures paramount to getting people to sign off potential waivers. And you can do that various ways and some ones are probably ones you cannot waive.
Marshall:
(02:07):
If you're going to represent multiple clients, you're going to need a conflict waiver. And they may not be an actual conflict, but there's always generally with the new rules, it's going to be a potential conflict. And it could be a father and a son, two friends, you may want to represent them both. It may make sense for you to represent them both. I'm not at all saying don't do it. I'm saying get a signed conflict waiver that gets informed written consent. Tell them they can go see another lawyer to get advice and talk about the conflict. And then the thing that I see come up is people get that signed conflict waiver and then they never think about it again. They think they're good. And conflicts evolve throughout the case. And so just because you got a waiver on day one doesn't mean that that waiver covers a conflict that comes up two years down the road.
Bob:
Yeah. And for people in personal injury, if you're doing, for instance, a wrongful death case or you're doing two passengers in the same car, anytime there's a finite pot of a settlement that has to be split up amongst those parties, you're going to run into a conflict because what happens if mom and son want equal or less amount, right?
Marshall:
MM-hmm.
Bob:
Walk us some best practices. If you do represent multiple errors in a wrongful death case and there is going to be that finite pot, what are some things to help insulate ourselves from malpractice?
Marshall:
Well, as an experienced attorney, if you've handled those types of claims, you're going to know that's going to be an issue on day one. You're going to want to disclose that and discuss that. And you're going to want to talk about attorney-client privilege and client confidences that if someone asks you to keep something secret from your other client, you can't necessarily do that. And so you're going to want to talk about the fact that information can and should be shared, but as many of the conflicts that you can foresee on day one, you should list them. These are potential conflicts. We're not there yet, right? We haven't gotten that million dollars to divvy up and mom's not demanding 900 of the million, but that could happen and so they talk about it. And so that's day one. Let's just say you've represent two friends in an auto accident and you learn down the road that the driver was intoxicated or whatever comes up where now you're saying, okay, friend passenger may have a claim against the driver where they may have been aligned on day one.
You didn't know that. You need to stop, talk with the clients, get a waiver. And that could very well could be an actual conflict that you're going to need to have separate counsel come in, but it may not be that clear. And the point is you just want to have another conversation and get another conflict waiver.
Bob:
Yep. And it also works strategically too. I could think of one case we had where I had both the driver and the passenger and it was a big rig crash into them, and I thought this whole time we had the waiver and everything, but the tractor trailer counsel was blaming the driver and I was like, this is bull. There's no way they're going to carry this. Well, we're going to trial. I'm like, they're really going to put this BS argument in front of the jury. I was like, you know what? Got one of my friends who's now one of our partners at the firm, he's a different firm, to represent the other plaintiff. Strategically, what happens there is when you go to trial, you're getting two bites at every apple. We're getting two separate counsel with two separate issues for two different plaintiffs. He did his own opening, his own closing, and it amplified the verdict. He had a strict PTSD case and the jury gave him $3 million just on that alone. And it was of course 0% on our gals 'cause the jury was really ticked off at this frivolous defense. But that's an example of it got to the point where we cannot go into trial 'cause what if the jury does put a percent? As crazy as we think it is, what if they did on the driver? We would've been in a bad situation.
Marshall:
And it's just a strategic decision. I mean a lot of it is strategy, and that was a great strategy call because also it allows you to focus 100% on your client.
Bob:
Yeah.
Marshall:
Your buddy can focus on that client and for sure it amplifies a verdict. But even if it doesn't get that far, a lot of you attend CLEs, I've attended them where they talk about conflicts, get a conflict waiver and then move on. No, it's not that. It evolves.
Bob:
Yeah. Walk us through some other areas that you see that in the fee sharing space where we're getting these battles with other lawyers, some of the stuff that you're seeing and how we can help insulate ourselves against those other issues.
Marshall:
(02:28):
I think you just want to have an established relationship that's going to help. I know that there's a lot of things out there where people are trying to expand their networks as much as possible. And so if you're trying to get cases, you're going to be taking cases from people you don't know or haven't dealt with before. You want to go into it with your eyes wide open in that scenario to begin with because are they going to remain as co-counsel or is this just a straight referral? They're no longer going to be counsel. You get to run the show. I think if you're going to be in a co-counsel situation that you got to be on guard a little bit more because what work are they going to be doing or are they the interface with the client, right? If you're the trial counsel and they're going to be the ones with the client control, that, again, you need to be concerned about that and just be aware as to what could transpire.
Bob:
You should have clearly defined rules. No one says, well, I thought so-and-so was going to do that, or that firm was going to do that. That's how you run into trouble. I see that all the time. Pick the captain for litigation or pick the captain that's going to be the client control. And I mean, I think that's a very good practice point for our listeners.
Marshall:
Yeah. And if you're referring the cases, I think everyone should just on both sides of that transaction should think about it as a business transaction and don't forget that you have an injured client, right? I mean the goal is to get them compensation for what happened to them. It's not about squeaking out a couple extra percentage points. I think it's about establishing a relationship with a firm that you know and can trust and each time you enter into the same type of deal that's signed, like we've discussed. I think those are all going to keep you out of these issues. I think if you end up in a dispute, liens come into play. And so if you think you're entitled to a fee, you're going to lien the case. You got to do it appropriately.
Bob:
Let's talk about that. There's a situation where you referred a case, you have a fee sharing agreement, but there's situations where one attorney substitutes out another attorney. Client fires them, they come in, they sub in, right? There's some scenarios where the client tries to fire them literally while their settlement's pending, bringing on a new lawyer. The new lawyer tries to reduce the fee and says, hey, I want the full amount of the settlement.
Marshall:
Mm-hmm.
Bob:
First, walk us through how that plays out. Lawyer one has had this case for a year and nine months, client fires them, gets a new attorney, a week later they settle for what was already on the table with a new retainer with this new lawyer for a less amount. How does that play out for this lawyer that lost the case for a year and nine months?
Marshall:
The year and nine month lawyer, he's going to immediately put a lien on the case and you're going to notify the defense counsel who's going to be paying the money and the court, and there's a form you fill out file with court and you're obviously going to notify the second attorney. And there's case law that establishes that lawyer who did all the work and it settles on the courthouse steps and the client presumably tries to get out of paying a big fee. There are protections in place for that lawyer. Now, in certain circumstances, lawyer number one there would be relegated to quantum meruit. But in a situation where it literally settles on the courthouse steps, I think you're going to have a really good argument that you're going to get the full fee. You can't really change the facts of these things, and the timeline is really critical, but it becomes less clear when lawyer one has the case for a year and lawyer two has the case for a year. That's where it becomes a little more difficult. And that's where I know you don't like writing down your time, especially on the plaintiff side. That's one perk I would say of being in that space, but you are in a quantum meruit world if you're lawyer one.
Bob:
Yeah. And that's where quantum meruit is, you get out with the work that you put in, right? That's the value that you added. And there's no real tried and true formula, but it's like how did you drive value to get the resolution? Sometimes it's not a time thing. Some people have had a case for a year, they've done zero.
Marshall:
Correct.
Bob:
New person comes in for four months, they crush it, they do all the work. Well, who really carry the ore under quantum meruit? What's the case, Frecusi or Frecusi? It's the [inaudible 00:25:42].
Marshall:
Oh, Fercasi?
(02:49):
Bob:
Fercasi.
Marshall:
We're probably both pronouncing it wrong.
Bob:
Yeah, whatever. Fercasi. Yeah. It's a quantum meruit.
Marshall:
It's quantum meruit. And if you do end up having to prove it's the reasonable value of your services. You do end up recreating your time. I attended 30 depos, my reasonable hourly rate is $800 an hour, $1,200 an hour, $300 an hour, whatever it might be. You come up with that, a judge will determine it. There are various formulas out there that you can look for to establish what a reasonable hourly rate is. The Laffy Matrix is one of them. We use for anti-SLAPP motions to establish the reasonable hourly rate of our services when we move for fees. You're generally going to be looking to that if you find yourself with an invalid rule 1.5.1 agreement. I mean that's a lot of them. They either didn't have them or they're just not rule compliant. And so the lawyer who's holding the money gets to say, no, I'm not paying you a fee because the agreement's not compliant. And then the lawyer who referred the case is stuck. And by the way, when you file your lawsuit, you have to file it against the client.
Bob:
Mm-hmm.
Marshall:
You're not just suing lawyer number two who went to trial, you're suing your client too. That's just a reality of the situation, as bizarre as it may seem, because your dispute isn't with the client necessarily.
Bob:
Yeah. One of the first cases I had as a young lawyer is Tom Girardi. I've represented an attorney that Tom Girardi stiffed, and I had to sue the client in order to get the money out of Tom Girardi. Funny story, we'll post that letter has been all over the internet that he wrote and told me, I would never work in this town if I didn't drop that lawsuit.
Marshall:
He was wrong about a lot of things.
Bob:
He was wrong about a lot of things. He lost that, by the way. But I think practice pointer here is stand up for your fee, have the value that you added put into it. Just remember though, don't be throwing bad money at good just because of your ego steps in. A lot of times what I do if this situation arises, just get on the phone with somebody and try to be reasonable to work it out.
Marshall:
Mm-hmm.
Bob:
(03:10):
People let their egos get into a lot of these far too often and then it results in terrible situations.
Marshall:
Terrible. There's no other word for it.
Bob:
Yeah. We got about three or four minutes left. Any other valuable advice you want to give?
Marshall:
The other thing that I wanted to talk about that I think is really helpful here that comes up a lot is arbitration provisions, have one or don't have one, and prevailing party fee clauses.
Bob:
This is all within the retainer?
Marshall:
All within the retainer.
Bob:
Okay.
Marshall:
Now, they may be less common for true personal injury attorneys, but it's something that comes up a lot is a question that gets asked in almost every CLA is, should I put an arbitration provision in my retainer agreement? I think maybe eight years ago or so, it was pretty clear arbitration was quicker and cheaper and-
Bob:
Dude, that is not the case.
Marshall:
I know.
Bob:
Dude, realistically, if you're listening, arbitration is a pain in the butt and it's super expensive.
(03:31):
Marshall:
Super expensive I think is the key. Unless you really, really want your dispute to be private, that's the benefit. And by the way, it's not really going to be private because presumably the plaintiff's going to ignore your arbitration provision anyways and file a complaint in the Superior Court. You're going to have to file the petition to compel binding arbitration. But once you're there, it's not necessarily quicker, but I think if privacy is key for you, that would be a reason to have it. The other thing that comes up a lot is should I have a prevailing party fee provision in my retainer agreement in the event you get a dispute with your client, I think nine times out of 10, does it really create leverage? Probably not. And does your client have any money that you're ever going to be able to [inaudible 00:29:28]?
Bob:
That's true. How about putting in a retainer we call the poison pill clause, where it's like if the attorneys recommend strongly a reasonable settlement offer and you refuse that, you have the client that has to carry the cost forward.
Marshall:
That's an interesting provision and I've never dealt with that provision, and it would be interesting to see if it would actually be unconscionable as far as creating a conflict, I think because if you put that pressure... It's the client's decision to settle a case. But if you're saying, look, if you become unreasonable and you just say, no, we're going to make you carry the costs, I don't have any red flags going off, but it's certainly-
Bob:
Well, I think ethically you have to put that, well, you have to put in your retainer that fees are negotiable.
Marshall:
Absolutely. Yeah.
Bob:
And you have to put in there that they're ultimately responsible for the costs, even though realistically, I mean I've never had a client if we lose ever gone back on them for costs, but you have to put that in your retainer.
Marshall:
Yeah, yeah. I don't see a problem with that, but I just try to think like a plaintiff's lawyer. If you can make hay, you can make hay. If there's anything in there that if I can find my way into my breach of fiduciary duty instruction, I'm going to do it on the plaintiff's side, right?
Bob:
Love it.
Marshall:
That's the job.
Bob:
Cool, man. Well, how do people get ahold of you, Marshall? What's the best way?
Marshall:
(03:52):
You can email me or go to our website. My email is M-C-O-L-E, mcole@nemecek, N-E-M-E-C-E-K-cole.com, or give me a call at the office. (818) 788-9500. We do, in addition to handling claims on a regular basis, we serve as outside general counsel. I provide ongoing legal advice to firms throughout the state on a regular basis. All different types of lemon law firms. Just general liability firms.
Bob:
I mean, you guys should almost do a thing where you do audits for people's websites and advertising and tell them what's good.
Marshall:
As long as it's all accurate.
Bob:
I mean, that's the number one thing. Just cite your source and don't mislead.
Marshall:
Don't get out over your skis. There's no need. There's another case out there. You'll get it. There's just no need for it. But I see, especially in your space, you're pushing, you're pushing. Everyone's pushing to get a little more of that market being creative, and it's real easy, I think, to just oversell.
Bob:
Yeah. I had one bar complaint anonymous, of course, that we were bolstering our stuff on our website 'cause we had the winningest law firm in California and we had to prove, I had actually to prove to somebody that verdict search gave us that award because that year we were the winningest firm in California. And they were like, okay, well just put that a little bigger on your website. And that was somebody you actually reported, it was probably a competitor, but we had to solve and had to prove that we had that many verdicts that year.
Marshall:
Yeah.
Bob:
It's so stupid.
Marshall:
Yeah, I've dealt with a lot of states-
Bob:
But it's true. We should be putting your site as to what...
Marshall:
If you have to pay for your award, I don't think you should put that [inaudible 00:32:31].
(04:13):
Bob:
I was going to end this episode, but I don't want to end it now because I want to talk about this. There's a lot of people that buy those SEO badges that say they're the top 10 lawyer in America and they've never even... Top 10 trial lawyer in America, they never tried a case.
Marshall:
Yeah.
Bob:
They're buying an SEO badge.
Marshall:
Yeah.
Bob:
I think that's fraud on the consumer.
Marshall:
I think you run into a violation of the Business and Professions code. I haven't dealt with a purchased ad case, but one's going to come. But again, earn the ad, earn the achievement and advertise and be proud of what you do. If you have to buy the ad, I think, or buy the award, [inaudible 00:33:08].
Bob:
As a consumer, if you're listening and you go to someone's website and they have 30 badges at the bottom of their website, click on them to see if they're real.
Marshall:
[inaudible 00:33:19]. If a real badge is-
Bob:
Or you get an email from somebody and they have all these different things that they bought that they threw on there. It's like, come on, man.
Marshall:
Yeah.
Bob:
(04:34):
But the consumer don't know.
Marshall:
They don't know. And it's unfortunate, but they don't know and they shouldn't have to know. They shouldn't be misled.
Bob:
Yep. Well, all right. Well, Marshall, thank you for coming on.
Marshall:
Thanks for having me.
Bob:
Watch the Justice Team Network. Go to justiceteamnetwork.com or on the Apple Channel or on the YouTube channel. You can find this and other like-minded episodes, but reach out to Marshall directly whenever you fuck up. Thanks for coming on, buddy.
Marshall:
There it is. Thank you.
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