I received a perfect Value Pricing issue this week. A fellow lawyer had a fee question, which I get from time to time. L (short for Lawyer) takes an opponent to task for a “frivolous pleading” and the court agrees, sort of. The judge finds that the pleading was frivolous (according to L) and awards L’s client the sum of $100 to punish OP (short for opposing party) for the bad faith action. My first reaction is “Thanks Judge, where is your memory of being a lawyer?”
L asks: “How much do I make my client happy by chasing the OP and its counsel for the $100?” The lawyer’s conundrum. What do you do when a client’s choice is “not worth it” from a dollars and cents point of view?
DON’T just hourly bill it based on your previous arrangement. Have a conversation with your client. Tell C that the judge did C a small favor. Both sides know the judge agreed, but did not think it was worth the fight. Now the client has a big decision to make – do you try to collect, or hold it over OP’s head? The fact is that you will spend nearly as much time trying to collect $100 as you did proving that OP filed the frivolous pleading. Let’s say that was $500.
As a sensible lawyer you probably would not spend an additional $500 (in addition to the first $500 which an economist would label a sunk cost) to collect $100. But that is not your decision to make. Talk to your client, tell her the truth, that to collect the $100 will be more expensive than the $100, but that this is their dispute and you are not in the business of subsidizing the fights of your clients. Then do three things that are part of Value Pricing: 1) tell the client what it will cost to pursue the $100 award, in order to prove to OC that the client won that issue; 2) tell the client that this is a fundamental change in the fee agreement, so the client is entitled to a second legal opinion under Rule 1.8 of the Rules of Professional Conduct, and; 3) let the client decide.
So, you make the decision here – do you spend $500 or more (I guessed that the value of the chase was $500, it might be $300 or $800 or more) to teach the opposing party OP a lesson that the judge valued at $100? Make your comments to let us know.