Here’s Looking at You, Kid

True story (facts changed to protect the unsuspecting attorney): Lara Lawyer represented Em Tipockets in a contract dispute that became more complicated than anyone expected. Em paid an initial retainer of $5,000 but the final bill was over $15,000. Despite the good result she received, Em filed an ethics complaint about the bill and also alleged that Lara did not adequately inform her about what was going on in the case. During the investigation, the investigator learned that Em had paid part of the retainer in cash to one of the administrative staff. The complaint against Lara was dismissed. However, the owner of the law firm, Tina Toppe, received a private admonition.

“Huh?” you say? When a client pays a lawyer in cash, the lawyer must provide a receipt to the client that is signed both by the law firm and the client, to avoid disputes later about how much cash was paid. See Minnesota Rules of Professional Conduct (MRPC), Appendix I(6). The receipt given to Em had only the law firm signature on it. Even though there was no dispute over the amount paid and Tina had nothing to do with the case or the payment, the director’s office disciplined Tina for —wait for it— a failure to supervise her staff because the law firm had no written policy about handling cash payments.

Supervision: There are two matching rules regarding supervision, one for supervising attorneys (Rule 5.1) and one for supervising non-lawyer staff (Rule 5.3). Those rules each set out two standards. If you manage a firm, you are obligated to make “reasonable efforts” to ensure the firm “has in effect measures giving reasonable assurance” that attorneys and staff comply with ethics obligations. If you supervise others, you must make “reasonable efforts” to make sure your subordinates comply with the ethics rules. In a small firm, the owners likely have both responsibilities. If you’re looking for guidance on what constitutes “reasonable efforts” or “measures,” you won’t find it in Rules 5.1 or 5.3, or in the comments to the rules. In fact, even the interwebs offer precious little by way of best practices for supervising subordinates, whether your goal is to ensure your firm operates in an ethical manner or just want to protect your own “bottom line,” if you get my drift. Make no mistake (so to speak), you are not responsible for your employees going rogue, unless you knew they were flouting your rules and you failed to do something about it. To a large extent, avoiding discipline under Rules 5.1 and 5.3 is all about having processes and procedures in place. Which begs the question of how lawyers should supervise subordinates and what types of policies and procedures they should implement. The answers will vary by firm size and practice area, but these approaches provide a useful starting point:

Policies and Procedures: Document how routine tasks are supposed to be completed at your firm and combine them into a paper or on-line manual. Many of your operations can be standardized in this way: opening a file, processing checks, handling incoming mail, sorting and filing e-mail, calendaring deadlines, etc. Do not be afraid of detail, i.e. “1. Open the envelope. 2. Take out contents. 3. Date-stamp the first page. 4. Remove staples. 5. Scan contents. 6. Name file (see File-Naming Guide).” And so forth. Leave nothing to the imagination.

Case Lists: Unless you are working very closely with a subordinate attorney, such as a new associate, who sends all of their work directly to you, you probably need a system of generating case lists that are updated and discussed regularly, perhaps monthly. For each matter, the case list identifies what it is, the most recent work completed, the status, the next work that will be done, and when that work will be completed.

Deadlines: Separate from case lists, you may need a system of tracking deadlines in cases, along with a procedure document that explains who identifies the deadline and how it will be tracked. Options may include a paper calendar, a shared computer calendar, a function in your practice-management software, or a clever task-list app.

Trust Accounts: Although you should guard against theft, it is far more frequently the case that lawyers are disciplined because they failed to properly supervise the bookkeeper who handles the day-to-day management of the trust account, resulting inadvertently in missing funds. Bookkeepers can do a great job 98 percent of the time and still fail to correct a duplicate withdrawal, mistakenly deposit funds in the wrong account, or disburse too much on behalf of a particular client. Every month, the supervising lawyer should sign off on the bookkeeper’s reconciliation, including the subsidiary ledger trial balance and a review of uncleared checks and deposits. Teams: As a firm grows, there is no way one lawyer can supervise everyone. Departments, groups, and teams help larger firms divide and conquer the work.

Co-Owners: Supervision of your fellow shareholder(s) can be tricky. You’re not likely to be able to compel them to maintain a case list that you review. Yet, you probably want some way of figuring out whether something is amiss. Policies and procedures by themselves probably will not cut it. Instead, try periodically rotating responsibility for the trust account and other managerial functions. Pay attention to your firm’s metrics for case openings and closings, billable hours, and receivables. Recognize that open communication is key and that its opposite— secrecy—could be a red flag. Supervision is difficult, non-billable, and thankless work. But it is critical to run an ethical firm and to avoid disciplinary surprises.

Eric T. Cooperstein, the “Ethics Maven,” defends lawyers and judges against ethics complaints, provides lawyers with advice and expert opinions, and represents lawyers in fee disputes and law firm break-ups.
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