Pro Bono and Profit Are Not at Odds Options

[Editor]

Pro Bono and Profit Are Not at Odds

The Wall Street Journal recently spotlighted the few (less than 2.9% of the total) lawyers in this country who can command $1,000 or more in hourly rates. The strong implication of the story was that these lawyers were charging an outrageously high fee, thus perpetuating the idea of greedy lawyers making more money than anyone reasonably should. There are many examples of such thinking, most of which do not go beyond mere rhetoric. One example is a book I reviewed several years ago with the overwrought title Lawyers Gone Bad, which contended that lawyers have abandoned helping the poor and middle class in their pursuit of profits.

Impressive Commitment
The problem with such hyperbole is that it directly ignores the fact that lawyers, in large firms and small, donate a tremendous amount of pro bono legal service that improves the lives of people in every community. It has been more than 15 years since the American Bar Association and the Pro Bono Institute launched the “Law Firm Pro Bono Challenge” that has encouraged firms with more than 50 lawyers to make an institutional commitment to pro bono service: a target of either five or three percent of each firm's total billable hours, in addition to the hours-per-attorney standard commonly used in articulating pro bono goals. (While firms do have the option to select an alternative goal of 100 or 60 hours per attorney, most signatory firms have elected to use the preferred percentage goals).

The results have been impressive. According to the Pro Bono Institute, in 2009 (the last year for available figures), at the height of the recession, 134 of the nation’s top law firms performed 4,867,820 hours of pro bono work, an increase of nearly 24,000 hours from 2008. The total translates to nearly $2 billion in free legal services, or the equivalent of 3,100 full time lawyers – almost the same as the number of full time salaried legal services attorneys in the U.S. And of course, that does not include the countless solo and small firm lawyers who do likewise. Hard to call them “lawyers gone bad.”
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Help Denied
Yet these are not numbers that get headlines, or even much notice. The constant media emphasis on high-priced, greedy lawyers has led politicians, mortgage holders and bankers in many states during the past two years to advocate mandatory bans of retainers for lawyers asked by their clients to seek loan modification. All loan modification lawyers are considered bad because a few are. The basic dynamic is simple – if a lawyer takes money in advance of the work and places the money into a clients' trust account, they can be assured of being paid on completion of the work. If the work is not completed, the money is not withdrawn. The penalty for withdrawal without doing the work is disbarment, and prosecution for theft. But instead state legislatures from New York to California have banned retainers for loan modification to “protect” the public. The practical result is that deserving clients are denied help.

The latest iteration of this thinking is to criticize those lawyers who question foreclosure procedures. In particular, lawyers are finding that mortgage/bank representatives are signing declarations (under penalty of perjury) that they have reviewed the file on a foreclosure and know the contents of the loan default to be true. This unexpected discovery of “robo-signers” by an attorney in Florida has thrown the entire foreclosure business (23 states require such signing) into turmoil and negated or delayed many foreclosure filings. The net result for foreclosure plaintiffs is that they get additional time to remain in their homes and, in some cases, the opportunity to renegotiate the terms of their loan or to remove the foreclosure from a credit report in order to refinance the house and start over.

This is an example of the legal profession coming to the aid of those in need. Yet financial and political interests use the popular image of “greedy lawyers” to limit the legal profession’s ability to help the disadvantaged by seeking new laws that void “technical problems” as a defense where the foreclosure is “substantially appropriate.” Combined with the ban on retainers for working on problem loans, such actions mean that lawyers who are willing to take the cases of persons with financial problems will be working pro bono in most cases. Laws and rules adopted “to protect the public,” actually hurt the very people they espouse to protect by denying them access to counsel.

Profit, Not Greed
These controversies ignore the fact that profitable lawyers are not synonymous with “greedy” lawyers. Profitability ultimately is the key to successful pro bono performance in any firm of any size. If the client billings are not sufficient to support pro bono non-billable time, or engagements at reduced rates for those who cannot pay a full fee, the commitment to serving the public will be at risk. In fact, by promoting a percentage goal, the Pro Bono Challenge ties pro bono activity to firm productivity and profitability. Individual lawyers and firms alike cannot ignore the financial and operational dimensions of what pro bono activities require. This should not make pro bono an afterthought or sideline. Instead, it means that pro bono should be an integral part of every aspect of what any size firm does.

The largest firms know (just as the largest corporations do) that profitability supports the provision of programs and services that benefit people who cannot otherwise afford them. Individual lawyers should take the same approach and be certain that their financial situation and personal choice supports pro bono time. If a client needs legal advice, but obviously can’t pay for the full cost, the lawyer must decide what to do. If the decision is that it’s a pro bono matter that should be undertaken, then do it. If the client has modest means and can pay something, then decide what the charge should be. There is nothing wrong with either choice, and the social goal of providing legal service to those who need it is met.

Tradeoff Variations
There are other variations on this tradeoff. In limited scope representation, lawyers take only a part of a case. That could mean a reduced fee to help people of limited means fill out forms and prepare documents and to coach them on how to present in court, or to represent them in court for one or two hearings. Such representation draws a distinction between providing services at a reasonable fee, and providing pro bono services voluntarily without charge. Limited scope representation occupies a middle ground between representing those clients who can pay for full legal service, and those who have no more than modest ability to pay.

During the past several years a number of major law firms have taken yet another approach, paying new-hire “deferred associates” reduced stipends to spend a year doing public interest work pro bono until the firm can afford to take them on full time. The associates gain valuable experience that will benefit them and their employers later, and the firms hold on to talent that they recruited heavily. There is also sacrifice involved on both sides. The stipends may be 50 percent of the starting salaries the associates expected in boom times, while – according to the Pro Bono Institute – the firms cannot claim “credit” for this pro bono service because the associates are not yet employees.

The organizational development of firms underwriting such service is the ultimate beneficiary. Students graduate even from the most prestigious law schools with little practical experience in the everyday aspects of being a lawyer, then are often buried in research and document processing for their first several years in their new firms. The hands-on experience that the pro bono apprentices will get “in the trenches” at legal aid societies and similar pro bono institutions will stand them in good stead for years to come.

Profitability Foundation
In all of these examples, law firm profitability is the pro bono foundation. Lawyers wanting to do better for themselves drives much of what they do, even as they strive to do the best that they can for their clients, their profession and the society in which they live. The airline mantra for dealing with loss of cabin pressure applies here: put your oxygen mask on first and then help others. The equivalent in a law practice is to ensure that there is the time and financial resources for pro bono work, whether a lawyer bills $1,000 an hour or $100 an hour. Either rate can be “reasonable” (the only requirement of Rule 1.5), depending on the value that the client receives in terms of a lawyer’s skill, timeliness, experience, reputation and results.

In the practice of law we must never forget that we are dealing with human lives. Our goal should be to bring a sense of order to troubled situations as we deal honestly and directly with the legal and human difficulties involved. There is always the need to understand “The Business of Law®” when combining it with being sensitive to the needs of the human condition. These fundamental thoughts shape the framework for providing legal services, not just to the clients who can pay for them, but to the people who need but cannot afford them.

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