Not unlike many of my colleagues, I’m spending what is turning out to be an amazingly beautiful Spring weekend in the Bay Area preparing tax returns due next week – most specifically those of my law business, Confluence Law Partners.

What I’ve discovered is that there are key components of Confluence’s model that don’t fit neatly within standard accounting practices, resulting in higher bookkeeping and tax preparation costs and exposing me and the firm to potentially higher tax liability.

While its going to take some time for the new normal shop to reduce bookkeeping and tax preparation costs, there are some things that can be done now to protect against inflated tax liability.   Furthermore, on reflection, its not surprising that current bookkeeping practices are not easily applied to the new normal model’s aggregation of outside legal and non-legal services; status quo bookkeeping practices are directed to serving insular status quo hourly law firms that don’t rely on significant outside collaborations to deliver legal services and whose model dissuades its lawyers from using outside legal services.  More after the jump.Continue Reading Tax and Accounting Practice Lags Behind New Normal Model

A Japanese IP firm has expressed interest in sharing fees with CLP on US-based IP litigation, prompting us to ask ourselves whether this is ethically permissible.

We already knew that here in California or elsewhere around the country the rules of professional conduct permit fee sharing between US based lawyers who are not members of the same law firm.   (Keeping in mind that local requirements can vary as discussed in the postscript below.)

The ABA’s 2009 paper, “Joint Responsibility: Sharing Legal Fees Between Lawyers Not in the Same Firm,” confirms the wide-spread acceptance of fee sharing and provides some good examples of the different state rules.

Fee sharing is part of CLP’s DNA because it allows us to scale with expert patent and IP transaction lawyers without bearing the incredibly high overhead of keeping all this great talent under one roof. We’ve had to become fluent on the applicable ethical rules. Prospective clients are less willing to hire CLP unless they are comfortable, in their words, “with how this [fee sharing] works.”

For example, a recent CLP pitch deck included the following slide explaining how the client enters into one engagement agreement signed by each of the fee sharing attorneys, as well as how the agreement discloses the fee arrangement and otherwise obtains the client’s informed consent in compliance with applicable ethical rules.

So CLP gets fee sharing. We use it successfully with other stateside lawyers and firms. Yet could we take it overseas?   We were highly incented to do so based on the big-time benefits of fee sharing for all concerned: the client; the referring Japanese firm; and CLP.

  • The client, a Japanese technology company, would get cost-effective and expert patent trial counsel from CLP, and also would receive continuing advice, counsel and guidance from its trusted Japanese counsel (which, as any US lawyer who has litigated on behalf of an Asian client will tell you, is crucial to enjoying timely and effective communication between US lawyer and their Japanese clients).
  • The Japanese firm would retain a valued client relationship and would capture fee revenue that it otherwise would lose to other firms.
  • CLP would enlarge its pipeline of core IP patent litigation.

We therefore were delighted to learn that yes, we could share fees with our Japanese colleagues.

Continue Reading Fee Sharing With Foreign Lawyers