Volume 18, Number 3
USING LEGAL ASSISTANTS IN A REAL ESTATE PRACTICE
James R. Walston and James A. Lund
Without the availability and utilization of qualified staff, it is difficult to operate a professional office effectively. Delegation of duties through use of assistants by professional service providers such as lawyers can improve office functioning in two important ways:
- Assistants provide intra-office support by performing on office management tasks and focusing on office operations, which allows the professional to concentrate on the substantive area of practice.
- Assistants with skills in a particular substantive practice area support the professional and deliver services to the client less expensively.
More often than not, a person seeking representation in a real estate transaction will engage and become a repeat client of the lawyer who "gets the job done." Staying within the parameters of delivering timely and cost-effective services requires awareness of several outside influences that can drive costs up and delay delivery of legal services. The influences include: competition from other law firms (both for legal services and in the search for qualified staff ); competition from other service providers such as title insurance companies, escrow agents, and abstract companies; timing deadlines inherent to a real estate transaction; changes in laws and regulations affecting real estate transactions; availability of qualified assistants; technological advances; and costs associated with running an office.
Lawyers cannot control outside influences, but they can respond to such influences by working to minimize their effects on the practice. With this in mind, the lawyer should frequently assess two factors:
- Is my practice providing cost-effective and timely services to my clients?
- Can services to clients be improved?
The experienced lawyer can certainly handle all aspects of a real estate transaction. One option is to work longer hours and do the work alone. However, is this the best way to use the lawyer's education and experience? Time constraints that exist in every practice, and billing a client for every task associated with a transaction at the lawyer's professional rates, or not billing for them at all, militate against the lawyer's going it alone.
Another option that may counter the effects of outside influences has found widespread acceptance in the legal community: engage the services of an assistant (paralegal, legal secretary, and so on) in a supervised setting.
Virtually every law practice, of any size, has assistants on its payroll. Using assistants in connection with delivery of legal services has been done since there have been lawyers. Bookkeepers, receptionists, law clerks, investigators, and legal secretaries enhance the lawyer's ability to deliver affordable legal services.
Although assistants are able to provide some legal services, lawyers must be mindful that assistants are not licensed to practice law and are not personally subject to professional rules of conduct. The Model Rules of Professional Conduct provide, in part, that (1) a lawyer must have direct supervisory authority over nonlawyers and must make reasonable efforts to ensure that assistants act in a way consistent with professional obligations of a lawyer; and (2) a lawyer and/or law firm is responsible for the conduct of assistants if the lawyer orders or subsequently ratifies an assistant's conduct, or the lawyer fails to properly supervise nonlawyers or to take remedial action to avoid or mitigate known conduct.1
A more affirmative approach to this issue is found in the Model Code of Professional Responsibility, which acknowledges, and to some extent encourages, the use of assistants: A lawyer often delegates tasks to clerks, secretaries and lay persons. Such delegation is proper if the lawyer maintains a direct relationship with his client, supervises the delegated work and has complete professional responsibility for the work product. This delegation enables a lawyer to render legal services more economically and efficiently.2
The ABA Standing Committee on Legal Assistants in 1991 developed the Model Guidelines for Utilization of Legal Assistants3 in order to assist lawyers with ethical considerations of using assistants. The Model Guidelines provides ten considerations, summarized below:
- A lawyer is responsible for all professional actions of assistants. A lawyer must take measures to ensure that the conduct of assistants is consistent with professional rules.
- A lawyer may delegate tasks provided the lawyer maintains responsibility for work product.
- A lawyer may not delegate: (a) responsibility for establishing an attorney-client relationship; (b) responsibility for establishing fees; or (c) responsibility for rendering a legal opinion.
- A lawyer must ensure that the client is aware that assistants are not licensed to practice law.
- A lawyer may identify assistants by name and title on firm letterhead and on business cards.
- A lawyer must ensure that assistants preserve client confidences.
- A lawyer must take reasonable measures to prevent conflicts of interest that might arise from other employment or interests of assistants as if the assistant is a lawyer.
- A lawyer may charge for work performed by assistants.
- A lawyer may not split fees with assistants nor pay a referral fee to them. The assistant's compensation may not be contingent upon the profitability of the law practice.
- A lawyer should facilitate participation by assistants in continuing education and pro bono activities.
A few points within the Model Guidelines are worth noting. First, the lawyer must in fact oversee and review the work of assistants. Second, the ability to charge for the services of an assistant means that the lawyer can add value to the services provided while also generating some revenue. Third, it should be clear that there are several tasks inherent to the real estate law practice that cannot be delegated to an assistant. These include establishing the lawyer-client relationship, establishing fees, and providing legal advice.
Another point that can be gleaned from the ethical codes and the Model Guidelines is that the real estate lawyer and assistants should be constantly mindful of rules pertaining to confidentiality. Assistants are required to observe this basic and vital ethical obligation. Not only is confidentiality mandatory, but also strict adherence to this rule facilitates effective utilization of assistants and fosters trust between the client and the firm. One final consideration is worth remembering: In addition to potential liability for an employee's acts that arise from the lawyer's role as employer, serious professional consequences can result from conduct that falls below ethical standards.4
PRACTICE SUGGESTIONS: Reacquaint yourself with professional rules relating to use of assistants. Be sure you supervise assistants adequately-you are responsible for their conduct. Periodically compare current office procedures with rules relating to use of assistants. Provide all office personnel with copies of pertinent rules relating to assistants' obligations.
Determine needs/job description. Once the decision is made to hire an assistant, the lawyer should review the status of the practice to determine who is currently handling the real estate work; whether current staff is underutilized; and whether there is realistic potential for growth, development, and improvement of the real estate practice.
To help answer these questions, consider soliciting input from long-standing clients, fellow lawyers, and existing office staff. This exercise could also result in assessment of practice areas other than real estate and review of operational issues. Prepare a written job description detailing specific tasks that will be within the scope of the assistant's duties. The job description will eliminate future misunderstandings and provide an inventory of existing practice procedures.
Filling the position. The lawyer's initial focus for filling a staffing need may be to look externally for a new assistant, but it's worth considering whether existing staff could fill the position. Smaller real estate practices within a small- to medium-sized law firm could consider transferring assistants from other practice areas within the office. The economics of a smaller volume real estate practice and/or firm may suggest the use of existing or part-time personnel. One benefit of using an existing staff member is that if he or she is already liked by clients, the clients will be more accepting of the use of assistants. However, if existing staff lack the necessary skills or will be more productive in their current roles, then fill the position with a new hire.
The candidate should have at least a basic understanding of real estate transactions. Too much is at stake, particularly in a smaller practice, to allow someone to use an existing practice as a classroom.
Creating a part-time position or offering a flexible work schedule might make the position more attractive to a potential hire. With the ever-changing advancements in computer technology, allowing a new assistant to work outside the office using remote computer access is also an option. Supervision doesn't always mean that work must be performed in the physical presence of the lawyer.
PRACTICE SUGGESTIONS: Carefully evaluate the existing needs and potential growth of your practice. Make the extra effort to prepare a detailed job description. Fill the position with someone who has real estate experience. Be open-minded about initial structure and staffing of the position.
A new assistant, regardless of experience, will require some training, particularly if the lawyer expects the assistant to play a big role in the practice. Relatively few legal professionals, including lawyers new to a firm, accomplish all parts of their jobs the same way.
Paralegal courses offered in most metropolitan areas, and continuing legal education courses typically designed for lawyers, offer excellent training opportunities. The assistant may also receive on-the-job training from the lawyer.
Formal educational courses will provide the assistant with essential legal knowledge and practice techniques. Written course materials from continuing education seminars can be utilized by the assistant as a future reference source and by the lawyer as a source for practice pointers. Formal courses also present the opportunity to meet colleagues and discuss current practice methods.
On-the-job training provided by the real estate lawyer must be considered an ongoing process, not as an optional exercise or one to be performed only when the need arises. Once the need arises, it may be too late. On-the-job training can be accomplished in a number of ways. At least at the outset of new employment, supervision and training could demand a great investment of time. After initial training, the lawyer and assistant should set up an informal procedure for discussing issues that arise and also schedule periodic meetings for hands-on training.
PRACTICE SUGGESTIONS: Formal training for assistants at venues outside of the office should be a regular part of enhancing their knowledge base and skills. Do not overlook in-house training-it is a valuable tool if done right.
The Client-Assistant Relationship
In the best of circumstances, assistants are viewed by the client as part of a team that provides quality legal services. In the worst circumstances, they may be seen as a barrier between the lawyer and client and incapable of responding to the client's particular needs. New clients should be informed, in writing, of the possibility that assistants will be involved in the legal work. Existing clients must be informed about and consent to the use of assistants before work is delegated to them. If at all possible, the lawyer should personally introduce the assistant to the client at the initial lawyer-client consultation. A client's ability to connect a face with a voice or a printed name can go a long way toward easing the relationship in the future.Integrating the assistant into the client's affairs depends on factors such as the assistant's level of experience, type of work to be performed, time constraints, and workloads. The assistant might conduct a portion of the initial meeting, as long as the ethical limitations set forth above are not exceeded. The client should be encouraged to contact the assistant for status reports during an ongoing transaction and to provide the assistant with information related to the transaction. Where practicable, some lawyers may choose to delegate to the assistant the responsibility of acting as the client's main contact after an appropriate introductory period.
Lawyers should also consider delegating many of the administrative tasks of client representation to assistants, such as initiating e-mail and faxes, as long as copies of any transmissions are forwarded to the lawyer. The lawyer should also consider delegating primary contact responsibilities with real estate brokers, lenders, environmental consultants, title/escrow agents, and surveyors and engineers. Most of the follow-up work with these parties requires no legal education. Integrating the assistant into the communication loop can be an opportunity to indirectly market the services of an efficient real estate practice. Perhaps most importantly, the client will appreciate the fact that the assistant works at a lower overall rate than the lawyer.
PRACTICE SUGGESTIONS: Make the client and third parties aware of the "team approach." Introduce the assistant to the client as soon as possible. Use the assistant whenever appropriate to communicate with the client.
Client dissatisfaction with a lawyer's services is all too frequently related to issues associated with fees and billing practices, caused by a lack of understanding of charges for services rendered by both the lawyer and the assistant. Other friction between the lawyer and client arises when a client simply believes that the fees billed are excessive in light of the services provided.Rules of Professional Conduct in most jurisdictions generally state that the basis or rate of fees shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing representation.5 Not only are written agreements preferred by the Rules, but also documentation and acknowledgment of fees have proven to alleviate a good portion of lawyer-client fee disputes. For this reason alone, written fee agreements should be standard for all types of practices. For a real estate practice in which assistants are used and clients are billed for their services, the fee agreement should specify that fact and state that assistants will be used only when it is reasonably determined by the lawyer that such services are in the best interest of the client.
The actual fee for assistant services should be carefully considered by reviewing the following points. Is the fee reasonable? Is the fee competitive with fees charged by other firms or title/escrow services? Is the firm being justly compensated for the added value of assistant services?
Such fees may vary from one matter to the next; under certain circumstances, the lawyer may choose to offer an assistant's services on a flat-fee basis. This approach may be particularly useful and serve as an effective marketing tool when an assistant's skills and services are used on a repetitive basis, such as preparing closing documents and conducting title examinations. Setting a standard rate with these questions in mind, however, can help add a valuable profit center to the lawyer's practice.
Transitioning Work to Assistants
Delegating may be the most important skill to be learned by newer lawyers. The ability to recognize when responsibility for certain aspects of a practice can be handled by others, and to monitor and supervise the work performed by others, can make the difference between constantly struggling to keep up and running a smooth and productive practice.
Assistants with minimal experience should initially be limited to gathering information, coordinating meetings, and covering other communications functions. Assistants with more experience can draft documents, review title and survey status, file real estate documents in appropriate offices, and review and interpret other documents related to a transaction. To effectively transition real estate work to assistants, the assistant and the lawyer should meet to discuss specific types of transactions and the steps necessary to complete them. Tasks should be clearly delegated, using a written checklist that details specific job functions, time frames, and the party responsible for completing the task. At some point, the lawyer should review the work. Use the latest project as the foundation for the next; efficiency and success are often the result of reviewing and examining previous performances. Never lose sight of the benefit of remaining flexible. Every transaction is different; every client has different needs and may have varying levels of comfort with your delegation of duties to assistants.
PRACTICE SUGGESTIONS: Take time to conduct a brief meeting with the assistant before any new assignment. Prepare a written outline or checklist detailing respective duties. Be sensitive to feedback from clients regarding assistants' performance on particular projects.
- Model Rules of Prof'l Conduct R. 5.3(b), (c)(1), c(2) (1983, as amended through Feb. 2000).
- See Model Code of Prof'l Responsibility EC 3-6 (1980) (emphasis added).
- ABA/BNA Lawyer's Manual on Professional Conduct 91:203-04 (ABA Model Guidelines) (Susan Michmerhuizen & Robert A. Robbins eds., 2000).
- In re Bright, 171 B.R. 799 (E.D. Mich. 1994); In re Jenkins, 816 P.2d 335 (Idaho 1991); In re Stegemann, 206 B.R. 176 (C.D. Ill. 1997).
- Model Rules of Prof'l Conduct R. 1.5(a)(8)(b).
James R. Walston is an attorney in the business department at Rider, Bennett, Egan & Arundel, LLP, in Minneapolis, Minnesota, where he focuses his practice in commercial real estate. James A. Lund is an attorney in the business department of Rider, Bennett, Egan & Arundel, where he focuses his practice on real estate law and transactions.