"A paralegal or paraprofessional may never sign and file court documents in her own name," the opinion states. "To do so violates the statutes prohibiting the unauthorized practice of law."

Rule 5.3, dealing with an attorney's responsibilities for non-lawyer assistants, and Rule 5.5, regarding the unauthorized practice of law, were also relevant, the opinion states.

"Before permitting a paralegal or other non-lawyer staff member to sign the lawyer's name to any court document, the lawyer must carefully review pertinent case law, local rules, or rules of civil procedure to determine whether such delegation is permissible and therefore compatible with the lawyer's professional obligations," the opinion states.

"In addition, the lawyer must exercise the appropriate level of supervision to avoid aiding in the unauthorized practice of law."

Litigation Funding

Opinion Also Adopted

In other ethics action, the Bar council gave final approval to 2006 FEO 12, which lets PI lawyers pass along the costs of litigation funding to clients (see Sept. 4, 2006 Lawyers Weekly).

Under the opinion, these conditions would have to be met:

"Financing arrangements that do not require that repayment be a percentage of the lawyer's fee in a given case or restrict repayment from a specific source of funds should be treated no differently than bank loans or lines of credit," according to the opinion.

— Questions or comments may be directed to Ertel.Berry@nc.lawyersweekly.com.

Petition Preparer - Practice of Law - Fine - Injunction

Where a freelance paralegal charged her ex-husband $100 to fill out bankruptcy forms, to file them with the court, and to advise him on bankruptcy matters, the paralegal violated 11 U.S.C. 110 and G.S. 84-2.1.

The paralegal shall disgorge the $100 fee, pay a $100 fine, and be permanently enjoined from acting as a bankruptcy petition preparer.

The debtor paid the paralegal to prepare the petition and schedules needed to file his Chapter 7 case. The paralegal obtained a copy of a blank petition and hand wrote the information of the debtor in the places on the forms that she deemed appropriate. Thus, she "prepared" documents for filing in a bankruptcy case. She is a "bankruptcy petition preparer"under 11 U.S.C. 110 since she is neither an attorney nor an employee of an attorney. The paralegal is subject to the provisions of Sec. 110 and hence required to comply with the provisions therein.

Where the paralegal failed to list her entire Social Security number on four of the debtor's forms, she clearly violated 11 U.S.C. 110(c) four times, subjecting her to four $500 fines. Where the paralegal's intentions in concealing her Social Security number were not to keep the court from knowing her identity but to protect herself from the possibility that a member of the general public might see the documents and misuse her Social Security number, the court concludes that a fine of $50 should be imposed for the paralegal's violations of Sec. 110(c).

11 U.S.C. 110(d) requires a petition preparer to furnish the debtor with a copy of the documents prepared by the petition preparer no later than the time at which a document for filing is presented for the debtor's signature. In this case, the debtor signed the documents, the paralegal delivered the documents to the court for filing, and after the documents were filed the paralegal had the clerk's office make a copy of the filed petition, which she gave to the debtor. Thus, the paralegal did not give the debtor a copy of the documents prepared until after the documents were filed, which was after the debtor signed the documents. This constitutes a violation of Sec. 110(d).

However, the court does not believe the failure to comply with Sec. 110(d) was intentional or resulted in any harm to the debtor. The court exercises its discretion to not impose a fine on the paralegal for her failure to comply with Sec. 110(d).

11 U.S.C. 110(g)(1) prohibits a petition preparer from collecting or receiving any payment from a debtor or on behalf of a debtor for the court fees related to the filing of the bankruptcy case. The debtor gave the paralegal cash in the amount of the filing fee. The paralegal tendered the filing fee to the court when she filed the debtor's petition. The paralegal's conduct violated Sec. 110(g)(1).

While the court has no discretion in deciding whether or not to fine the paralegal, the court does have discretion in the amount of the fine imposed. The court opines that the violation of Sec. 110(g)(1) was unintentional and, while it could have, it did not result in any harm to the debtor. A fine of $50 should be imposed for the paralegal's violation of Sec. 110(g)(1).

On the debtor's Statement of Financial Affairs, paragraph 9 disclosed that the paralegal was paid $100 for "payments related to debt counseling or bankruptcy." However, the paralegal failed to file a "Disclosure of Compensation of Bankruptcy Petition Preparer." The paralegal thus violated 11 U.S.C. 110(h)(1).

If the paralegal performed services that constitute the practice of law, then she cannot be compensated for those services. G.S. 84-2.1 defines the practice of law to include "performing any legal service for any other person ... with or without compensation, specifically including ... the preparation and filing of petitions for use in any court...." Anything more than merely typing a petition or legal document for another person constitutes the practice of law.

The paralegal clearly engaged in the unauthorized practice of law. She obtained a copy of the blank bankruptcy forms and, using information provided by the debtor, filled in the information on the forms in the places that she deemed appropriate. The debtor then signed the places on the petition and schedules where the paralegal instructed him to sign. Further, the paralegal attempted to explain to the debtor what an exemption was and to answer questions regarding what property he would be able to retain. Such actions constitute the practice of law under Sec. 110 and N.C. law.

The only activities in which a petition preparer can engage are meeting with a prospective debtor, providing blank bankruptcy forms for the debtor to complete without any assistance from the petition preparer, typing the information on the applicable bankruptcy forms without change or alteration, copying the documents prepared for the prospective debtor, and delivering the original and at least one copy of the documents to the prospective debtor.

The paralegal failed to show by a preponderance of the evidence that the fee she collected was reasonable compensation for her services as a petition preparer.

Typing is the only service for which the paralegal is entitled to be compensated in this case. However, the paralegal hand-wrote the petition and schedules. Thus, she performed no typing services.

Further, there were several errors in the documents. Schedule C was amended by the debtor for a third time with the help of an attorney. If Schedule Chad not been amended, the debtor might have lost a vehicle that he wished to retain because of the inaccuracy of his Schedule C.

Having found that no typing services were provided to the debtor by the paralegal and that the services that the paralegal did provide were of no value and indeed may have had a negative value, the court finds that the value of her services was zero, that the $100 fee charged by the paralegal was excessive, that the $100 fee should be disallowed, and that the paralegal should be ordered to turn over $100 to the Chapter 7 trustee.

The paralegal prepared and filed two bankruptcy petitions in this court within one month. Both petitions contain numerous violations of Sec. 110 and are riddled with errors. While the paralegal testified that she does not plan to prepare any further bankruptcy petitions or documents to be filed in this court, the court finds it appropriate to grant the injunctive relief available in Sec. 110(j) and to bar the paralegal from preparing further documents to be filed in this court.

The paralegal must disgorge her fee, pay a fine of$100, and prepare no further documents for filing in this court.

In re Thomas. (Lawyers Weekly No. 04-05-1368, 23 pp.) (Waldrep, J. - Order & Memorandum Opinion) M.B.N.C.

A Kelly Law Registry® Report

Paralegals play an increasingly crucial role in the delivery of comprehensive, cost-efficient and timely legal services, but many law offices have trouble retaining these skilled professionals.

Better pay can lure them away, but often other factors are involved. Many paralegals believe they do not get the respect they deserve or the challenging work they can handle. They can feel unappreciated and stuck in dead-end jobs.

"Law firms that have trouble retaining experienced paralegals are at a disadvantage in the very competitive market for legal services," according to Terry Murphy, vice president of Kelly Law Registry, a business unit of Kelly Services. "Cost-conscious clients are demanding the most competent person at the best hourly rate," he said. "That means utilizing paralegals effectively."

High Cost Of Losing Paralegals

When an experienced paralegal leaves, specialized skills are lost and other employees have to shoulder extra responsibilities. The result can be morale problems, workflow disruptions, downtime and ultimately decreased revenues.

"To avoid these problems, a wise law office manager will make retaining paralegals a top priority. It takes hard work to create and then maintain a work environment where paralegals can flourish," said Marybeth Davies, paralegal manager for DuPont Legal.

Davies estimates the cost of recruiting a replacement for an experienced paralegal can be as much as three times the paralegal's annual salary. It can take months to find someone equally qualified and even longer to train the new person on how the attorneys want the job done. This transition period can jeopardize a law office's relationship with clients who appreciate the lower hourly rate for paralegals.

Don't Overlook The Obvious

Any retention plan should start with compensation. Competitive salaries are very important for retaining any skilled employee and managers should keep track of what paralegals are paid in their city or region.

"Competitive pay is number one, although experienced paralegals should be up there in pay. Experienced paralegals also want respect, responsibility, the opportunity to work on more challenging assignments and the opportunity to prove themselves," said Davies.

Paralegals often change jobs early in their careers because it's the quickest way to get more pay. Law office managers should avoid the pitfall of letting raises lag behind the productivity gains many young paralegals achieve. As paralegals gain seniority, managers should consider including them in bonus programs. Stock options are one way to maintain the loyalty of paralegals working for corporations.

Develop A Strategy

In addition to offering competitive compensation, law office managers should develop a comprehensive strategy for paralegal retention that includes six principles:

Encourage And Promote Professionalism

As the scope and complexity of their work has grown over the years, paralegals have become more recognized as professionals. A strong educational foundation, a commitment to constantly upgrade skills, a dedication to best practices and high ethical standards are all hallmarks of the profession.

Law office managers should do everything they can to promote this professionalism, starting with hiring practices. Many firms and law departments prefer a four-year college degree, but will consider someone with an associate's degree from an ABA-approved program if they have good grades or appropriate experience and are committed to a career.

Paralegals should be encouraged to participate in professional organizations. Many law offices pay membership fees and allow extra time off for monthly luncheon meetings.

The same support should be given to advanced training and continuing education. In addition to in-house training, attorneys should take the time to update paralegals about developments in their practice areas.

Pro bono work should be encouraged. Just like attorneys, paralegals feel more fulfilled when they use their valuable skills to help people in the community. "Paralegals want to better themselves and they will value the support they receive from their employer," Murphy said.

Create A Career Track

Law offices should have a clearly defined career track for paralegals that face a glass ceiling because they are not lawyers. They should be able to work their way up to jobs with more responsibility, a more prestigious title, a better office and higher pay.

Paralegals should be given incentives to acquire additional skills that help the law office operate more efficiently. Clear goals associated with the career track should be part of annual performance reviews. Mentoring, networking and periodic training also can help paralegals advance in their profession.

"Paralegals are much more likely to leave if they feel they are stuck in a dead-end job with obsolete job skills," Murphy said. "But they are less likely to move if they feel they can advance their careers and enhance their professional standing."

Emphasize Teamwork

The law office's culture should put a high value on teamwork. When paralegals are treated as equal members of the team, they will do a better job and get more satisfaction from their work, according to Davies.

"Bring paralegals in on day one of a project when the strategy is generated. That allows them to understand what the attorneys are looking for and where a project is headed," Davies said. "Paralegals are invaluable to the team by offering suggestions on how to do things more efficiently or pointing out when things are not right."

Attorneys should be trained periodically on how to effectively utilize paralegals. By giving associate attorneys enough legal work, managers can head-off competition with paralegals over billable hours.

Make Good Morale A Priority

Letting paralegals know that their work is valued is a crucial step toward maintaining good morale, but it's something that often gets overlooked in the rush to meet deadlines. Most law offices need regular recognition programs to ensure that outstanding performances on important projects do not go unnoticed.

There are many ways to show paralegals that they are not being taken for granted. Bringing in a bag of bagels on a busy day is an inexpensive gesture that sends a positive message. Taking paralegals out to lunch or giving them a day off at the conclusion of a big project can make a big difference in how they feel about their job.

It can be a mistake to exclude paralegals from the guest list at social events with clients. "Introducing paralegals to clients and explaining their role on the team is one form of recognition that also assures the client that the firm is operating efficiently," Murphy said.

Another effective way for a law firm to recognize paralegals is to include them in promotional materials. This sends a positive message about cost containment to prospective clients, while also giving visibility to paralegals.

Beware Of Stagnation And Overwork

A paralegal's workload is often repetitive by nature. Boredom and stagnation can result, creating the risk of losing paralegals who need new challenges. Periodically rotating paralegals to new assignments is one way to provide intellectually stimulating work, but that's not always possible when the law office's workload is concentrated in one area or an individual's skills are vital for the success of a major project.

"These problems often are not easily solved. This is probably one of the hardest parts of my job as a manager, but also one of most rewarding when I can move them and see them flourish," Davies said.

Paralegals also can be stretched too thin by competing demands for their time. "Paralegals who are good sometimes get burned out because everyone wants to give them more work. They become overloaded and stressed out," Murphy said. Providing adequate secretarial support is one way to help paralegals be more productive and avoid stagnation, so the paralegal doesn't end up with too much overtime.

Consider The Individual

In the quest for maximum production, law office managers sometimes seem to forget that paralegals have personal lives. A key to long-term retention is taking into account their personal priorities and family responsibilities. A manager should never assume that the paralegal's family responsibilities could be ignored every time there's a deadline looming on a big project.

Flexible scheduling often makes sense for the paralegal that performs well and demonstrates a strong commitment to the job. Flextime, a compressed workweek, a part-time schedule or telecommuting can help a paralegal meet obligations both at work and at home.

Be Accessible

Perhaps the best way to retain paralegals is to stay in touch with them. They should have a manager they feel comfortable talking to about career advancement issues and problems on the job. Maintaining good communication can help prevent a dissatisfying aspect of the job from turning into a reason to leave.

"Law office managers and attorneys should always be attuned to problems that paralegals encounter because they have become indispensable in the delivery of legal services," Murphy said.

Recognized as one of the nation’s premier legal placement firms, Kelly Law Registry specializes in the permanent and temporary placement of attorneys, paralegals and other legal professionals. Kelly Law Registry is managed and staffed by legal professionals who have broad experience in corporate and law firm environments. Visit www.kellylawregistry.com.

By Christy Hall Benson, CLA

Good writing is essential in order to achieve success in the legal profession. With every memo, pleading, letter or e-mail, your firm or company's reputation is on the line. One typo-prone attorney in Philadelphia recently found out how much writing mistakes can cost you, literally. After winning a $430,000 verdict in a civil rights case for a former Philadelphia police officer, Attorney Brian Puricelli petitioned the court to recover his attorney's fees. Instead of paying Puricelli at his normal hourly rate of $300, Federal Magistrate Judge Jacob P. Hart reduced Puricelli's rate to $150 for bad writing. In Devore v. City of Philadelphia, et al., 2004 U.S. Dist. LEXIS 3635, Judge Hart wrote in his opinion that "Mr. Puricelli's written work [wa]s careless, to the point of disrespectful." He further described it as "vague, ambiguous, verbose, and repetitive." Judge Hart slashed more than $30,000 off the fee application, calling Puricelli's Amended Complaint "nearly unintelligible."

Judge Hart further stated in his opinion that "Mr. Puricelli's filings are replete with typographical errors and we would be remiss if we did not point out some of our favorites. Throughout the litigation, Mr. Puricelli identified the court as 'The United States District Court for the Easter [sic] District of Pennsylvania.' Considering the religious persuasion of the presiding officer, the 'Passover' District would have been more appropriate. However, we took no personal offense at the reference." Frequently throughout the pleadings, Puricelli referred to the judge as the "Honorable Jacon [sic] Hart." Judge Hart wrote, "I appreciate the elevation to what sounds like a character in the Lord of the Rings, but alas, I am but a judge."

As legal professionals, we should ensure that all written documents leaving our offices are free from errors. Like it or not, e-mail is here to stay. Here are five ways to improve your skills when communicating via e-mail. Don't let your writing mistakes cost you.

Be Professional

When using e-mail, it is the same as sending something on your firm or company letterhead. Accordingly, you should write that way. Would you write in ALL CAPS on letterhead? In the cyberspace world, writing in ALL CAPS is considered SHOUTING. Do you like being yelled at? Neither do I. If you find it necessary to emphasize something, try underlining it or highlight it using

Be Courteous

My mother always says to treat others as you would want to be treated. This isn't any different when you are communicating with e-mail. Consider your tone. When we are talking face-to-face with another person, we have the benefit of non-verbal communication through our body language. With e-mail, all we have is words. Your reader cannot see your face or hear your voice so choose your words thoughtfully and carefully. If you wouldn't say something to a person's face, don't write it. How would you feel if your e-mail was forwarded to the Senior Partner or CEO? Don't put something in writing that may come back to haunt you later. Also, as I try and teach my four-year-old, remember to say "please" and "thank you" appropriately.

Use Proper Spelling, Punctuation And Grammar

Most e-mail software comes with a spell checker. Learn how to use it. Sending an e-mail with misspelled words is a sure way to make a bad impression. Granted, no spell checker is 100 percent accurate. If you have any doubt at all take the time to look it up. There are three dictionary sites I keep bookmarked for easy access. It only takes a few minutes to double-check something:

http://dictionary.law.com/

www.economist.com/encyclopedia/Dictionary.cfm

www.m-w.com/home.htm

Sometimes I print an e-mail to proofread it before sending. Seeing it on paper in front of you may be easier than reading it on the screen.

Be Responsive

Respond to e-mail just as you would a phone call. A good rule of thumb is to respond to any messages within 24 hours. If I know I am going to be unable to respond in that time period I usually send the person a response message letting them know that I received their message, that I am working on it, and when I plan to respond back with an answer. A task communicated via e-mail is just as important as if were given to you in a meeting or by telephone call. Don't let it get lost in your in-box. A good idea might be to print off all of your "to-dos" received by e-mail and put them in a file. Another idea may be to mark the messages you need to respond to in your in-box. If you have Microsoft Outlook you can do this by right clicking on the message and "Flag for Follow Up." This will place a red flag beside of the message so you will not forget to respond.

Avoid Personal E-mails At The Office

Most law firms and companies have policies governing the use of personal e-mails in the workplace. Learn what they are and adhere to them. Your employer may think if you have time to send excessive personal e-mails, you may not have enough work to do. Most of my friends know that I love them. However, if you are compelled to forward me an e-mail that says so, send it to my personal e-mail address. I am too busy at the office. I am not saying that all personal e-mail is a no-no but keep it at a minimum please. And whatever you do never forward a message with profanity or that is explicit in nature.

Next time you send an e-mail message consider these guidelines. Think about how you would feel if you received the message. It will be time well spent.

Benson is a paralegal with NorthEast Medical Center in Concord. Benson has a B.A. in Journalism and Mass Communication from the University of North Carolina at Chapel Hill where she worked at The Daily Tarheel. She is the Editor of the NCBA-Legal Assistants Division (LAD) Newsletter, Chair of the NCBA-LAD Publications Committee and an LAD Executive Council member. She can be reached for grammar questions or comments at cbenson@northeastmedical.org.(dmc)

Fee Award - Antitrust - Class Action - Settlement Agreement - Lodestar Method

Even though the defendants agreed to pay the plaintiffs' attorneys' fees at the time they settled the plaintiffs' claims, and even though the defendants must therefore have settled for somewhat less than the maximum amount they were willing to pay, since the defendants agreed to pay the plaintiffs' attorneys' fees in addition to rather than out of the settlement amount, this is not a common fund case, and the plaintiffs' attorneys' fees will be determined via the lodestar method.

Plaintiffs' co-lead counsel shall receive $70,821,329.48 in attorneys' fees and $4,469,007.50 in costs.

The defendants do not object to the hourly rates claimed by plaintiffs' counsel in their proposed $18,585,383 lodestar. For the most part, the defendants do not challenge the reasonableness of particular expenditures of time submitted by plaintiffs' counsel. Instead, the defendants seek to have large classes of work removed from the lodestar and re-designated as expenses.

First, the defendants seek to exclude $2,453,767.50, representing the amount billed by plaintiffs' counsel for economic consultants. These consultants worked for CapAnalysis, an "affiliate" of co-lead firm Howrey Simon Arnold & White, LLP.

The degree of connection between Howrey and CapAnalysis is uncertain. The fact that CapAnalysis has a unique name suggests that it is an independent entity rather than a collection of economic analysts who work for Howrey.

Furthermore, most law firms do not have in-house economic consultants. These firms instead rely on outside consultants. It would be unfair to count Howrey's consultants' fees as attorneys' fees subject to a potential multiplier while merely reimbursing the consultants' fees incurred by other firms who hire outside consultants. For these reasons, the court agrees with the defendants that $2,453,767.50 in consulting costs must be counted only as expenses and not as part of the lodestar.

Even though the defendants seek to exclude $757,512.50, representing paralegal and other non-attorney work, from the lodestar, the Supreme Court in Missouri v. Jenkins, 491 U.S. 274 (1989), held the "reasonable attorney's fee" of 42 U.S.C. 1988 to include work done by paralegals. The Fourth Circuit has likewise held that paralegal time is to be included in an award of attorneys' fees. The court concludes that billed time for paralegals should not be excluded from the lodestar.

Where lobbying efforts with regard to the quota buyout were directly relevant to the issues in this case and represent one important aspect of the settlement agreement, and where the Fourth Circuit has approved of including relating lobbying in the lodestar, time spent on the buyout lobbying should not be excluded from the lodestar.

Where plaintiffs' counsel's work with the U.S. Department of Agriculture, investigation of potential claims by warehousemen, and work on seeking reimbursement for the lead plaintiffs are all activities related to this case, billed time for these matters should not be excluded from the lodestar.

Where plaintiffs' counsel seek $208,310 in fees billed while they met with potential plaintiffs, but where counsel presents no evidence to show that these meetings were used for gathering factual information for the litigation, the court will exclude this sum from the lodestar and treat this amount as a cost for reimbursement.

Even though some work performed and billed by attorneys was clerical—copying, opening mail, filing, and data entry—since resolving this question would require the court to conduct a line-by-line inquiry into voluminous attorney billing records, and since there is no clear means by which to distinguish hours for clerical work that might be permissible for attorneys, rather than staff, to bill, the court declines to exclude the "clerical" time from the calculation of the lodestar.

Where one timekeeper billed 35 hours at $240 per hour in a single day, this amount of time is clearly incorrect. Having no way to discern what amount of time would be accurate, the court will exclude this entire entry in the amount of $8400 from both the lodestar and costs.

Even though a primary defendant, R. J. Reynolds Tobacco Co., did not settle, the court will not make any corresponding reduction of the lodestar at this time. Most of the pre-settlement work was not directed toward one defendant or another. Moreover, this is a conspiracy case such that, if the defendants are liable, they are each equally liable for their wrongful agreement. However, if a verdict is returned against RJR, the court will consider assessing RJR its share of the attorneys' fees as awarded in this order.

The adjusted lodestar is $15,914,905.50, and the adjusted cost amount is $4,469,007.50.

There is a strong presumption that the lodestar represents the "reasonable" fee.

Although this suit was brought pursuant to a statute that allows an award of attorneys' fees to the prevailing party, the award in the present proceeding is pursuant to an agreement between the parties. This case is distinguished by exceptional circumstances that render a multiplier of the lodestar appropriate.

In awarding attorneys' fees, the single most important factor is the results obtained for the plaintiff. In this case, facing the dedicated and diligent opposition of the defendants, plaintiffs' counsel achieved a remarkable result for the class.

This settlement was the first class action antitrust settlement (and the largest class action settlement of any kind) by these defendants. Besides the significant cash payment, the value of the leaf commitment by the defendants cannot be overstated. The commitment guarantees that the defendants will remain in the U.S. tobacco market, purchasing at least 405 million pounds of tobacco annually for 10 to 12 years. Moreover, the fact that there were no objections to the settlement and only 161 timely opt-outs testifies to the value of the settlement in the eyes of the class. These impressive results lead the court to conclude that a higher-than-usual multiplier is warranted in this case.

Plaintiffs' counsel faced the daunting task of litigating against an industry that is one of the most ardently protective of its rights and well-represented in the nation with no guarantee that their investments of time and effort would be repaid. The defendants appropriately undertook a vigorous defense throughout the litigation.

Moreover, plaintiffs' counsel reached this result without the benefit of assistance from numerous other law firms. The fact that no additional firms joined this case may show that the legal community thought this case against these defendants was untenable. It also reinforced the value of the settlement achieved for the class given that plaintiffs' co-lead counsel were not assisted by so great a number of additional lawyers.

Finally, Congress has expressed its belief that private antitrust litigation is one of the surest weapons for effective enforcement of the antitrust laws.

The court concludes that a multiplier of 4.45, resulting in a fee award of $70,821,329.48, is reasonable. First and foremost, this fee properly compensates plaintiffs' co-lead counsel for the exceptional result they achieved for the class. In addition, it recognizes the difficulties faced by plaintiffs' counsel in pursuing this litigation. Also, the result is more closely in line with other comparably-sized antitrust cases than the defendants' suggested award. Furthermore, at 5.9 percent, the award made today very closely approximates the agreement reached between the firm of Conlon, Frantz, Phelan & Pires, LLP, and the original 6000 plaintiffs who joined the suit and who agreed to pay five percent of any recovery to the firm.

Plaintiffs' co-lead counsel shall received $70,821,329.48 in attorneys' fees and $4,469,007.50 in costs.

Deloach v. Philip Morris Companies. (Lawyers Weekly No. 04-03-0138, 29 pp.) (Osteen, J. - Memorandum Opinion & Order) M.D.N.C.

By Michael Dayton, Editor

A Columbia sole practitioner who ignored numerous red flags about financial irregularities in his real estate account has received an indefinite suspension from the state Supreme Court.

In an Aug. 28 order, the court sanctioned Walter H. Smith for ethical mistakes in the closings he handled. Smith's failure to keep close tabs on his trust account or supervise the employees at the title insurance agency he used led to the misappropriation of $838,916, the court said.

Several warning signs should have alerted Smith that something was amiss with his books, according to the order. Among them: 140 checks returned for insufficient funds during a five-year period, the court said.

The case is In the Matter of Smith (South Carolina Lawyers Weekly No. 010-131-06, 16 pages).

"This sends a very strong message to lawyers who handle the money of others that our court will look with great displeasure if you don't personally do a certain amount of due diligence to protect that money and follow the published procedures of our court," said Henry B. Richardson Jr., who heads the Office of Disciplinary Counsel "The implication here is that had the published procedures been followed, not much could have got gone."

Smith's attorney, Michael G. Sullivan of Columbia, emphasized that there had been no intentional wrongdoing by his client.

"He didn't properly supervise the real estate side of his practice, and the conduct of other people was correctly attributed to him," Sullivan said. "That's what happened, and he took responsibility for it. He knows he had a duty to supervise and he didn't do it.

"The message for all real estate practitioners is that your duty to supervise extends beyond your own office," Sullivan told Lawyers Weekly.

Smith self-reported to disciplinary counsel once the misappropriations were uncovered, Sullivan said, and used $195,000 of personal and family money to replace some of the missing funds.

"All of the individual clients have been made whole — every one of them," Sullivan said. "That was our first goal in taking this case on, and the second was to cooperate fully with the Office of Disciplinary Counsel."

The order means at least a two-year suspension for Smith. The court gave him 15 days to turn in his law license and denied his request to have the suspension run retroactively to November 2005, the date of his interim suspension.

Richardson said the lawyer's duty went beyond the supervision of employees at the title insurance agency.

"The rules on real estate closings also require you to supervise the disbursement of money and supervise the recordation," he said.

The 2002 case of Doe v. Condon (South Carolina Lawyers Weekly No. 010-113-02, 10 pages; see Aug. 12, 2002 issue) clarified that even for residential refinancings an independent attorney had to supervise title searches, the drafting of loan documents and the recordation of mortgages, Richardson said.

Rule 417 requires that a client's financial records be kept for up to six years after representation ends. However, Smith regularly turned over his files to the title insurance agency, the order states. Smith failed to reconcile his trust account on a monthly basis, as required.

Facts

Licensed in 1981, Smith primarily practiced family law but devoted about 10 percent of his practice to real estate matters.

In 1988, he began referring all of his real estate closing work to State Title, a corporation owned and managed by Stella Kelly. State Title also employed Kelly's daughter, Lauren Proctor.

Smith set up an IOLTA account and gave Kelly check-writing authority. Kelly kept up with most of the financial records related to Smith's closings, and he relied on her to reconcile the accounts, the order states.

Smith's disciplinary woes arose from his failure to adequately supervise State Title and watch over his books. His involvement in the closings ended when clients left his office, according to the order.

"[R]ecordation, disbursement of proceeds, and other actions needed to complete the transactions were handled by non-lawyer personnel of State Title without supervision of respondent, to include but not limited to, correspondence with payees, lenders, and clients, payment of real property taxes on subject property, recordation of documents, payoffs of prior liens, and the like," the order states.

"There were dramatic and glaring 'red flags'" that should have alerted Smith that proceeds of the real estate closings were not being safely kept, the high court said.

From 2000 until June 2005, 140 checks drawn on the IOLTA account were returned for insufficient funds.

Also, checks totaling $40,603 were written for the benefit of Proctor's roommate and friend. Those checks were not written, signed or authorized by Smith.

In August 2004, someone deposited $50,000 into the IOLTA account — apparently "to conceal shortages and/or other irregularities," the order states.

"Had respondent closely reviewed the cancelled checks and bank statements, he would have recognized the account was being used by State Title for inappropriate purposes unrelated to the arrangement and recognized that there were unacceptable and inappropriate shortages in the account."

An unexplained shortfall occurred in April 2005. Smith "promptly deposited $60,000 of his own funds into the account to compensate for the shortage and directed Kelly to determine and report the cause of the shortage to him," according to the order.

"Kelly later reported to respondent that she had discovered the source of the shortage was a previously non-received wire transfer or non-deposited check that had been received and/or located and deposited into the account, thereby curing the reported shortage."

Smith relied on Kelly's representation and removed his money. However, the shortages continued in the IOLTA account.

"Neither respondent, his CPA, nor ODC have been able to locate any non-received wire transfer or non-deposited check and it now appears to the parties that Kelly's representations concerning the cause of the shortage were false," according to a footnote in the order.

Smith learned on June 15, 2005 that the account was $195,000 short. That same day he raised that money from his personal funds and those of his family.

He then contacted a CPA to review the account. That turned up significant shortages in the account and other irregularities in the handling of Smith's real estate closings, including seven unpaid mortgages and numerous unrecorded mortgages and deeds.

Smith self-reported the problems to disciplinary counsel.

"It now appears that, over an extended period of time, someone (not respondent) misappropriated money belonging to respondent's clients and third parties from respondent's IOLTA accounts in excess of $838,916. This amount has been reduced to approximately $643,916 due to respondent's deposit of $195,000 into the account," the order states.

The order also catalogued several instances where complainants said their real estate transactions had been mishandled, including instances where taxes had not been paid, deeds had not been recorded or liens had not been paid off in a timely manner.

ODC lawyers did not argue that Smith misappropriated funds or condoned that by others but said the problems would not have occurred "had respondent strictly followed the published directives of this court and been more alert to the red flags mentioned herein."

Smith admitted violations of various rules of professional conduct, including:

In issuing the indefinite suspension, the court said Smith could not be reinstated "until he has provided proof that he has paid full restitution to all persons and entities who have been harmed by his misconduct, including clients, banks, the Lawyers' Fund for Client Protection, and any others."

Questions or comments may be directed to the writer at mike.dayton@sc.lawyersweekly.com.

Click here for the full text of the decision.

NOTICE: The opinions posted here are subject to formal revision. If you find a typographical error or other formal error, please notify the South Carolina Supreme Court.

DOE v. CONDON

THE STATE OF SOUTH CAROLINA

In The Supreme Court

John Doe, Alias, Petitioner,

v.

Charles M. Condon,

Attorney General for

the State of South

Carolina, Respondent.

IN THE ORIGINAL JURISDICTION

Opinion No. 25138

Submitted May 23, 2000 - Filed June 5, 2000

L. Sidney Connor, IV, of Kelaher, Connell & Connor,

P.C. of Surfside Beach, for petitioner.

Assistant Attorney General Jennifer A. Deitrick, of

Columbia, for respondent.

Disciplinary Counsel Henry B. Richardson, Jr., of

Columbia, for amicus curiae Office of Disciplinary

Counsel.

PER CURIAM: Petitioner sought to have the Court accept this

matter in its original jurisdiction to determine whether certain tasks

performed by a non-attorney employee in a law firm constitute the

unauthorized practice of law. Specifically, petitioner asks (1) whether it is

the unauthorized practice of law for a paralegal employed by an attorney to

conduct informational seminars for the general public on wills and trusts

without the attorney being present; (2) whether it is the unauthorized

practice of law for a paralegal employed by an attorney to meet with clients

privately at the attorney's office, answer general questions about wills and

trusts, and gather basic information from clients; and (3) whether a

paralegal can receive compensation from the paralegal's law firm/employer

through a profit-sharing arrangement based upon the volume and type of

cases the paralegal handles. The Office of the Attorney General filed a

return opposing the petition for original jurisdiction.

The Court invoked its original jurisdiction to determine whether

the paralegal's activities constituted the unauthorized practice of law, and,

pursuant to S.C. Code Ann. § 14-3-340 (1976), John W. Kittredge was

appointed as referee to make findings of fact and conclusions of law

concerning this matter. A hearing was held and the referee issued proposed

findings and recommendations.

We adopt the referee's findings and recommendations attached

to this opinion and hold that a non-lawyer employee conducting

unsupervised legal presentations for the public and answering legal

questions for the public or for clients of the attorney/employer engages in the

unauthorized practice of law. See State v. Despain, 319 S.C. 317, 460 S.E.2d

576 (1995). We further hold that a proposed fee arrangement which

compensates non-lawyer employees based upon the number and volume of

cases the non-lawyer employee handles for an attorney violates the ethical

rules against fee-splitting with non-lawyer employees. Rule 5.4 of the Rules

of Professional Conduct, Rule 407, SCACR.

THE STATE OF SOUTH CAROLINA

In the Supreme Court

IN THE ORIGINAL JURISDICTION

Of the Supreme Court

John Doe, Alias,

Petitioner,

v.

Charles M. Condon, Attorney General for the State of South Carolina

Respondent.

PROPOSED FINDINGS AND RECOMMENDATIONS OF THE REFEREE

This is a declaratory judgment action in the Supreme Court's original jurisdiction.

The Court referred this matter to me as Referee. Petitioner, a paralegal, has submitted a generalized

list of tasks he wishes to perform and has inquired whether performing them constitutes the

unauthorized practice of law. Petitioner also seeks a determination of the propriety of his proposed

fee splitting arrangement with his attorney-employer. Despite my repeated offers for an evidentiary

hearing, neither party requested a hearing. The record before me is sufficient to address and resolve

whether the activities in question constitute the unauthorized practice of law.

I find that a paralegal conducting unsupervised legal presentations for the public and

answering legal questions from the audience engages in the unauthorized practice of law. Further,

I find that a paralegal meeting individually with clients to answer estate planning questions engages

in the unauthorized practice of law. Finally, I find the proposed fee arrangement is improper and

violates the ethical prohibition against fee splitting.

BACKGROUND

Petitioner submitted the following questions to the Court:

(1) Is it the unauthorized practice of law for a paralegal employed by

an attorney to conduct educational seminars for the general public, to

disseminate general information about wills and trusts, including

specifically a fair and balanced emphasis on living trusts, including

answering general questions, without the attorney being present at the

seminar as long as the seminar is sponsored by the attorney's law

firm and the attorney has reviewed and approved the format,

materials and presentation to be made for content, truthfulness and

fairness?

(2) Is it the unauthorized practice of law for a paralegal employed by

an attorney to meet with clients privately in the law office for the

purpose of answering general questions about wills, trusts, including

specifically living trusts, and estate planning in general, and to gather

basic information from said clients for such purposes as long as it is

done under the attorney's direction, and the clients have a follow-up

interview and meeting with the attorney who would have primary

responsibility for legal decisions?

(3) Can a paralegal receive compensation from the law firm he is

employed by, through a profit-sharing arrangement, which would be

based upon the volume and type of cases the paralegal handled?

DISCUSSION

To protect the public from unsound legal advice and incompetent representation, South

Carolina, like other jurisdictions, limits the practice of law to licensed attorneys. S.C. Code Ann.

§ 40-5-310 (1976). While case law provides general guidelines as to what constitutes the practice

of law, courts are hesitant to define its exact boundaries. Thus, the analysis in 'practice of law' cases

is necessarily fact-driven. The Supreme Court has specifically avoided addressing hypothetical

situations, preferring instead to determine what constitutes the unauthorized practice of law on a case

by case basis. In Re Unauthorized Practice of Law Rules Proposed by the South Carolina Bar, 309

S.C. 304, 422 S.E.2d 123 (S.C. 1992). I find that Petitioner's proposed actions constitute the

unauthorized practice of law and that the proposed fee agreement violates the ethical prohibition

against fee splitting.

Our Supreme Court has set forth a succinct standard of the proper role of paralegals:

The activities of a paralegal do not constitute the practice of law as long as they are

limited to work of a preparatory nature, such as legal research, investigation, or the

composition of legal documents, which enable the licensed attorney-employer to

carry a given matter to a conclusion through his own examination, approval or

additional effort. Matter of Easler, 275 S.C. 400, 272 S.E.2d 32, 33 (S.C. 1980).

While the important support function of paralegals has increased through the years, the Easler

guidelines stand the test of time. As envisioned in Easler, the paralegal plays a supporting role to

the supervising attorney. Here, the roles are reversed. The attorney would support the paralegal.

Petitioner would play the lead role, with no meaningful attorney supervision and the attorney's

presence and involvement only surfaces on the back end. Meaningful attorney supervision must be

present throughout the process. The line between what is and what is not permissible conduct by

a non-attorney is oftentimes "unclear" and is a potential trap for the unsuspecting client. State v.

Buyers Service Co.. Inc., 292 S.C. 426, 357 S.E.2d. 15,17 (S.C.1987). The conduct of the paralegal

contemplated here clearly crosses the line into the unauthorized practice of law. It is well settled that

a paralegal may not give legal advice, consult, offer legal explanations, or make legal

recommendations. State v. Despain, 319 S.C. 317, 460 S.E.2d 576 (S.C. 1995).

A. Educational Seminars

Petitioner intends to conduct unsupervised "wills and trusts" seminars for the public,

"emphasizing" living trusts during the course of his presentation. Petitioner also plans to answer

estate planning questions from the audience. I find Petitioner's proposed conduct constitutes the

unauthorized practice of law.

I find, as other courts have, that the very structure of such "educational" legal seminars

suggests that the presenter will actually be giving legal advice on legal matters. See, In Re Mid

America Living Trust Assoc. Inc., 927 S.W. 2d 855 (Mo.banc 1996); People v. Volk, 805 P.2d 1116

(Colo. 1991); Oregon State Bar v. John H. Miller & Co., 385 P.2d 181 (Or. 1963). At the very least,

Petitioner will implicitly advise participants that they require estate planning services. Whether a will

or trust is appropriate in any given situation is a function of legal judgment. To be sure, advising

a potential client on his or her need for a living trust (or other particular estate planning instrument

or device) fits squarely within the practice of law. These matters cry out for the exercise of

professional judgment by a licensed attorney. Thus, in conducting these informational seminars,

Petitioner would engage in the unauthorized practice of law as a non-attorney offering legal advice.

Petitioner plans to answer "general" questions during his presentation. I have reviewed the

Estate Planning Summary submitted by Petitioner and his attorney-employer. This summary sets

forth the subject matter to be covered by the paralegal. Petitioner would present information on,

among other things, revocable trusts, irrevocable living trusts, credit shelter trusts, qualified

terminable interest property trusts, charitable remainder trusts, qualified personal residence trusts,

grantor retained annuity trusts, grantor retained unitrusts and charitable lead trusts. It is difficult to

imagine such specific estate planning devices eliciting "general" questions or a scenario in which

the exercise of legal judgment would not be involved. It is, after all, a legal seminar, apparently for

the purpose of soliciting business.[1] To suggest that some "plan" would anticipate all possible

questions with predetermined nonlegal responses is specious. And so complex is this area of law that

many states, including South Carolina, have established stringent standards for an attorney to receive

the designation of "specialist" in Estate Planning and Probate Law. SCACR, Part IV, Appendices

D and E. This is the practice of law.

I fully recognize the prevailing popularity of 'financial planners' and others "jump[ing] on

the estate planning bandwagon." (Estate Planning Summary submitted by Petitioner's attorney

employer, p. l). This trend in no way affects the decision before the Court. This paralegal would

not be presenting the estate planning seminar as a financial planner. This seminar would be

conspicuously sponsored by the paralegal's attorney-employer. The attorney's law firm is

prominently displayed in the brochure submitted, e.g., name, address, telephone number and "Firm

Profile." In promoting the law firm and representing to the public the 'legal' nature of the seminar.

neither the paralegal nor his attorney-employer can escape the prohibition against the unauthorized

practice of law.

B. Initial Client Interview

Petitioner intends to gather client information and answer general estate planning questions

during his proposed "initial client interviews." While Petitioner may properly compile client

information, Petitioner may not answer estate planning questions. See Matter of Easler, supra.

Petitioner's answering legal questions would constitute the unauthorized practice of law for the

reasons stated above. While the law firm in which Petitioner is employed plans to direct clients to

an attorney for "follow-up" consultations, a paralegal may not give legal advice in any event.

Moreover, permissible preparatory tasks must be performed while under the attorney's supervision.

The proposed after the fact attorney review comes too late.

C. Compensation

Petitioner's law firm intends to compensate him based upon the volume and types of cases

he "handles." A paralegal, of course, may not "handle". any case.[2] This fee arrangement directly

violates Rule 5.4 of the Rules of Professional conduct, SCACR 407.[3] This limitation serves to

"discourage the unauthorized practice of law by lay persons and to prevent a non-lawyer from

acquiring a vested pecuniary interest in an attorney's disposition of a case that could possibly take

preeminence over a client's best interest." Matter of Anonymous Member of the S.C.Bar, 295 S.C.

25, 26, 367 S.E.2d 17, 18 (S.C. 1998). This compensation proposal arrangement coupled with

Petitioner's desire to market the law firm's services via the educational seminars and meet

individually with clients creates a situation ripe for abuse. Indeed, the proposal by Petitioner

presents the very evil Rule 5.4 was designed to avoid. Accordingly, I find Petitioner's proposed

compensation plan violates both the letter and the spirit of Rule 5.4 prohibiting fee splitting with

non-attorneys.

RECOMMENDATIONS

1. Offering legal presentations for the general public constitutes the practice of

law.

2. Answering estate planning questions in the context of legal seminars or in

private client interviews constitutes the practice of law.

3. Fee sharing arrangements with non-attorneys based on volume and cases

"handled" by a paralegal violates Rule 5.4, Rules of Professional Conduct,

SCACR 407.

RESPECTFULLY SUBMITTED.

John W. Kittredge

April 7, 2000

Greenville, SC

FOOTNOTES:

[1] While this marketing method may raise ethical implications for the attorney involved, the issue before me

is whether the activities of the paralegal constitute the unauthorized practice of law. See Rule 7.3, Rules of

Professional Conduct, 407 SCACR; Matter of Morris, 270 S.C. 308, 241 S.E.2d 911 (1978)(lawyer improperly

solicited employment); Matter of Craven, 267 S.C. 33, 225 S.E. 2d 861 (1976) (an attorney's knowledge that his

employee is engaged in solicitation of professional employment for attorney constitutes professional misconduct);

Matter of Crosby, 256 S.C. 325, 182 S.E.2d 289 (1971) (attorney improperly solicited business). Thus, not only

does Petitioner's solicitation of legal clients raise possible ethical concerns for his sponsoring attorney, Petitioner's

involvement clearly constitutes the unauthorized practice of law.

[2] The suggestion that Petitioner and the law firm intend for him to "handle" cases speaks volumes about the

anticipated role of Petitioner, far beyond the permissible tasks performed by paralegals.

[3] Nonlawyer employees may certainly participate "in a compensation or retirement plan, even though the

plan is based in whole or in part on a profit sharing arrangement." Rule 5.4 (a)(3), Rules of Professional Conduct.

SCACR 407.

By Cheryl J. Leone

Any successful law firm owner will tell you that hiring the right person for the right job is the hardest part of employee management. You are investing a great deal of time, energy and money in an individual you know nothing about. The first thing I teach lawyers in the hiring process is you are looking for attitude and aptitude. Everything else can be taught.

Be Prepared

Let me interject some strong advice for any law firm. Create "Standard of Practice" manuals. Every process in your office should appear in the manual including checklist items, forms, standard deadlines and office management procedures. This information is worth its weight in gold and it should be used for training new employees. Your office depends on systems and it is impossible for the owner to know them all. This is the training and learning ground for all new employees. Involve your current employees in preparing the manual so they share their knowledge of systems for which they are responsible.

Hire A Temp And Prepare For Upcoming Deadlines

Once you find out there is a position in your firm that is going to open, don't panic. Most employees give two weeks' notice and there is no way you are going to hire the right person in that two weeks. It will take you one week just to get the ad placed. It is a natural inclination to hire the first person who looks good because you feel pressure to have someone in place quickly.

Instead of rushing the hiring process, hire a temporary staff person through an agency. If possible, bring that person in to work with the departing employee to learn the office systems. Do not worry about teaching them everything the current employee knows about the job. Your other employees will pitch in on big projects; your goal is to have clerical support until you find the right person to fill the position.

Graciously accept the two-week notice and ask the person leaving to draft a detailed job description for all their duties. You should also ask the departing employee to make a small manual of certain tasks he or she does that will assist their replacement. Finally, ask for a list of any deadlines and important dates for the upcoming month that you can review immediately. Then use your departing staff member to help you get a head start on these deadlines.

Do not look to the departing employee to train their replacement. If someone is leaving, you need every minute of that person's time to get the work done, continue the momentum of the cases, and to assist you in looking 30 days down the road for any emergencies. Unless there is bitterness resulting in the departure, good employees will want to help the lawyer get stabilized during the transition.

There are pros and cons for allowing someone to work a two-week notice. Don't let fear or helplessness drive this decision. Certainly if an employee has been fired the best advice is never let them back at their workstation or near a computer. Tell them a date and time they may come back to pick up personal items and their paycheck. I can tell you horror stories of fired employees who destroyed computer files, sent e-mails bad-mouthing their firm, or even taking firm intellectual properties with them. My bottom-line rule is if the employee has been a good employee and will continue to give 110 percent during the last two weeks, they stay. If I believe they won't, I accept the resignation on the spot.

Screening Candidates

The last position advertised for one of the law firms I manage had over 400 applicants. Out of the 400, there were at least one-third that on the face of the resumes were superior resumes and qualifications. I require all applicants to submit resumes through e-mail. I read them, save them to folders, and mark the ones I want to interview. If there is a resume that has any spelling errors in them, I reject them immediately by e-mail and tell the applicant why. If they cannot accurately type a resume, they cannot make it in any office I manage.

I then e-mail the candidates I am interested in a summary of the firm and give an overview of the philosophies of the firm. I attach a job description, the required skills, and a summary of benefits, together with the salary range. It also contains a complete firm application which they are required to complete and bring with them to the interview along with an authorization that allows background and reference checks. I do this to weed out those who are not interested for any reason. I then schedule interviews with those who are still interested.

Interviewing Process

I do a three-interview process. The first interview is not the time for you to talk but rather to listen to the applicant talk. Watch for people who change jobs frequently. I always ask applicants to explain why they left a job. My first interview is to get a feel for the candidate more than the qualifications they list. One of my favorite questions is, "Tell me about yourself." This allows them to use their communication skills. I ask them to tell me their professional goals and what they are looking for from an employer. The first interview should be no more than 30 minutes and you should have in hand when they leave the signed application and authorizations.

While I am doing the first interview, I am rating them on a scale of 1 to 10 in certain areas. Do they look professional and communicate well? This is important in a law firm. I refuse to interview anyone who shows up in blue jeans or shows up late. I expect my applicants to have a good grasp of the English language. I watch their gestures and their face when they are talking. If they claim great experience in an area, I ask specific questions. I have some basic computer questions that anyone who has a home computer can answer.

Because I believe in attitude and aptitude, I do not necessarily believe you have to hire people with prior legal experience except in specialized positions. I keep my specialized positions filled with people with four-year paralegal degrees and experience in the practice area. Rather, I believe that people with the right attitude and the ability to learn and grow are the best employees. You must find people who can relate to your clients. Also, remember that someone without legal experience has no preconceived idea of how to do things. You get to teach them your way.

If you feel the person needs a legal background, be wary of people who call themselves paralegals. Far too many firms are conferring this title on staff who do not have the paralegal qualifications or degrees. Good paralegals are worth their weight in gold, but don't accept they are one just because they say so. I have a list of tasks and job duties a good paralegal should be able to perform and I review it with the candidate. If you do not know how to prepare a paralegal job description or what a paralegal education program should teach, talk to a reputable paralegal education program and see what knowledge a paralegal should have when completing their studies.

I may interview as many as 20 to 25 applicants during the first interviews and I am willing to do more. At the end of round one, I look for those I marked with 8 to 10 ratings. If you do not do the rating during the interview, you will forget later. Usually I end up with about 10 applicants I am truly interested in as potential employees.

The second interview is with someone else in the firm. If you, as the lawyer owner did the first interview, let a staff person do the second interview. I also have the departing employee meet with the applicant as well. The second interviewer should also rate the candidate. The second interview is appropriate for any skills testing you want the candidate to perform. For typing tests, I am not worried about speed but rather familiarity with the computer and accuracy.

The third interview is crucial. At this point, I rarely have more than three to five remaining applicants. This is the time for you to do the talking. You need to let them know your expectations with respect to the position. If you have never thought about this, take the time to write out what you expect from an employee. This covers everything from how you feel about people being late to quality work product and team play. This is also the time to talk benefits and salary. You should know in advance of the interview your budget for salary and what you can or cannot pay. If you make an offer and the candidate wants to negotiate, you can decide if you wish to pay more, but do not be placed in a hostage situation. Applicants are very perceptive if you are unsure of yourself with respect to salary.

I always insist the candidate meet with their potential supervisor so the supervisor, whether lawyer or non-lawyer, can also discuss expectations.

With this three-round interview complete, you then check references, do background checks and if you test for drugs, you have the drug test scheduled. When checking references, I want to talk with the candidate's immediate supervisor from positions held over the past five years, the prior employer owner, and the human resources officer, if any. I always ask two questions: (1) what was the candidate's greatest strength; and (2) what was their biggest weakness. I verify any educational degrees listed. I also ask for two personal references and I call them. While personal contacts tend to give a glowing reference, I have found out more about the candidate by letting the personal reference talk rather than just respond to questions.

Narrow the Field

Once all three interviews are complete, the reference and background checks done, I do a round table with all who interviewed and we rank the top three or five. We contact these applicants and have them take pre-employment tests that will show personality, ethical considerations, work ethic, etc. There are many companies that provide this service and it is amazing what information you get back.

With the results of the pre-employment tests we again meet as a group, rank the top three, offer the job to the highest rated applicant, and go down the list if the first one declines.

Why go through all of this? It's a huge investment of resources, time and training for the new employee to be a valuable, contributing member of the team. You have to give yourself every advantage. You want to find soaring eagles rather than those who want to stay in a cage. You should not lightly add someone to your work culture without good due diligence. Your retention rate will be higher and there will be less confusion integrating the new employee because you have made a good choice.

One final note of caution. All the interviewing and testing available can still result in wrong hiring decisions. The first 90 days of any new employee's performance in the firm should be monitored closely and if it is not working out cut the new employee loose and start over. Do not accept less than the best. If you are not 100 percent satisfied during the first 90 days, you never will be and it will only get worse.

There is nothing magical about finding the right person for the right job. Rather it is a commitment to due diligence up front that makes the search worth the work and worth the wait.

Catalyst is a managing, mentoring and marketing company for law firms located in Raleigh, N.C. The principals of Catalyst have over 100 years experience in working with law firms. Cheryl J. Leone is the CEO of Catalyst and handles the management division. For further information go to www.catalystgroupinc.com or contact Leone at 1-800-434-8911.

By KELLY KLINE

Attorneys and their paralegals have an important working relationship that can be rewarding for both, and for the client, if effective paralegal utilization is implemented. How do you know if you are effectively utilizing your paralegal? If you are not utilizing your paralegal, then how do you get to that point?

How Do You Know?

First, let's review what your paralegal is NOT allowed to do:

1. Represent clients in court.

2. Give legal advice.

3. Establish fees.

4. Sign pleadings.

This means that there is an endless variety of legal work a paralegal can do for you.

Here are some examples:

If your paralegal is not doing any of the above, then it is simple; you are not effectively utilizing your paralegal.

Why Is Effective Utilization So Important?

Attorneys, more than ever, are faced with being able to provide quality legal services while keeping the cost of doing business at an all time low. Moreover, as our society becomes more and more complex, individuals, groups and corporations are faced with more legal issues that require the expertise of an attorney. The work load for the attorney increases and can become overwhelming. In order to accomplish the work that is brought on by this increased case load, attorneys are depending more than ever on their paralegals to assist them in getting the job done. As this dependency increases, the attorneys are giving more and more responsibility to their paralegals.

What will you gain through paralegal utilization?

However, giving a paralegal more responsibility requires the attorney to adequately supervise to ensure ethics rules are complied with and quality work product is generated.

Tools To Assist In Effective Utilization

As previously mentioned, there are many responsibilities that you can hand off to your paralegal as long as boundaries are set. A paralegal may, without meaning to do so, cross the boundaries of practicing law. Dedicated paralegals have a desire to learn and grow in their knowledge of their particular subject matter, deliver quality work product and assist their attorney. However, this desire may put them in a situation where they are giving legal advice to a client for the sole purpose of providing assistance to an attorney. The managing attorney must implement boundaries and supervision so that paralegals do not cross the line between working as an assistant and working as an attorney. The key is simple: supervision. If you can adequately supervise, then you can begin to effectively utilize your paralegal.

1. Training. Many law firms offer in house training programs that a new employee must complete. Smaller firms may think they do not have the resources to make this possible, but they do. It just takes time.

It is more effective in the long run to spend time training your paralegal than to just do the work yourself.

2. Practice drafting motions, pleadings and discovery. Once you feel comfortable with the abilities of your paralegal, let them begin more challenging work. In my first job, I did not have the opportunity to draft documents. As soon as I began working for my current employer, I was immediately asked to draft a motion. It seemed to take forever, but now I can produce them much faster. I practiced by reading the file contents to determine what we would use as exhibits and I used several other motions to help me with the language. Now, I love drafting motions.

A paralegal can draft motions independently and still be supervised. For example, when I have completed a motion I simple e-mail it to my attorney. He then reviews my work and can either make corrections in the document himself or e-mail me the changes that need to be made.

This revision process is a type of training in itself. The most important thing to realize in this example is that the changes must be discussed. Ask your paralegal why she thinks the changes were needed or explain why you made the changes. This new knowledge can then be used in the next drafting assignment.

3. Case review. Once a week, the attorney and I meet to review his case list. In each meeting, we simply go through the list and we brief each other on where we are with each client, what needs to be done, where we are going with the case and if any pertinent information has come in that week. I am either given a list of things that need to be done for each client or I offer suggestions on things that I see need to be done. I can then take the case list, work on it the entire week and then meet with him again the following Monday to begin a new review. Not only is this an excellent way to supervise, it is a great learning tool.

The following is an example of a case review. This happened during one of our first case reviews. We came to one particular client and we were discussing a problem the client had been experiencing. Rich asked me, "What do you think our next step should be?" Well, needless to say, I was surprised. I knew he was testing me. I gave him my response and he said, "Sounds good. And why don't we also.....". He listened to what I said and added in what was needed. Having this type of case review really keeps the paralegal on her toes and interested in the progression of the case.

4. Documentation of work. It is our policy that any conversation a non-lawyer has with any person whether it is a client, another attorney or her staff, adjusters, etc. must be documented immediately in our case management system. Paralegals and other staff members must provide details of the conversation. By using this system, the attorney can pull up any file and view the conversations anyone in the firm has had in connection with a particular case. This provides anyone in our firm with up to date information on the file.

Besides recording conversations, we also enter in notes (a section of our computerized case management system) all of the work product we produce. For example:

January 19, 2004
12:12 PM
Kelly Kline

Drafted motion for additional medical treatment. Added exhibits and prepared cover letter to IC.

E-mailed to RAM for review

Or:

January 20, 2004
9:10 AM
Kelly Kline

TC with client this morning. She had an appointment with Dr. Smith today and he is keeping her out of work for another month. Gave her a Rx to help her sleep. Her next appointment is 2/20/04. Dr. Smith will take more x-rays next month if swelling has not decreased.

E-mail to RAM, FYI.

This allows the attorney to review the work and conversations on a particular file produced that day. The attorney has the opportunity to put supervision in motion by correcting any information or spotting when a paralegal has been exceeding her boundaries. In addition, it can give the attorney a chance to give compliments on work well done.

5. Client service. Do you sometimes feel like all you do is talk to clients, other attorneys, insurance adjusters and all other parties involved in your cases? Why not let your paralegal be in charge of client contact and at the same time provide your client with outstanding service? At our firm, staff are required to call, not write, each client every 30 days. We have a set of questions we must ask each client that will provide information to the attorney. Our files are randomly audited to make sure we are in compliance. We must be at 95 percent compliance or higher at all times. This is a powerful tool. Our clients have no complaints about unreturned phone calls. But how does client service help the attorney?

6. Assigning tasks. Through our case management system and Outlook, an attorney can assign a paralegal certain computerized tasks that must be performed in a case by a certain due date. This is an excellent learning tool.

Example 1: A new file is opened and the attorney knows that the client has a nurse case manager. A task would be sent to the paralegal to send a notice of rules and to request a copy of the file. Once the task has been performed, the paralegal marks it as complete and the attorney instantly knows it is done when she receives an automatic e-mail regarding the status of that task. Eventually, the attorney will not have to send this task because the minute the paralegal learns that there is a case manager, he or she will have already been trained on what to do.

Example 2: An insurance adjuster refuses to authorize additional medical treatment to a client. The attorney takes the time to teach her paralegal how to draft a motion for additional treatment and provides some "go-bys" for help. Then the attorney sends a task to draft the motion for her review. The paralegal spends time drafting the motion and getting the exhibits together. Eventually, when the paralegal hears from a client or adjuster that treatment was not approved, she will automatically know to draft the motion. No direction to begin the motion should be needed, but the paralegal should ask the attorney if it is appropriate to do so.

How Can Paralegals Gain Your Trust?

You may not utilize your staff to any extent other than having them transcribe letters and asking them to take messages. This may be because you are not sure ethically what tasks paralegals can perform, they have not demonstrated to you a desire for greater responsibility or you do not have confidence in their abilities. What can paralegals do to gain the trust and confidence of attorneys?

How To Motivate Your Paralegal

You may not utilize your paralegal fully because you do not know their skill level or she seems unwilling to take on additional responsibilities. Below are a few examples of ways you might be able to get your paralegal in the game.

Utilizing Other Staff Members

Some law firms consist of receptionists, file clerks, law clerks, secretaries and paralegals. Each position is different and holds a different level of responsibility. The attorney must make his or her own decision as to what the levels of responsibility come along with each position. If you are fortunate enough to have a large staff, then you should do three things:

Why should you do this? You can begin to delegate tasks according to skill level. When implemented, you will find that more can be delegated and work product develops faster. For example:

Instead of paying a paralegal to perform clerical duties, turn that work over to a less costly support staff member.

Qualities An Effective

Paralegal Should Demonstrate

Kelly Kline is a graduate of the Meredith College Paralegal Program and she works in the Manger Law Office in High Point, N.C. Richard Manger focuses his practice on personal injury and workers’ compensation.