Thursday, August 30, 2007

How Employment Lawyers Charge Their Clients

Employment lawyers work to earn money. When an employment lawyer is evaluating a case his or her eyes are on the bottom line. "Can I service my client while making a profit?" is the question we are asking. Many cases come with laudable rewards in addition to money, including working to attain a measure justice for our clients. But do not kid yourself: lawyers work for money.

There are four ways a lawyer can charge: by the hour, on a flat rate, on a contingency-fee basis, or some combination therof. Choosing how to charge involves an evaluation of risk for both the attorney and the client.

Hourly billing -Most risky for client; Least risky for attorney.

The attorney keeps track of his or her time and send the client a bill for the hours worked. Because liability often is not readily apparent in employment law cases, many employment law attorneys require that the initial phase of the attorney-client relationship be based on hourly billing. In purely defensive cases, such as when an employer is claiming my client is violating a non-competition agreement, hourly billing is often the most rational choice. (Much has been written about hourly billing variants, such as value-based billing. I am keeping it simple for this article.)

Flat Rate -- Moderately risky to the client; Moderately risky to attorney.

Employment lawyers bill a flat rate for certain discrete tasks. For example, I have processed federal employee disability retirement applications on a flat rate. The client pays a set fee and does not need to worry about the amount of time I am spending on his or her matter.

Contingency Fee -- least risky to the client; most risky to attorney.

The attorney only recovers a fee if the client wins. For this reason, most employment attorneys will not consider a pure contingency fee relationship unless the employer's liability and ability to pay are clear. I generally only consider pure contingency fee arrangements in overtime, unpaid commissions, and accrued vacation pay cases.

Combination of Hourly, Flat Rate, and/or Contingency Fee.

The lawyer and client and agree to any combination of the above. For example, the lawyer and client may agree to hourly billing until the bills reach a certain dollar amount and then agree to convert the matter to a contingency fee relationship. The possibilities are infinite and require careful analysis of the merits of the claim and the possibility for settlement or success at trial.

Wednesday, August 29, 2007

Accrued Vacation Pay Is Covered by the Wage Payment and Collection Law

I have written many articles on why accrued vacation should be considered a wage under the Maryland Wage Payment and Collection Law (MWPCL) . This is an important issue for Maryland employees. If accrued vacation is covered by the MWPCL, a plaintiff suing to recover earned wages may be entitled to three times the amount actually owed.

The Maryland Court of Special Appeals settled the matter in favor of Maryland employees. In Catapult Technology, LTD v. Wolfe, the Court held that accrued vacation is covered by the MWPCL and cannot be forfeited. The Court stated that information on on the Maryland Department of Labor's website stating that accrued vacation is not a wage -- is wrong. In a troubling portion of the opinion the Court denied treble damages finding that the plaintiffs did not prove Catapult kept their earned waged in bad faith.

My colleague, Marc Smith, of Smith, Lease and Goldstein,and, litigated this case.