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Counting Hourly Pennies Spoils Client Relationships

You might recall I posted previously about waiving hourly fees in a case where the Supreme Court unexpectedly changed decades of precedent. In that instance, the client came to me after the one year period in his insurance policy had lapsed, however, the law at that point was clear that the one year period in which to bring suit against the insurance company was told from the date of notice to the date the insurance company denied the claim. When the Supreme Court extinguished its own judicial tolling precedent, it failed to provide any retro-activity for what was certainly millions of dollars of pending claims which had relied on that precedent.

In any event, by waiving approximately four thousand dollars worth of fees in order to get the client's matter wound up for a settlement of about fifteen thousand dollars (which was paid by the defendant in spite of the change in Supreme Court precedent based on the arguments we came up with to get around that precedent and the threat of appeal). We gave our firm an opportunity to build a client relationship for the future. That opportunity came to fruition today when the client called and indicated that he wanted our firm to represent his company in a variety of new matters. The client clearly appreciated the waiver of fees because he knew that any other firm would have grasped every last penny. I even wonder how many firms would have felt bad for themselves that the Supreme Court had changed precedent because of the firm's loss of fee potential on a matter that would come to an untimely conclusion?

Building relationships requires more than good conscientious service. I believe that building client relationships is fundamentally dependent on demonstrating to the client that you are willing to share in the risk of the outcome of the case. You have to have "skin in the game" as Patrick Lamb likes to say over at the Perfect Client Service Blog. Without it, you are not in the boat with the client.

Comments

Aaron
In that instance, the client came to me after the one year period in his insurance policy had lapsed, however, the law at that point was clear that the one year period in which to bring suit against the insurance company was told from the date of notice to the date the insurance company denied the claim.
Are you blogging via dictation? ;-)

The old rule, of course, had the benefit of avoiding unnecessary litigation where the insurance company ultimately decided to grant the disputed benefits. And with the number of years the tolling interpretation had been in effect, the legislature was certainly aware of how the courts were treating the statute... as were the insurance industry lobbyists who devote so much effort to getting pro-insurance industry legislation passed.

Yet it is the original precedent which intrudes upon the province of the legislature, and not the new ruling which changes a status quo which was clearly accepted by the legislature? Some state courts assume that if a legislature has not acted within a given number of years, it agrees with the manner in which courts have interpreted its legislation. The Michigan Supreme Court doesn't seem to care what the legislature thinks about past interpretation, even when claiming to be respecting legislative intent.

Patrick Lamb

Thanks for this post. Aaron clearly missed the point of your post, which certainly was not to discuss the exciting topic of insurance law. But every post on smart business decisions based on long-term thinking provides a measure of strength for others. Congrats on being smart and for reaping the payoff!

Aaron

Dare I say, if you are going to accuse people of missing the point you should buy a mirror? You missed the point of my comment, which was to digress on the subject of the Michigan Supreme Court.

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