We are now finishing up talking about the topic of “collecting” as the last area of the five areas that make up every business in the world. As we have stated, the other four areas are as follows: “Clients” or “customers”; “Administration”; “Getting the work done”; and “Billing.”

Last week’s topic was the concept of “introduction of your clients to a friendly banker,” or the “use of credit cards for the payment of bills.” The topic for this week is “the acceptance of personal property and real property” for the payment of your bill.

The Rules of Professional Conduct in Rule 4-1.5 Fees, in the Comment, Terms of Payment, provides as follows:

“A lawyer may accept property in payment for services such as an ownership interest in an Enterprise providing this does not involve acquisition of a proprietary interest in the cause of action or subject matter of the litigation contrary to [the Rules]. However, a fee paid in property instead of money may be subject to special scrutiny because it involves questions concerning both the value of the services and the lawyer’s special knowledge of the value of the property.”

What this Comment is saying is that you better be sure that what you are taking by way of property is reasonable with regard to its value verses the value of your services.

Over the years I have taken a motorcycle, vehicles, big screen T.V.s and other such property as payment of my fees. I have always been careful to be sure that I let the client set the value of their property, and that I always took special care with regard to how much I was billing a client who was going to pay their bill with property. I think one of the smartest things you can do is to be sure you always take property of lesser value than your bill, and therefore, if any scrutiny is ever made of it, you will always be on the safe side with regard to trading value for value.

Recently, I had an opportunity to handle an estate planning matter for a neighbor. I worked closely with this neighbor and her relatives to be sure we had done everything properly to avoid probate. Shortly after the time that we finished her estate plan, she died of old age at the age of ninety-four. Our efforts at her estate plan were successful, and there was nothing that needed to be probated and everything passed through her relatives to a Trust. When it became time to talk about how to dispose of the major asset of her estate, which was her house, I tried to talk the beneficiaries of her Trust, who were relatives from out of town, into maximizing the amount from the house by selling it at auction or by rehabilitating it and selling it because it was a house that literally nothing had been done to in probably the last thirty years, but with some TLC the house would probably bring a very good price because it was in an excellent neighborhood where the houses had been selling at some very high prices. The relatives looked at me and said, “why don’t you buy the house?” I of course said Whoa! I had a conflict of interest and the only way I could even think about buying the house was if we had the house appraised and they hired themselves another attorney to conduct a transaction on the sale of the house to me. This is exactly what happened. I was happy with the appraisal, they were happy with the sale, the attorney who represented them in the transaction got paid, and everyone lived happily ever after.

The reason that I’m telling you this story about the purchase of this house from a trust that my firm had set up, is to illustrate the length you need to go in order to be sure to handle the taking of property in payment of your fee with extra special care. Obviously, the attorney who takes property for their fee has a built-in conflict of interest. If the value of the property taken for the fee is substantial by comparison to the fee that it is taken to pay, the lawyer is subject to substantial criticism.

I can see a set of circumstances where a lawyer taking a piece of property for a fee might have to go so far as to have an obligation to say to the client that they need to get themselves an attorney to represent them in the transaction with you, the lawyer, in order to be sure that the amount of property you are taking in lieu of money for your fee is reasonable. There is nothing written in the Rules of Professional Conduct with regard to this concept, but clearly it is contemplated with regard to the language “however, a fee paid in property instead of money may be subject to special scrutiny...”

One of the things I have always tried to do over the years is to always err on the side of caution with regard to dealing with clients and fees. I must admit that I don’t have a perfect track record with regard to every client being totally satisfied with their fee, but it is certainly not for want of trying on my part to be sure that they are, if not happy, at least satisfied. Even with that effort, there are still some clients that, no matter what you do, you are not going to be able to make them happy or satisfy them.

In short, the more equal the value of the services are to the value of the property, the better off you are. Anything you can do to ensure this is the case, such as getting an appraisal or utilizing blue book prices on vehicles or any other such mechanism, is going to be very helpful with regard to being sure you comply with the Rules of Professional Conduct. Remember one of my favorite phrases is: “the eleventh commandment is, thou shalt cover thy after side!”

This is the last article we have in the area of “collecting,” and next week we are going to have you add up your score to see where you are with regard to being somewhere between “On the Cutting Edge,” and in the “Stone Ages.”

Talk to you next week!

Jim Wirken is a civil trial attorney and the Chairman of the Board of The Wirken Law Group in Kansas City.