This morning, I posted about DLAPiper’s $200k minimum annual billing cover charge for clients. But after a couple of conversations, I’ve gotten to wondering how DLAPiper can enforce this minimum charge without running afoul of ethics requirements.
For example, what happens if DLAPiper estimates that defending Company X in a major lawsuit will cost $250,000, but the case gets dismissed after the client spends only $100,000. If Company X paid a $200,000 retainer fee up front, does DLAPiper have to return the remainder? And if the Company didn’t pre-pay, can DLAPiper go after it for the remaining $150,000. Is the $200,000 considered a non-refundable retainer? If that’s the case, what services are being secured for $200,000? Of course, if the amount is not refundable, does the mandatory minimum really have any teeth – since any client could promise to spend $200,000 and fall short. Or perhaps the firm will make up the difference from the generating partner’s paychecks- if a lawyer brings in a client who is supposed to generate $200,000k, the lawyer takes a pay cut for any amount collected less than that amount?
Does anyone have any thoughts on how mandatory minimums work in practice?