Law firm consultants like to throw around terms like “value added billing” and “alternative fee arrangements” in describing creative ways for lawyers to be compensated by their clients. But long before the billable hour, the flat rate, or the contingency fee, lawyers would make use of the barter system like anyone else. Even Abraham Lincoln accepted food and livestock periodically as payment for legal services rendered.
In a nod to the digital age, Houston DWI defense lawyer Jay Cohen made headlines recently with the announcement of his willingness to accept bitcoins (a form of virtual currency) in payment of legal fees.
What may surprise many people is that even today, while cash is still king, lawyers have been known to accept what might be called truly alternative fee arrangements. Of course, it’s not always voluntary.
After successfully defending a small furniture manufacturer in a lawsuit over a workplace injury, I had to confront a client with cash flow problems so serious that he was on the verge of shutting his doors. Rather than accept the fact that I would likely never be paid, I informed him that I would be at his furniture showroom the next day to collect my fee—in furniture. My paralegal and secretary got leather sofas as part of their bonuses that year.
By some lawyers’ standards, that’s not unusual at all. Fred Schwartz, a Boca Raton, Fla., defense lawyer, accepted a white 1977 Rolls-Royce from Rose Marks, a Fort Lauderdale fortune teller being prosecuted by federal authorities for fraud.
In the late 1980s, Schwartz represented another individual in a white collar crime case. After the client ran up a $400,000 legal tab, he proposed that Schwartz and his firm accept a rundown Miami Art Deco hotel that he was in the process of refurbishing. Schwartz held out for cash, and eventually got around $300,000.
As luck would have it, the hotel would have been a better idea: The Tides hotel on Ocean Drive in South Beach later sold for $5 million.
Attorney Michael Weinstein, like Schwartz, has taken the occasional automobile in trade for his services. His “fees” over the years have included a 2005 Mini Cooper, a Krieger watch, paintings and a Cartier ring that he later sold on eBay.
Schwartz isn’t the only lawyer to be asked to barter legal fees for real estate, either. Criminal defense lawyer Fred Haddad took to heart his doctor-father’s advice to barter when necessary. His payments have included a Wyoming ranch, as well as boats, Ferraris, and even a few airplanes over the years.
And hey, a lawyer’s got to eat, too. One lawyer reportedly had his client pay one invoice with an entire lamb, while the next bill was settled with 100 pounds of beef—“a couple of dozen steaks, a lot of roasts, and the rest is ground beef.”
As he puts it, “If I get paid (in cash), I can eat. If I get paid with food, well, I can eat.”
Another lawyer, Jason Kreiss, was offered a fee in beef that was a little more on the rare side— a herd of cattle in Venezuela, to be exact (he declined). But Kreiss, an avid offshore fisherman, did accept an offer of free live bait for life from one client he’d defended on a theft charge.
Food and real estate aside, some lawyers have been presented with alternative fee offers that range from the sublime to the ridiculous. Fur coats and jewelry were about as strange a fee as attorney Jim Lewis ever got—until he received two adorable little Yorkshire terriers.
Eric Schwartzreich was once asked to defend a man accused of being an illegal arms dealer. The proposed retainer may have given him a clue about the would-be client’s guilt—Schwartzreich was offered an army tank.
“I think he was serious, but I didn’t take the case and I didn’t take the tank. I didn’t know where to park it; I didn’t think it would fit in my garage,” he says.
Naturally, some offers would tend to make most lawyers leery. Jason Kreiss thought better of accepting free paralegal services from one client; after all, Kreiss had defended him on charges of impersonating a lawyer.
Other criminal defense clients have been surprised when their offers of childcare services aren’t accepted. And any number of lawyers (who wish to remain nameless) have turned down offers from clients to barter legal services for sexual favors.
Of course, even when something non-monetary is accepted, a lawyer and his accountant still need to value it and declare it as income—Uncle Sam won’t take steaks or Yorkies.