Trade Secrets
Laura McFarland-Taylor
Photo courtesy of Laura McFarland-Taylor
When a potential client asked Kim Wilson Vincent whether she’d be willing to trade her legal services for some construction work, Vincent was taken aback.
“I had never been asked that question before,” says Vincent, a solo in Austin, Texas. “I said: ‘I’m not sure.’ ”
While the proposition may have been new to Vincent, it’s not to many other solo and small-firm practitioners who say their practices allow them more flexibility when it comes to fees—and in what form those fees take.
More and more cash-strapped clients are proposing barter as a way to get their legal needs handled without shelling out cash.
“I was very surprised to learn that there are attorneys who do this, and do it quite often,” Vincent says.
Lawyers who have bartered in the past say there are a few key pointers to keep it legal, ethical and as problem-free as possible.
Laura McFarland-Taylor, a solo practitioner and horse owner in Bolingbrook, Ill., has traded legal services over the years for riding lessons and horse feed. McFarland-Taylor, a trademark lawyer, has been slowly expanding into equine law and says the barter arrangement “seemed to be appropriate because it’s an area of law I’m just getting into.” She adds: “Horse people are poor.”
In one case, McFarland-Taylor traded riding lessons from an instructor who wanted to draw up an estate trust for her horse and cats not unlike those more commonly drawn up for children. The other client, who had a collection matter, traded bags of feed for legal services.
In both instances, McFarland-Taylor treated the barter arrangement just like any other fee-paying representation, including having a retainer agreement. The agreements spelled out exactly how McFarland-Taylor would be paid, down to the kind of grain and the size of the bags. “I could figure out relatively easily that five bags of grain equals X amount of time.”
While the client effectively ended up getting a discount because she buys the feed in bulk, McFarland-Taylor says bartering is still an attractive option. “You can help more people who don’t necessarily have the cash. … They have a service they can provide to me, and I can provide my service to them. Everybody ends up happy.”
MATTERS TO CONSIDER
If you don’t know the client beforehand, you can end up running into disagreements, even if you are very specific, she says. For example, “this trainer friend of mine—I know her work, I know the kind of person she is. I knew the level of instruction would be the same as someone paying [cash for the lessons]. You don’t always know that’s true.”
Newton, Mass., tax and estate planning lawyer Barry Wilensky cautions attorneys to remember the tax consequences. Bartered goods and services are taxable. Ask a client for a 1099 form stating fair market value for the goods and services received and include it as income on a Schedule C, he says. Few do so, Wilensky suspects.
“I would venture to guess that a majority of them don’t,” he says. “Do a lot of attorneys [barter]? Probably, depending on the type of law they do. If you’re doing contracts for small businesses, and a guy owns a furniture store, he’d probably rather give you a couch.”
Bartering is also ethically permissible as long as the deal is reasonable, says Art Garwin of the ABA’s Center for Professional Responsibility in Chicago. “In theory, it’s no different from bargaining for what the hourly rate is going to be.”
Of course some clients may propose deals that work to their advantage, cautions Chia Evers, a nonpracticing attorney in Los Angeles. She once worked for a firm in her hometown of Laramie, Wyo., where one of the lawyers regularly bar-tered with a client for meat. “It helps you to provide services to people who might not otherwise be able to afford them, but without doing full pro bono work,” she says. But if you’re not careful, “some people will feel like they can put what they owe you on the back burner.”
