S06.E02: Trust Issues

[webruce]

Dean Levine-Wilkins(Taye Diggs)came back to Lockhart/Gardner, from the NY office like Julius Cain(Michael Boatman) did last season, but then Cain disapeared. I like him on the show. 

Will we see Patty Nyholm again? She was Louis Cannings partner in the LG "strapped for cash" story about 2 years ago. Also speaking of former LG partners, will we ever see Derrick Bond? I would have thought with Will's passing they would have gotten some message of condolences or something. And with Will and Diane out of the company maybe he will try to become a partner again?? Ideas!

 

 Maybe Glen Childs should come back and run for States attorney, again. He had good battles with Peter.

 

 I had no idea who Valerie Jarrett was. I had to look her up.

[Kel Varnsen]

Will we see Patty Nyholm again? She was Louis Cannings partner in the LG "strapped for cash" story about 2 years ago. 

 

I hope so. We watched the entire run of Raising Hope over the summer and seeing Martha Plimpton try to do something dramatic after that could be fun.

 

Also totally agree that it would have been better to have the guy who played Julius in place of Taye Diggs. I mean he was already a really established character and could have easily filled the same role.

[AudienceofOne]

I didn't think the episode was boring. I mostly thought it was somewhat contrived. I usually find that particular kind of contrivance works for the Good Wife (the new firm going through changes being in a literal construction site and Alicia as usual being in the centre of a maelstrom) but in this case it just felt kind of overdone and clichéd. I felt like I was watching an episode of the Good Wife; almost as if it came from an episode template.

 

As usual, money problems that were a massive problem in one episode are suddenly resolved with a hand wave.

[NutMeg]

Why does a law firm have a shower?

And if you are going to let some homeless guy use the shower, wouldn't you tell him to use it early in the morning, before clients come in? And wouldn't you tell him that he needs to keep all him clothes on until he is in the bathroom?

 

As to the first question, I agree with Marceline above. Plus that allows people to run or play basket ball during lunchtime or late afternoon and still be able to cleanly function afterwards if they need to be back at the office.

 

As for the last question, a resounding yes in ordinary life, but a weak maybe in a soap ;-)

[romantic idiot]

He's a homeless guy - I figured by then they were just resigned to him doing what he will.

[Inquisitionist]

I assumed they were constructing Diane's office, adding a few walls.  Somehow, I can't picture Diane sitting out in the open!

 

No attorneys sit out in the open.  The space they had F/A procure is simply ridiculous.  There are turn-key operations in Chicago where you can rent fully equipped office space (with actual, you know, enclosed offices) on a temporary basis.  If F/A couldn't afford this, they had no business starting up a new firm.

 

I've visited many law offices in Chicago and other cities.  They are unfailing quiet environments. 

[BearCat49]

Actually, "advance", very generally speaking, means payment before it is due: that can mean (i) before it is due because it hasn't been earned or (ii) before it is due because the agreed upon payment date hasn't occurred even though it has otherwise been earned. If she had said, "they've sent us their retainer for next month, let's use it on Cary"...no doubt she was blatantly unethical. 

 

 

Sorry about that!:)  I'm done now.

 

ETA:  I just noticed that the episode is entitled "Trust Issues".....DUN DUN DUUUN! Maybe they really are setting up another trust account violation arc for the show this season!  I don't believe that to be the case, I think it was sloppy writing, but who the hell knows....

 

 

Hadn't planned to post about this again but the issues are significant to our mythical firm, lol.  Hoping to find time for the next episode, later!

 

All I can say is that as a finance and legal professional, when I hear the word "advance", it tells me the revenue is unearned.  Didn't have time to properly research this issue but here's literally the first thing that came up on my search, RE:  the definition of "unearned" revenue:

 

http://www.accountingtools.com/questions-and-answers/what-is-unearned-revenue.html

 

I looked at this site for literally 30 seconds but noticed that this CPA publication uses the word "advance" in both the main definition (top of page) and the first 3 out of 4 "Examples of Unearned Revenue", third section down.  WARNING:  Their debits and credits don't apply to F/A b/c they don't address accounting for attorneys' trust funds.

 

Chum Hum must understand their importance to F/A and (sorta' slimy) Neil Gross has probably, IMHO, stretched their payments.  Instead of selecting the word "advance", I would have expected Alicia to say something like, "make an early payment on our balance" or "catch up the past-due payments on the receivable".  As the m/p, Alicia would be keenly aware, IMHO, of how much the firm had actually earned that remained unpaid.  (Yes, attorneys typically work on retainer and don't finance; remember, however, Chum Hum is always special, lol!)

 

If she'd used the words "our balance" or "receivable", IMHO Alicia confirms (or would have confirmed, that is) that the firm's already provided the services and recognized the revenue.  Because trust accounts are the property/asset of the client, they may not be reflected on the firm's books.  So, if Alicia had used those words, confirming it's on F/A's books, she confirms that the revenue was previously earned and recognized but remains unpaid.  The difference between "advance" and "receivable" is significant, IMHO.

 

If it's an "advance", that means Alicia is committing the firm to provide $1.3M in future services to Chum Hum, diverting the payment for those services to Cary's personal expense, the bail $$$.  Or, alternatively, if it wasn't unearned revenue but a payment on their "receivable" balance, Alicia was proposing the diversion of $1.3M in working capital to Cary's bail, i.e. his personal expense.  IIRC, the other partners didn't immediately second her motion, whatever option the Kings intended!

 

Incidentally, the $1.3M would be recorded as a personal loan to Cary and subsequently written off as uncollectible, IMHO.  Even at their high billing rates, we're talking about thousands of hours of legal work.  (No wonder they didn't all jump at once to second the motion!)  They indicated during the episode that Cary had neither the assets on hand nor borrowing power to obtain the funds.  The firm wasn't thrown in jail - Cary was.  He's responsible for his bail, not the firm, IMHO.  The bail funds would not be returned by the court until completion of the trial, that is, the entire trial.  So, that's probably years down the road.

 

It's nice that most viewers assume that fine, upstanding Cary will definitely appear for his entire trial.  Although Peter only mentioned the political optics of the situation when he refused to cosign for Alicia, Peter knows, as a former SA, that desperate people do desperate things.  If Cary truly reviewed various hypothetical scenarios with a group of drug runners, we don't have any assurances of his innocence, IMHO.  If things don't go Cary's way, would a desperate Cary jump bail?  Many (formerly) fine, upstanding professionals have done just that.  

 

And another thing, when is Matt C's contract up?  Seems like TGW is reaching that point in time where the leads might prefer to move on.  Josh Charles ("Will") was ready.  Yes, it's very soapy but instead of killing off Cary, they might have him suddenly disappear!  At least with Matt (v. Josh), they'd leave their options open WRT the character.

 

Anyway, those were some of my additional thoughts - all, JMHO.

Edited October 7, 2014 by BearCat49

[pennben]

oh, n/m.  I think lawyers aren't as good of business folks as you do, nor do I think they think in accounting definitions versus legal definitions, which seems where we split.  But, who knows, I tip my cap to you if you are right when I thought it was a thowaway line.  All the best.

Edited October 7, 2014 by pennben

[BearCat49]

Still trying to get a chance to see the next episode so my apologies if my comment's slightly behind the times.

 

I understand your point, pennben, but that's the difference between a partner's responsibilities at a firm and the managing partner.  The m/p is required to devote a portion of their time to administrative matters.  Part of that includes monitoring issues including, but not limited to, billable hours, receivables, trust funds, collections, etc.  Using the proper terminology at the p/s meeting and properly handling trust accounts is part of that position and critical to the firm's success, IMHO. 

 

And, as mentioned before, Alicia should know better than to place her own license in jeopardy.  Incidentally, when someone of Diane's stature jumps ship from an established firm to a start-up, it's possible that he/she hopes to return to straight legal work and avoid the day-to-day administrative headaches involved with the m/p responsibilities.  

 

Returned to add a little more info about the importance of trust fund monitoring.  Spent another minute and pulled up a basic trust account white paper, posted by LexisNexis.  Again, I didn't do proper research so this is just one example but trust fund management is typically fairly standard from state to state, IMHO. 

 

The interesting thing to me is that the very first recommendation in this white paper, "The Lawyer's 7 Point Plan for Trust Account Management" is entitled "Avoiding the appearance of Impropriety: ..."

 

http://www.lexisnexis.com/law-firm-practice-management/documents/lawyer-trust-account-white-paper.pdf    

 

As you can see, "avoiding the appearance of impropriety" is not a general recommendation buried in the document's fine print, behind the practical, day-to-day procedures.  It is front and center, i.e. possibly the most important thing when handling client trust funds.

 

One other thing about the p/s meeting, I mentioned the significance of the p/s minutes, above.  Again, I do not believe Alicia would take a cavalier approach to those minutes or her word choices.  Partnership minutes are used by external auditors as primary source documents when auditing an entity's books and records and their trust fund management.  The firm's probably required to submit audited financials to their landlord, bank, partners, any investors and so on ... 

 

Under no circumstances would Alicia want to have to explain to an audit partner that she didn't really mean what she said at the partnership meeting.  Any time a firm's books and records disagree with the p/s minutes, an audit exception may occur.  Audit exceptions, if considered material to the firm, can result in an unfavorable audit opinion.  Worst case scenario, an unfavorable audit opinion can cause problems with any or all of those parties mentioned, e.g. the landlord, bank, ...  The state bar association wouldn't be far behind, IMHO.

 

Ultimately, at minimum, IMHO the firm would be required to disclose Cary's loan on the published financial statements.  (I also question whether or not the loan violates their p/s agreement.)  I realize that some viewers may consider this "loan" as an "advance" (yes, it's unearned) against Cary's draw and NBD.  I tend to disagree.  For one thing, Cary's future billable hours may be significantly reduced b/c of his legal troubles. 

 

Financial accountants are required to be conservative when they analyze transactions.  Consequently, they will not assume that Cary will appear for trial or book sufficient future billables.  Bottom line, Cary has no collateral so it's my opinion they would write it off.

 

If/when Cary makes any payments or sacrifices his draw, an asset recovery, i.e. reversal, of the previous write-off would be recorded in the financials.  Personally, I believe Cary will need every penny of his 200K cash balance and any available $$$ from future draws to finance payment of his legal fees.   

 

Don't know how far the Kings plan on taking this arc.  Will F/A suffer any of the worst possible consequences?  This is the type of situation, i.e. Cary's arrest and all the issues associated with it, that IRL can easily (IMHO) take down a start-up.  Guess we'll have to stay tuned, lol .....

 

Sorry to get into the weeds on these issues.  it's JMHO.

Edited October 7, 2014 by BearCat49

[photo fox]

Guys, let's just agree to wait and see.