Watch for These Warning Signs
Even if you never break a law, at some point in your life you will need a lawyer to buy a home… write a will… or administer an estate. Unfortunately, you might not get what you pay for.
A 2007 survey of 251 attorneys by William Ross, a professor of law at Samford University’s Cumberland School of Law, found that a staggering two-thirds of attorneys either admitted to padding client bills or said they know an attorney who regularly pads bills.
Even many lawyers who don’t intentionally cheat clients may push the ethical envelope to bill them in a manner that maximizes revenue. Either way, the result is legal bills that are hundreds or thousands of dollars higher than they should be. How to make sure your lawyer’s fees are reasonable…
NEGOTIATE THE FEE
Discuss money matters with the attorney before hiring him/her.
A simple flat fee (plus expenses), agreed to up front, is often best for the client — because it ensures that the cost won’t go over a certain amount. And lawyers often accept a flat fee for simple matters, such as uncomplicated wills or real estate closings. However, many lawyers will not agree to a flat fee if there is a risk that the legal matter could become more complex and time-consuming than anticipated.
Instead, lawyers frequently demand an hourly fee. Exception: Some matters, such as personal injury lawsuits, commonly involve contingency fees — meaning that the attorney agrees to take a predetermined percentage of any settlement or court award.
Some lawyers claim terms are not at all negotiable, but there usually is some room for flexibility or even creative compromise, assuming that the lawyer wants your business. Example: Offer to pay a certain amount that you both consider reasonable as a guaranteed minimum flat fee for the expected amount of work. In addition, agree to pay an hourly fee at a lower-than-usual rate if the matter becomes more complicated than expected — for instance, if you are an executor and a beneficiary contests your execution of the will.
Other terms to negotiate in advance if you are paying an hourly fee…
Billing increments. Most law firms bill in six-minute increments. Protest if a firm wants to bill in 15-minute increments even when, say, only one minute is spent on your case.
Photocopying rates. Some law firms charge as much as 20 or 25 cents per copy, which can really add up if there are thousands of copies. You should push for as little as 10 or 12 cents.
Travel time. Most attorneys bill their full hourly rate for time spent in transit for a case. Savvy clients ask that travel time be billed at half the attorney’s usual rate… or that the attorney be required to use travel time for which he bills you to work only on your case.
An attorney who is hired for an hourly fee occasionally may slip questionable charges onto a client’s bills. Watch for these common warning signs…
Poorly itemized bills. Your bill should explain what your attorney was doing during each time segment billed. What to do: Insist on a detailed bill. Vague terms such as “research” and “preparation” should be explained.
Complex bills. Bills written in impenetrable legalese might hide overcharges. Example: Latin terms used without explanation. What to do: Insist on a bill that a layman can understand.
Too many junior lawyers. When business is slow, law firms often assign extra junior lawyers to cases where they are not needed. What to do: If more than two attorneys are listed on your bill, call and ask why such a large team was necessary… and what special talents each attorney brought to the table.
Attorneys doing nonlegal work. Your lawyer should not bill you for time that he spent filing, scanning, assembling documents or doing other clerical work. What to do: Tell your attorney that he should have handed off these clerical tasks to a legal secretary. Legal secretaries’ salaries are part of law firms’ overhead and should not appear on your bill. (Do expect to be billed for paralegals’ time, however, at lower rates than for lawyers.)
Staff changes. You should not be responsible for the added time it takes a new attorney to get up to speed on your case if the law firm assigns you a different attorney midstream and you did not ask for the change. Best: Watch for inflated hours on your monthly bill following an attorney change.
Billing for billing. You should not be charged for the time spent compiling your bill or answering questions regarding the bill. Best: Scan your itemized bill for entries related to billing. Try to keep conversations about billing separate from other conversations, and track them in a diary.
RESOLVING A BILLING DISPUTE
If you are not satisfied with your bill and can’t get the lawyer to alter it, contact your state’s bar association to find out how legal fee disputes are resolved in your state. Most states offer some form of arbitration. State bar associations can be found through the American Bar Association Web site (www.abanet.org/barserv/stlobar.html).