For Those Who Spend Less Than $300 Million on a Lawyer

If you spend $300 million or more a year on legal fees, this post is not for you. If, however, you need to hire a lawyer and are concerned about how – and how much – you will be billed, keep reading.

Certainly anyone who finds themselves needing to retain an attorney – whether a Fortune 100 company, a small business, or an individual –  wants to make sure they are being billed fairly by their lawyer and that they are getting value for their money.

The folks who write $300 million checks to lawyers can go to insurance giant AIG for help managing their legal expenses, as the company recently set up a new entity whose sole purpose is to advise large businesses about the amounts they are paying their attorneys and “what the right costs for services are and the right value is for the services that are being delivered.”

But most folks aren’t going to be hiring a whole other company to make sure that happens.

When you hire an attorney for a business or personal matter, your assurance that your lawyer is being straight up with you on their fees and billing practices will largely hinge on open and honest communication between you and your lawyer. This should include establishing clear expectations as well as dialogue about how and why you are being billed.

Clear Expectations – Even When Things Are Unclear

I have a fairly diverse practice, encompassing estate planning, family law, and transactional matters as well as litigation. With litigation in particular, the process can be and usually is lengthy, time-consuming, and notoriously unpredictable.

Cases can be resolved fairly early in a dispute (which is always the hope and goal) or the conflict can metastasize into a matter that takes a long and winding road to trial, on to post-judgment motions and appeals and perhaps another round in the trial court, just to name a few possibilities.

I let my clients know upfront about the dangers and potential costs of litigation, and those discussions not only set expectations but play a role in the strategy we decide upon going forward. It is vital that clients go into a lawsuit with a clear understanding that the amount in fees that may be expended is unclear. This does not mean you are writing a blank check. It does mean that you know what you may be in for so you can plan accordingly.

While estate planning and business transaction matters may have more predictability than litigation, the necessity of setting expectations upfront is no less important. I provide my clients with either a set fee or a range within which they can expect their matter to cost.

By having these discussions at the outset, we can avoid surprises or misunderstandings down the line, and we can incorporate any questions or concerns about costs into our planning.

A Dialogue, Not Just a Bill

From our first meeting until your matter is concluded, I want you to feel and believe that I will be fair, transparent, and accommodating in my billing practices. I want you to know what to expect in the future and what has been done for you in the past. I want you to review and fully understand your bills and reach out to me if something is unclear. If your case has taken a turn that will result in a monthly bill being particularly high, I will make every effort to give you a heads-up so that you can plan accordingly.

Finally, I know that if you are paying for my services, you are likely doing so because circumstances have made it a necessary or prudent move in order to protect your interests or advance your goals. Part of protecting your interests is being judicious in my billing and cutting time from my bills on occasion.

My fundamental role as a lawyer is to help people who need legal assistance. To that end, I will work with you to find an arrangement that fairly allows me to do so.

At the end of our legal journey together, you should feel that my bills are fair, reasonable, and within the expectations set throughout the course of your matter – even if you spend a little less than $300 million.

“How Much is This Going to Cost Me?” – Understanding How Attorney’s Fees Work

Either you or someone you know has likely found themselves in one of these situations at some point: you’re facing a health problem and want to see a doctor, or you know it’s been way too long since you’ve been to the dentist, or that leaky roof, broken air conditioner, or sputtering car is in desperate need of repair – but you put it off or never take care of one of these vital needs because you are worried about how much it’s going to cost.

The same thing happens when people are facing a problem or issue that requires the assistance of an attorney, often for the first time in their lives. But just like the foregoing problems won’t go away on their own, and likely will only get worse, ignoring a legal problem or failing to get help because you are worried about how much a lawyer will cost you may only end up costing you more in the long run. The reality is that a lot of folks don’t understand how attorneys charge for their work; sometimes, speaking with or even retaining an attorney to handle your matter won’t cost you anything at all.

Before you make a decision as to whether or not to reach out to a lawyer for help, it is important to understand the different kinds of attorney’s fee arrangements and which one may apply to your case. Here are the most common fee arrangements:

  • Initial Consultation. The first step in your relationship with a lawyer is usually your first meeting, or initial consultation, in which you discuss your specific problems, concerns, and questions with the lawyer and explore whether or not to retain the attorney to handle your matter. While some attorneys may charge you for that first meeting at a flat rate or an hourly rate (as discussed below), many attorneys, including myself, provide for free initial consultations regardless of whether or not you choose to hire the lawyer after your meeting.
  • Contingency Fee. When you see a lawyer in a TV commercial exclaim something like “You pay nothing unless we recover damages for you,” they are speaking about a contingency fee arrangement. Primarily used in personal injury, medical malpractice, Social Security Disability, and workers’ compensation matters, this arrangement means that if the attorney fails to recover any compensation for you either through trial or settlement, you are not obligated to pay any attorney’s fees (though you may be on the hook for out of pocket costs). If you do obtain a recovery, the attorney will take a percentage of that amount (most often 33⅓%, but sometimes higher or lower depending on the law or the agreement) as their fee and also reimburse themselves for any costs incurred during the case.
  • Flat Fee. For simpler matters like preparing a basic will, a standard bankruptcy matter, or uncontested divorces, an attorney may charge a flat fee, that is, a set amount up front for completing the requested work or for particular aspects of the matter.
  • Hourly Rate. This is perhaps the most common fee arrangement, and the one used most often in litigation matters. The attorney will charge you a dollar amount for every hour of time they work on your matter. How many hours your matter will require and how much per hour the attorney may charge for their work will depend on a number of factors, such as the complexity of the matter, the attorney’s experience, and the average rate in the community in which the attorney practices.
  • Retainer Fees. A “retainer” is essentially a deposit a client gives to an attorney at the beginning of the attorney-client relationship, with the funds being drawn upon to pay the attorney’s fees as the matter proceeds. These funds are usually deposited into a client trust account only to be applied to fees incurred for that specific client’s matter. At the conclusion of the case or relationship, any unused portion of the retainer will be returned to the client.

For those who are involved in a lawsuit, it is important to understand that most of the time (unless a contract, court order, or specific statute says otherwise), the prevailing party will not recover or recoup their attorney’s fees and costs from the losing party at the conclusion of the case.

Whatever the fee arrangement, it is important that you discuss and fully understand how the attorney will bill you for their time and their work, and that a written agreement be executed clearly explaining how the fee arrangement will work. Don’t simply ignore or put off any pressing legal matters; contact an attorney to see what arrangements can be made that will allow you to address your needs.