Financial Matters: Dealing with Legal Fees
by Joseph Warren Kniskern
Regardless of which attorney you select, you must understand fee arrangements and be aware of how to keep your legal costs reasonable.
Negotiating Fee Arrangements
How fees are set.
Attorneys' fees are often negotiable, although most experienced lawyers do not want to lower their fees. Most lawyers set their rates based upon these factors: time, labor, novelty, the difficulty of the legal issues involved, and the legal skills necessary to work the case properly; the likelihood that acceptance of the case will prevent other employment, either because of time or conflicts of interest; the customary fees usually charged in the area for similar legal services; the amount involved and results obtained; the time limitations imposed by the client or circumstances; the nature and length of the professional relationship with the client; the experience, reputation, and ability of the lawyer performing the services; and overhead (library costs, secretarial help, office rent, and costs of equipment, etc.). The lawyer will be very familiar with what can and cannot be done in setting a reasonable fee for your case. Even so, negotiate for lower fees. Above all, make sure fees are in line with what other local lawyers charge for doing the same type of work.
Most attorneys realize that the practice of law is no longer just a service profession but is also a business. No one can ignore business considerations and practice for very long. Therefore, many attorneys are diligent in advising their clients up-front what they charge. You should expect regular bills during the case, as well as a collection system for late payments.
Types of fee arrangements.
There are three traditional methods for setting fees: fixed fees; hourly rates for work of uncertain duration; and contingency fees (a percentage of whatever a lawyer wins for the client).
Fixed fees are unusual in litigation cases because no one can reasonably foresee when and how the case will end. Although fixed fee arrangements may force the lawyer to work more efficiently and prevent misunderstandings about the final bill, lawyers know that clients can take advantage of them by excessive calls and conferences. Consequently, the lawyer may lose interest in the case and assign it a low priority.
Contingency fee arrangements in dissolution of marriage cases are illegal in most states. Such arrangements create many conflicts of interest at the expense of shattered marriages and broken lives. Therefore, you should expect your lawyer to charge a negotiated hourly rate for your case.
Many lawyers want an advance retainer or deposit against your fees and costs. You should receive full credit for this retainer against your legal expenses. Negotiate now for a refund of all unearned portions of the retainer when your lawyer's representation ends.
Legal representation agreements.
Fee and representation requirements are usually written into an agreement or letter signed by you and your lawyer. Carefully read this agreement. It will control how you and your attorney work together in handling your case. If you have any questions or concerns about the lawyer or the work involved, have your understanding written into your agreement. These agreements help avoid misunderstandings and assure effective communication about mutual expectations.
You have a right to know about work completed on your behalf in enough detail to be sure that fees are reasonable and comply with your fee agreement. If you do not ask for a detailed bill, many attorneys will simply send a short, one-page statement that states "For Services Rendered" and list a lump sum fee due. This saves time for the attorney, but even the most honest of lawyers can make mistakes in figuring fees. Without a detailed bill, you cannot correct those errors. Therefore, always ask for a statement with a daily accounting of tasks performed, hours per task, individuals who did the work, and the hourly rate for each.
In examining your fee statement, be aware of a few overbilling problems like these: overuse of conferences among lawyers in the same office about your case; repeatedly passing your file on to new lawyers who will bill you for reviewing your case; overstaffing your case by having more than one person attend hearings and depositions; over-researching issues and padding legal research hours; charging a high hourly rate for existing computerized form documents usable in many cases; charging for services at improper rates such as billing secretaries as paralegals, paralegals as lawyers, and lawyers not yet admitted to the bar as admitted lawyers; billing for work product that cannot be produced to you; markups on fixed costs such as computerized legal research, photocopying and facsimile charges, meals, and airline tickets; and summarizing depositions to an unwarranted degree. If you prohibit these matters in your fee agreement, you avoid many expensive misunderstandings during your case.
Most lawyers bill on a monthly cycle under the theory that regular billing helps assure regular payment. It also reduces your shock in receiving one enormous bill at the end of your case. However, billing at the end makes it easier to talk to your lawyer about adjusting the bill if the result is worse than expected due to decisions he or she made.
Payment of fees.
Most lawyers have a precise system for collection of fees. After 30 days, the lawyer may send out a second statement. A letter follows after 45 days, with a personal telephone call after 60 days. Slow-paying accounts receive low priority for the lawyer’s time if other clients pay promptly. Also, although lawyers do not like to arbitrate or litigate fees with clients, they will do so if the potential loss is large enough to warrant it. Be wise and promptly pay your bills within 30 days. Your lawyer will appreciate you as a client and work harder for you.
How to Cut Your Legal Fees and Costs
Developing a strategy and budget.
Many variables are difficult to control in a divorce, such as whether your spouse and opposing attorney will settle, fight discovery, or use delay tactics. Developing a strategy and budget for your case -- and updating it before major hearings or conferences -- will provide you and your attorney with a clear understanding of the proper level and limits of the work.
Try to set a maximum fee cap on the case that should not be exceeded without prior written approval. This helps you monitor expenses and avoid surprises in your final bills.
Your lawyer should watch fees and expenses to make sure you are billed fairly under your fee agreement. Before your budget for legal expenses in any phase is exceeded, you should be notified promptly so that you can decide whether to revise your budget or modify the strategy. Then you can give your prior written approval of the excess amount.
Encourage your lawyer always to be alert for a creative or less expensive way to proceed -- even if the work is within your budget -- and to discuss these matters with you promptly. Above all, in developing a strategy and budget, use a laser rather than a shotgun in addressing your issues and problems. Be precise and efficient.
Ask your lawyer to be sensitive to the costs of multiple representation at meetings and hearings, high staffing levels, rotating persons onto matters with which they are unfamiliar, and training young lawyers on your case.
Since your lawyer can handle most of your case in the office, the need for overnight travel is slight. However, if out-of-town travel is necessary, have your lawyer agree that only one attorney should travel; expenses for lodging, restaurants, or transportation should not be extravagant; and charges for airfare should be at the coach rate only.
If you require extra or unnecessary legal work, such as excessive telephone calls or conferences or filing unwarranted court pleadings, you should expect to pay for these. Similarly, your lawyer should agree that if work completed is not budgeted or approved, is not properly done, or requires correction, you will not be billed. Find out what your lawyer's minimum billing increment is. Lawyers often charge in tenths or quarters of an hour. If you are charged a quarter-hour for a two-minute phone call, prepare for this call and use the full fifteen minutes to your benefit.
Does your attorney double-bill you and other clients for work benefiting everyone? If so, object to this and work out a fair fee allocation.
Assist your lawyer in finding documents or information to lower your legal expense. Offer to locate witnesses, secure property appraisals, and copy lengthy documents at discount copy centers.
Develop a friendly working relationship with your lawyer's secretary. You will receive information about your case at no additional cost, since time for secretaries is not usually billed to clients and they are quite familiar with cases. Happy secretaries will also work to keep your case a priority.
Hourly rates almost always include your lawyer's overhead, which should not be added separately onto your bill. Reimbursement of expenses to third-party suppliers should be at documented, actual cost.
Unless agreed upon in advance and in writing with your lawyer, try to avoid or limit paying for these costs:
Administrative time by the attorney;
Secretarial overtime, unless it is a legitimate emergency for your case alone;
Time spent preparing bills and discussing billing matters with you;
Photocopies made internally in excess of a good faith estimate of actual cost;
Internal office messenger expense in excess of the cost of comparable outside services;
Meal costs, except for a reasonable cost if a matter necessary to advance your case must be discussed with an outside party during the meal;
Auto mileage in excess of a reasonable cost per mile (AAA rates or IRS allowances).
When you meet or talk with your lawyer, be prompt. Organize papers and have information ready with a list of carefully thought-out matters you need to discuss. Avoid deluging your lawyer with information unless it is requested. Always listen carefully to your lawyer's advice. Promptly follow the instructions carefully.
Tell your lawyer you do not want "surprises". As the expert, your attorney should expect and warn you in advance of matters that may affect you or your case so that you can properly prepare yourself.
Make sure your lawyer does not negotiate away any of your rights or give away any personal information without your prior written approval.
Tell your lawyer that you will not call unless you have an important legal concern. (Remember, you are not your lawyer's only client.) Your attorney should return telephone calls within 24 hours unless he or she is out of town or reasonably indisposed.
Keep your case files up-to-date. Ask your lawyer to copy for you significant memoranda or pleadings prepared on your behalf so that you can monitor your case progress. This also allows you to stop any activities that may be too expensive or overly combative with the other side.
Encourage your lawyer to alert you to anything you do that interferes with your case. Similarly, advise your lawyer that you want to discuss any of your concerns directly with him or her as well.
If your questions cannot be answered within 15 minutes by telephone, write your attorney a letter. This will give him or her time to focus on your needs and give you a more thoughtful response. Letters allow you to share more information with your lawyer in a shorter period of time while also documenting your concerns. Always keep a copy of your letter for your files. Use it as a checklist when your lawyer responds.
Disagreements and termination of representation.
If you have any disagreements with your lawyer, discuss problems directly without delay.
If you and your lawyer cannot agree on a fair settlement of the dispute, your attorney should agree to promptly secure court approval to withdraw so you can secure alternate counsel without jeopardizing your case.
Pay your first lawyer a reasonable fee to the date you change lawyers. To avoid disputes about fees in this instance, have your lawyer agree in advance to arbitration or mediation of the dispute. If this is not available, then you and your attorney can pursue whatever legal remedies are available.
If your lawyer has violated rules of professional conduct (such as missing filing deadlines or misappropriating trust account funds), you should consider filing a formal complaint with your state bar association. This association also may have a client security fund to reimburse you if your funds or property have been embezzled by your lawyer.
Joseph Warren Kniskern is an attorney in Raleigh, North Carolina with more than 32 years of experience, who has been cited in Who's Who in American Law. This article has been edited and excerpted from When the Vow Breaks: A Survival and Recovery Guide for Christians Facing Divorce (B&H Publishing Group, revised edition copyright @ 2008).