Everything You Didn't Want to Know About Attorneys' Fees
6/06
Lets face it, no want wants to be in a position where they are incurring legal fees. In most cases, when you retain an attorney, it is because you have a problem in your life. You could have had an accident, you could be involved in a civil lawsuit, you could be going through a divorce or you could be involved in a criminal matter. Even with matters that do not pertain to problems in your life, such as buying or selling a home, starting a new business or planning your estate, you will need the assistance of an attorney and will have to address the issue of legal fees.
Lawyers do not sell products. What you get when you pay for an attorney is his or her time and expertise. Unlike when you visit your accountant and walk out with your completed tax return or when you visit your insurance planner and walk out with a life insurance policy, very often when you visit with your attorney his or her representation does not provide you with something tangible that you can walk out the door with. Because attorney work product is sometimes very intangible, clients sometimes leave their attorneys’ office with an empty feeling.
As a client, it is extremely important that, in dealing with your attorney, you feel that you are getting value for your money. The value of an attorney’s services can be measured in many ways. You may pay more for an experienced attorney to handle your case, but if the case is resolved in a quicker fashion than it would have using a less experienced attorney, you will probably be ahead in the long run. You may also pay more and appreciate the value if you are getting more personal service from your attorney.
At a minimum, you should always be apprised and kept fully informed of how your legal fees are tracked and billed. Always insist on a written retainer agreement you’re your attorney. Traditionally, attorneys charged by the hour and many attorneys still use the hourly billing method. This is particularly true in matrimonial and other litigation matters. This rewards the attorney by compensating him or her for more difficult and time consuming tasks and it also encourages clients to take a more active role in the handling of their matter. The downside from the client’s perspective is that there is always an uncertainty regarding the ultimate cost. Flat rate fees, which are typically used in real estate transactions and in estate planning matters provides the client with reasonable certainty of the final cost. This encourages lawyer efficiency.
In many litigation matters, clients and attorneys are using an approach called a “blended” rate where, instead of using the high hourly rate of senior attorneys and lower rates for work done by younger associates or paralegals, time is billed at a median flat rate no matter who is working on the file. “Transactional” type billing is similar in that a flat rate is assigned to complete a given project. This allows the law firm to become more efficient because it is able to assign paralegals or office staff personnel to complete the task.
A “value” billing approach to legal fees is similar to transactional billing but the focus is not on how long it will take the attorney to complete a given project, but rather it will focus on calculating the benefit to the client. An experienced attorney who uses delegation and systemization may be able to produce a product in one hour’s time but the product may be worth a lot more to the client than what the attorney may charge as his or her hourly rate. While the work to the attorney may diminish with each repetition (due to the experience and expertise of the attorney), the value to the client is the primary focus.
The market for legal fees is set by the collective perception of clients as to the value they are receiving from the services of their attorneys. Attorneys cannot survive if their fee structure is not fair and competitive. As a client, you should take a realistic look at the value you expect for your attorneys’ services and then discuss whether a non-traditional approach to your legal fees may be a mutually agreeable option.