Mar 18

Lawyers’ Fees, How do You Know You Are Getting What You Are Paying For?

There are three primary arrangements to cover attorneys’ fees, with variations on each. Contingency fees are only recoverable upon successful ending of the dispute or lawsuit. Fees by the task are fixed amounts for each task or job performed. Hourly fees are a set amount for each hour worked, typically with 0.1 hr. the minimum billable time.

A fixed fee, for example, would be $7,5000 for a New York liquor license or $4,000 to process certain immigration applications. Even if you would like to hire the first attorney you go to, it is always a good idea to speak to other attorneys in the practice area to see what they charge for the same service. You can then made an informed decision.

The hourly billing arrangement is ripe for fudging and abuse. First, you need to figure out whether the hourly rate is reasonable; like with the fixed fee arrangement, you can find that out by speaking with other lawyers in the same practice area. The more experienced the lawyer or the larger the firm, the higher hourly the hourly rate. With the more experienced lawyer, you should be getting more bang for the dollar.

Second, with hourly fees, the lawyer will almost always ask for an up front retainer to start his or her work, particularly if you are not a current client. In states like New York, non-refundable retainers are not allowed. So, for example, if you pay your lawyer a $5,000 retainer to start a lawsuit, but after $3,000 of billable work the case settles, the lawyer is required to return $2,000. But don’t be surprised if the hours worked balloon to account for the entire $5,000 retainer. You wouldn’t know whether $5,000 worth of work was done unless you consulted with another lawyer.

Third, with hourly fees, how do you know that the work you are billed for was actually done or the amount of hours billed is the time that was put into the work. If you’re dealing with a large firm, don’t accept double billing, that is, two attorneys doing the same work on the same matter. You should demand that the hourly worked be billed to the 0.1 of an hour, and that each task performed be expressly stated. If it looks like too much time was billed for a telephone call or a meeting, or anything like drafting a document or doing legal research, ask questions. If an attorney has a specialty in a particular area of law, no or little legal research may need to be done. Also ask that travel time not be billed or billed at 1/2 rate (sometimes lawyers may be doing actual work if traveling but the concentration level is not the same as at the office). At the end of the day, you will never know that the bill is reasonable unless you consult with another lawyer in the same practice area.

Don’t be shy about asking specific fee/billing questions when hiring a lawyer and when receiving your lawyer’s invoice, if necessary. It’s your right and your money. Good luck.