The prudent business person will investigate the cost of legal services just as he or she would carefully scrutinize estimates for any other service. It is important to question and understand the conventional fee structure used by attorneys, in order to intelligently estimate a bill for legal services
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The prudent business person will investigate the cost of legal services just as he or she would carefully scrutinize estimates for any other service. It is important to question and understand the conventional fee structure used by attorneys, in order to intelligently estimate a bill for legal services. There are five basic types of fees:
* Flat fees are charged for a standard service such as incorporation of a small business, divorce, and bankruptcy.
* Contingency fees are usually based on positive results in some legal action such as bill collection. A percentage of the amount recovered becomes the attorney's fee.
* Annual or monthly retainers are negotiated when an attorney agrees to perform all the legal work required by a corporation. This is used when the work is predictable and does not require extensive time away from the office.
* Hourly charges are frequently used for cases such as lawsuits and estate planning.
* Other fees that may be included in the charges are process service fees, investigations, court costs, travel expenses, long distance calls, expert testimony, medical reports, appraisals and out-of- pocket expenses.
Different services are billed in different ways. A higher hourly rate by an experienced lawyer can result in a lower charge than the bill from a less expensive but inexperienced lawyer. Charges are relative to the experience and legal knowledge of the members of a legal firm who may work on the case. They range from the highest fees for senior members of the firm, and decrease for the work of the associate attorney and the legal assistant. The lowest rates are assigned to the work of the paralegal staff who prepare routine documents under the supervision of a lawyer.
Fees can also be altered by the routine or special circumstances of the case, as well as the unexpected results of preliminary procedures and the experience and legal knowledge required to complete the proceedings.
During the first consultation (the fee for which may be waived by the attorney), the prospective client should collect enough information to agree upon a billing method. Some ideas for discussion during this meeting might be:
* If a retainer agreement is used, it should specify that, wherever possible, routine work should be done at the appropriate staff level. Final documents should be reviewed by the next qualified level of attorney.
* If an associate is handling the case, the client should not be billed for office conferences during which the inexperienced attorney is instructed or has his or her work reviewed by a senior counsel.
* The client should request a clear explanation of travel and waiting time rates and should not be billed at the same rate as litigation proceedings.
* If hourly charges are selected, it is a wise precaution to place a cap on the fee and to plan for a meeting to discuss a future course of action and additional fees.
* How is research charged? If the research for this assignment is used to educate the junior attorney, the expense should not be borne by the client.
* How are overhead charges such as copies, messenger services, overnight mail services charged to the client? While multiple copies of necessary documents can be billed to a client account, single house copies of a document should not be billed. Messenger and overnight mail service charges should not accrue due to procrastination on the part of the attorney, but rather as a result of valid, emergency changes.
* How are overtime charges accrued? If the overtime services of the law office staff are a direct result of proceedings in connection with the client's interests, the overtime may be billed to the client. However, if because of the volume of work, the lawyer requires a secretary to clear up a backlog, the client should not be billed for the secretary's overtime. The invoice should state the reason for the overtime and the nature of the work done during the overtime period.
* How are document revisions charged? Since documents are frequently stored on word processors, small changes can be easily and quickly inserted without considerable expense to either the firm or the client. If extensive revisions are the result of valid discussions between the two contracting parties, fees for such changes are valid.
* Experts suggest that to ensure that erroneous charges are not included in the invoice, the client should initially request copies of each letter or document for which the firm is billing. This allows the client a framework for a discussion of a bill which is unclear or seems unreasonably high. If the client has a copy of the lawyer's actual work product, the lawyer will be more disposed to charge a more reasonable fee.
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