Understanding Lawyers' Fees
Knowing how your lawyer tallies up your legal tab can help you negotiate a 'fee adjustment' that favors your wallet.
Just because lawyers are high-rent professionals doesn't mean you can't negotiate with them. Many will "adjust" their fees (before or after the fact) if you know what to ask for. Here are some of the ways your attorney might try to make 2 + 2 = 5:
- Hourly or daily rates:
- I believe there's an innate fairness to billing by time--provided your attorney doesn't drag his feet or over-lawyer to pump up his or her receivables. Prevent this by insisting he or she: 1) gets your express, prior, written approval before specific tasks are undertaken and 2) sends bills frequently enough so you can attempt to control costs.
- The minimum billing unit:
- One attorney I know used to brag about billing 10 hours by lunchtime using quarter-hour minimums! Watch the clock. Obviously, the smaller the minimum unit, the better for you.
- Double billing:
- When two or more hourly professionals start jawboning, it gets really expensive, really fast. Double billing may be legit when different specialists are needed. Other times, you're financing some rookie's education. Don't.
- Padded bills:
- These are common. After all, eight and three-quarters hours could just as easily be nine or even 10 hours. It's tough to police. Know that in big firms, there's a lot of pressure on young members to bill hours. Watch for large round numbers. Question each entry. Keep track of time as much you can: phone calls, meetings you attend and so on. Compare your numbers to the ones on your bill.
- Bills that are too general:
- A two-line invoice for 226 hours calls for a detailed breakdown. It's your right to check for inaccuracies, double billing, padding and the like.
- The percentage:
- Sometimes called a contingency, the percentage was the subject of last month's column. Compare it against an hourly rate to see which works better for you. When litigators are involved, a contingency is often the way to go: no recovery, no fees.
- The flat fee:
- Certainty is the selling point here. The problem, however, is fixing the amount. Unless it's a standard service in a competitive market, professionals will protect themselves by quoting really high and excluding certain services. So think twice: A well-controlled hourly rate may be better. And if you do opt for a flat fee, hold back enough cash to make sure your job is finished. Here are some variations:
- The retainer:
- In its pure form, the retainer is a set amount that assures your lawyer's availability for a certain period of time. Sometimes it's applied against future fees. It may also refer to a returnable advance made for services to be rendered. It depends on the professional, so be clear.
- Value billing:
- This is very stylish these days. In essence, the fee is based on the value of the service to the client. Sometimes it's negotiated in advance; other times, after the fact. Obviously, it requires lots of good faith on both sides.
A speaker and attorney in Los Angeles, is author of Deal Power.