This is the third and final post reviewing a Huffington Post article titled “My Lawyer, My Friend”.  Here, we will address “the money stuff”.  This is a very important topic for both the client and the attorney.  Even so, far too often, this is the topic that is ignored or at least inadequately addressed at the beginning of the working relationship, which then almost always results in frustration (in the “best” case) and can even result in heated disagreements or lawsuits between the client and the attorney.

First, understand how you are going to be charged. For example, most attorneys charge by the hour, in increments as small as one-tenth of an hour, and if they are spending time, including travel to your office, they are on the clock. In other cases, you may arrange for a flat fee for a project or a fixed monthly retainer or a contingency for a good result — or a mix of these arrangements. But don’t beat around the bush. Have a clear discussion and then confirm it in a written agreement.

https://www.huffingtonpost.com/entry/my-lawyer-my-friend-a-ceo_b_6095572.html

Traditionally, attorneys have billed clients an hourly fee for work performed.  Hourly fees today can vary from about $100 (for newer attorneys and/or those practicing in rural markets) to well over $1000 (in the case of attorneys at large/big city firms).  Why such a contrast?  Lots of reasons, including the relevant legal market, size of the firm and qualifications and experience of the attorney.  But hourly fees are slowly and steadily being replaced over time by other types of fee arrangements, at least in some areas of the law.

Estate planning is one practice area where fixed fee arrangements are common.  Some “open-ended” projects may be difficult to structure via a fixed fee arrangement.  Litigation matters fall into this category in many instances because at the start of a contested litigation case, neither the attorney nor the client may have any way of knowing whether the engagement will last for 2 weeks or 2 years (or something in between). 

There are pros and cons to hourly work and fixed fee arrangements and what works well in one type of legal engagement may not be appropriate in another situation.  Further, some attorneys offer clients a choice between different fee arrangements, sometimes depending on the nature of the work to be done, while other attorneys permit only one type of client billing.  The traditional hourly billers often fall into this category–those of the older generation of attorneys who have never done anything other than bill by the hour and are now, therefore, resistant to anything else.

It is very important for the client and the attorney to discuss the available billing options at the beginning of the engagement and then clearly memorialize the terms of payment in writing in the engagement letter.  Normally, fees and other charges should be on the list of items discussed during the first meeting and prior to any papers being signed by the client and the attorney.  If the client and the attorney do not have an agreement as to how the client will be charged (manner of billing and hourly rate, total cost or other terms of payment), then it is unwise to proceed any further with the attorney/client relationship.  As a prospective client, you should feel entitled to ask the attorney many questions about the nature of the work to be performed, including with regard to his or her qualifications and experience and certainly about terms of payment and an estimate of overall or at least periodic costs.

In addition to hourly fees, many law firms have traditionally charged clients for travel time and “office expenses” associated with working on the client’s file, such as costs of copies, long distance phone calls, faxes, postage and other delivery fees and travel expenses.  This practice of passing costs on to clients in the bill (in addition to hourly fees) continues at many law firms today.  However, many attorneys have changed this approach to the law practice and instead, include such overhead costs in calculating the overall fee to be billed to the client.  Neither approach is necessarily right or wrong and as the client, you simply need to ask the right questions, understand what you will be billed for (and how) and then agree to the same with your attorney in writing at the start of the working relationship.