IBs Your Lawyer’s ill Too High? How to Avoid (and Resolve) Fee Disputes • How Lawyers Charge • Avoiding Fee Disputes • Sources of Fee Disagreements • Dealing with a Fee Dispute CITIZENS LEGAL GUIDE HALT is dedicated to empowering legal consumers, and learning how lawyers charge and how to deal with possible overcharges are critical skills that you should Is Your Lawyer’s have even if you never need to use them. Bill Too High? HOW LAWYERS CHARGE Lawyers charge three basic kinds of fees— L How to Avoid (and Resolve) awyers charge three Fee Disputes basic kinds of fees— flat, contingent flat, contingent and hourly. You need to un- and hourly. You derstand how each of these need to under- billing systems works to stand how each Q know what you are agree- ing to pay when you hire of these billing an attorney. For a detailed systems works uestioning an explanation of how lawyers charge, see HALT’s Citizens to know what attorney about your bill Legal Guide “Understanding Attorney Fees: So You Can you are agree- isn’t easy, but you should Keep Legal Costs Down.” ing to pay when not pay inaccurate or A flat fee is usually for a you hire an single job, such as drafting a attorney. inflated charges. If you will, and requires you to pay a specified amount, such as think your lawyer is $500, when the job is completed. In a flat fee agree- ment, the client is also usually responsible for expens- charging too much, es such as filing fees and court costs. you’re not alone. State A contingent fee is usually for a case against another person or her insurance company, such as a personal and local bar associations injury claim, and requires you to pay a percentage of your recovery, for example one-third, if the lawyer across the country wins your case. In a contingent fee agreement, the client may also be responsible for additional expenses, consistently report that such as expert witness fees and deposition transcripts. fee disputes are among An hourly fee is most common and can be used for any kind of legal representation, from document prep- the most frequent aration and contract negotiation to courtroom litigation and appeals. In an hourly fee agreement, the client’s complaints they receive bill lists each attorney’s hours and multiplies them by that attorney’s hourly rate (more senior lawyers always against attorneys. charge higher rates). Law firms using hourly fees will also try to charge clients for every conceivable ex- pense, including copying, messenger services, postage, travel and consultants. Finally, lawyers often ask clients to pay a retainer for Thanks to a growing number of searchable, online their services. Depending upon the agreement, this databases—such as avvo.com and nolo.com—you can charge may be an advance payment of the lawyer’s fee obtain reliable and objective information about many or it may be an additional fee. attorneys online, including how they charge for their services. As you can see, attorneys’ fees are complicated and can easily become For example, if you visit nolo.com’s very contentious, especially if there is a Too many lawyer directory, you can learn how breakdown in attorney-client communi- people enter much lawyers typically charge, wheth- cations. er they will participate in fee arbitra- into an tion or counsel pro se litigants and While some fee disputes are the result whether they are in good standing with attorney-client of a lawyer padding his bill, many are the state bar. Nolo’s directory also of- actually misunderstandings or simple relationship fers some reassurance about the lawyer bad math. you’ll be dealing with because all must without take a pledge to treat clients well by This Citizens Legal Guide explains discussing their communicating regularly, using written the steps you should take to reduce the agreements and issuing timely billing chance that you and your attorney will lawyer’s fee up statements. get into a fight over legal fees, and how front. to protect your rights and fairly resolve Avvo.com actually rates lawyers on a any disagreements you may have with ten point scale (1= “extreme caution” your lawyer. 10=“superb”) and provides fee rates, endorsements by other lawyers and client references. AVOIDING FEE DISPUTES Discuss Fees in Advance. Too many people enter into T an attorney-client relationship without discussing their here are four simple, common-sense steps you lawyer’s fee up front. Ironically, most of us―including can take to minimize the likelihood that you lawyers―would never dream of hiring an accountant or will get in a fight with your lawyer over his any other service provider without first asking about charges. First, find the right lawyer, someone who is the fees involved. The reason is simple. You cannot competent, honest and trustworthy. Second, discuss know if you are paying the going rate or even a com- fees in advance; be sure that you understand and are petitive rate, if you don’t know what you are going to comfortable with your financial obligations. Third, be charged. If your lawyer fails to bring up the subject get a signed fee agreement so both you and your law- of fees during an initial consultation, you should. yer are on the same page. Finally, confront problem immediately, so they can be resolved before they Whether your attorney is proposing a flat, contingent become full-blown battles. or hourly fee, you need to understand your obligations and to be comfortable with them. If you have any Find the Right Lawyer. While there are no guaran- questions about your lawyer’s fee, be upfront about tees, taking the time to find the right attorney—some- it. If a retainer is going to be charged, be certain you one who has expertise and experience in the area of understand what it is—advance payment or additional law you need, a good reputation among fellow col- fee. leagues and former and current clients, and a clean disciplinary record—will help you get off to a good Lawyers are expensive, and they know it. Responsible start and may offer some insurance against fee dis- attorneys are often willing to work with you to help putes occurring later on. you meet this financial burden by negotiating a differ- ent fee or payment schedule (for example, ask for a Investigating the attorney you’re planning to hire, smaller upfront retainer, or extend your payment due before you sign on the dotted line, is very important. dates). Make sure that you and your attorney are on the same SOURCES OF FEE page and actually agree on your financial obligations. You are hiring a lawyer because you need legal DISAGREEMENTS services from a professional you can trust. If you are F not comfortable discussing fees with your lawyer, ee disputes can be triggered by internal law maybe you should be looking for a different lawyer. firm practices that are unfair to clients, such as overstaffing, uncompensated staff turnover, Get a Signed Fee Agree- unnecessary research, and redundant expert witnesses No single and consultants. They can also reflect lax financial ment. No single factor is factor is more more important to avoiding controls for expenses, overhead costs, and travel and fee disputes than a detailed entertainment. They may even be caused by outright important to fraud, i.e., charging for more hours than were actu- fee agreement that spells out avoiding fee the terms of your relationship ally worked. with your lawyer and the disputes than Overstaffing. Some firms assign too many lawyers to fees you can be charged. A a detailed fee fee agreement is often called a case or project just to fulfill billable hour quotas. If a “retainer agreement,” you think too many lawyers are working your case, agreement that because the client pays a raise your concern and insist the firm reevaluate its spells out the retainer when it is signed. strategy on your case. terms of your Keep a lid on A good fee agreement Uncompensated staff turn- relationship with includes the services to be over. Be aware of staff expenses by provided, the rights and changes that can shoot up your lawyer and the cost of your case. If you asking the responsibilities of you and the fees you can your lawyer, how legal discover that the lawyer han- lawyer to antici- fees and expenses will be dling your case has moved be charged. on, you shouldn’t have to pay pate in advance calculated, how often you will be billed, how the lawyer extra to reeducate a new law- what expenses can be terminated and how disputes will be resolved. yer about your legal matter. will run and by Never hire a lawyer without a written agreement. Without a signed document, any fee dispute becomes Unnecessary research. Some including a an argument about “he said, she said.” Walk away firms constantly reinvent the from attorneys who are evasive about fees or refuse to wheel on each new engage- stipulation in commit them to writing. For sample key clauses that ment in order to bill as many your agreement should appear in every attorney-client agreement, read hours as possible. If you are HALT’s Citizens Legal Manual, Using a Lawyer: being billed for research in an that you cannot And What To Do If Things Go Wrong. area the firm already claims be charged expertise in, question it. Confront Problems Immediately. If problems de- over the velop, don’t ignore them and hope that they will go Redundant expert witnesses estimate without away; respond immediately. Keeping the lines of and consultants. The use of communication open, informally and formally, can go expert witnesses and consul- prior approval. a long way toward making sure problems don’t esca- tants may help your case, but late. If you are unsure about a charge, feel that you’ve not always. Don’t hesitate to been overcharged, or have other concerns, question ask why more than one (or two) expert witnesses are it right away. It could be a simple math error or an needed, if that’s what your lawyer proposes. unintentional mistake on a bill. Your quick attention gives your lawyer a chance to explain or to correct the Uncontrolled expenses. Another way a lawyer’s bill situation, so you can go forward confident that your can increase is when expenses are not watched care- attorney actually is competent, honest and trustworthy. fully. Keep a lid on expenses by asking the lawyer to anticipate in advance what expenses will run and by DEALING WITH including a stipulation in your agreement that you can- not be charged over the estimate without prior written A FEE DISPUTE approval. T he unfortunate truth is that even when we Excessive overhead costs. take pains to protect ourselves with signed fee If your attorney Not long ago, law firms agreements and close monitoring of our case, routinely absorbed the cost of fee disputes can still occur. If you find yourself in is traveling on overhead—the cost of keep- a fee dispute, start with a phone call to your lawyer. your behalf, hold ing an office running—from If that doesn’t work, promptly write a letter that’s heating and air conditioning cordial and succinct. If the letter doesn’t resolve your him or her to to subscribing to LexisNexis dispute, consider arbitration. Only when all of these the same stan- or WestLaw and filing cli- approaches fail should you ents’ papers. Some lawyers consider a lawsuit. dards you would now try to pass these costs on If the amount hold yourself to clients by billing for every Call Your Attorney. If the amount in dispute is relative- in dispute is expense the firm incurs. Cli- when traveling ents should challenge charges ly minor, your best bet is to relatively minor, pick up the telephone and try for business or that obviously cover a firm’s your best bet is routine overhead. to resolve it. Politely explain pleasure. Insist what the problem is and what to pick up the Deluxe travel and enter- you propose as a solution. on a complete telephone and tainment. If your attorney Hear what your attorney has breakdown of is traveling on your behalf, to say. If you cannot come to try to resolve it. hold him or her to the same a mutual agreement on how travel charges— to resolve the billing issue, standards you would hold air and ground yourself when traveling for decide if it’s really worth pursuing. If the answer is business or pleasure. Insist yes and you have included a stipulation about fee dis- transportation, pute resolution in your contract, inform your attorney on a complete breakdown hotel and meal of travel charges—air and that you plan on requesting either mediation or arbitra- ground transportation, hotel tion. If the dispute is over a more substantial amount, expenses. you will need to write a letter to document your efforts and meal expenses. Specify what air class you believe is to resolve it amicably before taking more formal steps. appropriate. Unless you’ve agreed ahead of time, you shouldn’t pay for a first-class or business-class seat Write a Letter. If after careful review of your bill, for your lawyer. Make clear in advance what you will you conclude that you’ve been overcharged, write a not pay for. Some examples include in-room movies, letter to your attorney questioning specific items that bar bills, any expense over $5 without a receipt, and seem unnecessary. You should be firm but indicate a laundry and dry cleaning. willingness to compromise. Suggest a specific dollar amount you consider fair. It is to your advantage to Bill padding or overbilling. Unfortunately, some law- be reasonable and willing to negotiate. In your let- yers intentionally try to rip off clients by padding their ter, remind your lawyer about estimates, what was bills. While overbilling is difficult to prove, if you said about fees earlier, or what seems fair to pay for believe you’ve been overcharged, raise it with your the work being done—for example, you don’t want to attorney. For example, if your lawyer charged you for pay your lawyer’s hourly rate for work that is cleri- more phone call conversations in a month than you cal—such as photocopying. You want your letter to be have actually participated in, you need to challenge thoughtful and concise, not confrontational or dis- it. You should also raise questions if you are being jointed. Ask for a written response by a certain date charged at your lawyer’s hourly rate for work that is (two weeks is typical) and keep a copy of your letter obviously clerical, or for items that seem vague. for your files. Here is a sample. Jane Doe 123 The Street Anytown, NY 12345 Mr. Dewey Law Offices of Dewey 123 Law Street Anytown, NY 12345 Dear Mr. Dewey: I am writing about the bill I received for your services dated October 7, 2011. As I told you when we spoke on the telephone yesterday, I do not agree with the charges of $450 for copying expenses. Your previous estimate indicated that copying expenses would not total more than $100. The representation agreement we signed also states that you will obtain my consent before incurring any copying expenses over a $100 limit. I was not notified that any additional copying expenses would be necessary and did not give my written approval for these charges. Please reduce my bill to $100 for copying as you originally estimated and as we previously agreed. I am eager to resolve this matter as soon as possible so we can continue to work together, and would appreciate a written response within two weeks. Sincerely, Ms. Jane Doe Sometimes the amount in dispute can be in the thou- asked for an accounting of the hours spent on the case. sands, especially if your attorney is working for a It turned out the firm had spent 112 hours on his case contingent fee basis. For example, in one case, a law and charged $14,000 for this time at the firm’s normal firm computed its 1/3 contingency fee on a $600,000 rate of $125 an hour. The additional $20,000 charge award as $200,000, but corrected it to $180,000 when has been based entirely on the value of the property their client pointed out that under the signed represen- sold in the transaction. The client disputed the bill, tation agreement, the fee is computed after deducting pointing out that he had never agreed to pay an amount the $60,000 in expert witness fees and other costs she based on the value of the property transaction. The had to pay. law firm reduced his bill to $14,000. In another case, a client was charged $34,000 for legal In a less clear-cut case, a client took issue with the services on a property sale. After receiving the bill, he number of hours she was billed for her case and wrote the law firm a letter outlining her understanding of an arbitrator may have biases, under most systems you the quantity, quality and nature of the legal services may challenge their appointment. she had received. She explained what she believed to be the fair value of the services, based on the firm’s How Does the Process Work? Once the arbitrators hourly rate of $120, then added an extra percentage have been selected, the committee will notify both you to show her “good faith.” She suggested cutting the and your attorney of the hearing date. In most circum- original bill by 25 percent. stances, you are allowed to have an attorney represent If you and your The firm accepted her offer. you during the arbitration, but attorney representation is not required. Both you and your attorney will be lawyer agree If you and your lawyer agree allowed to present your sides of the story. Typically, to compromise, to compromise, make sure a you are allowed to bring in witnesses and documents new bill is issued to reflect to prove your argument. The process is much more in- make sure a your agreement. Also, use formal than courtroom proceedings and usually takes new bill is is- this opportunity to discuss a few hours. Although rules of procedure vary among what you should do if other states, in most circumstances you will be notified of sued to reflect problems occur between you. the decision within 30 days. The decision will be final your agreement. This will show your commit- and binding, thus enforceable in a court of law. ment to an ongoing working relationship. If you cannot What If My Attorney Refuses to Arbitrate? In some come to an agreement after telephoning or sending let- jurisdictions, if your attorney refuses to arbitrate, the ters, the next step to consider is arbitration. bar association will help you. For example, it may offer an advisory opinion for you and your attorney to Arbitrate the Dispute. State and local bar associations consider, give you free advice, or even appoint a free offer voluntary or mandatory arbitration. Voluntary, lawyer to help you file a lawsuit against your first at- the more common, requires that you and your attorney torney. agree to participate in binding arbitration. Either side is free to refuse. In mandatory arbitration, the The arbitrator’s decision. If the arbitrators find that lawyer is required to submit to binding arbitration if your attorney overcharged you and that you should be you request it. California offers a hybrid of the two reimbursed, that attorney is legally obligated to do so. systems. The lawyer has to participate, but if one side The reverse is also true—if the arbitration commit- doesn’t want binding arbitration, an advisory opinion tee finds that you owe your attorney money, you are is issued. Your first step is to contact your state bar required by law to pay. A binding decision cannot be association to determine what kind of program it offers appealed in court if you do not agree; it can be ap- and how you can apply. You can obtain the necessary pealed, however, if you prove a procedural error was form by calling or writing your state bar association made. If your attorney still does not comply despite or by downloading it from the bar’s website. Learn his legal obligation, some states will impose disciplin- more about these programs by viewing the results ary sanctions upon him. A few will even provide you of the “HALT 2007 Lawyer-Client Fee Arbitration with a lawyer to take your attorney to court. However, Report Card” online at www.halt.org. in most circumstances you personally must take your attorney to court to enforce the decision. Who Will Hear My Case? If your case is accepted by the bar, you will be given the names of the arbitrators Sue in Court. If less formal methods for resolving who will hear your case. In most states, if the dispute your fee dispute fail, there is still the courtroom. But with your attorney is above a certain dollar amount, suing a lawyer in any court, outside of a small claims say $10,000, a panel of three arbitrators will be ap- court, is a risky proposition. Threatening to sue a pointed to hear the case. Many programs now in- lawyer is usually not an effective way of resolving clude at least one non-attorney arbitrator on the panel a fee dispute. Instead, threats are likely to cause of three. Keep in mind that the attorney arbitrators an irreparable rift. Besides, it can take three years practice within the same state and therefore may be or more for a lawsuit to be settled, and your lawyer the colleagues of your attorney. If you feel as though knows it. Time will not be on your side. The one possible exception to this rule is suing in Join Our Fight for Reform small claims court where rules are less formal, and where cases and judgments are rendered more quickly. Since 1978, HALT has provided a powerful voice You can sue in these simplified courts if the amount working on your behalf in Washington and across the in dispute between you and your attorney falls within nation to help Americans navigate the legal system the jurisdiction of small claims court. The maximum with or without a lawyer. We need your help. Join us amount that can be disputed in small claims var- and help HALT allow more people to settle their legal ies among states, but most range between $3,000 to affairs simply and affordably. $7,500. To find out the maximum amount in your state, contact your state’s small claims court or visit www.halt.org. The next step is to obtain a complaint Where to Find More Information form from your state court and notify your attorney that you are taking him or her to small claims court. More information about the attorney-client relation- For a complete explanation of the small claims court ship is available on HALT’s website, www.halt.org, in process and how to present your case in court, consult HALT’s Everyday Law Series and in HALT’s Citizens HALT’s Citizen Legal Manual, Small Claims Court: Legal Guides I Have a Problem with My Lawyer Making Your Way Through the System. and Where Do I Go for Legal Help? Glossary of Terms Attorney Discipline: Act by a state bar grievance committee or court sanctioning a lawyer for violating the state’s code of professional responsibility. Breach of Contract: Reason for suing based on failure to live up to a legally binding promise, such as the terms of an attorney-client relationship. Contingency Fee: Attorney’s fee based on a percentage of the amount awarded to the client. If no amount is awarded, no fee must be paid, although the client will be required to pay legal expenses. Expenses: Charges for a lawyer’s work other than fees, typically including long-distance telephone charg- es, photocopying, court filing fees and expert witness fees. Fee Arbitration: Out-of-court forums for settling fee disputes between attorneys and clients. Most state and local bar associations have established fee arbitration committees. Hourly fee: Lawyer’s fee based on the amount of time worked on a case. The fee is the hourly rate multi- plied by the number of hours worked. Mediation: Informal alternative to suing in which both sides to a dispute meet with a neutral third party (mediator) to negotiate a resolution. The resolution is usually put into a written agreement that is signed by both sides. Retainer: Money asked by the lawyer before beginning work on a case, often considered a deposit for a portion of the work to be done. The money may be used to cover expenses or the lawyer’s fee or simply to reserve the lawyer’s services for a specified time period or a lawsuit. The unused portion may or may not be refundable.
Pages to are hidden for
"Lawyer Bill"Please download to view full document