Lawyer Bill by kvc26933

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									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.

								
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