Questioning an attorney’s bill is not all that uncommon. State and local bar associations consistently report that fee disputes are among the most common complaints they receive against lawyers. Some states have even established attorney-client fee dispute resolution programs.
One well publicized lawsuit between law firm, DLA Piper, and Mr. Adam Victor, chief executive of TransGas Development Systems in Syracuse exposed internal correspondence of the law firm. After DLA Piper sued Mr. Victor for $675,000 in unpaid legal bills, Mr. Victor filed a counterclaim accusing the law firm of engaging in overbilling.
William Ross, a law professor at Samford University’s Cumberland School of Law specializes in billing ethics and ran a survey in 2007 interviewing 250 lawyers. The results of the survey indicated that over half of the lawyers surveyed acknowledged that billing extra time doing excessive legal research or extraneous document review was common.
There are, of course, some simple common-sense steps any business owner can take to negotiate legal bills ahead of time and avoid fee disputes. Let’s start by understanding how lawyers charge their clients.
3 Ways Lawyers Typically Charge
Lawyers typically use the following methods to charge fees to their clients:
Flat fees – usually applied to single jobs, like drafting a will or creating a partnership agreement. Many lawyers offer a range of flat fees for standard services.
Contingent fees – usually for a case against another person or company, such as a personal injury claim where the lawyer is paid on contingency of winning the case. The client may be responsible for other expenses such as transcriptions, expert witness costs, and more.
Hourly fees – this is the most common and the client’s bill should list the tasks performed in detail as well as the amount of time billed.
Now that you understand the types of fees, let’s look at how you can avoid legal billing disputes.
1. Find the Right Lawyer
While there are no guarantees, taking the time to interview and find the right lawyer – someone with the specific expertise and experience you need – is the first critical step toward success. Investigating the attorney you are planning to hire before you sign an agreement means ensuring they have a good reputation among their colleagues and former and current clients.
At UpCounsel, we help you find attorneys and legal professionals and give you the tools to narrow your search by the attorney’s experience. You can also review their bio and get details about their experience level. Once you’ve selected an attorney (or a few!) you can invite them to submit a proposal for the work you need to have done.
2. Discuss Fees At the Start
Too many business owners and individuals start the relationship without discussing the fees upfront – right at the start – and this is a mistake. Ironically many business owners would never dream of hiring any other service provider, but when it comes to lawyers we avoid it. We know it’s going to be expensive and yet we aren’t willing to discuss it up front.
Whether your attorney is proposing a flat fee, a contingent fee, or an hourly fee, you have the responsibility of knowing this at the beginning and being comfortable with the charges. If you have any questions about how the billing will be handled, you don’t want the surprise later.
3. Ask for a Signed Fee Agreement
Responsible attorneys are willing to disclose their fees upfront and let the client decide. Make sure that you and your attorney are on the same page and that you can agree on the financial matters before you get started. The best way to do this and avoid unexpected surprises is by asking for a signed fee agreement. You’ll want to know what you will be charged for ahead of time and why. A fee agreement will outline exactly how the lawyer will be charging you.
The most common sources of fee disagreements are commonly noted as being:
Overstaffing – multiple lawyers working on the same case
Staff turnover – staff changes can inflate the bill when the client has to pay to get a new lawyer up to speed on the case
Over researching – a law firm shouldn’t need to reinvent the wheel with each new engagement, if you are being billed for research by a lawyer who already claims expertise – question it
Expenses – if you are being charged for expenses, ask about them
Overhead costs – lawyers sometimes pass on the cost of overhead, including heating and cooling the law firm offices, on to clients – you can challenge these as they are not your responsibility
Travel or entertainment costs – if your attorney is traveling for you, hold them to the same billing standards you expect of your own employees
Overbilling – also known as ‘bill padding’ but being charged for more time than they actually worked is very common
Knowing ahead of time what you will be charged for, when, and how much is key to avoiding legal fee disputes later on.