Fees and Charges

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By Valerie S. Johnson

When hiring a lawyer, do not be coy about the details of fees and charges. Ask any prospective lawyer directly how much they will charge. The cheapest one may not be a bargain in the long run, but there is no guarantee that the most expensive will be the best, either.

Ask your attorney for an estimate of the total bill before she starts working, but be ready for her inevitable response: “it depends.” She may be able to give only a range, and that is perfectly normal. The final cost will depend on many factors that no one can predict in advance, such as how unusual or complicated your case is, how the other parties behave, how motivated and organized you are, and what happens during the course of events.

There are three possibilities for the fee structure: time-based, fixed fee, contingency or some combination of the three. Before your attorney does any work for you, you both must sign a written fee agreement that spells out all the details of how you will be charged.

Time-Based Fee

Most lawyers charge by the amount of time they spend working on your case. The hourly rate depends on their area of law, their level of experience and location. A newly admitted real estate lawyer in Iowa charges a lot less than a superstar corporate attorney in Manhattan. Where possible, some of the work is done by junior (less expensive) attorneys who are supervised by more experienced attorneys.

Lawyers generally break each hour into six-minute intervals or “units.” Why? Because there are ten 6-minute units in an hour. Lawyers like neat, even numbers. A lawyer may charge you 6 minutes (one unit)just for leaving you a voicemail message. It is therefore very important to return your lawyer’s calls promptly. Don’t make them call you twice unless you want to pay twice. If you keep changing the provisions of your will, you may be charged each time he has to redraft it.

Be as organized as possible. Find out before each appointment or phone call exactly what information is required. What papers do you need to bring? Does he want a list of your assets and liabilities? Do you need to provide exact numbers or are estimates sufficient? What are the important dates you must supply? What about police reports, medical records, etc?

When telling your story, stick to the major facts. Remember that the clock may be running while you chat, so keep the small talk to a minimum. Try to avoid discussions with your divorce lawyer that are more appropriate for your therapist or your friends.

Do whatever you can to minimize the amount of time your attorney spends on administrative or non-legal work. The fewer hours he has to spend adding up figures, plowing through your paperwork, or deciphering your notes, the less it will cost you in the long run.

Check your monthly bills. People are often surprised by how long it takes lawyers to do things. Hey, they don’t just pull a motion-for-summary-deposition-judgment-dismissal-brief out of a hat. However, if you think the time was excessive, do not hesitate to talk to your lawyer about it. They may be willing to reduce the amount of your bill.

Fixed Fee

Due to all of the possible variables in legal matters, it is less common for attorneys to charge a predetermined fee. For example, they may not have a fixed fee for preparing a will. It is a lot less complicated (and consequently less expensive) to produce a will where you leave everything to your spouse than a will which addresses the issues of second marriages, kids, family-owned businesses, and Aunt Martha’s jewels.

What happens if there are unexpected surprises that require more work than the fixed fee includes? This issue must be clearly addressed in your written fee agreement. For example, if you are selling your house and just before closing there is a problem with the title, will deal with it cost you more money? Will you be charged at an hourly rate for the extra work?

Contingency Fees

In some personal injury, class action, and other high stakes cases, a lawyer will only charge you if you are successful. His fee is a set percentage of your winnings in a settlement or lawsuit, typically one-third. Your lawyer invests his time — sometimes for years — and if you lose, you do not pay him for that time. Generally, you are required to reimburse your attorney for court filing fees because he has to pay them up front whether you ultimately win or lose. Your fee agreement should address whether you are responsible for other expenses such as fax, phone, photocopy, postage and messenger charges.

Other Expenses

No matter which fee arrangement you have, you should ask up front about charges in addition to your lawyer’s fees. These items can add a lot to your bill. Will you be charged for postage? FedEx or other overnight delivery services? Phone calls? Messengers? Faxes? Photocopies? At what rates? If you are charged for messengers or overnight delivery, insist that you are charged on a “pass through” basis. There is no reason for the firm to charge you more than the amount they pay for those services.

If you have Internet access, some lawyers will email drafts of your documents to you for review. You will get them faster and without charge. The documents may be in a “read only” format so that you do not play junior lawyer and alter them or pass them on to a friend. Never review important documents on your computer screen. You should print the documents and review the hard copies.

Some lawyers require you to pay a retainer, especially for time-based billing. This is a lump sum that you pay up front. As you rack up the charges, they subtract that amount from the retainer. You get a monthly bill showing your beginning balance, the amount deducted and the ending balance. If the retainer is exhausted, they may require you to replenish it. You may be able to negotiate the amount of the retainer if you have trouble paying a large amount, but be aware that lawyers do not like extending credit. Just like everyone else, they want to get paid for their work.