[ This is Part II of a three-part series on hiring a lawyer. Yesterday, you learned that just like a good pair of jeans, you need to “try your lawyer on” during the interview process to make sure he or she “fits.” In this edition, I’ll give you some hints about what types of billing-related questions to ask so that you can be sure that your new wardrobe is affordable! ]
As we discussed yesterday, IT’S YOUR MONEY, and you need to ask polite but direct questions about the fees and costs involved in your representation. At the very least, and if your frozen brain can remember only one question, ask your attorney to give you a rough estimate of what you can expect to spend.
If you manage to keep some measure of composure while sitting across from your potential attorney, find out if you will be billed by the hour, on a contingency basis, on a flat rate, or some mixture of the above. Today, we will focus on some of the questions to ask with regard to each of these common types of billing arrangements.
Hourly Billing Arrangements
Find out what the attorney’s hourly rate will be, and the time increments for which you will be charged (typically attorneys will bill for their time in 6 minute increments). Ask how your matter will be staffed, and whether there is a more junior lawyer with a lower billing rate that can handle the routine parts of the matter under the guidance of a more senior lawyer. You need to ensure, however, that this will actually help to save you money, and not just turn into a vehicle to get charged by multiple lawyers in a firm for overlapping work – an unfortunate phenomenon that is far too common.
Contingency Billing Arrangements
In a contingency matter, typically where you have suffered a personal injury, the attorney does not require you to pay a fee for his or her time. Instead, the attorney will take a percentage of any recovery you receive (usually 20 to 40 percent depending on whether the case is settled or goes to trial). The advantage for you in this type of arrangement is that you don’t pay fees for your lawyer’s time if you lose. Nonetheless, you need to ask some very important questions.
You need to know what percentage of your recovery that the attorney will take if the case settles without a trial, if the case goes to trial, and what happens if the case goes to trial and is appealed. It is also crucial to know how and when the attorney’s percentage of the settlement or verdict award is to be computed: will it be computed before or after costs are deducted? Costs include expenses such as filing fees, expert fees, court reporter charges, photocopying, postage, travel and lodging, etc. Obviously, it is to your advantage to have the attorney’s percentage computed after the deduction of costs. Moreover, you need to know if you are responsible for costs (as opposed to fees) if you lose the case. Costs can run many thousands of dollars. The fact that you don’t owe attorney’s fees if you lose provides little solace if you are handed a bill for $20,000 of costs. Try to keep the risk of loss on your counsel – not on you.
Flat Rate Billing
Sometimes an attorney will handle something based on a flat rate – a specific price for the handling of your matter. Often these are simple repetitive legal tasks such as preparing a simple will, or a power of attorney form that the attorney has done many times and that does not require extensive analysis or customization. Other times, you may be able to negotiate a flat rate for a matter if you have an ongoing relationship with the attorney in a number of other matters, particularly if you are a business owner. In a tough economy, many attorneys are struggling and looking for clients – it never hurts to explore the possibility of using a flat rate for a matter, especially if you are on a tight budget.
Negotiate Your Deal
Without getting lost in the intricacies of legal billing, the point here is that you need to get details about your proposed billing arrangement during the interview, ask questions, and make sure that you understand the details of the arrangement. Don’t be afraid to negotiate your terms in a direct, and non-confrontational manner. Most hourly rates and billing arrangements are not set in stone, and lawyers seeking work will often be surprisingly flexible and creative in order to accommodate your budget. You are only hurting yourself by being silent.