Saving Money on Legal Fees

February 8, 2009 by  
Filed under Spending

Somehow this weekend I’ve found myself captured by a “saving money”  theme, even though I ordinarily leave that subject to the expert frugalists who write elsewhere.  There are a few areas where Mr. ToughMoneyLove may have a frugalistic knowledge advantage.  One of those is in the area of lawyers and their fees.  That’s because (please don’t hate me if you didn’t know this), I am an attorney in my day job.  (A patent attorney to be precise.)  So I have been billing legal fees to clients for 29 years.  I have also paid lawyers who helped me and Mrs. ToughMoneyLove with wills, trusts, etc.  

I even had a part-time gig as a fee consultant.  I was paid (rather well actually) to review very large bills sent by other law firms to their corporate clients, looking for “pork” (if you know what I mean).  My job was to strip the pork out of the bill, just like some members of Congress are trying to do with spendulus 2009.  And yes, I did find some pork.  Can you imagine – pork in a bill for attorney’s fees?  

But in defense of most attorneys, the majority of the bills I see are 100% legitimate.  Unfortunately, there often is a wide gap in understanding between what clients expect to be billed for a legal task and what it actually costs.  That is something that both lawyer and client need to work on.

A lot of what I know about how attorneys work for and bill their business clients has application to consumer use of lawyers as well.  So here are a few tips for you to consider.

1.  Require a detailed retainer agreement.  Sometimes called an “engagement letter”, you should not allow a lawyer to start any legal project for you (no matter how small) or to provide billable advice, until you have seen and signed off on a retainer agreement.  This agreement must specify precisely what the lawyer will do for you, i.e., define the scope of the work.  It must also explain in detail how you will be billed, e.g., flat fee, by the hour, etc.  If the project is something tangible such as a will, estate plan, tax return, or the like, the retainer agreement should state the deliverables – what the attorney will be sending you when the project is complete.  Finally, their should be an estimated completion date.   Nothing says “overbilling” like an attorney working on a project without a deadline.

2.  Ask for flat fee or fee cap billing.  If your legal needs are well defined (e.g., a will), I recommend that you engage an attorney on a flat fee basis.  No surprises is a good thing for both sides.  Better yet, if you can persuade the attorney to work on a project on an hourly basis with a fee cap, that can be the best of both worlds.  In other words, the retainer agreement will provide that your fees will be billed on an hourly basis, but “not to exceed _______________.”

3.  Get an estimate.  Some legal projects – even for consumers – can’t reasonably be handled on a flat fee basis or with a fee cap.  In those cases, require your attorney to give you an estimate of what the fee will be.  And here is the important part:  Require your attorney to notify you in advance if it appears that the fee will exceed the estimate.  That way you will have an opportunity to stop the project, re-negotiate the fee, or at least prepare for the worst.

4.  Stay informed.  Many attorneys are terrible at keeping their clients informed as to the progress of the legal matter they are handling.  You don’t want that, for a lot of reasons.  One of those reasons is that you will end up calling your attorney and asking for updates.  He or she might charge you for those calls.  You really don’t want that.  So specify in the retainer agreement that you must be copied on all correspondence and emails (sent or received) for which the attorney will be billing you.  If the lawyer expects to be on the phone talking to people about your project, require the attorney to shoot you a quick email summarizing each billable call.  If there is a gap in communication, then call and find out why.  But make it clear that you will not pay for any communications involving your lawyer unless you are advised of the nature of that communication when it occurs.

5.  Require detailed billing.  If your legal matter will be billed at hourly rates, then you must tell your attorney that you will pay his or her bills only if they itemize each billable activity by date, name, and description.  You want to know who did it, when they did it, and exactly what they did.  (Of course, and how long it took.)  A billable time entry that just says “worked on case” or “reviewed file”  or “email with ….” is not acceptable.  You want to know what work was done on your case, why the file was reviewed, or why the emails were sent.  It is not too much to expect that every time you are billed by an attorney, value is added.  That value should be reflected in the time entries and descriptions on the bill.  Make sure your attorney knows what you expect.  With most billing software and systems used by attorneys these days, providing detailed bills is easy to do.

6.  Choose wisely.  It should go without saying that you need to select an attorney that has experience and expertise in the area related to your need.  An inexperienced attorney may be able to complete the work fine, but it is likely to take longer and cost you more.  When I hire an attorney or physician for a specific service or need, I ask them politely how many projects they had completed in this area before mine.  Having lots of years of experience is great but only if that experience is applicable to your legal need.  So don’t be shy about this.  I get asked this question often and I regularly turn down work which is outside my specialty.

7.  Don’t be a jerk.   Some clients come into a relationship with a lawyer thinking that all lawyers are out to get them.  To them, a lawyer is a necessary evil who must be questioned or challenged at every turn.  If that is your attitude, and it is reflected in the way that you deal with your attorney, there is a good chance you will pay a higher fee than the next guy who is not a jerk.  Lawyers and staff do not like working with clients who are obnoxious and that can be reflected on your bills.  I have grown immune to clients who are only mildy annoying but I will fire a client who makes a point of questioning everything I do.  You do not want to get fired as a client.  I guarantee that will cost you more in the long run.

I have two final thoughts for readers who are about to tell me about LegalZoom.com, Nolo Press, and all of the other DIY legal providers.  First, for routine, simple legal projects, these alternatives will work for 95% of the consumers who use them.  The problem is that most people lack the knowledge to know whether they will be in the 95% group or among the 5% that make a huge mistake by not consulting a professional.  You are rolling the dice on that issue.

Second, some of these DIY providers are moving into legal areas where they simply do not know what they are doing.  A case in point is my specialty.  You can go to the LegalZoom website and read promotional statements about using their service for “Provisional Patents.”  Folks, there is no such thing as a “provisional patent.”  Never has been.  Several months ago I even told them about these deceptively incorrect statements through their contact form.  They ignored me.  This tells me that it’s all about the money with them and buyer beware.  I haven’t checked, but I suspect that I could find other specialty legal areas where the DIY outfits are misleading consumers using legally incorrect statements.

I hope these tips help.  If not, sue me.  (Just kidding – you would have to hire a lawyer to do that anyway.  That would be expensive.)


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Comments

4 Responses to “Saving Money on Legal Fees”
  1. Chris says:

    I have found that pre-paid legal is a good alternative to legalzoom, depending on how much you would need to use it.

  2. goldenrail says:

    I’ve heard some patent attorneys say they love legalzoom – gives them lots of work cleaning up the messes.

  3. Great tips, Mr. TML.

    With respect to #6, this can go both ways. While you want a competent and experienced lawyer, there are many tasks that can be handled quite well by more junior lawyers. While they may take a little longer (although not always), they will often charge significantly less per hour. Retaining a lawyer with 20 years experience and billing at $400 an hour to draft a routine will or handle other relatively minor issues doesn’t make a lot of sense.

    On the topic of junior lawyers, it’s also important to ensure that the letter of engagement makes it clear what tasks will and will not be delegated to more junior associates. Having a junior handle research or drafting/revision tasks can save quite a bit on legal bills, but you still get the peace of mind of having a more experienced lawyer review and take responsibility for the end product.

    On a more personal note, one of my favourite parts of my new in-house position is getting to review and approve the bills from external counsel. There’s a fair bit of pork to be found, but even more questionable areas that result from lawyers being sloppy with their docketing and descriptions.

  4. constantlearning says:

    I work for an attorney in a one-attorney law office and have an additional suggestion. If you are not keeping your payments up to date, do not be surprised if your work takes longer to complete. Law offices are businesses and have to pay bills just as individuals do. Therefore, the clients who are paying their bills on time usually receive immediate attention.

    In my experience, the clients who do not pay their bills are also the ones who insist that they should have more attention from an attorney.

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