It is no secret that attorneys charge a lot for their services. Hourly rates of $350/hour are not uncommon in the legal industry. Once embroiled in litigation, clients have committed to paying their attorney, often with nothing to go on but blind trust. In today’s world, that simply is not enough. Sooner or later, clients are receiving $30,000 bills every month from their lawyers with nothing to show for it.
While businesspeople by now believe that the high cost of legal representation is simply a cost of doing business, there are ways to protect yourself from these ever-increasing legal fees. The following tips will provide a starting point to lowering your attorneys’ fees. The legal authority cited herein is solely for reference purposes.
Tip #1: Negotiate costs with your attorney prior to engaging their services.
Frequently, by the time clients find that they can’t keep up with their legal bills, they have already spent thousands of dollars on unnecessary fees. You can avoid this problem by negotiating certain aspects of the engagement beforehand. The most efficient way to do this is through the engagement agreement (also called a “retention agreement”) with your attorney.
This agreement usually contains all of the key terms of your attorney’s legal representation of you, including hourly rate, extra charges, and staffing information. Your ability to negotiate a discounted hourly rate for example, is a great way to save money on legal costs. Many times this is only done at initial stages of the attorney/client relationship.
Tip #2: Ask for a litigation budget
One very useful way to minimize expenses is to have your attorney prepare a budget detailing the expected costs of the litigation. Although the budget will not restrict what the attorney can charge (as a contract would), it can be a useful tool in negotiating down bills once they are received on the basis that they exceed those listed in the budget.
A budget has the obvious benefit of informing the client of what to expect in terms of fees, and to create a dialogue between attorney and client to ensure that fees are reasonable and that there are no surprises.
Once established, a litigation budget has the added benefit of keeping your legal bills within the attorneys’ self-imposed guidelines. This at minimum will discourage wasteful billing and create a medium for communication on an otherwise delicate subject.
Tip #3: Make Sure That Your Attorney Bills in Low Increments.
Attorneys typically break their time up into either quarter-hour or tenth-of-an-hour increments. The lower the increments, the more money you will save on attorneys’ fees, since you will be billed for less time. For example, if your attorney makes a phone call to you that lasts five minutes, roughly 1/10 or 0.10 of an hour, they should bill you for 0.10 of an hour of their time. If on the other hand, your attorney bills in quarter of an hour increments, the same phone call would cost you a 1/4 or 0.25 of an hour of the attorney’s time. If your attorney charges $300 an hour, thus would cost you 75 dollars more than it would have otherwise. This change alone can save you thousands of dollars throughout the course of a case.
This is not just good practice, it is supported by legal authority. ‘[P]rofessional persons who charge their clients fees in excess of $80.00 per hour, based upon time spent, cannot, in all honesty and reasonableness, charge their clients for increments in excess of one tenth of an hour.’ In re Tom Carter Enterprises, Inc., 55 B. R. 548, 549 (Bankr. C.D.Cal. 1985.) In another case, the court found that [t]he practice of billing in quarter hour increments “inherently inflates and distorts the time actually expended, and hence is unacceptable.” In re Price, 143 B.R. 190 (Bankr. N.D. Ill 1992). Should your attorney cite firm policy regarding billing in low increments, be sure to cite these cases in your response.
Tip #4: Provide your attorney with billing guidelines
Billing guidelines are used by savvy companies in order to detail exactly what an attorney can bill for and exactly how much they can charge. Billing guidelines are extremely effective in reducing your attorneys’ fees, since they provide rigid requirements for your attorney to follow, such as the extras you will be obligated to pay as well as staffing for your case.
Making these billing requirements clear and comprehensive will give a lot of power to the client, since many terms can be dictated in this regard. Sample billing guidelines are available at www.LowerMyAttorneysFees.com
Tip # 5: Get your bills as soon as possible.
Many law firms bill for their services up to three months after they have been incurred. This makes it much more difficult for bills to be challenged, since the passage of time eliminates evidence and makes memories fuzzy.
To avoid this situation, insist on being billed for services the very next month after they are incurred. This will make it much easier for you to remember which services were incurred for what, and whether the bill is fair.
Tip #6: Have only one contact in your organization that deals with the attorney regularly.
Communication with an attorney is typically billed at the attorney’s hourly rate. If several people within your organization are communicating with your attorney at the same time, this can lead to a great deal of repetition and inefficiency. To reduce this have only one representative of your company act as the liason to the attorney or law firm.
If you are on a board or are in a partnership that is being sued, the rules are no different – have only one trusted member be the contact for the attorney. You can then have this individual report back to the rest of the group, cutting the overall amount of time spent with the attorney.
Tip #7: Have your legal bills audited by a professional
Many organizations will audit your legal bills and look for inconsistencies. Informal studies have found that most attorneys unsurprisingly don’t meet industry standards of efficiency. If you feel that you are being overbilled, contact one of these professional services.
If you want more tips, check out www.LowerMyAttorneysFees.com, which sells a comprehensive guide to lowering your legal fees.
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