I recently bought an older home and completed a major renovation on it. Well, I did not do the renovation, I paid a contractor to do the renovation for me. The contractor said they would bill me bi-weekly, but I did not receive my first bill until they had been working on the house full-time for four weeks. Boy, was I scared to open that bill! I had no idea how much I would owe them. Had I already run through my entire renovation budget even though the house was nowhere near livable? Throughout the renovation process I never knew what I was being charged for and because I never received a detailed bill, I still do not know if I received everything I paid for.
That experience has made me sensitive to the need for lawyers to openly discuss billing with their clients. There are several different ways that lawyers can charge for their services. The most traditional ways are a contingency fee or hourly billing rates. Contingency fees generally work most effectively for lawyers who represent Plaintiffs who are suing to recover some amount of money. When working for a contingency fee, the lawyer will represent the client and will be paid only when the client recovers money, generally taking a percentage of the client’s recovery. The other traditional model involves an attorney keeping track of all of his or her time spent working on behalf of a client and billing the client at an hourly rate for actual time spent. Hourly billing is perhaps the most common method of billing clients. This song does a great, and amusing, job of presenting the traditional view of hourly billing from the attorney’s perspective.
Within the legal community the concept of hourly billing in under fire right now. There are some who feel that hourly billing is antiquated and charging flat rates for attorney work is a better system. Attorneys who use the flat rate system determine the scope of the work to be performed and then charge their clients a set fee to perform that work. The benefit to the clients is that they will know exactly how much they will be paying for legal services, regardless of how much of the attorney’s time it takes to complete the work.
Which ever billing system you and your attorney agree to utilize, it is important that billing is discussed openly and early on in the relationship. You should know that if you are being billed hourly you will probably be charged each time you call the office to check on the status of your case and each time the attorney sends a letter to you, as well as whenever the attorney or support staff work on your case. You should also find out from your attorney whether you will be billed separately for costs. Will the cost of postage, copies, and filing fees be passed on to you or are they included in the fees you pay to the attorney?
Do not be afraid to ask about billing. If your attorney does not bring it up during your initial meeting, you should bring it up. If you have a budget that you need to stay within, let your attorney know. Most attorneys have software that tracks their progress on files. If you want to be informed when a certain dollar amount of work has been performed, your attorney may be able to set up an alert to accommodate your request. Above all, if you have questions about billing at any time, you should ask your attorney or the support staff immediately. Your attorney works for you and you should know exactly what you are paying for.