Legal Overbilling – The Price of a Lawyer Letter
I recently had a case where a new client disputed their former lawyers’ bill. Although sophisticated, the client did not have a good handle on how lawyers typically bill – that is, other than the adage “as often as they can”. The case has given me grist for this column’s mill.
First, let us start with your pop quiz for the month. Do you really know if the price of that lawyer letter is too much? For many, the answer is the same as that of a Supreme Court Justice’s called upon to define obscenity … “I know it when I see it”. The truth is that it is sometimes hard to gage when a lawyer’s billing is legitimate. However, this does not mean that you are unable to critically look at your attorney’s bills.
I break lawyers time into two categories. The first I call “unique services”. This is the so-called lawyer letter, phone call, document negotiation or attorney to attorney meeting. These are the billed items for which there really is no standard. For example, a phone call lasts as long as it takes. To be sure, an hour call to arrange a meeting date is probably not a good sign. However, it is generally hard to determine a typical amount of time for these unique services.
Contrast this with services comparable to other similar lawyer expenditures of time. In this category would fall items such as contract review, lease preparation or preparation of a lawsuit. Many businesses already have an historical record of what attorneys have charged for these activities. While your “historical” standard is useful, do not overlook the fact that even the more standard services can also vary greatly. For example, has combative opposing counsel driven up the time, or are the issues complex – even for your attorney experienced in your business area?
Here are some useful suggestions to avoid uncomfortable calls about the bill. First, define with your attorney the scope of their work. This helps both sides better understand the work’s complexity (i.e. cost). Second, set parameters. Things rarely go as anticipated. Therefore, ask your lawyer to explain likely scenarios that could increase the costs. Third, agree to a budget. This can be formal in writing or as simple as a “guestimate”. But remember, attorneys advise, they do not guaranty – especially fees.
Attorneys are expected to be honest and loyal to their client’s cause. They are held to the very highest of fiduciary standards. Clients use the bill as a barometer of the relationship. Client doubts about the bill can be tantamount to questioning the attorney’s honesty and loyalty. Little wonder why billing conversations are generally more uncomfortable for the client than the lawyer.
Happily, lawyers generally have legitimate explanations for questioned billing. Sometimes they don’t. Most are willing to make reasonable adjustments for honest mistakes. However, you do not get to that point without informed (not emotional) communication about the concerned bill. Therefore, make an effort to identify why the bill appears out of line, and don’t employ the Supreme Court Justice’s test of what seems “obscene”! … At least that’s what this lawyer thinks.
