Many businesses are dismayed by their outside lawyers’ steep hourly rates. Even more become dismayed when they receive their first legal bill and learn how quickly those five minute phone calls add up. With that in mind, here are some tips for avoiding legal billing disputes before they start.
1. Consider a Lawyer’s Efficiency Alongside the Rate
The best way to prevent disputes with your lawyer is to find the right one. The process of finding the right lawyer often begins with discussions about hourly billing rates and the amount of time needed to complete your project. While you may be inclined to choose the attorney who offers the lowest hourly billing rate, you may also be surprised when that attorney logs many more hours than a higher-billing lawyer to complete a relatively simple task. With this in mind, remember that efficiency matters just as much as a lawyer’s rate.
You can often prevent disputes about how long a project should have taken by discussing it before the attorney begins. Unless your attorney lacks the information needed to make an estimate, you should proceed with caution when he or she is not willing to provide an estimate.
2. Negotiate Your Written Fee Agreement
You should never work with an attorney without first signing an Engagement Letter that clearly sets out fees and rates, including the hourly rates of any associates or paralegals who will be working on your project. Before signing anything, remember that you have the power to negotiate the terms of your Engagement Letter.
You might consider a flat-fee arrangement. If the attorney insists on hourly fees and you are concerned about unpredictable expenses, you can suggest a ceiling or limit on fees. If the hourly fee seems high, you should also consider asking competing law firms for their hourly fees as a reference for the negotiation.
When you negotiate your Engagement Letter, you are not being cheap or unprofessional. You are working to protect your business from unnecessary costs, just as you would when working with any other outside vendor or service professional. Though it might feel uncomfortable to negotiate—especially with someone who has significant legal and negotiating expertise—it is in the best interest of your business to do this well before a bill arrives.
3. When Prevention Fails: Disputing Your Bill
Companies do not want to waste time disputing their legal bills. These disputes distract management from the company’s immediate business needs and create problems when the company has relied heavily on outside counsel for representation and advice. However, if you believe that outside counsel is not honoring your fee agreement or is not billing hours in good faith, you may choose to dispute your legal bill.
There are several ways that you can dispute your legal bill, ranging from informal conversations to formal legal disputes. When disputing your bill, consider the full range of responses. From the least to the most adversarial, these include:
Talking it Out: Explain your concern regarding the bill. Try to negotiate down the hours billed, obtain a discount, or even renegotiate the fee agreement altogether. In nearly every scenario, this should be your first response to a billing dispute. Lawyers who want to maintain a healthy client relationship and retain you as a client will work with you to resolve billing disputes without attempting to escalate the issue.
Mediation or Arbitration: If you cannot resolve the billing dispute through informal conversation, you may want to pursue mediation or arbitration. If you choose to enter arbitration, you should consider hiring a lawyer to adequately represent your interests. While you are not required to have a lawyer for arbitration and may want to avoid the cost of hiring one, you risk inadequate preparation and representation in the proceedings without one.
Turn to the Courts: A lawsuit is a last resort, and should only be used when the amount of money at stake justifies it and when you believe that outside counsel has violated your fee agreement. Clients who choose to bring a legal action against their attorneys hire an independent lawyer to represent them unless the dispute is in small claims court. Beyond taking direct legal action against your attorney, you can also file a report with the state bar association if you believe he or she has acted unethically in overcharging you.
Though you can dispute a legal bill if you feel you are being overcharged, it’s best to avoid the time and hassle of a drawn-out dispute by finding the right attorney, negotiating the terms of your Engagement Letter, and initiating conversations outside of the courtroom to resolve any disputes. Priori Legal can help you find the right attorney for your needs with completely transparent rates and an electronic billing system that helps you stay on top of how much time your attorney is spending on your matter.