For most legal cases, time based fees are charged for the work performed on a client matter with some exceptions where cases may be handled on a flat 'task' rate basis or contingency basis.
With time based fees, a client can expect to pay only for the time actually spent on behalf of the client. The time based fees are calculated using a previously agreed upon rate, the rate being determined upon an assessment of a number of factors including, among other things:
- The complexity of the issues within the client matter such as whether the case is simply about payment of a debt or whether the case is a technically challenging defective workmanship case, among other case unique factors;
- The level of importance to the client including expectations, urgency, and other pressures including the extent of resistance from the opposition; and
- The legal business risks faced such as whether the client may become a liability hazard.
As the manner in which a legal matter will unfold is often unpredictable, clients should refrain from seeking to establish an absolute fixed budget mindset. This is especially so when the opposing side in a legal matter becomes difficult and behaves unreasonably. However, for most matters, a ballpark range in total expenses can be provided - but without guarantee! Accordingly, it is always best for the client to carefully review the emotional strength and financial capacity when considering willingness to carry a legal matter through its course. Be forthcoming about any concerns. Ask questions. You will find many hints and tips shared on how you can help minimize the expense of your legal matter by helping with some tasks, communicating efficiently, and providing other assistance.
Time based fees are calculated a little differently than most lawyers or paralegals as we generally tend to round down rather than round up the time spent on a client matter. Whereas most legal professionals will charge a four minute telephone conversation at 1/10 of an hour (the "six minute interval"), we tend to round this down and charge only for three minutes or 1/20 of an hour. Of course it is important to keep in mind that the end of a three minute phone call may not be the end of the work as lawyers and paralegals are required to keep careful notes of client conversations.
Another way clients save money is through the use of unlicensed assistants such as second year paralegal students, all properly supervised of course. As these unlicensed assistants are carefully vetted as being well on the way to becoming qualified paralegals, the quality of work produced generally needs only a few touch ups by a licensed colleague. By involving students, we create a win-win-win environment as the client saves money, the student fulfills mandatory placement hours, and we simply feel good by doing what is best for everybody.
Travel and Waiting
Generally, all time spent on a client matter is billed. This includes all time involving absence from the office including travel to attend court, meetings, or consultants on behalf of the client. Additionally, the time spent waiting in court for a client's matter to be called is billed. However, it is common that we will cap the fee where an unusual amount of time spent occurs. In some situations, a flat fee rate may also be agreed to.
Prior to retainer, an in-person appointment or telephone consultation will be required. During this talk, a licensed paralegal will assess interest in offering services to the client and undoubtedly the client will assess interest in hiring the services, if offered. The consultation may involve a flat fee rate payable prior to the consultation. Depending on the type of matter and whether the client has had dealings with us in the past, the consultation may be offered without charge; however this tends to happen only for repeat clients.
As mentioned above, the actual fee rates charged on an hourly basis (billed in 1/20 of an hour intervals) will vary depending on the type of matter. However, for relatively straightforward matters, rates may begin as low as $150 per hour. For complicated or challenging matters, rates may be over $200 per hour. It is also important to keep in mind that a rate review may occur if a 'straightforward' matter becomes a 'challenging' matter due to changes in the case direction brought on by opposing party conduct or new instructions from the client.
Invoices are typically generated at month-end; however, where a file has had significant activity, a mid-month invoice may be generated so as to help the client avoid a 'surprise' at the month-end and also to help ensure that the bills get paid as without prompt paying clients, other clients suffer.
Nickel and Dimed
Members of the public sometimes complain that, "My lawyer nickel and dimed me for every phone call." Unfortunately, this is a reality, and often a necessity, of the legal business as lawyers and paralegals typically make a living five minutes at a time. As most legal issues are discussed, negotiated, and settled out-of-court, most of the legal work is out-of-court. Also, as the lawyer or paralegal is required to keep proper records, for a variety of reasons including simply keeping track of where the matter stands, at the end of a five minute phone call, the lawyer or paralegal may have another five minutes, or more, of memorializing notes to complete and file.
If fees for legal work were due only for the few days a lawyer or paralegal is actually performing in-court work, the fee charged for an in-court day would be enormous (although some will argue that this is also true). The reality is that on most days, a lawyer or paralegal will be making a living from dozens of brief phone calls or emails.
As we generally operate only on a retainer basis, outstanding receivables are rare; however, we also know that times are tough and sometimes clients may get a little behind on an account. Where a first time and small amount receivable does occur, a gentle reminder and thirty day grace period will be allowed but on accounts repeatedly with a receivable owing or a significant amount outstanding, advisement that payment of the amount is immediately due will be provided. If prompt payment is not received, representation of the client may be terminated. As a small business, a personal touch is provided; however, a small business is unable to carry receivables. Interest on past-due accounts is charged and any past-due accounts may be reported to the credit bureau.
To avoid receivable concerns and to ensure that focus always remains on client matters rather than client billings, clients are required to provide a deposit upfront. The deposit is known as a retainer and the money held remains the money of the client until invoiced for fees due and expenses incurred. When the invoice is generated, the deposit money held in trust is applied in payment of the invoice. For more on retainers, click here.