The legal profession is one of few remaining professions that charges in units of time. This can be confusing for non-lawyers or those who have been fortunate enough to avoid needing a lawyer. To resolve some of the confusion in the simplest way possible, most law firms bill according to the time invested in completing a task. Let’s say, for example, a lawyer charges $400 per hour, and that lawyer prepares a letter for you which takes an hour, then you would be charged $400 for that letter. If that letter took 30 minutes to prepare then you would be charged $200 and the invoice for that letter would be sent after the work has been performed.
I will be the first to admit that this is an old-fashioned way of charging for a service, and it has been around since before I started practicing as a lawyer. It is however a method that has been tried, tested and is still commonly used in the legal profession.
So, if a lawyer has control over how much time it takes to complete a task, how can I reduce legal costs? A perfectly valid question of which most lawyers won’t answer. Regardless of the type of legal issues, these 7 easy tips will help to slash your legal fees.
Ask for itemised invoices
In practice today most law firms bill monthly and put little to no detail in the invoice other than a lump sum cost - period. Who in their right mind would pay any sizeable invoice within a timeframe without any information on it? If you’re lucky they might put the total of hours worked, without detail, without a breakdown leaving you with no idea where your money is being spent, or on who. It amazes me the number of firms that focus on the details running your legal matter but overlook detail when it comes time to your invoice.
If you are subject to this kind of billing practice, you should seriously consider having a conversation with your lawyer. Law firms need to be accountable for their legal fees. If there is no detail or justification, there is nothing to hold them accountable to.
If you are working with a law firm that provides itemized invoices, then before you begrudgingly pay the invoice, spend some time looking through your invoice. When you receive your bill, familiarize yourself with each of the component like:
- the units – this is the time invested to complete a task
- the description – this should be a detailed breakdown of what your lawyer has done for you
- the author – is the person who completed the task
- the outlays – these are the costs for printing, scanning, 3rd party fees and the like
It may be hard to believe but lawyers are also susceptible to human error and sometimes we do make mistakes when it comes to billing our clients. Honest mistake or not, you should be vigilant as client. If something looks unusual or wrong, you need to ask about it. Every law firm should have an accounts department or accounts officer who can answer your question and investigate what may be a genuine mistake. Law firms should not charge for you questioning your invoice.
Get invoiced weekly
When you do raise issue, it is best to raise your billing question sooner rather than later. This will ensure the task in question is fresh in the mind of the lawyer responsible. This is why monthly bills need to be avoided - nobody remembers.
I cannot over emphasize how important it is to be prepared for every interaction with your lawyer. Some of my most cost-effective matters are those with clients who over-prepare and really listen when asked to gather certain information or complete a task. The more information you have available to you, the less investigating and chasing your lawyer must do on your behalf.
November of last year I released an article entitled “Top 10 Amazing Tips to Prepare for Your Strategy Session”, the strategy session being your first meeting with your lawyer. The article is still very relevant. It amazes me the people that are offered this information and don’t read it - that’s why I put it into a video. Being prepared for every interaction with your lawyer can save you thousands over the lifetime of your matter.
One strategy which I find helps most clients is to take notes, not only about things you need to do but questions you want to ask your lawyer. This will help maximize the benefit to you during each interaction with your lawyer.
Avoid reciting War and Peace
Especially in regards to Family Law, we do appreciate hearing about the ins and outs of your matter and life in general, however we will be your most expensive friend. In all sincerity, I really enjoy hearing about my clients’ day to day life, their friends and their family but when this is intertwined with discussion about your matter, family law solicitor costs can skyrocket.
Whether face to face, by phone or in an email every interaction with your lawyer is billable (with few exceptions). When you keep your communication focussed to progressing your matter or in direct response to a query asked of you by your lawyer, you will reduce legal costs substantially.
Do not write 1,000-word email venting your frustration in response to a question that would need a simple 10-word answer. As a lawyer, we need to read every single word to make sure we have understood your instructions. Read and listen to what your lawyer is saying or asking of you and limit your communications to progressing your matter.
Make your conversations effective, a standard rule of thumb that I am sure you will not forget – when you pay 14 cents a second (for a lawyer who charges $500 per hour), every second counts.
Separate principle from commercial decisions
At different points in your matter, you will be given guidance and be asked to make decisions, some easy others not so much. The most difficult decisions you will be asked to make are those which challenge your principles and your expectations of your outcome. Our job as lawyers is to protect our clients and achieve the best outcome possible in the circumstances. We give you advice and options and you make decisions based on that advice.
With most matters, there comes a point when you need to make a decision that isn’t aligned with your principles, expectations or values but can resolve your matter. Sometimes it may be worthwhile to swallow your pride in the interests of finalizing your matter and avoiding further legal costs. This is when your lawyer will start talking to you about ‘commercial viability’ and proceeding with your matter while incurring further costs. In layman’s terms, you can continue to pay legal fees to prove your point or you can resolve your matter quickly to reduce legal fee. Sometimes this is easier said than done, especially in matters of separation where people are emotionally hurt.
In these cases, I will be the first to caution clients against running ‘principle’ arguments which only seem to increase divorce lawyer costs, regardless of whether you have proven your point or achieved your desired outcome.
Avoid Court where possible
It sounds ridiculous when a lawyer tells you to avoid going to Court, however, a lawyer with your needs and interests in mind should be advising you about all the possible options before proceeding to Court. Granted there are some matters which warrant the intervention of the Court though these are few and far between. Most matters are capable of resolution through collaborative and strategic negotiations or alternative dispute resolution processes such as mediation or arbitration.
The minute you step in front of a Judge, not only are you faced with the burden of significant legal fees, but you also lose an element of control in that you are at the mercy of the Judge, who will decide how your matter resolves. If that isn’t enough to encourage you to exhaust all your options, then consider the hours a lawyer labour’s over court documents not to mention time your lawyer spends in court. Putting some thought into the dollars and cents involved when going to Court should motivate you to reconsider whether Court is right for you.
Consider your fee arrangements.
One very common question that almost every single client has asked or will ask myself or my colleagues is, how much will this cost?
Hourly Rate - Because most law firms charge on an hourly basis, the answer is usually cliché such as how long is a piece of string. Unfortunately, this is the reality of the situation as it is difficult to tell how long any task will take and, based upon an hourly rate, it is near impossible to give an accurate estimate of costs. The only way to balance this method is by reading the invoices in detail, and questioning time entries as to its relevance to your matter.
Fixed Fee – fixed fee options give more certainty of costs to a point, be very mindful of ‘extra’ or hidden charges. For instance, fixed fee conveyancing that exclude searches or printing costs. Also, be mindful of the description of that Fixed Fee option and really look at what is included in the fixed fee. It is wise to consider in advance if your matter would be a run of the mill basic matter or one that is extremely complicated. If you believe it to be extremely complicated, you should scrutinize the ‘fixed-fee’ fine print to avoid unpredictable additional costs later.
Cost assessed – This is a very old school method of estimating your legal costs, commonly performed after the matter has started, or in some cases even after it has been finalised. From an outside perspective looking in it resembles an independent contractor getting a few brief details of your matter, picking up the printed hardcopy of your file and magically knowing how much on a scale it should cost.
No win – no fee – The ultimate smoke and mirrors slogan, commonly misinterpreted for we do all the work, you do nothing, and get all the money (excluding a small fee). This is rarely the case, with hidden fees and ridiculous percentage cuts in the law firms favour. Not to mention that you must also do a lot of the paperwork.
Like every profession, there are costs associated with the service provided, sometimes those costs are reasonable, other times the costs are disproportionate to the level of service you receive. Unless you enter into a no-win no fee contract, you pay for the service and not the result. You would not go to a doctor’s office and dispute the consultation bill because he gave you a fatal diagnosis, much the same for a lawyer, you can’t argue a bill based upon the fact the judge didn’t give you the desired result.
It is critical that you understand you do not pay for the result, you pay for the service getting you to that result. I personally loathe spending $500 at the dentist for three filings, not a great outcome, however their experience and service to fix the problem as skilfully as they can make the costs worthwhile. When you are paying for a service it is reasonable to expect that you receive quality service and experience.
This is impart the reason why there is such a focus on customer service these days, and is what separates good law firms from the bad. It may be hard to believe that there is a new era of lawyers in existence who are not motivated by the billable hour but by outcomes and success stories of their clients. For this reason, we developed our 10 client service excellence pledges to perform the framework for our valued clients to hold us accountable to the values, commitments, and responsibilities our team preach in each pledge.