December 21, 2013 • By Dennis Beaver
HANFORD — Over the years, two small law firms in this town have generated more questions from readers about attorney fees and billing practices than any other we have seen, and this column has reviewed bills from across the country.
For things that are normal overhead — customarily covered by an hourly fee — these lawyers would charge extra, such as: “Discussing your case with my secretary, 30 minutes. Review of File — 45 minutes. Reviewing your file with my new associate and paralegal, 1 hour.”
On cases where nothing was happening (confirmed by examining the court’s file) “Review of File — 1 hour” would appear on a bill every six weeks. With several clients, over half of the retainer was cannibalized this way.
Now, you don’t want to see your lawyer standing by the side of the road with a sign reading, “Will Give Legal Advice for Food.” If an attorney is competent and knows how to run a business, then it’s not that difficult to earn a good income. Note: The operative word is earn, not steal.
But when a lawyer’s moral compass is Gordon Gekko, and he or she lives by the motto “Greed is Good,” then clients become victims of predatory billing practices. This column has helped our readers stand up to these guys, saving thousands of dollars, and it would have been easy to conclude that one of them was up to it again when we received this email:
“Our attorney is handling a real estate matter and I phoned to check on how the case was coming along. Later, his bill arrived, and in addition to other items, there was a $150 charge for that telephone conversation. Is it reasonable to be billed for simply asking about the status of our case?”
‘Time is the Lawyer’s Inventory’
As we would learn from New York attorney Seth Rosner — regarded as one of the nation’s most respected experts in legal ethics and professional responsibility — the answer to the question is: Yes – No – It Depends.
“That truly is a serious answer,” Rosner explained. “Clients need to know what is happening with their case or, for example, if a draft of their will or contract is ready. Questions which can be answered briefly should not be billed.
“But often it isn’t a question that calls for a yes-or-no type of answer, as the client asks for an explanation, or provides information in response to the lawyer’s request. Before you know it, half an hour is gone,” he points out, and next highlights the difference about law practice from most any other line of work:
“For a moment, let’s think of a Lowe’s or Home Depot, and the enormous inventory of things which they sell to generate the money which pays employee salaries, heat, air conditioning, rent, computers, all the same things which lawyers have to pay for as well.
“But our inventory isn’t stuff; rather, it’s time. We sell time, advice, knowledge and information. Whatever result the client is looking for, the attorney-client relationship is all about time. But often what the client expects goes well beyond what the lawyer understands, so this needs to be addressed when the attorney is hired,” he maintains.
A clear retainer agreement is important
“In general, where attorney fees are expected to exceed a certain amount — for example, $1,000 in California — a written fee agreement is required. This is also known as a retainer or engagement agreement.
“Clients typically have greater expectations for work than what the lawyer thinks. For that reason, the agreement must define as precisely as possible the scope — what services the lawyer will perform — and just as important, services which the lawyer will not, such as filing an appeal. And it is extremely important to state how the bill will be calculated.
“It is critical that the written retainer agreement be in clear language.” Rosner stressed.
“While it is a business transaction, an attorney-client relationship is different from virtually all others. It must be based on truthfulness, trust and placing the client’s interests ahead of the lawyer’s.
“So, an easy-to-understand retainer agreement will often be the key to establishing a relationship that lasts for decades and embody the Lawyer’s Golden Rule:
“Always treat every client as you would wish to be treated if the client was sitting in your chair and you were on the other side of the desk,” Rosner concluded.
And our Hanford reader? Did he ask a question that called for that brief, yes-or-no kind of an answer, or was their discussion far more involved? We’ll tell you next time, as well as focus on how clients can drive their lawyers “sane.”
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.