Alternative Fee Arrangements Are Useful. And We Use Them.
The typical lawyer billing model uses hourly billing for Attorney time and Law Firm Staff time devoted to the case or project.
The Hourly Billing Model is typical.
Each hour or fraction of an hour that the Attorney or Staff spends on the client project is included in the Attorney Invoice. Usually, this is at a quarter of an hour increment or a one-tenth of an hour increment. “Billable” time includes all time spent, such as communications with the client or others, research, document preparation, time for court or other activities (including in most instances travel to/from the location of the project).
Have you discussed with your Attorney the use of a Flat Fee Billing alternative?
This method uses a value-based approach to Attorney services by fixing the Attorney fee to the type of service. For example, Marc D Sherman & Colleagues PC often provides Flat Fee Billing rates for Client projects such as: Preparation of Wills, Trusts and other Estate Planning materials, for creation of a business entity like a Limited Liability Company or other Business Corporation, for residential real estate transactions, for Deed Transfers, and for other projects.
Using Flat Fee Billing sometimes includes the out-of-pocket expenses involved with the project, like filing fees or recording fees. But the regular practice at our Law Firm is for the expenses to be invoiced separately from the fee charged to the client. Ask your Attorney what those expenses may be and how they are paid.
Contingent Fee Billing May Be Applicable In Some Circumstances.
In some cases, usually certain types of litigation like personal injury cases, the use of contingent fee billing is arranged in order to provide the client with a reasonable basis for the Attorney Fee that is related to the results of the case. In this way, the client may only be responsible, say, to pay the Attorney a fee based upon one-third of the award to the client. At our Law Firm, the nature of our work does not often include cases where Contingent Fee Billing is appropriate.
You should review contingent fee billing agreements carefully. Is the fee payable when the award is announced? Or is the payment of the fee contingent upon the recovery of the award in collection.
Hybrid Billing Arrangements May Be Worthwhile For Both Client And Attorney.
The Attorneys at Marc D Sherman & Colleagues, PC may suggest that a hybrid billing agreement is advantageous for both the Law Firm and for you.
Consider this example: You and two friends are looking to create a new LLC entity. An agreement may be made with our Law Firm for the organization of the entity for a flat fee billing rate, and then for an hourly billing rate to be applied for representation for the creation of the Operating Agreement due to extensive work among the several new LLC Members who require a detailed Member agreement for buy-sell purposes or to include other protections to be negotiated between the Members and memorialized by the Attorney.
In that example, hourly billing may also be appropriate for creation of the new LLC business policies, employment agreements, independent contractor agreements, or contract terms and conditions appropriate for the type of business.
Get it in writing, including the Attorney Retainer Deposit.
You should expect that the Attorney-Client Engagement, including the billing agreement, will be in writing. The Engagement agreement and the fee discussion should be understandable. Ask questions, so that you are sure that you understand the Law Firm expectations and your own responsibilities.
In most instances, Law Firms expect the client to deposit a retainer payment. This is an advance deposit that will be applied to the services and expenses for the client’s case or project. There are different types of retainers, so ask the Attorney to explain the reason for the retainer, where the retainer will be deposited, and how the retainer will be applied to legal services and expenses.
And Don’t Forget That The Fee Agreement May Need To Be Modified.
It is appropriate for an attorney to modify a fee agreement under certain changed circumstances. This means that our Law Firm may reasonably suggest a change to the fee agreement in situations that are understandable: For example, if the nature of the case or project changes significantly because of outside or unexpected forces or because of the client’s directions. Or, if the client’s own circumtances change, such as a business entity organization that begins as a single-shareholder project and turns into the organization of a multiple-shareholder project.
The Attorney Fee Agreement will often anticipate changes in circumstances, such as changes in the Attorney’s hourly rates over the life of a case that may take years to complete. But even if these changes are not specifically anticipated, changes are appropriate as long as they are reasonable under the circumstances.
Check Out Limited Scope Representation or Unbundled Services.
There are times when the client’s needs are only related to certain limited elements of the legal project or case. For instance, in a small claims case, the client may want Marc Sherman to only provide certain services – like preparation or review of the Complaint to be filed, or assistance with preparation for a motion to be presented in court or for a trial that is scheduled to take place.
Sometimes the client wishes to hire Marc Sherman to only handle parts of a court case, like contested motions or pre-trial or trial aspects of the case. The Illinois Attorney Professional Rules allow Attorney Sherman to file a limited appearance in the court case, and the Attorney Fee Agreement will set out the basis for the Law Firm billing and the expenses. The Fee Agreement will also identify the limitations on Attorney Sherman’s responsibility for the elements of the case.
Next steps? Attorney Fees and Billing can be confusing for even long-standing clients. If you have questions about Attorney Fee Arrangements, alternative billing approaches or other considerations discussed here, or if you have an agreement with another Law Firm that you feel should be reviewed, reach out to Marc Sherman by phone to (847) 674-8756 or by email to msherman@mshermanlaw.com.
