Controlling
Legal Fees:
First, Do You Need a Lawyer?
Legal fees
are among the highest unbudgeted expenses that people incur during
their lives. Learning how to control legal fees may result in
significant savings. This article will cover the basic ways by
which legal fees may be controlled. Later
articles will focus on different ways to pay legal fees, such as
contingent fees, and various methods to control each of these.
Obviously,
if you do not need a lawyer, you should not pay for one. Many of
the services usually provided by lawyers in the past are now being
provided by others or may be supplied by you. Examples include
(1) small claims courts for claims under $5,000 wherein lawyers are
not even allowed, (2) straightforward residential real estate deals
involving standard real estate forms, escrow and title insurance
companies, and (3) simple divorces not involving children or
significant assets.
Two
questions to ask whether you need a lawyer: (1) Is there significant
financial risk involved? (2) Is there a risk of going to
jail? Answering “yes” to either or both of these questions
obviously indicates the need for a lawyer. When in doubt, an
hour consultation with a lawyer may put your doubt to rest. Some
lawyers offer free initial consultations. Use them.
Once you
determine you need a lawyer, then shop as you would for anything else.
Again, use free consultations with several lawyers to obtain rates,
qualifications, and the “good, fuzzy” feeling.
Remember that law is not a situation where cheaper is necessarily
better, since an expensive, but experienced, lawyer may give you the
answer immediately, whereas a cheap, but inexperienced, lawyer may
spend ten hours in the law library to find the answer.
While
talking with each lawyer, determine whether he or she will do the work
for a fixed fee. This makes it easier to shop around.
Fixed fees are becoming more available, as competition among lawyers
forces them to take more of the risk in the time estimated to conclude
your matter. Obviously, some matters just do not lend themselves
to fixed fees where it truly is difficult to estimate the time and
effort involved.
Another way
to reduce legal fees is to utilize contingency fees. A
contingent fee is paid from any amounts collected and is usually an
agreed percentage thereof. You will not have significant legal
fees to pay each month, although you will usually pay for costs, such
as court filing fees. Contingent fees will not always result in
lower legal fees. This issue and other methods to further reduce
contingent fees will be the subject of a later article.
If your
matter should proceed upon an hourly fee basis, there are many things
you can do to control these. If paralegals or others can do the
work, they should. A much lower rate should be agreed for this
work, or a lower blended rate should be agreed for all work. A
detailed statement of services rendered should be given to you so that
you know each activity and the time taken. If you do not
understand or agree to each item, call your lawyer.
Finally,
discuss these matters in detail with your lawyer and obtain a written
fee agreement before the lawyer commences work, regardless of the type
of fee employed. These methods will give you greater control
over your legal costs. Subsequent
articles will examine each type of fee in greater detail to
further control your legal costs.
Disclaimer:
I publish these articles for your interest and to provide information
on legal issues that may affect you. Although I use only
reliable sources for the contents, every case is different depending
on its particular facts. You should not take any action based
only on the advice in this article. You should discuss any
proposed reliance or action based upon this article with me or another
lawyer first.
