Lawyers are familiar with the complexities of operating a law office and functioning in the courts. Clients are not! Unfortunately, lawyers often tend to forget that one simple fact. A client may have a relatively brief conference with his attorney and see him next at a hearing or in a courtroom. He is, therefore, astounded when a bill representing many hours of preparatory work and negotiation is presented. The client was not present in the library when the law was researched. He was absent when motions were prepared and filed. The client was not included in the telephone negotiations with opposing counsel. He did not participate in the drafting of a settlement nor in the preparation for trial.
In the course of buying his home the client did not spend ten hours searching through musty courthouse records to trace a chain of title. He did not coordinate the activities of a mortgage department, title company, broker, and seller. All the client knows is that he briefly talked to an attorney about buying a house and then spent forty minutes with him some time later at settlement.
Lawyers must take pains to describe the work they are required to do on a matter and they must be careful to explain the basis of charging a particular fee at the beginning, and in full. The two most important rules for the trouble-free billing and collecting of fees are to advise the client as early in the relationship as possible concerning the expected amount of the fee, and to involve the client in the handling of his case while his work is being performed.
Costly Error
But in most cases, the client who is, for example, entering into a small business partnership, having his will drawn, purchasing a home, or contemplating a law suit has little idea what the fee will be.
The second rule, involve the client in the handling of his case, is largely delegable function. It can be accomplished by sending extra copies of documents and correspondence to the client as they are prepared or received.
One law firm that makes a policy of sending a copy of every item to its clients stamps the words "For Your Information Only-No Action Necessary," across the top of each copy being forwarded. The firm has increased its rate of collection, and reduced the number of inquiries regarding the amount of fees, since initiating the system.
When billing is done at the conclusion of a matter, timing is a crucial factor. This is especially true if the results are favorable. If a case is won, or a claim settled, or a piece of property transferred, the bill should be rendered almost simultaneously with the conclusion. A thirty-day delay will lower the value of the service in the eyes of the client, and several months' delay will lower its value in the lawyer's eyes as well.
As immediate billing is expensive in terms of system and personnel, a delay to a regular month-end billing period may be worthwhile in most cases. A longer delay often results in a lower bill and a client showing reluctance to pay the bill.
The art of billing involves four items:
- Have a clear understanding with the client at the beginning as to the fees and costs involved. If necessary, estimate a range, but be clear on what basis billing is to be accomplished.
- Keep the client informed of the work done. It may be valuable to get him away from his dinner ask him a question!
- Bill frequently. Several small bills are more likely to be paid than one large one.
- Bill on time.
Billing Rates
The actual rates used by lawyers are influenced by many factors. The most important one is experience. For example, the average standard hourly rate of associates with one year of experience was $64 per hour in 1986. The average was $75 for three-year associates, $85 for five-year associates and $93 for seven-year associate lawyers. (These are national averages for firms of all sizes.)
Hourly rates for partners ranged from an average of $90 per hour for those with six years of experience to an average of $143 for partners with 25 to 29 years in practice. (The average rates decline somewhat thereafter.)
In general, rates are higher the larger the firm, and the larger the city in which it is located. There are also regional influences on hourly rates. Current information on lawyers' standard billing rates are published each year in the Altman & Weil Survey of Law Firm Economics.
