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Tuesday, September 25, 2018

How Much Do Lawyers Charge?

TRANSCRIPT:

Hello Everyone:

My name is Kimberly Shin. I am a small business attorney. And today we are going to talk about how much lawyers charge. But how much lawyers charge really depends on the lawyer and your specific situation. So the real question that we’ll be answering today is what are the different methods lawyers use to bill their clients? And generally, there are four that are the most common. And the other billing methods usually involve a hybrid of one or more of the four that I’ll be talking about today.

Before I get started, I want to put out a disclaimer that this video may be considered attorney advertising and that it should be used for informational purposes only. It should not be taken as advice specific to your situation.

Okay, so let’s get started. I’m going to go backwards, starting from the least popular to the most popular. And that’s just to create that sense of surprise, or suspense that might make this type of video more enjoyable to watch.

Okay, so the least common type of billing method is something that is specific to startup companies. So I’ve seen this in the past where a law firm will take a certain percentage of your company in return for doing legal work for you. Some lawyers will say to run away from firms that engage in this type of billing practice. What I would say is be very cautious. So what lawyers do is, we draft contracts for a living, and if they own a percentage of your company and they are doing your legal work for you as well, they are most certainly protecting themselves, and they may be drafting contracts that are favorable to them. This raises a lot of ethical concerns and conflicts of interest that you should really carefully consider before engaging with a firm that practices this type of billing method.

Okay so that was number 4. Number 3. This is most popular in personal injury cases, or workers’ compensation. This is where the law firm takes a certain percentage of anything you’ve been awarded by a judge or a jury, or anything you’ve recovered in court. What I often see is somewhere between 10 and 40 percent. I know, it’s a large range. And if you recover nothing, then they don’t get paid for their work. But they may bill you for any costs that they’ve incurred.

The second billing method that is gaining in popularity is the flat fee method. And this is something that I personally like a lot because I like to know in advance how much I’ll be charged for the work  But this doesn’t lend itself well to every situation. So in my firm, we usually offer flat fee billing for routine matters such as LLC and corporation formation, but it’s hard to offer flat fee billing for every type of service that I offer.

Another type of billing that is similar to flat fee billing is the monthly retainer. And this is where the law firm charges you a monthly rate for maybe unlimited calls or maybe ten 15-minute phone calls. And so you know in advance how much your lawyer is going to charge you, and you can feel free to call them for your routine legal matters.

So the second billing method was a combination of flat fee billing and a monthly retainer. And the most popular billing method by far is the hourly billing method, and I don’t see this changing anytime soon. You can compare your attorney’s hourly billing method to getting your car serviced. When you bring your car in to the shop, they might be able to give you a quote, but they won’t really know how much to charge you, how much parts and labor will cost, until they actually get in to your car. Once they are done, then you get billed for the work. An attorney’s office is very similar. We don’t really know what we have in our hands until we actually start doing the work. And in order to charge you a fair price, and to only charge for the work that we do, we bill by the hour.

Like I said, the hourly billing method is the most popular billing method by far. It’s not as transparent as the flat fee billing or the monthly retainer type of billing method, but I don’t see that changing anytime soon, unfortunately. That’s kind of where we’re at.

If you have any questions or comments, please leave a comment below. I’ll be reading those from time to time so I would love to hear your feedback.

I know this isn’t a great quality video, but I’m working on it so please give me some grace. Thank you and see you next time. Bye.

 

 

 





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