Legal fees: 5 things you should know but don’t

Law is a business—a big business. In fact, American lawyers generated around $300 billion in legal fees in 2018, and likely more in 2019.

But despite all of the money sloshing around, shopping for lawyers is difficult. It has very little in common with comparing choices on Amazon. The price is unpredictable and the lawyers themselves do not come with a handy rating system or a list of helpful reviews. Usually you pick a lawyer based on the recommendation of a friend or colleague who likely has little idea if their recommended lawyer is actually good at the type of work that you want done.

We are not going to solve all of those problems today. But by the end of the article, hopefully you’ll have a better understanding about how to make sure that you aren’t paying too much or, if you did, how to get some of your money back.

The first step is to talk about your situation with several lawyers. If you’ve talked with three lawyers and they all gave you similar quotes for the project, then you can be confident about what the going rate is for your case.

After that, ask the lawyer about their experience with your kind of case. This is important because law is among the broadest professional fields possible. It’s impossible for any attorney to be experienced and knowledgeable about more than a few areas of law at once. For example, a lawyer that focuses on criminal defense and personal injury will generally not be the right person if you want help setting up a company or completing a real-estate deal. And, by extension, a transactional attorney who specializes in creating companies and doing real-estate deals will not be a good choice if you’re facing a criminal charge.

Let’s fast forward a bit. Assume you’ve hired a lawyer and received your first bill: What do you do if the bill seems too high? Ask the lawyer to explain why your bill says what it says. If they are an honest attorney, they will happily do so. And sometimes they’ll even discount it. If, by contrast, they refuse or get defensive, that’s a red flag.

Next, it’s helpful to realize that even if you negotiated a bad deal with your lawyer, you are not out of luck. That’s because the ethical rules governing lawyers (yes, they exist) prohibit lawyers from charging an unreasonable or excessive fee. A fair fee, in turn, is based on many factors such as the time required, the complexity of the case, the skill and experience of the lawyer, and the fees normally charged by lawyers within the community.

One implication of this rule is that even if you signed an engagement agreement with your lawyer (I hope you did), they cannot use that agreement to force you to pay an unreasonable amount. In other words, if the fee is unreasonable, it does not matter that the agreement says you’ll pay it. In those cases, if a court gets involved, they will slash the bill or even eliminate it altogether. But before you get a court involved, you may want to ask another attorney for a second opinion.

For instance, let’s say that you hire a lawyer to handle an uncontested probate of your mother’s estate, which owns $100,000 of land. Now assume that the lawyer doesn’t ask for money. Instead, he wants a 30% interest in the land (i.e., $30,000). This fee is unreasonable because the going rate for an uncontested probate is no more than a few thousand dollars. As a result, a court would reject the fee and admonish the lawyer.

Now let’s talk about what happens if you dispute your bill: Can your lawyer quit the case? Not necessarily. But it’s likely they will threaten to do so if you miss a payment or two. In that case, you don’t have to decide between paying a bill that you think is unreasonable or finding a new lawyer (and paying them to get up to speed on the case). You have a third path. Put your objections in writing, pay a reasonable chunk of the bill, and then ask the lawyer to keep working.

Why does this approach work? Because a lawyer does not have an automatic right to stop representing a client. They can only do so in a few scenarios, one of which is that a client “fails to substantially fulfill an obligation to the lawyer regarding the lawyer’s services and has been given a reasonable warning that the lawyer will withdraw unless the obligation is fulfilled” (Model Rule of Professional Conduct 1.16). Notice that the rule is not all-or-nothing. You simply need to “substantially fulfill” your obligation to pay. So, paying a reasonable portion of your disputed bill will make it hard for your lawyer to ethically exit the case.

So, where does that leave us? Finding a good lawyer and then getting a fair price sometimes feels like searching for the proverbial needle in the haystack. But we improve our chances if we start the process by speaking with several lawyers about their prices and expertise. And we do even better if we regularly check our bills and ask questions when they seem too high.

This column is for informational purposes only and is not intended to be taken as legal advice. For your specific case, consult a lawyer.