Top 5 Questions for Your Estate Planning Attorney – Q3

Top 5 Questions for Your Estate Planning Attorney – Q3

Question #3: Do you quote a fixed price after reviewing my estate planning project?

How Attorneys Charge Their Fees

When you need to hire an attorney, one of the first questions you might ask is how much it will cost. Attorneys charge different ways for the legal services they provide.

Hourly

These are often called billable-hour attorneys. These attorneys charge for the time they actually work on your legal issue. They typically track and bill their time in 1/10th of an hour increments; Senior attorneys with many years of experience bill more per hour than Junior Associate attorneys. These attorneys also have paralegals and legal staff who also track and bill their time. One benefit of this type of arrangement is that the total fee reflects the actual amount of time that the attorney and his/her staff put into the case. If the work does not require much time, the bill is less expensive. However, if the legal matter is more complicated than originally expected, the client may be in for a real surprise when he or she receives the bill.

A disadvantage to this type of arrangement is that it often causes anxiety because there if no clear estimate of how much time the legal issue will take to resolve, and therefore the client doesn’t know how much it will cost until the job is finished. Also, hourly rates can encourage inefficiency since the attorney is paid more for taking more time on the legal matter.

Contingency fee

This arrangement involves the attorney receiving a percentage of the client’s award or settlement when the legal matter is finished. If the client doesn’t win, the attorney doesn’t get paid. This type of payment arrangement is more common with personal injury law and medical malpractice cases than with other types of law.

An advantage to this type of arrangement is that the client gets legal representation without having to pay upfront for the legal services. The client may, however, be responsible for paying any expenses as they are incurred (cost of obtaining documents or medical records, cost of a court reporter to take a deposition, cost of travel, etc.).

One disadvantage is that contingency fees bring about a certain degree of uncertainty. Sometimes, when everything is settled, the client gets less than the attorney does because the client is responsible for paying all the litigation expenses, as well as any medical expenses the client incurred. Another disadvantage is that this type of arrangement may cause the attorney and the client to strive for different goals. A client may want to go to trial because he feels he could get a bigger payout, and the attorney may want to settle the case so that he or she can get paid.

Flat Fee

This type of arrangement is more common when the legal issues are well-defined and the lawyer can predict with reasonable certainty how much time a case will take.

An advantage of the flat fee arrangement is that it’s transparent and removes uncertainty for both the clients and the lawyers. The client knows up front what the entire matter will cost – avoiding the risk of huge, unanticipated fees. Additionally, clients don’t have to worry about being charged every time they communicate or meet with the lawyer or staff. Flat fees encourage lawyers to work more efficiently and be more productive with their time.

Another advantage is getting to the finish line faster. Whereas hourly fees give attorneys an incentive to work slower, flat fees give the attorney the incentive to come up with more efficient strategies for handling the project – such as better systems, delegation or technology that can tremendously benefit the client.

Lastly, flat fee arrangements reduce the number of fee disputes between the client and the lawyer. There’s no need to dispute unexpected fees since the client knows up front exactly what he or she is paying for the legal services.

A disadvantage, though, is that sometimes the legal matter becomes more complicated than expected. If this happens, the lawyer can wind up investing much more time than anticipated without being able to charge more fees. Or, even worse for the client, the lawyer may cut corners so that he or she doesn’t lose money. Therefore, speed may come at the expense of quality. Because of this, many lawyers require an agreement for a flat fee up to a certain point, then an hourly billable arrangement to cover unexpected issues that might arise.

Estate Planning and Elder Law matters are well-suited for flat fee arrangements. 

Flat fee arrangements work best for those legal practice areas that can be delivered with predictability and repetition. Typically, Estate Planning and Elder Law involve a consistent pattern of tasks, can be systemized, allows for delegation and becomes drastically efficient with the use of technology. Therefore, these practice areas allow the attorney to adequately predict the amount of time necessary to provide legal services. It also allows the attorney to spend more time staying on top of the laws and legal strategies relating to this area of practice so that they are the experts you want them to be.

Most professional estate planning and elder law attorneys provide legal services using the flat fee model. That’s because these attorneys strive to provide their clients with high-quality work, regardless of the time it takes. They want to be the best at what they do (or at least they should want to be the best). The flat fee allows the client to determine, right from the beginning, whether they can afford the legal services that will be provided. It also encourages the client to communicate freely with the lawyer because they won’t be billed extra for consultation, telephone calls or electronic communications. The client is never surprised by a large fee at the end of the process because fees are negotiated and agreed upon before any work begins. A Flat fee arrangement aligns the attorney’s interests with the client’s interests. It also puts the emphasis on the value of the attorney’s work, instead of his or her time. Since I became an attorney, I’ve wondered why law firms stress the importance of billable hours. I’ve always thought that this type of arrangement is counterproductive. I didn’t spend 3 years in law school, obtain a Juris Doctorate degree and pass a very difficult State Bar Exam so that I could emphasize the importance of my time. My clients hire our firm because they know an investment in their estate plan is one of the most important things they will do in their lives. They hire us because of the quality of the legal services we provide, not because of the quantity of our time. A flat fee arrangement allows us to focus on providing the very best work, rather than tracking our time.

IMPORTANT: When considering a flat-fee lawyer, it’s important to remember that you’re not looking for the cheapest way out. Estate Planning and Elder Law are areas where you definitely get what you pay for. Your family is the most important thing in your life. PLEASE don’t go cheap when it comes to protecting something this valuable. If you were buying a parachute, would you want to buy one that you know will open or one you hope will open? Instead of just trying to drive down attorney fees and get the lowest estimate possible, look for a win-win situation to maintain proper alignment of incentives.

 

Author: Fred Haiman 

 

 

 

2019-05-07T12:43:59+00:00May 6th, 2019|