Effective Strategies for Challenging Legal Fees and Safeguarding Your Rights

What are Legal Fees?

Legal fees can vary significantly based on the nature of the legal work involved. Generally, lawyers charge on an hourly basis or in flat fees. The final legal bill can include a variety of itemized costs, each of which may or may not have a direct relationship to the work performed by the attorney.
Hourly Rates
Hourly fees are the most common billing method for attorneys. Experienced attorneys charge higher rates than junior attorneys. Attorneys will often provide the client with a retainer agreement that outlines the hourly rates of the main attorneys and other personnel who will work on the case and what types of tasks are generally billed.
A legal bill will list specific tasks and the time spent by the attorney and paralegals on each task. Paralegals are usually billed at a much less expensive rate than attorneys, but a paralegal can perform some legal tasks in the absence of an attorney in some situations.
Flat Fees
Flat fees are one of the few alternative forms of legal fees. With a flat fee, the client pays the same amount regardless of the time spent on the case. Clients generally prefer this type of arrangement, but the attorney may also prefer hourly fees in some cases. Flat fees are typically used when the scope of the tasks is more clearly defined , and the attorney believes that there are no significant complications likely to arise.
Some attorneys offer "bundled" services for flat fees, such as: Forming a corporation, bankruptcy cases, Wills, formation of LLCs, etc. These services or tasks all have roughly the same scope, so the attorney can estimate the time involved.
Contingency
Contingency fees are not as common as other types of legal fees. In most cases, a lawyer will not enter into a contingency agreement unless the case has a strong likelihood of success. As a way to lower the potential of litigation costs, the parties will often negotiate where the client pays only court costs and filing fees and the attorney receives nothing if the client loses.
If the client prevails, the contingency fee will then be calculated as a percentage of the recovery in the matter. For example, you may have agreed to pay your attorney a contingency fee of 33.3 percent. If you win $100,000, your attorney will receive $33,300.
It is extremely important to understand the scope of any matter in which you will be involved with a lawyer before entering into any type of contingency representation.

When to Challenge Legal Fees

There are several common scenarios in which a lawyer’s bill might be disputed. Examples include when the final bill exceeds the initial retainer amount; when it contains charges for unexpected or unauthorized services, such as travel time to a distant office or billed hours for a lunch meeting that was not rescheduled after a cancellation; if it reflects a rate increase that was not agreed upon, and/or if it is not itemized or otherwise fails to clearly reflect what the services were, who performed them, and when and where they were performed.
Sometimes a billing issue is evident by glaring errors, such as when a lawyer bills $400 an hour, but the bill reflects 40 hours of work during a single day of representation, or where the billing shows a rate that seems too high for the geographic area where the case is being litigated, or where it would exceed what the same firm has charged a client with similar work in some other matter. An experienced lawyer will have the experience necessary to know whether the hourly rates reflected in a bill are reasonable, and where the bill appears to show erroneous amounts, it is wise to dispute that first with the billing lawyer and then with the senior partner, if necessary.

Steps to Follow Before Challenging Fees

If you are considering filing a lawsuit, you need to "meet and confer" before the filing of any lawsuit. In the context of a fee dispute, what this means is you should attempt to resolve the dispute without a lawsuit before filing a complaint. The first step in this process is to review the fee agreement. Most fee agreements have an introductory paragraph that states something to the effect of "if you have questions about fees or costs, discuss the matter with the lawyer who is handling your matter". This is practical advice, which generally gets ignored. However, you should still carefully review your fee agreement and analyze the basis upon which fees were charged. More often than not, reading the fee agreement will point out what you think are factual errors in the invoice regarding time spent.
Most attorneys will agree that you should understand the invoice before you start complaining about it. If you do not understand at least the general terms of the invoice, you should ask the attorney for some clarification. Attorneys have been known to charge their clients for meetings or e-mails attempting to explain their bill. You can be sure if you do not understand the invoice and the attorney has to explain it to you, you will be charged for the attorney’s time. Under the ethical rules, the attorney is allowed to charge for any time reviewing the file as well as explaining the contents of the file. So, if the attorney has to spend time reviewing your file to explain the charges on the invoice, you will be charged for that time. Therefore, it is always advisable to educate yourself as to what the invoice means. You do not know what you do not know, and unless you ask questions you will not learn anything.
So, you have reviewed the fee agreement and the invoice, but you still have questions or objections to the fees. Just like a child, parents and politicians have learned that the loudest screamers get the biggest suckers. However, just because you scream the loudest does not mean you will get the piece of candy. Before you start screaming, you should consult with another attorney independent from the one that you have the dispute with. Most attorney’s do not like it when a client goes behind their back and consults other attorneys. In most cases, they have suffered the consequences as a result of the loudest screamers getting the biggest suckers. They are annoyed when they discuss the case with the former client, and the former client explains how they got over on the attorney by screaming and was they wrong for doing so. The attorney generally will tell the former client that they should not have screamed but rather should have approached the matter diplomatically to try to resolve their concerns.
In that same vein, you should be as diplomatic as possible with your concerns before resorting to threats. There are attorneys who do not care what others think and are more than happy to verbally abuse, humiliate and embarrass anyone who does not meet their demands. These attorneys revel in the skirmish and enjoy arguing with clients. If this is not your cup of tea, then you probably want to avoid threats and insults, especially because there may be an easier way to resolve the dispute. If the attorney did something wrong, you always have the option of filing a complaint with the state bar. However, before you file a complaint with the state bar, you should consider whether this is really something you want to do. If you do not get along with someone, are you really going to make their life miserable by ruining their career? That is essentially what you are doing when you file a complaint form with the state bar. Not every perceived slight by an attorney amounts to unprofessional or unethical behavior. You will have to decide for yourself whether it is worth the effort to complain to the state bar about relatively minor objections to your attorney’s work.

How to Challenge Fees

Besides attempting to resolve the fee dispute with your attorney or law firm, there are a number of other formal options available:
Mediation – This is a non-binding process in which a neutral person listens to both sides and attempts to facilitate a mutually agreeable solution. Arbitration – Arbitration is a binding process where a neutral person hears the evidence from both sides and then renders a decision. Here, the arbitrator chooses one side or the other even if the parties do not agree. State Bar or Attorney General Complaints – In some circumstances, you can file a complaint against the attorney with the state bar or attorney general. It is important to note that, with arbitration and some complaints, by requesting that resolution bodies such as a state bar intervene, you may waive your right to bring a civil lawsuit . Additionally, these bodies will generally only take action in cases where there is a substantive violation(s) of the law.
Lastly, it is important to understand how these resolutions bodies work. With mediation and arbitration, you present your fee dispute to a neutral person with the goal of working out a solution. In these proceedings, both parties set out their position and support it with evidence such as the retainer agreement, transcripts, notes, and/or other communications. Then, the neutral person decides whether the billing was fair based on the evidence and issues a decision. Meanwhile, the state bar and state attorney generals pursue violations of the law. The state bar recommends discipline and the attorney general can bring suit for fraud.

Resources and Support for Addressing Legal Fees

The landscape for potential legal fee disputes is often overwhelming for those involved. Prior to 2016, individuals in New York State had no protections if they disagreed with the fees charged by their attorney. In an effort at reform, a bill was passed providing for fee arbitration for attorneys and clients that can be compelled if brought in Supreme Court. However, it is often through private organizations that counsel is able to assist their clients with obtaining legal fees at a reasonable rate.
For attorneys, StateBar.Net is the best source of information about fee arbitration and will even provide statewide referrals for lawyers throughout New York.
StateBar.Net matches a client with a lawyer in their area specializing in their particular issue. This is especially important for those in rural areas, as there could be only one law firm available to be the client’s counsel. Unlike private counsel, who values the client highly (the wisdom of which is not lost on the Insurance Company), the StateBar.Net lawyers also know that there will be another client in the future, should they not pursue fee arbitration. This is one of the reasons the StateBar.Net fee arbitration program is so widely known to be the best method for clients to dispute fees in New York State.
The New York State Bar Association is the governing body overseeing all of the StateBar.Net attorneys. If you are directing your readers to the legal services or helplines available through StateBar.Net, let them know that the New York State Bar is their governing authority in New York State.
On a Federal Level, Consumer Action is another valuable resource that can help direct people to lawyers involved in consumer issues. Consumer Action also provides consumer action guides that walk the public through arbitration and debt collection, among other consumer issues.
Additionally, the National Consumer Law Center (NCLC) website has a variety of information available on the website including ideas on how to handle collections, filing a complaint, what to do if you are being sued in a debt collection case and the statute of limitations, all of which can be helpful to a client who feels that their attorney may have charged too much for work performed.
Finally, most counties in New York State have legal aid services available to those whose income falls within the guidelines. These services may also be able to help those clients who are pursuing fee arbitration through the State Bar Association of New York.

Avoiding Future Disputes over Legal Fees

To avoid future problems in legal fees, the best approach is always to deal from the beginning in as much detail as possible. This involves careful and frequent communications with your lawyer or law office regarding the work they are doing for you.
The first step usually should involve a very clear conversation or written communication between you and your lawyer about how much the work you are hiring him/her to do will cost in advance. Then, detailed billing statements should be provided by the lawyer regularly, in enough detail that you are able to tell, from looking at the statement, what work was done for the cost charged.
Ideally, the statement would include a breakdown of how much work was performed on each matter and, if multiple matters are being handled for the same client, what percentage of the total billed is attributable to each matter – in a way that keeps you or someone else who looks at the statement apprised of not only what was done, but what it cost and what was involved in the process .
However, it is also important to know that newer rules that require that lawyers charge clients in the form of monthly statements instead of hourly billing bases may not provide all the details you require, simply because the lawyers must keep track of how many hours they spend on your specific matters every month, even though they do not bill you for them each month.
However, doing all this can avoid headaches later if you ever find yourselves disputing the bill.
If a bill is too complicated to figure out or does not reference particular matters, ask your lawyer or his law office employees to break it down for you. If you have a hard time getting answers to your questions, you may want to consider looking for someone else to handle your legal matters.