How to engage with a lawyer cost effectively

By Paul Hunt*

I’ve been a lawyer for over 20 years. One of the things I hear often is how expensive lawyers are. Part of the issue is of course the complexity of the law and how the ‘other side’ behaves, but there are things I see clients do that actually increase the cost of their legal services. In this article I hope to give you some insight into how lawyers charge, and what you can do to reduce what you are charged.

Time and task

Most lawyers charge their clients on what they call a time billing basis. Whatever time is spent on your matter gets charged at the hourly rate of the person undertaking the task. Hourly rates are usually broken down into 10 x 6 minute units.

What is hidden in this is: z each task is usually separately billed; and z part of a unit is charged as a whole unit. Something that takes zero to 6 minutes will be charged as 1 unit. Something that takes 6 to 12 minutes will be charged as 2 units, and so on.

If you send a lawyer two emails which the lawyer actually reads in 3 minutes, you will generally be charged 2 units (1 unit for each email) – i.e. as if it were 12 minutes!

If you combine the two emails into one email, then you would only be charged 1 unit.

But make a judgment call, if you are having back and forth emails with the lawyer, pick up the phone and spend the units asking them to explain the issue to you.

Note: if you send an email asking the lawyer to call you, you may be charged for the email and the phone call.

Tip 1: Reduce the Tasks – send one comprehensive email, not multiple emails.

Tip 2: If there are multiple emails on the subject – pick up the phone.

Give the lawyers what they need

Lawyers sell time. They charge you for the time they spend on your matter. If you give them your opinion, maybe the thoughts you have on the matter that you have ascertained from an extensive review of the internet, the football scores, or indeed useful information about your matter, you should expect to be charged for that time.

What do lawyers need? Lawyers need facts. — Dates — Times — Documents — Emails — Text messages — Photos — Conversations.

Unless a lawyer asks you, they don’t want what you remember about a contract, they want to ➤

see the contract. Documents that were created at a time carry far more evidentiary weight than what someone remembers later about it. A copy of the actual email is important, not just a cut and paste of what was in the email.

What do lawyers do with the facts? Generally they turn these facts into a time line or chronology. The chronology is extremely important. When things are put in date order, the lawyer can see when rights and obligations were created, and when they were breached. Often, the chronology exposes connections between things which appear on their own to have no relationship but when looked at in date and time order start to explain the behaviours of parties.

Of course creating a chronology takes time. If you can do this for them, at least in draft, then you are saving the time (and therefore the cost) of the lawyers doing this.

The chronology, cross referenced to the facts which are independently verifiable (i.e. not from someone’s memory) allow the lawyer to see the whole case and determine how the law applies to those facts.

The exception is conversations where a person’s memory is all there is to ‘prove’ the facts. For a conversation to be introduced into evidence it must be in admissible form. This does not mean it has to be word for word what was actually said, it is OK to put the conversation in “words to the effect of”. I have found that the best form to describe a conversation is to write it out like the script of a play or a movie. For example, instead of saying

Vader said the dark side was powerful and Obi-Wan never told me what happened to my father. I told him Obi-Wan told me enough, that he had killed my father. And then Vader says he was my father! I was shocked. I said it wasn’t true. It should say:

Vader and I had a conversation in words to the following effect:

Vader: If you only knew the power of the dark side. Obi-Wan never told you what happened to your father.

Me: He told me enough! It was you who killed him.

Vader: No. I am your father.

I was shocked. The conversation continued in words to the following effect:

Me: No. No. That’s not true! That’s impossible!

Tip 3: Create a time line of your matter and provide cross-referenced supporting primary material.

Tip 4: Write out conversation evidence in the style of a play or a movie.

Hourly rates and who does the work

Charge rates generally increase with experience and seniority. For example, the standard charge rates of a firm may be:

Role

Principal

Special Counsel

Senior Associate

Associate

Solicitor

Graduate

Paralegal

Standard Rate per hour ex GST

$700.00

$550.00

$400.00

$350.00

$300.00

$250.00

$175.00

The theory behind different charge rates is that any task that could be undertaken by a more senior lawyer will take less time than a junior lawyer (or paralegal), and so the actual cost is about the same no matter who does the work.

For example, a Principal may spend 1 hour doing work and charge $700.00, because they are experienced and know what to do, however the same work would take an Associate 2 hours to do, costing the same: $700.00.

In practice however, someone that is not as experienced should seek the guidance of the senior person on how to undertake the task, and this often leads to the junior undertaking the work, that work being reviewed by a senior person, then the senior person and the junior person. This may appear like doubling up, but can save you money if you know what to ask junior lawyers to do, and what to ask senior lawyers to do. The more administrative tasks should be done by more junior lawyers.

So it is important for you to understand who in a firm is going to undertake the work, and who is going to supervise it, and what work can be done by junior people.

Sending an email to the partner and two junior lawyers may result in 3 people charging you for reading the email!

Tip 5: Ask who is best to do the parts of your work and allocate that work to them.

Negotiating

Don’t be afraid to negotiate on the hourly rates, but careful what you wish for. Hourly rates are linked to a law firm’s budget, and flow through to salaries of the lawyers, on costs and of course profit.

This does not mean lawyers won’t negotiate on the rates, but you need to understand your own bargaining power to negotiate, and the effect of any reduced pricing on the priority your work is given. Put simply, busy lawyers don’t need to negotiate price. If you have enough work to offer to make the loss of that work significant, or if the law firm is wishing to grow, then the law firm may be open to negotiating their prices.

Reducing the price means that the lawyer working on your matters will need to do more to achieve their budget. This may mean the lawyer is more inclined to do work on other matters ahead of yours!

Tip 6: Understand how valuable you are to the law firm and negotiate accordingly

Other ways of charging

In Australia lawyers are prevented from taking a share of the outcome of contested matters. For example if you are suing someone but unsure if there will be any recovery, you can’t have a deal with your lawyer to get a percentage of what is recovered. Lawyers can be engaged on a speculative basis, and the lawyer is not prevented from charging an uplift on their fees of up to 25% of their standard rates. Generally lawyers will only take on these types of matters if there are good prospects of recovery.

Some firms offer ‘fixed fee’ arrangements for certain matters. Fixed fee arrangements are OK where the matter does not involve any other person, just the client and the lawyer – for example a review of terms and conditions, drafting a standard document etc. Fixed fees do not work where the amount of time to undertake the matter is uncertain. For example in defended litigation you have no idea how long the matter is going to take so it is highly unlikely a law firm would agree to a fixed fee. Having said that, litigation can be divided into smaller pieces where fixed fees may work – eg fixed fee for preparing and serving a statement of claim, or a fixed fee until default judgment if the matter is undefended.

I can tell you that a firm that charges a fixed fee has usually factored in the profit, and also an amount of risk that the time taken to finish the matter will be less than the fixed fee divided by the usual hourly rates.

If you have a significant number of matters, the lawyer may consider a monthly retainer. This is where a fixed amount of fees are paid each month regardless of how much work is done. In my experience this can work well where the retainer amount matches the amount of work the lawyer would do at hourly rates, and the lawyer and client should meet regularly to review how the level of work and payment are going. Beware of January though – when it seems like the lawyer is on holidays and nothing is getting done, the retainer should still be paid because it is likely the lawyer was doing over and above in the lead up to Christmas.

Tip 7: Ask your lawyer if they are open to other ways of charging – see if there is something that works for both you and the lawyer.

*Paul Hunt MICM Principal Solicitor Hunts.Law Tel: 1300 048 687 Email: p.hunt@huntslaw.com.au