Legal Fees: Avoiding Sticker Shock

I just got off the phone with the founder of a website that caters to small businesses. He commented that small-business owners routinely suffer sticker shock when they receive invoices from their attorneys. I responded that lawyers can do three things to reduce the likelihood that the amounts of their fees will be a surprise.

First, some work can be done for a fixed fee. Forming a new corporation or LLC is an example, especially if there is only one founder.

Second, sometimes it is possible to estimate the number of hours (and, thus, the fee) for a matter. Preparing an agreement often falls into this category. As work progresses, if it appears the estimate will be exceeded, I contact the client to explain why additional time will be required, and we proceed accordingly.

Finally, for some tasks it is impossible to estimate how much time will be required. Contract negotiation is the prime example: I’ve had negotiations that finished in 20 minutes, and others that took more than a year to complete. In this situation, I work with the client to establish an initial budget. As we approach the budgeted amount, we confer and, as required, revise it.

As I continue to work with a client over time, the budgeting process tends to become less formal. The client gains a sense of trust and an idea of how much work a given matter will require. Occasionally, an emergency will require that a substantial amount of work be done immediately without an opportunity to provide a fee projection, but that should be the exception rather than the rule.

The bottom line: There is no reason why a business owner should be constantly surprised by lawyers’ invoices.

Photo credit: John Ridley via stock.xchng

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.