Controlling Legal Fees: First, Do I Need a Lawyer?
Legal fees are among the highest unbudgeted expenses that people incur during their lives. Learning how to control legal fees may result in significant savings. This article will cover the basic ways by which legal fees may be controlled. Later articles will focus on different ways to pay legal fees, such as contingent fees, and various methods to control each of these. Obviously, if you do not need a lawyer, you should not pay for one. Many of the services usually provided by lawyers in the past are now being provided by others or may be supplied by you. Examples include (1) small claims courts for claims under $5,000 wherein lawyers are not even allowed, (2) straightforward residential real estate deals involving standard real estate forms, escrow and title insurance companies, and (3) simple divorces not involving children or significant assets.
Two questions to ask whether you need a lawyer: (1) Is there significant financial risk involved? (2) Is there a risk of going to jail? Answering “yes” to either or both of these questions obviously indicates the need for a lawyer. When in doubt, an hour consultation with a lawyer may put your doubt to rest. Some lawyers offer free initial consultations. Use them.Once you determine you need a lawyer, then shop as you would for anything else. Again, use free consultations with several lawyers to obtain rates, qualifications, and the “good, fuzzy” feeling. Remember that law is not a situation where cheaper is necessarily better, since an expensive, but experienced, lawyer may give you the answer immediately, whereas a cheap, but inexperienced, lawyer may spend ten hours in the law library to find the answer.
While talking with each lawyer, determine whether he or she will do the work for a fixed fee. This makes it easier to shop around. Fixed fees are becoming more available, as competition among lawyers forces them to take more of the risk in the time estimated to conclude your matter. Obviously, some matters just do not lend themselves to fixed fees where it truly is difficult to estimate the time and effort involved. Another way to reduce legal fees is to utilize contingency fees. A contingent fee is paid from any amounts collected and is usually an agreed percentage thereof. You will not have significant legal fees to pay each month, although you will usually pay for costs, such as court filing fees. Contingent fees will not always result in lower legal fees. This issue and other methods to further reduce contingent fees will be the subject of a later article.
How to Control the Fees
If your matter should proceed upon an hourly fee basis, there are many things you can do to control these. If paralegals or others can do the work, they should. A much lower rate should be agreed for this work, or a lower blended rate should be agreed for all work. A detailed statement of services rendered should be given to you so that you know each activity and the time taken. If you do not understand or agree to each item, call your lawyer. Finally, discuss these matters in detail with your lawyer and obtain a written fee agreement before the lawyer commences work, regardless of the type of fee employed. These methods will give you greater control over your legal costs. Subsequent articles will examine each type of fee in greater detail to further control your legal costs.