Monday, May 4, 2020

The Secret Behind Legal Fees

Did you ever wonder why lawyers charge so much?  You'll hear the same old story about arcane knowledge and student loans. Malpractice insurance and office leases. Books and continuing legal education.  You'll hear the excuse that there so much that goes into a legal action and that if you want to get results you have to pay for it. Then there is the pet food for all those bull dogs, lions, tigers, and bears that attorneys try to convince you they are. Finally, you know they are competent because they either smile with artificially white teeth or the don't smile and strike a stern and threatening posture with their arms folded.

You may ask, "Are there any other reasons?"  Funny you should ask because there are other reasons.

1. Attorneys make money because you let them. They will ask for a retainer of several thousands of dollars. Many attorneys will not even consider a case unless you can pony up $5,000.00 or more of retainer. Twenty-five hours at $200.00 an hour. They will earn every penny of that. They will give you status updates when there is nothing has changed. They will send emails and make phone calls and draft letters and review your file. And they will dutifully mark the time on their billing software. Question them and the excuse is that "the other attorney is ___________ (fill in the blank)." You see, opposing counsel is responsible for the fees you are being charged.

B. More conflict = More fees. You have gone to see an attorney because there is conflict that you have been unable to settle. If you have one issue, the attorney will make "X" amount of money.  If the attorney can convince you that there are other issues, the attorney will make multiples of "X" amount of money. So, in an attempt to get you "what you deserve," the attorney "creates" conflict where none necessarily need exist. Furthermore, "what you deserve" is always something that the other person has- so it is their fault for not giving it to you in the first place. Opposing counsel is the reason you have to pay more.

Let me give you a real-life example from the case files of Christopher B. Enck. I was handling a divorce that could have been very simple. The parties were living apart and most of the marital estate had already been divided. There were a few minor issues that needed to be resolved and I presented the unrepresented spouse with a settlement proposal that was, in my eyes, very reasonable. That spouse decided to hire an attorney- which was their right. The simple litigation was prolonged for more than a year, cost the spouse several thousand dollars and my client several hundred. In the end, we reached an agreement that cost the spouse more than if he had accepted the proposal that I presented earlier.

It is true that my "loyalty" was to my client. It was also true that we discussed the settlement and I told my client that the opportunity existed to possibly receive a better settlement. My inclination is generally to be reasonable in an offer and to reasonably negotiate. It saves time and money if both parties are realistic and meet in the middle, rather than negotiate from extremes and meet in the middle anyway. My client respected that approach and approved of the position.

To be fair, there are times when conflict may need to be created and sizable retainers make sense. If you are planning a divorce and you have young children, working on custody might prevent future trouble. If you are faced with criminal charges, a big retainer to an attorney might keep you out of prison. There is also the fact that, unlike a mechanic who can keep your vehicle if you don't pay your bill, an attorney's work product is their knowledge and creativity. Once litigation is over, a client does not have an incentive to pay a bill- and I have had to file suit against numerous clients to recover my fees.

In the end you pay for what you get; you don't necessarily get what you pay for.