Do lawyers charge too much? Or are they fairly compensated for their time and effort? All bar associations require that legal fees should be “reasonable”. But what does that mean? Factors that should be taken into account include the time and labor required, the complexity of the legal matter, the skill and expertise of the attorney, and the comparable rate for the services in your jurisdiction among other considerations. Some jurisdictions have parameters of what can be charged, for example, for personal injury cases based on contingency or statutory fees for probating a will.
Should you charge a Flat Rate or Hourly Rate?
Transactional work such as wills or real estate transactions lend itself better to flat rates. Clients see an advantage to knowing up front what something will cost them. In your retainer letter, always have a phrase or two about additional time charges if the work goes outside of the scope of the flat rate. However there may be situations where you should charge based on an hourly rate. For example if you have a long drawn out case or a contract that must be changed several times. In billing on an hourly basis, it is better to itemize the work done with a descriptive sentence or two rather than present a bill that says “2 hours work = $750.” More details will lead to fewer disputes with your clients.
Another note about fees, as attorneys your time is your inventory and how you get paid. Although there is much talk about attorney’s overbilling, it is easy to charge too little as well. In fact, I know more solo practitioners who charge less than they could rather than “pad” their billing hours. Make sure you truly document your hours worked and the work done. While it may be nice to round down for your client’s matter, you should be fairly paid for your efforts.
Catherine Hodder, Esq. and Kelly C. Sturmthal, Esq., authors of Law Office on A Laptop: How to Set Up Your Own Successful Mobile Law Practice, provide practical e-books, advice and support for solo practitioners and entrepreneurs.