Why Lawyers Cost So Much
One of the primary complaints about lawyers is that we are greedy money grubbers who care about nothing except making money. Are there greedy lawyers out there who are swindling the public out of their hard-earned money? Yes, they are listed in the quarterly board notes for being disciplined by censure, suspension, and disbarment. Here’s what you need to know about lawyers and money:
What You Are Paying For
You as the client are paying for a couple of things. You are buying access to knowledge, experience and expertise. Can you google legal questions and get answers? Yes, but can you take that knowledge and determine what applies to your situation, what you need to be doing to protect your interests, and then develop a plan to get it done? Probably not. Just like if you research medical symptoms and think you have cancer when you clearly don’t, reading online articles (such as this one) does not mean you are capable of applying the knowledge correctly to your own situation.
How good are you at public speaking, especially public speaking when it really matters what you say? Probably not very good. Nothing is sadder in court than watching an unrepresented party standing in front of a judge staring at their shoes while mumbling. It’s a lot harder than you think, and you probably don’t know what all the terms mean, what the judge expects to hear and needs to know, and what things not to say that will anger the judge for wasting their time. This is why the first thing your lawyer will likely tell you is not to speak. You need someone to speak for you in court.
One of the most important things you are paying for is for someone else to take away the stress of dealing with your situation. You no longer have to worry about what’s going to happen or how the process works. Your lawyer will take care of the paperwork and set a plan for how your case will be resolved, and you just have to wait for the process to play out. That’s worth the fee right there.
How Prices Are Set
So how do we determine what to charge you and why is it so expensive? First, you should think about how stressful and important your case is to you and then multiply that times 50, 75, or maybe over a 100. That’s how many clients a lawyer may be managing at a time, so just consider what you would charge someone to deal with your case and fifty others, and I think you’ll have your answer as to why it costs so much.
Prices will vary considerably depending on the city, state, and region of the country and how the lawyer bills the client. Overall, the market in your jurisdiction will dictate the price. It costs a lot more to get divorced in California and New York than it does in Tennessee or Mississippi. The most important thing to understand is how your lawyer is billing you.
Retainers and Billable Hours
The current traditional method of billing in family law cases is the retainer and billable hour method. This is where you pay a deposit up front and then the lawyer bills at a certain rate per hour and takes the money out of the retainer until it is used up and then sends you a bill. While this is the most common method, it has lots of problems, the most important of which is that you don’t know how much your case will cost in the end. Your case is open-ended, and the lawyer determines what happens and how much you owe. I’ve seen plenty of shocking lawyer bills over the years that stretch up into the tens of thousands.
The other problem is for us as lawyers. The billable hour method creates a large amount of administrative busy work. We have to track our time, calculate a monthly bill, apply it to the retainer, and send out a monthly invoice or bill. Also, it creates an unconscious incentive for the lawyer to do more work than is absolutely necessary as the more work they do the more money they make. Davis & Greene doesn’t use billable hours because there is a better way.
Flat Fees
This is both an old method and the new trend in family law. The lawyer quotes you a fee and that’s what you pay. The beauty is in it’s simplicity. It can be done in many different ways, but it will nearly always involve a contract for limited representation. This means you are paying for a set amount of services at a set price. If something comes up in your case that is not covered by the contract, then the lawyer may charge another flat fee or perhaps refer you to another lawyer. Flat fees could be an a la carte menu of services or divided into packages or tiers of service. They will often be charged in phases, so if you get through all of the services provided in the first phase you will have to pay another flat fee to move on to the next phase and so on.
The primary benefit to clients is that you know how much your case will cost and what the cost of additional services will be if needed. The benefit to the lawyer is we get rewarded for being efficient and resolving your case quickly and easily, and we get rid of the administrative tasks of billing and invoicing so we can work fewer hours overall. This creates a financial incentive that benefits everyone as your case is done quickly and the lawyer has a higher profit in terms of time spent on each case. At Davis & Greene every case is a flat fee case so you know what you’re getting.
What the Board is Looking for
Most of the complaints to the Board of Professional Responsibility about lawyers is in regard to billing. Clients don’t think they are getting their money’s worth and accuse lawyers of ripping them off all the time. What the board cares about is whether the contract terms were clear, the overall fee charged was reasonable for the work performed, and whether the lawyer complied with proper trust accounting. So long as the contract is clear and the fee is reasonable under the circumstances, then the board is not likely to get involved in a fee dispute. The issue with trust accounting is that lawyers are required to keep our money separate from our client’s money, so in billable hour cases the lawyer keeps your money in a separate account and then transfers it as billing occurs. In flat fee cases, the fees are usually not held in trust because they are “earned upon receipt.” Not all states allow that but Tennessee does. Even in flat fee cases, funds held for clients for expenses like filing fees, service of process, and so on will always be held in trust until spent. The board really will punish a lawyer who mixes up client money with the lawyer’s money. That is the most common area of fee disputes that results in lawyer discipline actions.
Higher Prices Don’t Equal Better Results
It is very important to understand that a lawyer that charges more doesn’t mean they are better lawyers. I know a lawyer in Memphis who brags about having the highest billable rate in town and promises he will raise his rate whenever he discovers someone charges more than him. This lawyer understands the psychology of luxury pricing, but you are just as likely to get the same results at another firm at a lower price. It costs a lot of money to have luxury office suites, extensive support staff, and multiple associates. If your case is simple, high prices should be a warning sign that you are not getting the best value for your money. There are cases where the expensive law firms are necessary, but they are a small percentage of the total.
However, there is another side to that coin. Cheap lawyers should definitely be avoided. If you see advertisements for divorces that only costs a few hundred dollars or they accept payments plans that stretch on for years, you should probably reconsider hiring that lawyer. You do get what you pay for and you should not hire a lawyer whose advertisements are indistinguishable from a used car lot.
