updated June 5, 2011
I read an interesting article from Smartbiz.com about some of the warning signs that you and your company are being overbilled by your lawyer or law firm. The article, Cut Legal Costs: 10 Red Flags that Signal Potential Overbilling, is geared primarily toward large corporations that are served by big-city, mega law firms, but some of the points raised also apply to some of the mid-sized and larger firms representing clients in Charlottesville, the Shenandoah Valley, Northern Virginia, Richmond, and the rest of Virginia.
I did have a couple of thoughts about some of the specific points raised in the article:
1. Who, what, when, and how much. You should insist that your law firm’s bill designate who performed a task in question, what the task consisted of, how much time was spent on the work, and the amount of that particular individual’s hourly rate for the task. Without this basic and essential information, you cannot tell what work was performed, when the work was done, and whether the work was performed efficiently by someone with a reasonable hourly rate.
2. Senior partners and Fridays. The bit about senior partners not working on Fridays might be the case in New York, but it doesn’t necessarily apply in smaller markets like Charlottesville.
3. Time increments. If you notice that you are invariably being billed in half-hour or full hour amounts, your law firm may be billing in increments other than the standard six-minute increments. That being said, however, some lawyers may round down their fees, so the fact that your bill shows only half-hour or hour amount of time may not be a dealbreaker.
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4. Learning curve time. Law firms may need to bring in new attorneys to replace departing attorneys or to satisfy some other increased demand for services. Using newly minted associates for your work can certainly be advantageous by allowing you to pay a reduced rate for their services. Problems arise when those new attorneys, who are facing a steep learning curve as part of the initiation process, have their inefficient learning time passed on to you without some sort of reduction.
5. Special rates. Some law firms may charge higher, special rates for certain clients. And it may be the case that the uniqueness of those special rates are not disclosed to the client. While it is certainly understandable that a firm may charge a higher rate for a client that demands a unique, specialized service, be careful that you and your company are not being charged a special, higher rate merely because you have the ability to pay the firm’s charges at an increased rate.
In addition to these points, take a close look to compare time entries where more than one attorney is working on a project. Not only should you check that you are not being billed for duplicative work, it is important to make sure both attorneys are reporting the same amount of time for a specific task. Legal fees are expensive, especially in this economy.
Robert E. Byrne, Jr., the author of this post, is a trial lawyer and President and managing attorney of MartinWren, P.C. Named the Virginia State Bar’s Young Lawyer of the Year for 2010, Bob has twice been recognized as a “Rising Star” by Super Lawyers Magazine in Business Litigation and as a member of MartinWren’s Virginia Personal Injury Lawyers group and Charlottesville Personal Injury Lawyers group, an honor reserved for just 2.5% of the eligible attorneys in Virginia. To contact Bob about his services as a Charlottesville automobile accident lawyer, please call (434) 817-3100 or send an email to [email protected].
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