I generally charge by the hour. That is traditional in the United States and in Germany, Switzerland and Austria. My hourly rate is $450, an amount that is well below what it was in 2008 but still high enough that I will not be asked to do work that is not interesting. Some lawyers quote a similar rate or one even lower, but the client should ask how many similar projects they have worked on and how many time keepers will be involved. Many law firms work in teams, with several lawyers billing on every call. 2 x $350 = $700. Of course if the work is repetitive and can be done by paralegals at $100 an hour with little supervision…….
More and more I am asked to give an estimate of my fees in the first phone conversation with the prospective client or his/her attorney. This is impossible to do without knowing the scope of the project, the sophistication of the attorney on the other side and the extent of the negotiations that will result. If there will be an investigation (“due diligence”), the whole purpose is to discover what we don’t know.
Nevertheless, I have given estimates – and they have turned out to be accurate. In one recent case, I estimated $125,000 and the actual hours turned out to be $100,000, despite unnecessary work required by the broker. A fixed fee gives the client little incentive to limit his/her demands. A more reasonable arrangement is a reduction of the hourly rate after some amount has been reached. Of course any fee based on hours depends on the honesty of the attorney.
As a sole practitioner, I have no staff of lawyers to keep busy. In large American law firms, the most important lawyers are the ones who hand out work to lots of colleagues. Every aspect of a transaction which falls into a different practice area – real estate or employment law, for example – has to be handed off, often to a partner AND an associate. Sometimes the result is better quality. Often clients bring their own tax advisers. But a law firm’s tax group will not be happy unless it plays a role in the transaction. The same is true of the firm’s environmental experts, even if the risk is in a different state and a local expert has to be engaged. A lawyer in a law firm cannot insist that his partner meet a deadline. If the lawyer is with another law firm, he can.
Other Firm’s Fees
Negotiating a reduction in a colleague’s hourly rate in a US law firm is difficult or impossible. But recently I needed an environmental expert. My firm did not have one. I called my old colleagues from my 800 lawyer firm. Even though they were all now with smaller firms, they still wanted $750 an hour, too high for even a big German client. I finally called a respected environmental boutique. I got the same answer: $750. I said that was too high and I would look farther. The partner quickly asked, “What are you billing?” When I said $450, he immediately reduced his rate to mine. His firm did an excellent job.
This problem is even greater when one works as a partner in a mulit-state law firm. There is no possibility of giving the work to another law firm if there is an affiliated office there.
If you think my fees will be too high, but your case is interesting, contact me. I have – for very little money or deferred payment – helped clients collect debts, find out they were defrauded, understand US legal proceedings, fight off an unfounded claim based on an art sale in 1933.