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Legal Fees

Beware of Lawyer Math

Lawyers typically bill in 6-minute intervals (one-tenth of an hour). So, a lawyer with a $500.00 hourly rate bills $50.00 for 6 minutes of work.

Say a lawyer billing $500.00 per hour spends 6 minutes for a client on one day, consisting of four tasks, being a two-minute phone call, one minute reading an email, one minute leaving a voicemail message, and 2 minutes drafting a quick letter.  Six minutes. One-tenth of an hour. At $500.00 per hour, that’s $50.00. Right?  

Maybe. 

For some lawyers it would be $50.00. For other lawyers, it would be recorded as four separate tasks, each rounded up to 6 minutes, so 4/10 of an hour, or $200.00. 

Some firms have been known to have a “minimum docket” policy which might treat each of the 4 tasks as being worth 2/10 of an hour ($100.00), or in this case, $400.00.

Other lawyers would bill somewhere in between $50.00 and $400.00.

Perhaps it is important to know how your lawyer handles this type of thing. Many firms have a written policy on how to record time that would make interesting reading. Whether or not they share it with clients is a whole other matter. (As an aside, I still remember one provision of the written policy of the firm for which I articled some 41 years ago. It provided guidance to the firm’s lawyers by explaining that if the lawyer was on an airplane working on a file for one client while travelling to a meeting for another client, both clients should be billed for the time.)

On the other hand, I often told clients that they should not really care about what my hourly rate was or even how I recorded my time, because until they had worked with me, they did not know if I was the type of lawyer who could analyze a problem, focus on the real issue and find a quick and efficient way to resolve it, or the type of lawyer who would make a mountain out of every mole-hill and then spend hours resolving it. Both types of lawyers exist.

Nor did my clients know, until they worked with me, what type of lawyer I was when it came to billing. There is the type of lawyer who simply prints the bill off the computer and charges the recorded time whatever it adds up to or even adds a “premium” because in their mind they have done a really great job. There is also the type of lawyer who reads the bill carefully and thinks about how he or she would react to it if they were the client and had to write a personal cheque to pay it. That type of lawyer then adjusts the bill to represent value to the client if for some reason it is simply too high for what was done.  (By the way, there are a myriad of reasons that the recorded time may exceed the value to the client.)

Of course, it is not as simple as asking your lawyer whether they spend too much time looking under irrelevant rocks, working on problems which are not worth spending time to fix or trying to achieve the perfect fix for every imagined problem, because human nature being what it is, many lawyers who practice in that way genuinely believe that everything that they are doing is necessary, whatever the cost.  And if you must ask your lawyer whether they reviewed the bill and wrote down unproductive time, you can be quite sure that they are probably not the type of lawyer who is going to recognize that they should have done that.

Clients should ask about the lawyer’s billing philosophy up front. When hiring a lawyer, don’t be shy to ask the lawyer how they approach billing, and what you should expect things to cost at the end of the day. If you are not comfortable with the response, it may be time to look elsewhere. (The typical lawyer response is often going to be that it is impossible to provide a reliable estimate because there are so many unknowns, which is true for some types of work but less true for other types of work. Even where it is true, a lawyer should be able to provide a reliable estimate for each successive phase of the work as the scope of that phase becomes known.)

The bottom line: Find a lawyer who you trust, who is practical, who communicates clearly and who is committed to billing you fairly because of their own personal ethics and because they value long-term relationships.   And yes, there are plenty of those lawyers around.

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