How Does “Hourly Billing” Work? What Can I Do to Keep My Costs Down?

Lawyers often bill by the amount of time spent working on your legal matter, a practice called “hourly billing.” Hourly billing is fair to the client and the attorney because the attorney only bills for the time spent actually assisting the client and the client does not have to pay for more than the amount of time the attorney spends on the case. The hourly pay rate is included in the retainer/fee agreement.

Hourly billing can be confusing. Here is a brief sketch of how hourly billing works.

First, the client pays a retainer up front. This is basically a deposit for the firm’s work. This money is placed into a special account called a trust account, which is only used to hold client funds. The firm does not take the money out until it has earned it. After the attorney or paralegal does hourly work, they send a report to the client. If the client does not dispute the report, the firm takes the money out of the trust account and put it into their regular business account, the operating account, to pay for the hours they work.

After the attorney or paralegal has done work, though, though, the money in the trust account is reduced. Because of this, the law firm’s report to the client is also a bill. The client still needs to pay this amount to the law firm. This money does not pay the attorney directly; instead, it goes back into the trust account so the firm can do more work.

After the case is completed, the attorney will give the client any funds that remain in the trust account.

Law offices aren’t credit card companies; they can’t give a client their services and then bill the client later. Once they have put in the time for a case, they need to be paid. The trust accounting system, combined with hourly billing, is a good way to ensure that clients and attorneys are fair with each other. For this reason, it is important that clients keep money in the trust account so the attorneys can continue to work for them.

There are other approaches to billing also, such as flat fees (the client pays a fixed amount up front and the attorney works until the case is done), contingency fees (if the client can get money from the person they sue, they give a percentage of that money to the attorney), monthly retainer agreements (the client pays a fixed monthly amount for ongoing legal representation, and combinations of any of the above, among others. At Freedom Legal, we offer many approaches to meet your legal needs.

So how can you make sure to get the most out of your attorney’s time? The best and most important way to do this is effective communication.

If your attorney sends you information, review it carefully. Many questions can be answered by examining what the attorney has already given you.
If you have questions, write them down and ask several questions together. That way, the attorney can use time more efficiently for you. Every time an attorney gets a phone call, he or she has to mentally “change gears” from whatever they were doing. This takes a little time for all attorneys. If you give the attorney a “quick phone call” every time you have a question, the attorney can’t get as much done on their different cases as they would if they could focus on one or two at a time. Asking lots of questions at once means you only have to pay for one phone call, and lets the attorney give you better work when they focus on your case.
Another way to simplify communication is to send the attorney an e-mail. This is easier for attorneys to record, letting them manage your case more efficiently; you can also ask more questions at once, letting the attorney answer them all for you at the same time. They can usually answer more thoroughly and accurately, too.
If your attorney needs information from you, get back to them quickly. When attorneys call a client several times to get the answer to an important question, it takes time away from other matters and makes the client’s case take longer to resolve. Save time and money for yourself and your attorney by responding quickly when they need information from you.
By using these techniques, you save time for yourself and your attorney. This means you are getting more legal representation for what you pay for, and your attorney can give you better legal service at the same price.