Legal Fees/Billing

THE QUANDARY OF LEGAL FEES AND BILLING

By Robert M. Meisner

One of the areas of greatest confusion and sometimes consternation is the lack of understanding and/or appreciation by a client, including a homeowner’s association, of the bills which it receives from its attorney and the billing practices of attorneys in general. Since not all attorneys are created equal, not all billing practices are equal in the sense that one attorney may be able to accomplish a successful result in a much more expeditions way than the next attorney, even though the more expeditious attorney charges a substantially higher hourly rate or flat fee. Additionally, attorneys do not all bill the same in regard to the increments of their time. While our firm’s bills are based upon increments of one-tenth (1/10) of an hour, many firms bill in different minimum increments, including quarter hours, two-tenths of an hours, and, in some instances, half hours. What that means to the client is that a phone call charged by one attorney who bills at $250.00 an hour, in tenths of an hour, costs you $25.00 for a six minute phone call; whereby an attorney who charges $150.00 an hour, who charges in minimum increments of a quarter of an hour (1/4), is charging you $37.50 for that same phone call. In addition, some law firms will have a range of hourly rates depending upon the attorney involved, presumably based upon experience and reputation, while other law firms may charge the same hourly rate no matter which attorney in the firm handles the matter. In that instance, while the senior attorney may be charging a lower hourly rate than some other law firms of similar experience may charge, the firm is actually reaping a benefit because its less experienced attorneys are charging the same hourly rate regardless of their experience or expertise. While that is not necessarily improper, it is important that the client understand how it is being billed and on what basis.

Not only can hourly rates in terms of comparing one firm to another be somewhat difficult to appreciate for the reasons stated above, but also the hourly rate itself is reflective of many things, including the experience and reputation of the attorney in the community. Often times attorneys command very high hourly rates because of their recognition in the community as a leading attorney in the particular field involved or, simply, the demand for their services. Many times this allows them to be able to obtain favorable results more effectively and more efficiently than perhaps another attorney who has equal experience, but does not command the same reputation. While that is not always the case, it is reflective in the attorney’s desirability and consequently the hourly rate or fee being charged by the attorney for the work requested.

Also, to the extent that attorneys market their services to multiple condominium or homeowner associations, their availability to respond to the needs of that association is also a consideration for the client, which is reflected, on occasion, in the hourly rate. While some attorneys attempt to market their services to community associations at lower rates to attract new clients and keep existing ones, there is sometimes the concomitant inability of that attorney or law firm to deliver the services in a timely fashion. While this is not necessarily the case in all instances, it is a consideration for the client in retaining an attorney, that is, to ensure that the attorney and/or the law firm has sufficient personnel to deliver services in a timely and effective manner regardless of the hourly rate or charges being incurred.

In summary, comparing attorneys is not like buying a car where you get the same product on the same terms and conditions between one dealer and another. Quality, ability to provide service, experience, and community recognition are factors which all play into the question of hourly rates and billing. The enlightened Board of Directors of the community association should take these factors into consideration in choosing the right attorney for the needs of their association. As I have often said to my community association clients over the years, community association Boards serve without compensation, and many times without appreciation. Given those circumstances, the community association should endeavor to pick the very best attorney that it can reasonably afford to assist in the operation of that association. That, of course, applies as well to the management company, accountant, insurance consultant, and any other person that the association chooses to retain.

Dated: July 9, 2004