When the lawyer is charging an hourly rate, you want them to strike a balance between working quickly and being careful not to make mistakes. It’s a problem if your legal representative is managing to be neither speedy nor accurate.This is the situation Adam Long encountered when he hired a lawyer to draw up a contract.
“When I met him face to face, I realised he was a two-finger typer. He sat opposite me typing out my name and address ever so slowly,” says Adam. “I realised that it was going to take him a long time to write even a simple document, and at $550 an hour, why would he ever want to learn to type faster?”
“Later, I was devastated to discover the document had a previous client’s name in it and was full of typos – and the lawyer was going to charge for his time to fix his own errors!”
The next time Adam needed to engage a lawyer, he insisted on a fixed price agreement.
Fixed fee agreements mean you don’t have to worry about essentially signing a blank cheque for your lawyer to rack up billable hours. These types of agreements would generally be available for work such as preparing leases and legal wills, conveyancing and divorce applications.
There are various kinds of fixed fee arrangements, including where the client pays a lump sum up front, ‘staged’ payments at various points and ‘capped’ fees where there’s a guaranteed maximum total price for the whole case.
Lewis-Dermody recommends opting for a fixed fee agreement wherever possible, as lawyers can be under pressure from their employer to inflate clients’ bills due to the internal performance targets they’ve been set.
“Many lawyers in firms have the added pressure of unrealistic billing targets, which can mean that more work is completed on a matter than perhaps may be necessary,” she says. “It’s a good idea that if the client is not engaging on a fixed-fee basis that they request frequent invoices so they are not hit with ‘bill shock’.”
The fixed fee structure doesn’t mean that the lawyer charges every client the same price for the same service (for example, writing a will), but would assess how much work would be involved and agree with the client upfront on a set price. Drawing up a very simple will under this arrangement might cost $150, whereas one requiring a 30-page document, a trust and in-depth financial planning might set you back $1500.
Taking a matter to court through litigation, on the other hand, is too uncertain to nail down to a fixed price, and depends on the decisions both parties make along the way to end the dispute or keep fighting.
“Litigation is hard to look at [for] a fixed fee arrangement because you don’t know whether it’s going to resolve with writing a letter and a small amount of negotiation or whether it will go into contested court proceedings. That really depends on the personalities of the parties involved,” says Heuston.
For those kinds of cases, the lawyer should provide an estimate based on the matter resolving quickly versus the potential bill if it goes to court, and keep you informed about costs as the matter progresses.
