Explaining and Justifying Your Hard-Earned Fees to Clients

If a client expresses concern about or questions the basis for your fee, explain how your fee relates to your extensive experience. Look your client in the eye, maintain eye contact, and tell them that this is your job and you do your job well. If you’re taking the case on a contingency basis, explain the concept of shared risk in relation to the hours you expect to work. They’re choosing you, but you’re also choosing them, and by taking their case you’re forgoing other work. If you’re charging an hourly rate, explain it in relation to the education, skill, and experience you bring to the table.

Be up front with your client about the likely cost of the case and explain that it’s a societal reality that legal representation is expensive. You might be uncomfortable discussing your fees or afraid of scaring the client off with too much money talk, but if you approach the conversation correctly your client will respect your candor. Explain that you’ll do your best to minimize the expense but be clear that unless you are paid, you will not work.

Don’t let feelings of guilt or unease about the amount you’re charging filter through to your communications or your approach to fee collection. Remember that what you sell is your time and you should be paid for using it. Remind yourself often that you did not create the conflict but are there to find a resolution or to bring unresolved issues to the court. You have worked hard, sacrificed much, and spent a lot of money to get where you are today. You charge a fair fee, and you deserve to be paid.

If your client questions your fees or billing practices, explain that your law practice is your business and you have to run your business efficiently to be successful. You depend on your clients’ prompt payment for your livelihood, so note that your law practice is your family’s source of income, as well as the means for paying your assistants and taking cases on behalf of indigent clients. Even though you are likely helping your clients with personal issues, it is important not to establish a personal relationship with them because doing so makes enforcement of financial obligations that much harder.

Carefully drafting your fee agreement and sitting down with your client to discuss it paragraph by paragraph puts you in the best position to define and limit the scope of your representation at the outset. Make sure to include what you are and are not agreeing to (e.g., taking an appeal in a contingent fee matter). Always, always, always (did I say always?) get a signed, carefully drafted fee agreement. (If the initial payment is not refundable, it must be characterized as a nonrefundable engagement fee.) If a third party is guaranteeing your fees, include that third-party guarantor language in your fee agreement. Note that written agreements are mandatory under Michigan law and failure to enter into one typically leads to disputes and could lead to attorney discipline.

Be confident when explaining your experience, but make sure you do not cross the line into predicting the result of the case. Tell your client that he or she is investing in quality representation, which you will provide every step of the way, but that the case is ultimately in the hands of the judge or jury. When things don’t go your way at every turn, your client won’t be as quick to complain.

Clients deserve to know where their money is going. If you are charging an hourly fee, make sure your descriptions of how you spend your time go beyond “research” or “telephone conversation.” Taking a few extra minutes to briefly describe your task will go a long way toward keeping your client informed about and satisfied with your representation.

If you let a client’s statements accumulate for more than one month, your reasonable fee could look a lot more daunting and collection becomes harder. Implement a monthly billing system that gets your bills out about the third week of each month and stick to it without exception, even if the client does not have billable time in any particular month. (If a client uses an unreasonable amount of time, send a prompt bill to remind him or her of the cost of your time.) Because expert witness and court reporter costs can be substantial (and counsel generally gets the bill), you should get these costs paid in advance per your fee agreement. If your client doesn’t pay on time and the bill is mounting or sure to mount fast with an upcoming trial, get out of the case. It almost never pays to stay in a case adding more fees to the account hoping to capture payment later.

When clients are happy with your services, they will be more inclined to pay. Consider sending a bill after you’ve won an important motion in court or drafted an important document, even if it means deviating slightly from your billing schedule. (If your client is to receive payment or an asset during the case, ask that the payment go through your office so you can ensure that your bill is paid from those monies.) Strike while the iron of client satisfaction is hot and you’re likely to get less grumbling.

• Attorney Fee Agreements in Michigan