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When Are Legal Fees Voluntary?

Forbes; May 21, 2013

According to many self-made millionaires, the times legal fees are voluntary – or quasi-voluntary – are ALL THE TIME. The general process is that lawyers do legal work and they send a bill. Sometimes they get a retainer – partial payment. It’s also likely the lawyers, depending on the nature of the work, provided estimates (which are rarely on target).

The trend for the self-made millionaires who get these bills is to then start negotiations. When the negotiations end (usually quickly), the lawyers are usually but not always paid. And, when they’re paid it’s typical for them to be compensated less than what they asked for.

It’s almost habitual for large corporations to question legal bills and drive them down. The wealthy are also very intent on paying for value as opposed to what many lawyers deem their services to be worth.

There are a number of exceptions where the affluent are highly motivated to pay full freight. Criminal defense, for example, is a perfect example of times self-made millionaires are not prone to question their attorney bills. However, even here once the matter is resolved, the very wealthy will likely evaluate their lawyer’s advice and may very well not pay their last bills. Consider the following logic: if the problem has gone away why pay, and if the case goes against them, the lawyers don’t deserve payment.

For a plethora of reasons, it’s usually not in the best interest of lawyers to sue their clients – especially their wealthy clients – over bills. Writing off the differences is sometimes the wisest course of action.

A large part of the problem lies with the lawyers themselves. In many ways, when it comes to billing and getting paid, they’re their own worst enemies. Many lawyers fail to recognize that as professionals, they’re highly fungible… they’re commodities. This is not to say that some lawyers aren’t better than others, for that certainly is the case. It’s just that a preponderance of lawyers, while maybe technically quite proficient, are real bad business people. Real bad. But, this isn’t always the case.

To read the complete article, please visit forbes.com.

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