ISBA Development Site
This website is for ISBA staff use only. All visitors should return to the main ISBA website.
Billing options
When attorneys start to grow their own small firms or solo practices, they may need to adjust their billing practices, in order to accommodate more clients. More and more clients are trying to represent themselves or try to negotiate legal fees, in order to save money and to control the amount of the legal fees. As clients seek more opportunities to save money, attorneys must become more flexible with billing options, in order to meet the needs of the clients. Some types of billing options to consider are legal services plans, discounts, flat rates, and limited scope representations.
Legal services plans are benefits that some companies offer to their employees. The employee pays monthly fees, from his or her paycheck, just like health insurance. If the employee needs legal services, he or she receive a list of approved plan attorneys and obtains a case number. After reviewing the list of attorneys, the employee contacts an attorney and verifies that the attorney can represent him or her in the specific case and can retain the attorney.
As a member of the plan, an attorney chooses which areas of law he or she is available to represent clients. When a client contacts the attorney, for representation, the attorney obtains the case number and can verify the coverage. Each plan provides different coverage, depending on the type of case, as well as the benefit available to the employee. Some plans only cover consultations, while other plans cover a specific number of hours of attorney time or require the attorney to provide a discount to the employee. The attorney needs to carefully review the type of coverage that the client/employee has with the plan. Typically, the attorney provides a bill to the plan, when the case is finished. However, if the case is extensive, the plan may allow the attorney to send bills, at certain time intervals, to make payments to the attorney.
If the potential client has a legal plan, he or she is, still, obligated to pay any costs in the case, including filing fees, service fees, copy fees, etc. Even if the plan pays the full attorney fees, it is important to verify the amount of the fees that will be paid. Some of the plans have limits on fees, so, if the case is complicated or you expect the case to be contested, it may not be worthwhile for you to accept the case. It is, also, important to send out regular billing statements, to the client, so he or she can, still, review the work done on the his or her behalf, even though the plan will not pay the bills until the case is finished.
A second type of billing option to consider is discounts. If the client pays an initial retainer fee, then he or she will receive regular billing statements to review the work done on the case, as well as the balance of the retainer. Once the retainer fee is exhausted, the client needs to make payments on the balance or pay an additional retainer fee. In order to encourage the payment of the bill, you can offer the client a discount, if he or she pays the remaining balance, in full. It is better to receive the full payment, as soon as possible.
Clients may make monthly payments on the bill, if they do not have the ability to pay the balance, in full. As time goes by, the client may become less and less likely to make the payments. The attorney has to continue to send out regular statements and monitor the account activity, in order to ensure that the client continues to make payments. All of these activities take additional time away from actually working on client files. By offering a discount, the client receives the benefit of a price adjustment, while the attorney receives the benefit of closing out the file and not having to chase the client down for monthly payments. It is a good way to get a client to pay the bill, if you know when he or she is receiving a tax refund, bonus, commission check, or another large payment.
The next type of billing option to consider is a flat rate. Depending on the type of case, the flat rate is attractive to the client because he or she knows the exact amount of the attorneys’ fees and costs. This type of option can work well for transactional matters, like real estate or wills. For other types of cases, such as family law, it can be risky. Too often a simple, uncontested case evolves into a highly contested matter. In those types of cases, it is important to specify, in your retainer agreement, that the flat rate applies only to the uncontested case. If the case becomes contested, then the attorney should provide, in the retainer agreement, that he or she is allowed to withdraw from the representation or that the client will agree to pay the hourly rate. Otherwise, you can end up spending a lot of time, on the case, and essentially not get paid for your work.
Lastly, the limited scope representation is a billing option. Pursuant to Illinois Supreme Court Rule 13(c)(6) and Rule of Professional Conduct 1.2(c), an attorney may file a limited scope appearance in the representation of a client. This representation is a way for the client to limit his or her legal fees and for the attorney to provided limited court appearances. The appearance form requires that the attorney delineate the areas of the representation, including appearance at a specific hearing, trial, deposition, or the scope and limits of representation for a family law matter.
The limited scope representation, also, allows the attorney to review documents, such as settlement agreements, assist with the preparation of pleadings, review financial records, etc. without the obligation to represent the client for the entire case. This option may be useful for a client who is looking for legal review of documents, but who is capable of representing himself or herself in court. It, also, is helpful for a client, who is involved in an uncontested case, but would like an attorney to review and/or explain the documents to him or her.
When the attorney completes the agreed upon representation, under the limited scope appearance, he or she files a motion to withdraw. Alternatively, if the client would like to extend the representation, the attorney files a new notice of limited scope of appearance, stating the scope of the new or extended representation of the client.
As a solo practice or small law firm grows, billing options may be useful to meet the demands of the clients. The billing options provide flexibility in terms of representation and billing, which will increase the firm’s revenues, while providing the clients more certainty over their bills. Regardless of the billing option utilized, it is important to completely disclose and communicate the fees, with the client, in the retainer agreement, in order to ensure that the client and the attorney have the same understanding as to the attorney’s representation of the client.