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  • Inside Track
    January 06, 2016

    On Family Lawyers and Billing: The Clock Is Ticking

    Is there a good alternative to hourly billing divorce clients? This author believes hourly billing remains the best option, but integrity in billing practices and attention to early settlement options just might save divorce lawyers from obsolescence.

    Karen G. Zimmermann

    Jan. 6, 2016 – Pro se filings are at an all-time high. Clients are choosing not to use lawyers even when they have the economic ability to do so. Are family lawyers in danger of becoming obsolete? Are our billing practices contributing to the rise in pro se cases?

    Other than the limited exceptions of collection of past due support, maintenance, or other financial orders, family lawyers cannot ethically bill divorce cases on a contingency. SCR 20:1.5(d)(1). The policy of no contingent fees to secure a divorce, “win” legal custody or physical placement, or establish property division and support numbers is appropriate. The substantive areas are well established by the law. The ranges of settlement/litigation outcomes are narrow in most cases. Appropriately, most divorce lawyers charge fees on an hourly rate billed in one-tenth of an hour increments, and of course, our written fee agreements comply with SCR 20:1(b)(2).

    Two Problems with Hourly Billing

    There are two main problems with the hourly billing system in family law. First, there is the risk of “padding” hourly legal fee bills. As an experienced member of the Fee Arbitration panel, I’ve seen some very creative timekeeping methods and charges. A charge for “interoffice conference” with your paralegal?

    Karen Goldman Zimmermann (Marquette 1982) practices family law with Zimmermann Law Offices S.C., Milwaukee. Reach her at (414) 352-4400 or email.

    Second, the hourly lawyer has no incentive to ask the client to resolve a problem, settle the case, or even to end an unproductive phone call. Sadly, most cases settle just before trial. Other than the collaborative process, we just don’t seem to settle cases until we are staring at a drop-dead date. This leads to client resentment for fees incurred in preparing for trial and feeling rushed in understanding the options and outcome. How many cases have you seen where a new client comes in and says, “I just got divorced and really don’t understand what happened”?

    Hourly billings need to be tightly controlled and practical. Lawyers need to send out monthly bills itemizing their time and fees. Clients appreciate being reminded that they are paying for the lawyer’s time when they are endlessly using that time to vent their emotional distress. We hourly billers need to be disciplined in managing not only timekeeping records but also in attempting to help clients find therapy and other tools to help them manage their use of our time and to prepare the client emotionally for settlement discussions.

    Is There an Alternative to Hourly Billing for Divorce Clients?

    One alternative to hourly billing is the flat fee. A flat fee for an entire case seems quite risky. Some lawyers charge a flat fee for each motion filed, for each document prepared, and so forth. If there is a flat fee per court appearance, there is no incentive to resolve the issue. Some lawyers charge a mix of an hourly rate with a minimum charge for each court appearance. It is easy to tell when this is happening; you find yourself being told that it is too late to draft an agreement or that a phone conference with the court will not work. It is suddenly always imperative to be in court.

    Then we have “value-added billing” used by a few lawyers. This is also known as “results-based billing.” Such lawyers proclaim that they offer their clients an option to take this billing approach or an hourly billing approach, and all the clients seem to want the value-added approach. What this approach is saying is that the lawyer claims “I got you a better result” than expected, so you should pay me more. This is, in reality, a contingent fee. “Contingent” means dependent on the outcome. No client can possibly give informed consent to such a billing system. It violates the underlying policy of SCR 20:1.5(d)(2). Lawyers using such an approach do damage to the public image of lawyers. Clients who are offered such a billing plan should be directed to another lawyer to negotiate their representation contract – they simply can’t possibly know enough to understand what might leverage their ultimate bill.

    So What’s the Answer?

    Today, I don’t know of any option better than the hourly billing formula. Integrity in billing and attention to early settlement interventions can do a great deal to reduce legal fees. Done accurately, reasonably, and sensitively, we may just save ourselves from obsolescence.

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