The Wall Street Journal reported that some U.S. law
firms shattered the $1,000 (all figures in U.S. currency)
per hour mark for their senior lawyers in September
2007. Not surprisingly many clients think that controlling costs is about negotiating lower hourly rates, according to Toothman. Although Toothman dismisses
many of these exorbitant rates as “vanity rates” he
maintains that bargaining for discounted rates or insisting that only more junior associates with lower hourly
rates work on a file won’t necessarily lead to substantial
cost savings.
“Lawyers with higher hourly rates generally know
more and are more efficient. A senior partner won’t
waste 20 hours researching an issue like a junior associate,” Toothman says. While there is no harm in requesting reduced rates, beyond setting out hourly rates the
retainer agreement should also contain a provision that
the client will be notified of any changes to hourly rates,
to prevent law firms from raising rates without the client’s knowledge or consent.
Distinguishing between billable and non-billable work
When it comes to billing clients some law firms aren’t
shy about billing for work that should be considered
non-billable. Case in point: In September 2007, The
National Law Journal reported that some U.S. law firms
have started to bill clients for time spent billing. “
Lawyers should not bill for clerical work,” Ross says. Therefore it is essential that the retainer agreement clearly distinguish between billable work and non-billable work,
such as administrative tasks.
Detailed billing guidelines
“The biggest challenge in auditing legal bills is that
the entries are often too cryptic. There often isn’t
enough detail to know if the fee is reasonable,” Toothman explains. Incorporating detailed billing guidelines
in the retainer agreement can establish standards to
make bills more transparent.
First, the billing guidelines should set out the minimum billing increments. “Clients should be billed in
units of 1/10 of an hour, since lawyers tend to round up
time,” Ross says. He notes that “some clients still toler-
bill’ing in’cre’ment
[bil-ing] [in-kruh-muhnt]
1. The minimum time units billed.
B.B. Papazian Q.C.
P.F. Rooney
A.B. Forrest
M.C. Pearce
M. W. Mulholland
M.S. Myers
R.G. Goodman
C.G.Carter
P. Cho
A.M. Heisey Q.C.
Ms. Carter will continue her practice
of insurance defence litigation with a
focus on the defence of public institutions and municipalities as well as
environmental matters. She will also
continue to represent individuals and
institutions in estate litigation matters including will challenges, dependency claims, contested passing of accounts and any other litigious matters.
416.601.2707 or
carter@phmlaw.com
Mr. Mulholland will continue his practice in litigation with an emphasis on
insurance defence and commercial
litigation. He will also continue to represent individuals and companies in
transportation related matters.
416.601.2706 or
mulholland@phmlaw.com
Suite 510, 121 King St. W., P.O. Box 105,
Toronto, Ontario, M5H 3T9
Telephone: 416.601.1800 Fax: 416.601.1818
www.phmlaw.com
