Today’s story in the Boston Globe provides a glimpse into the kinds of disputes that that can arise when a law firm’s client believes its legal fees are too high. The story covers an arbitrator’s finding that one of Boston’s premier law firms overcharged a client by more than $540,000. The arbitrator reportedly faulted the firm for submitting “vague” invoices and for assigning multiple employees to work on pleadings (e.g., six employees who billed more than 200 hours in total to prepare a complaint and injunction papers).
In these kinds of disputes, clients and lawyers are often forced to deal with the question of what constitutes “reasonable” attorneys’ fees. If the dispute is presented to a court in Massachusetts, a judge will use the “lodestar method” to calculate reasonable attorneys’ fees. According to a Massachusetts Appeals Court decision, this method involves “the multiplication of a fair market hourly rate by the amount of reasonably spent time.”
The lodestar method’s references to “fair market hourly rate” and “reasonably spent time” provide scarce objective guidance, so courts look at a variety of practical factors to help steer their analysis. According to the decision referenced above, these factors include:
(1) the length of the trial, (2) the difficulty of the legal and factual issues, (3) the degree of competence demonstrated by the attorney, (4) the nature of the case and issues, (5) the time and labor required, (6) the amount of money at stake, (7) the result achieved, (8) the experience, reputation, and ability of the attorney, (9) the usual price charged for similar services by other attorneys in the area, (10) the amount of awards in similar cases, and (11) the alternate demand for the attorney’s services.
With so much subjectivity and so many factors in the lodestar analysis, much is left to the discretion of the trial court judge. This level of discretion gives judges wide latitude to decide cases involving the reasonableness of attorneys’ fees, so it is difficult to predict the outcome of any particular dispute over legal fees.
Neither lawyers nor their clients want a dispute over fees to turn into a lawsuit. To avoid runaway fees, clients can and should have frequent communications with their attorneys about expectations for fees and disbursements. For example, if there are going to be multiple attorneys working on a single project, the reason for the staffing arrangement should be shared with the client. Similarly, if a firm plans to bill a client for internal conferences (i.e., conversations among attorneys at a single firm), the managing attorney should explain to the client his or her view about the value of having such conferences.
Avoiding fee disputes is not an exact science, but — as with much in life — good communication is the key. Beck Reed Riden LLP’s mission is to help our clients as business partners; a significant component of this approach involves practical discussions about our clients’ goals and expectations. Through these discussions, we explore mutual expectations surrounding fees. We also offer a variety of innovative billing arrangements. We share our clients’ interest in minimizing the chances of any dispute over the cost of legal services.
For more information, contact Stephen Riden: sriden@beckreed.com or (617) 500-8672.
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Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and labor and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.
