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To charge or not to charge, That is the question

By: ED POLL//August 24, 2009//

To charge or not to charge, That is the question

By: ED POLL//August 24, 2009//

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Believe it or not, some lawyers are getting new business from new clients, and when they do they may face an issue that, if not handled properly, could stop new business before it starts.

The issue: whether to charge a prospective client a fee for an initial consultation. The wisdom of charging in this situation has long been debated, and it comes down to three fundamental choices:

  • Free initial consultation
  • Paid initial consultation at the lawyer’s regular rate, exclusive of any subsequent engagement
  • Paid initial consultation at the lawyer’s regular rate, with the payment applied to the total bill if the consultation results in an engagement.

There is no one right answer. Obviously, a potential client would find it attractive to get something (the consultation) for nothing. Lawyers might counter that when it comes to a free consultation “You get what you pay for,” and some clients may well be inclined to agree. Too many persons have gone to “free” consultations for timeshares or investment products, only to find out that they ended up paying far more in the long run.

The issue is part of an ongoing debate about ancillary charges. Some lawyers charge their clients for “opening” a file on each matter; others charge for photocopying the file before giving it to the client when requested. Generally speaking, these are legitimate charges if specified in the retainer agreement.

Another example is charging to file a notice of unavailability or a notice of continuance before an extended absence from the office. This is often in the client’s best interest, and can be considered billable, in part because failure to file such notices creates risk for the client. If opposing counsel doesn’t know you will be on vacation and files a motion or other action requiring a special appearance or a later motion of continuance, the client will ultimately pay more than the original time needed for a simple notice.

Whether you can charge for the initial consultation, or any ancillary fee, ultimately becomes a question of the client’s trust and confidence in you, and how long it takes to generate those feelings.

Given the need to attract clients in today’s economic conditions, alternative three (a charge that can be applied toward the total fee) might be the most practical approach. Of course, if your competitors do not make such charges, or if your client resents being “nickel and dimed” for them, it’s your call to charge or not. In the final analysis, separate charges should not be viewed as profit items, but rather as part of the total fee structure.

As lawyers help people’s lives improve, our objective should be to provide and account for our services in such a way that clients understand and accept the value as well as the cost of what we do. When that happens, fees are not an issue and lawyers do not have to apologize for what they charge. Even if you decide against charging for a particular action, at least show the time spent, the charge, and a courtesy discount. It may educate your client, and strengthen your mutual relationship.

Ed Poll J.D., M.B.A., CMC is the principal of LawBiz® Management, a national law firm practice management consultancy based in Venice, California. For more information, visit his Web site www.LawBiz.com or email him at [email protected].

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