Paying for Legal Services
As professionals, physicians and attorneys charge for the exercise of professional judgment. Most physicians charge based on procedures and patient encounters. These tend to be fixed charges that are independent of either the results or the time actually spent on the procedure. Some physicians, such as anesthesiologists, have charges that are related to the time spent with the patient. Physicians also charge for services performed by their staff. Physicians record their diagnoses and procedures in complex, standardized notations. Physicians throughout the world use the standard taxonomy for medical diagnoses, the ICD-9 (international classification of disease, revision 9). In the United States, physicians use the American Medical Association’s current procedural terminology (CPT) system to classify medical procedures.
In contrast to physicians, attorneys do not have any standardized system for billing, for keeping records, or for describing legal work and legal diagnoses. Without such a formal structure, it is difficult for clients to track and manage legal services. It is also very difficult to audit legal records for either quality assurance (QA) or to ensure that the charges were necessary and proper. From the client’s perspective, the absence of a standard procedure code for legal procedures is more noticeable than the lack of a standard diagnostic code. While attorneys’ hourly bills may be intricately detailed, they are seldom comparable among law firms or even from attorney to attorney in the same law firm. This lack of standardization prevents clients from comparing their legal services with those rendered to other clients and makes it impossible to relate the billing entries to the progress of the client’s case.
Plaintiff’s attorneys usually work on a contingent fee. Fixed fees are used in certain routine matters such as divorces and in most criminal defense cases. Criminal attorneys also demand the fee in advance, since unsuccessful clients have little incentive to pay the attorney’s fees. Attorney’s fees range from $75 to $400 per hour, with certain specialists charging up to $1,000 an hour. Within a large law firm, the younger, less experienced attorneys are billed at a lower rate than the senior members of the firm. Nonattorney support personnel are also billed on an hourly basis. These may include nurses, physicians, engineers, certified public accountants, and other nonattorney professionals whose expertise is necessary for the proper preparation of a case. They also include law students and paralegals who work on client matters. The client is billed for every minute that law firm personnel spend on activities related to the client’s case. If an attorney does the work, the client pays the attorney’s hourly rate. It does not matter that the attorney is doing work that does not require the exercise of legal judgment. The rates are the same for solving a difficult analytical issue, making telephone calls to schedule a deposition, or organizing the papers in a file.
Lawyers working on a contingency do not charge the client an hourly rate, but they do pass on the expenses of the case. Attorneys working for an hourly rate pass all expenses through to the client, in addition to the charges for their time. These expenses range from a few dollars for photocopying and messenger charges to expert witness fees in the thousands of dollars. The client sometimes pays the bills directly, although in most cases, the law firm includes the expenses with the professional services bill. The client pays the aggregate charges, and the law firm pays the outside vendors. Expenses in a simple collection matter may be $100. Expenses in the defense of a medical malpractice case may be $30,000 or more. Expenses in a complex antitrust case can run to millions of dollars, plus tens of millions in attorney’s fees.