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Avoid Attorney-Client Fee Disputes By Discussing The Economics Of Litigation

Many potential clients are surprised at the expenses associated with litigation. Unsophisticated purchasers of legal services do not understand the inefficiencies associated with getting their cases to trial and are frustrated by the gamesmanship over procedural matters. After paying thousands of dollars of fees and costs (with no end in sight), some clients look for a scapegoat to vent their anger. Not surprisingly, the client’s lawyer is an easy target.

Setting aside pro bono work, before accepting representation for new clients, consider discussing the economics of litigation. A simple example will make the point. It does not make sense for a client to hire an attorney who charges $600 per hour to recover $10,000 in a contract dispute. The client will spend more money on the attorney than is in dispute and will be in a worse position. That client should go to small claims court without an attorney.

Discussing the economics of the potential client’s prospective case, before initiating litigation (regardless of the size of the case), minimizes attorney-client fee disputes. If lawyers have candid conversations about the expenses of litigation before filing suit, then clients can make informed decisions on what to expect and whether they should proceed. Some lawyers are reluctant to provide litigation budgets because litigation is unpredictable and accurate budgets are difficult to prepare. If lawyers educate their clients about the potential turns and twists of court cases (and how those unforeseen events will affect the budget), most clients will not blame their attorney when their matter goes off the rails. The alternative is to keep the client in the dark about their fees and costs and hope they don’t have a heart attack when they get the bills.

When budgeting, I work backwards. I assume the case will go to trial. I get an understanding of the number of likely trial witnesses and then calculate the fees and costs for handling just the trial itself. I know I will spend time arguing motions in limine, picking a jury, presenting an opening statement, examining witnesses and presenting a closing argument. The budget for the trial is usually the easiest part of the overall litigation budget to prepare, once I make an assumption on how many trial days there will be. Then, I determine what work is needed to get the case to trial (i.e., factual investigation, written discovery, depositions, experts that need to be hired, anticipated law and motion, etc.) If you make reasonable assumptions (including discovery motions and the inevitable dispositive motion you or your adversary will file), your litigation budget can be fairly accurate. Of course, even well-considered budgets with realistic assumptions can be wrong. But if you regularly reevaluate the tasks needed to move the case along with the client (and amend the budget if necessary), your client is likely to maintain confidence in you and less likely to initiate a fee dispute.

I recommend discussing the economics of litigation with clients early and often. Clients hate surprises. And when you surprise clients, they perceive you to be unprepared or uninformed. Then, they lose confidence, and the attorney-client relationship begins to deteriorate. If you present a realistic budget to a client and, as a result, the client decides not to proceed, you have saved yourself from a miserable experience.

Mark Wilson, a trial attorney, has won nearly every case he has tried or arbitrated. He lost only one jury trial and obtained a complete reversal on appeal. Mr. Wilson represents clients in business litigation and legal malpractice cases and was named in the 2018 SuperLawyers Top 50 Orange County list. Mr. Wilson is a California State Bar certified specialist in Legal Malpractice Law.