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July 2018

Fees and Expenses in The Project Based Attorney Model

Determining fees and expenses to charge a client is crucial to any successful lawyer-client relationship. In recent years, clients have started demanding more transparency and creativity from lawyers when making these determinations. Lawyers have responded by offering flat rates, preparing detailed budgets, and at times outsourcing or hiring project-based lawyers. Hiring project-based lawyers allows senior lawyers to focus their efforts on complicated legal matters while supervising efforts on lower level work. Administrative tasks, paralegal work, and attorney work can all be delegated to appropriately experienced persons.This allows a hiring lawyer to more efficiently utilize and be compensated for their higher-level expertise while being able to offer clients a lower rate for more basic attorney and administrative work.

Describing this relationship to clients can help them understand why hiring project-based lawyers is not only desired in some situations but may be beneficial to both the law firm and the client. Some, but not all jurisdictions, require this type of notification for changes in fees or expenses.

While the Model Rules only“prefer” that lawyers inform clients of fees and expense in writing, some states require in-writing communication. Some states, like Wisconsin andMassachusetts, add the written requirement but only for the amount charged exceeds a specific dollar amount. Such as a bill exceeding $1000 or $500 in the case of Wisconsin and Massachusetts respectively. Lawyers should check these requirements for their jurisdictions.  

In almost all cases, the project-based lawyer is doing work for the hiring law firm as opposed to doing work for the client. This is an important distinction that clients will likely be eager to learn more about for two reasons. It means they will be billed for the project-based work, in most situations, as an expense to the law firm. i.e., a lower rate and less built-in margin. Second, the client will feel well taken care of knowing that a licensed attorney is doing their work instead of a law clerk or non-lawyer paralegal.  

Although not a requirement in most jurisdictions informing clients of the use of project-based lawyers can open a healthy dialogue and provide a better overall service to clients.

This post is the second in a series discussing ethics rules as they apply to lawyers in the United States who use the Lawyer Exchange website. Our next topic Conflicts of interest discusses how and when conflicts might arise with project-based lawyers. Competence and supervision summarizes the rules regarding supervising project-based work so that clients receive the best possible service. Lastly, a post on the unauthorized practice of law will clarify if and when this ethics rule is triggered.

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