Costs are the expenses your attorney incurs which are directly attributable to your specific case. Almost all personal injury attorney fee contracts require that these costs be reimbursed from your share of the recovery, i.e., the money left over after your attorney’s fees are deducted. Therefore, every dollar that you can save on costs is a dollar that goes in your pocket. Most attorneys are diligent at maintaining a running list of your costs (though some costs won’t appear until your attorney receives and pays certain bills, so there will always be lag on some items). The two times you absolutely need to review the costs in your case are: (1) right before you agree to a settlement and (2) after you receive the settlement check and your attorney provides you the final accounting in your case. The pre-settlement review will help you avoid a rude surprise after it’s too late to stop the settlement, and the post-settlement review is to verify that the costs haven’t changed significantly from earlier.
The vast majority of your costs will be items for which your attorney paid directly out-of-pocket, and will be supported by invoices and canceled checks. The rest will usually be “in-house” expenses which your attorney tracked throughout the case, such as postage, long distance phone calls and photocopies. Unlike repair shops, which almost always charge you more for “parts” than their actual cost, lawyers are not permitted to do this with their costs. If the lawyer paid $150.34 for a deposition transcript, that is the most he can charge you. It is incredibly difficult to fake the first type of cost (due to the availability of invoices), and for the most part, the second type are so insignificant as to not warrant the risk your lawyer would take by inflating them. Nevertheless, you should always review an itemization of your costs to make sure that you are not being overcharged (or that someone else’s costs weren’t accidentally put on your bill).
Attorney Costs — Things That Should be Supported by an Invoice, Receipt and/or Canceled Check
Not everything that comes with a receipt is properly chargeable to the client as a cost. Here are the most common items you can expect to see which are properly charged to you:
- Medical records – Don’t be surprised by how expensive medical records (including billing records) are. For example, in my home state of Florida, most medical providers charge $1.00/page for the first 25 pages, and $.25/page for every page after that, per request. So, a 100-page medical record request will cost $43.75 (a lot more than Kinko’s charges for copies). Blame your medical provider for this one. It’s not your lawyer’s fault. Your lawyer should have proof of billing and payment for these.
- Outsourced photocopies – When possible (given time constraints), your lawyer should handle large photocopy jobs (say, more than 50 pages at a time) by sending them out to a service to be copied. These services should be cheaper than how much your lawyer charges for in-house copies, though they may not be the cheapest copies in town. There are some copy businesses that cater to lawyers which offer services such as guaranteed confidentiality and pickup/delivery that other, cheaper, copy places do not. If the outsourced copies seem to cost almost as much as your lawyer’s “in-house” copies, you should probably ask your lawyer if he is an owner of the copy business — I know some lawyers who are.
- Court filing fees – Filing fees vary from state to state, but don’t be surprised if it cost around $400-500.00 to file your lawsuit.
- Process server fees – Your lawyer must use a process server to serve the initial complaint in your lawsuit, as well as subpoenas for document requests, depositions, and to compel witnesses to appear at trial. These will usually cost between $20-40 each, but will vary depending on where you live.
- Private investigator fees – If a party or witness is difficult to find, or is trying to avoid being served with a complaint or subpoena, your lawyer may have to hire a private investigator to track the person down and serve him or her. This will obviously cost more than a process server, and will depend on the difficulty of the job. Your lawyer may also hire an investigator to take recorded statements from witnesses, which isn’t unusual in cases involving a large number of witnesses or witnesses who may be far away.
- Deposition transcripts – If numerous depositions were taken in your case, don’t be surprised if you see large variances among the costs of the deposition transcripts. Depositions which your own lawyer ordered typically cost around $3.00/page to transcribe (again, this varies by location). Deposition “copies” (every copy after the original transcript) cost a fraction of that. Usually, the lawyer who sets the deposition pays the cost for the original and opposing counsel pays the “copy” rate. So, if your lawyer paid for two 100-page depositions, and paid $300.00 for one and $75.00 for the other, it’s because he ordered the original of the first one and opposing counsel ordered the original of the second. If any depositions were videotaped, the cost of the video is in addition to the cost of the transcript.
- Expert witness fees – Expert witnesses can be extremely expensive. Doctors can range from $300-600+ per hour, depending on their specialty and location, and they frequently charge a premium over their usual rate for depositions and trial appearances. They charge for any reports they write on your behalf, such as MMI reports which can easily cost $1,000.00 each, and they charge you every time your lawyer talks to them. If you think you are getting gouged on this expense, take it up with your doctors.
- Travel – If your lawyer needs to fly somewhere for a deposition, you’re going to get charged for his air fare. Make sure he isn’t charging you for first class travel (assuming you didn’t agree to that up front — better check your fee contract!). You’ll also be charged for rental car or taxi fees and hotel accommodations, if they were needed. Again, let reason be your guide in judging the quality of car and hotel your lawyer chose.
- Mediation – Depending on the mediator and your location, this usually costs between $150-250.00/hour per party. If the defendant agreed to pay mediation costs as part of your settlement, make sure your lawyer takes this cost off of your bill.
- Trial exhibits – If your case went to trial (or got close enough that exhibits needed to be prepared), your lawyer may have incurred the cost of blowing up certain documents and/or photographs to use in front of the jury. This may include the hiring a graphic artist to make these exhibits more useful, or to turn them into a Power-Point presentation. If the graphic artist seems way too expensive, you may want to ask if he or she is related to your lawyer (some lawyers hire their spouses or adult children to do these).
The following are items which should not be charged to you, even if your lawyer does have a receipt:
- Outsourced legal research – There are legal research businesses which charge lawyers to research an issue and provide them with a memorandum summarizing the relevant cases. Some also draft motions and other court documents for your lawyer. You should not pay for these services. If your lawyer wants to outsource his research and writing jobs, he should eat that cost. You pay him his attorney fee to do this work. If he didn’t feel qualified enough to do his own research and writing, he shouldn’t have taken your case. If he was just too busy (or lazy) to do the work himself, it’s not your fault and you don’t have to pay for it. If your lawyer wants to fight you over this type of expense, take it to the state bar.
- Meals – Your lawyer shouldn’t charge you for meals, even if it was a “working lunch” with an expert. He can take his tax deduction for “working meals,” but he shouldn’t expect his clients to pay for them. However, I will make an exception to this rule for “out of town” meals, if your lawyer had to stay somewhere overnight for your case. He doesn’t have access to his kitchen, so the cost of a reasonable restaurant meal (but not any booze) is a fair cost, in my opinion.
Attorney Costs — Things That May Not Supported by an Invoice, Receipt and/or Canceled Check
Some things itemized on your attorney cost listing don’t come with a receipt. These are almost entirely in-house expenses that most lawyers traditionally charge their clients. Expect your post-settlement costs for these items to exceed the pre-settlement itemization you reviewed, because these items continue to accumulate while finalizing the settlement, and will often only be calculated once per month. Luckily, these tend not to be “big ticket” items, so the room for your attorney to inflate these costs is limited (and not worth the risk). Your lawyer should charge you for:
- In-house photocopies – Your lawyer’s office isn’t Kinko’s. While he may have a nice copy machine and appear to make a ton of copies, he doesn’t do the volume of business to allow him to charge Kinko’s-like rates for photocopies. Don’t be surprised if your lawyer charges $.25/page for in-house photocopies. I have no doubt that lawyers actually make money on their copies by charging this much, and they probably should charge less (I do). However, there are enough lawyers charging this rate that I doubt any state bar would consider it excessive. It may be worth your time to see if you can knock a few cents off per copy, if your lawyer had a lot of in-house copies done for your case. Then again, it may not. As for tracking the number of copies done in your cases, many, if not most, law firms have devices attached to their copy machines which require a case code to be entered before copies are made. These are usually printed out and assigned to each case’s costs once per month. So, it’s not just “guesstimation” in most cases.
- Postage – Yes, your lawyer will charge you for stamps, or more likely, the postage spit out by his postage meter. Most law offices just have a typed list of cases next to the stamp machines where the paralegals manually record the postage used in each case as letters get stamped. In my own experience, I’ve seen more errors in postage not being billed to a client (due to someone forgetting to write it down) than postage being overbilled to a client. There may be some FedEx or UPS charges as well, for sensitive documents which needed to be tracked or large volume shipments (such as when you need to ship a large number of medical records to an expert).
- Long distance phone calls – Most lawyers will charge you their actual cost for long distance phone calls. It’s becoming more and more common these days for insurance companies to have defense firms act as “regional counsel” for a large area of a state, so opposing counsel may not be a local phone call away. If your lawyer charges for long distance, he should have a phone system which requires the entry of a case code prior to making a long distance phone call, so that each monthly phone bill will list which charges should be assigned to your case. Obviously, if your lawyer uses a VOIP system which allows him to make free long distance calls, he cannot ethically charge you for them.
- Vehicular travel – Your lawyer should not charge you travel expenses for local automobile travel, such as driving to the courthouse or to meet a local expert. However, if he must travel a long distance, say more than 50 miles, he may charge you the mileage for that trip. This is usually billed at the business mileage rate set by the IRS, which is currently $.55 per mile.
The following “non-receipt expenses” should not be billed to you as costs:
- Faxes – While it is reasonable for your lawyer to charge you any long distance telephone charges associated with a fax, it is not reasonable to charge you a per page cost for incoming or outgoing faxes.
- Online legal research – Your lawyer should not bill you all or part of the cost of his monthly Westlaw or Lexis subscription. That is just part of his overhead. The only exception I could envision to this rule would be if your lawyer needed to access a case or law journal article which was not part of his standard plan, and for which he was charged a separate fee. This should be extremely rare, as most legal issues can be researched using only your state’s caselaw and statutes, which should be part of his standard plan.
Attorney Costs — Can My Lawyer Charge Me Interest on Costs?
Many lawyers do charge interest on your costs. They view their up-front payment of your expenses, which may not be reimbursed until years later, as being akin to a loan. Don’t be surprised if your lawyer charges you 1% or 1.5% per month (12-18% annually) interest on your costs. Check your fee contract to see if your lawyer included an “interest on costs” provision. If he didn’t, he shouldn’t charge it.
Attorney Costs — Final Thoughts
Most lawyers make an effort to keep costs in your case down, as it doesn’t benefit them to run costs up — because most costs are simply reimbursement of money your lawyer already spent and involve no profit. In fact, lawyers know that excessive costs can make cases, especially smaller ones, nearly impossible to settle, because the client won’t take a settlement where he winds up getting nothing. I, like most lawyers, hate the fact that depositions and expert witnesses cost so damn much. Unfortunately, there’s not a whole lot we can do about it, as they are necessary to win most cases.
Remember that your lawyer will eat all of these costs (under most fee contracts) should you lose your case. If you lose at trial, not only does your lawyer not make any money on your case (in the form of attorney fees) but he actually loses money due to the expense of your costs. Running up costs unnecessarily is rarely a smart move.
If you see something on your attorney cost itemization that concerns you, don’t automatically assume the worst and take an accusatory tone with your lawyer. Be sure of your position before you accuse your lawyer of cost inflation, which is tantamount to accusing him of stealing. There’s nothing wrong with you wanting to verify certain large costs against your attorney’s invoices, but when you start challenging the number of photocopies or the amount of postage used, decide whether it is worth fighting over first. If your lawyer made thousands of dollars in fees, do you think he would risk his license by overcharging you $100.00 in costs? If you are diligent, and ask to see your current costs prior to agreeing to a settlement, you should be able to compensate for any higher-than-expected costs by demanding a higher settlement, or asking your lawyer to knock something off of his fee in order to get you to settle.