Named Top Lawyers in Las Vegas by Greenspan Media Group/Vegas, Inc., & Desert Companion
What Goes into a Lawyer's Hourly Fee?
To a client the hourly fee is a scary proposition. It gives the lawyer an incentive to drag things out. How can the client know if the lawyer will honestly try to work efficiently, or if the client will be paying for the lawyer to sit there day dreaming? How does the client know if the lawyer has the good sense not to spend too much time being a perfectionist on some minor point? At Reed & Mansfield we offer to do many legal matters on either a contingency fee (we don't get paid unless you do) or a flat rate. For example, in probate we seek to be more than affordable probate lawyers in Las Vegas, Nevada; we believe we are the high quality low cost probate lawyers in Las Vegas, Nevada. Still, in some cases an hourly rate, if the lawyer is honest and uses good legal sense, is a fair arrangement for both client and lawyer.
In addition, the client wants to know why the attorneys charges so much. At $200/hr. a lawyer who bills and gets paid 40 hours a week, 50 weeks a year is taking in $400,000 a year. What makes the lawyer worth that much?
Unfortunately for both lawyers and clients a large chunk of a lawyer's gross income goes to overhead. For starter's the lawyer (if self-employed) or the lawyer and the lawyer's firm are paying 15.3% of the lawyer's income in Social Security and Medicare taxes on the first (in 2015) $118,500 of the lawyer's income. On any income over that amount the Medicare tax is 2.9%. Of course, this is before regular federal income taxes. Even in a state like Nevada with no income tax, there are business license fees to pay.
But the biggest cost to the lawyer of doing business is overhead. Rent and salaries for support staff are usually the two biggest items. Then there are a host of other expenses. State Bars usually charge around $500 a year for the lawyer to keep his or her license active in each state. Malpractice insurance is pretty much required and runs, perhaps, on average, $3,000 per lawyer per year. Most states including Nevada require lawyers to take continuing legal education which costs at least a few hundred dollars a year. Most lawyers voluntarily join various legal associations where they network with other attorneys doing their kind of legal work. Figure another a few hundred a year to much more for association fees.
There is always equipment to buy. There is always useful and specialized software to buy and software to update. Most lawyers have shifted from having libraries of books to paying for access to searchable online legal data bases. (True, a lot of "law library material" is available on free online databases, but the commercial databases usually have much better search engines and are far more complete.)
Of course, the phone company has its hand out. Business lines typically cost more and you can't buy a business phone system at WalMart. We don't know of any lawyers who use Magic Jack for their phone lines.
For some law firms advertising is a huge expense as you can see by all the billboards in town and feel by the weight of the Yellow Pages.
Finally, honest lawyers actually bill for fewer hours than they work. If a lawyer spends one hour driving to court and back for a ten minute oral argument and spends two hours waiting for the case to be called (because by bad luck that case is at the end of a long list of cases all set for the same time) most of us aren't going to bill you for 3 hours and ten minutes. Many of us spend hours each week talking to potential clients who don't become actual clients. We'd rather spend five or ten minutes talking to you on the phone to see if your legal matter is something we can handle to our mutual satisfaction then have you pay us for an office consultation and then leave unhappy because you spent time and money only to find out we can't do what you hoped we would do. (There are instances in which we recommend you come to our office for a paid consultation but only after we have talked to you first to get a feel for the legal issues you have.)
In short, the lawyer doesn't really "get" anywhere near the full hourly rate just like the car dealer mechanic doesn't "get" anywhere near the hourly rate the dealer charges for his work.
Still, the hourly rate can be rough for clients. For that reason it is our least favorite billing method. That is why most of the work we do is either personal injury or malpractice cases taken on a contingency fee or uncontested probates taken on a flat fee.
We keep our overhead extremely low, and take few cases per attorney. In that way we can pass savings on to you because our overhead is lower than most firms.