In the legal industry, clarity and transparency are paramount. Fee agreements serve as the foundation of any attorney-client relationship, outlining the terms, responsibilities, and expectations on both sides. But why are fee agreements important, and what issues can they solve? In this comprehensive guide, we'll delve into the world of fee agreements, exploring their significance and best practices. We'll also introduce you to Advocate Capital's Case Expense Financing services and how editing your fee agreement to include language about passing through borrowing costs can help your firm keep your financial options open.
Any law firm considering changing its attorney-client fee agreement should thoroughly research the matter in the context of applicable local, state, and federal guidelines and statutes and should hire its own local counsel for advice.
Fee agreements are the cornerstone of trust and transparency between attorneys and clients. They ensure both parties are on the same page regarding legal services, fees, and other essential terms. Without a clear fee agreement, misunderstandings and disputes can arise, potentially damaging the attorney-client relationship.
Fee agreements address a wide range of issues, such as:
When it comes to drafting fee agreements, following best practices is essential to maintain professionalism, prevent disputes, and protect your firm from any issues that arise. Here are some key best practices, along with brief explanations:
Why It's Important: Legal jargon can be confusing for clients. Using plain language ensures that clients understand their rights, obligations, and the services they're receiving.
Tips: Avoid legalese where possible. If you must use legal terms, provide a brief explanation or definition.
Why it's Important: A concise agreement is more likely to be read in its entirety, reducing the chances of misunderstandings.
Tips: Keep sentences short, use bullet points for lists, and avoid redundant information.
Why it's Important: Clearly identifying the client ensures there's no ambiguity about who the agreement is with.
Tips: Include full names, contact details, and, if applicable, the legal status (e.g., individual, corporation).
Why it's Important: Clearly defining the scope prevents scope creep and sets clear expectations for both parties.
Tips: List specific tasks or milestones, and clarify what is not included in the agreement.
Why It's Important: Transparency about fees prevents disputes over billing later on.
Tips: Break down fees by hourly rates, flat fees, or contingency. Specify any additional costs, like court fees or expert witness fees.
Why it's Important: Effective communication is the backbone of a strong attorney-client relationship.
Tips: Specify preferred methods of communication (e.g., email, phone), expected response times, and any periods where the attorney might be unavailable.
Why It's Important: Waivers can protect attorneys from potential conflicts of interest and other issues that might arise during representation.
Tips: Clearly explain the reason for the waiver and its implications. Ensure the client provides informed consent.
Why It's Important: Clients have a right to their files, and attorneys have ethical obligations regarding file retention and destruction.
Tips: Specify how long files will be retained after the conclusion of the matter, the method of storage (e.g., digital, physical), and the process for clients to retrieve their files.
Why It's Important: Sometimes, the attorney-client relationship needs to end before the matter is concluded. Both parties should understand the terms of termination.
Tips: Detail the reasons for which either party can terminate the agreement, any notice requirements, and financial obligations upon termination.
Advocate Capital understands the financial challenges law firms face. Case cost funding can help your firm get even better results for your clients and get your post-tax profits out of your cases so you can spend your money to grow your firm and accomplish your financial goals.
Including language in your firm’s fee agreement that allows you to pass borrowing costs through to your cases is a strategic move that can benefit both your firm and your clients. This practice ensures transparency in billing and helps law firms maintain financial stability while handling cases.
By clearly outlining the possibility of these costs and the mechanism for passing them on, clients are fully informed right from the start. This transparency fosters trust and ensures that clients have a realistic expectation of potential expenses associated with their case.
Clients understand that these costs are a necessary part of pursuing their case and many of our law firm clients have expressed that they have received no pushback from their clients about interest pass-through. Click here to read testimonials from our law firm clients or check out our videos page to watch interviews we’ve done with some of our clients about their experience with us.
Including language about passing borrowing costs through to cases in your fee agreement aligns with ethical standards in the legal profession. If you’d like to see the ethics opinions on pass-through for your state, contact us and we will send you a copy.
To assist you in drafting your fee agreement, Advocate Capital offers a sample fee agreement language. Click here to request the sample fee agreement language, which can serve as a template for your legal practice.
Ready to learn more about how Advocate Capital can support your law firm? Contact us today to explore our Case Expense Financing services and discover how AdvoTrac®️ can make a difference in your practice.
