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Ways That Startup Lawyers Overcharge

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Re: Ways That Startup Lawyers Overcharge

#11
"So let’s say a lawyer’s fee is $600 per hour (which is $10 per minute). He speaks to you on the phone for 2 minutes. That just cost you $60. Not $20. That’s a $40 rounding charge. Wow. Another way to think of it is a 200% markup."

So what we have is that the base cost of a phone call with your lawyer is always going to be $60. I don't have a problem with that other than obviously it would be nice if the cost were zero.

As far as $60? A conversation of 2 minutes and a conversation for 10 minutes is still interuptive and takes your attention from whatever you are doing. As anyone who has been in a zone doing work will attest to.

Re: Ways That Startup Lawyers Overcharge

#12
post #6

If I were still an IT consultant and a client raised even half these issues with me, I would probably terminate my relationship with that client, because I don't want to be nickel-and-dimed. If I would find this sort of pushback so irritating as an IT consultant, I presume a legal consultant would find it just as irritating. Why would you want to annoy an important consultant in this way?

Were you doing this as an IT consultant? Where you double billing for your time? Were you changing rates without warning?

Good point.

On second thought, I think the more important issue is the one 7Figures2Commas raised: If you have a lawyer who does the worst of this stuff, you have the wrong lawyer.

With that said, my blood pressure would definitely climb if a client challenged a 6-minute incremental bill for a phone call that was only 2 minutes.

Re: Ways That Startup Lawyers Overcharge

#13
post #6

If I were still an IT consultant and a client raised even half these issues with me, I would probably terminate my relationship with that client, because I don't want to be nickel-and-dimed. If I would find this sort of pushback so irritating as an IT consultant, I presume a legal consultant would find it just as irritating. Why would you want to annoy an important consultant in this way?

"nickel-and-dimed"

Exactly. Experienced business people write this off to the "cost of doing business". You look at the total value and make a decision as to whether to continue the relationship. If you didn't know the way attorney's billed then you can be thankful for the lesson that you have learned. Read and understand before signing anything.

You are of course free to negotiate the fee down after receiving the bill and many lawyers will discount in order to continue the relationship. From my experience lawyers tend to be willing to accept whatever they can get that is reasonable - they aren't going to pursue an action against a client unless the majority of the bill isn't paid or there is something else causing animosity or problems.

Re: Ways That Startup Lawyers Overcharge

#14
post #5

It's good to know how lawyers overcharge, but it's better to find a trusted lawyer who you don't have to worry about. We work with Yokum Taku and Jesse Chew at Wilson Sonsini, and they've been awesome. Because I'm a former lawyer, I started out our relationship by scrutinizing every bill. I stopped when I realized that we were getting an amazing deal. We have only paid 1 legal bill in 2 years and we haven't been bugg…

Problem is that bootstrapped startups can't afford big names like Wilson Sonsini.

Any recommendations for cheaper alternatives that still offer similar quality?

Re: Ways That Startup Lawyers Overcharge

#15
post #5

It's good to know how lawyers overcharge, but it's better to find a trusted lawyer who you don't have to worry about. We work with Yokum Taku and Jesse Chew at Wilson Sonsini, and they've been awesome. Because I'm a former lawyer, I started out our relationship by scrutinizing every bill. I stopped when I realized that we were getting an amazing deal. We have only paid 1 legal bill in 2 years and we haven't been bugg…

This is important advice. Spend time finding someone you trust and that you feel comfortable talking to. You won't run into any of the unethical things mentioned in this post with a good attorney. In fact, some of those things are against the rules of professional conduct.

Another important point: You can always negotiate your bill. It is very common to pay less than the billed amount.

Full disclosure: I'm a former WSGR attorney. Now a WSGR client.

Re: Ways That Startup Lawyers Overcharge

#16
"There’s a clause in your agreement that talks about incurring expenses in connection with your representation and they can bill you for these up to a certain amount without prior approval. Tell them you require them to get your approval before incurring such expenses. And list out the expenses you will not pay for. It’s likely they will have a clause detailing the types of third party expenses they can incur on your behalf. Push back on this list and exclude items like mileage, travel, food, phone charges, copying and research expenses such as Lexis-Nexis, storage and data management services."

Ridiculous. As a business person that has dealt with lawyers, consultants, accountants (in the bricks and mortar world, not the startup lottery) as well as has clients that I do work for (so I've been on the other side) I would totally steer clear of anyone that comes out saying things like this. Unless I was desperate.

It's just not the way to have a professional relationship which involves trust.

Get approval on every expense? Even minor ones? Not going to reimburse for something unless on a white list? Get serious.

This strikes me as penny wise and pound (and time) foolish. The major cost is the hourly rate and whether you are being billed honestly for that (or not). And that is something you have no control over unless you are watching them all the time.

To expect that it matters that you will not approve a minor charge when the attorney can easily jack up his billing on the major charge is a waste of time.

Better to question the bills after the fact and if you feel that you shouldn't have to pay for the lunch bill that your attorney had when meeting with someone on your behalf while leaving a large tip by all means bring up the issue.

But just like with employees a certain amount of leeway is often necessary.

Re: Ways That Startup Lawyers Overcharge

#17
post #5

It's good to know how lawyers overcharge, but it's better to find a trusted lawyer who you don't have to worry about. We work with Yokum Taku and Jesse Chew at Wilson Sonsini, and they've been awesome. Because I'm a former lawyer, I started out our relationship by scrutinizing every bill. I stopped when I realized that we were getting an amazing deal. We have only paid 1 legal bill in 2 years and we haven't been bugg…

This is important advice. Spend time finding someone you trust and that you feel comfortable talking to. You won't run into any of the unethical things mentioned in this post with a good attorney. In fact, some of those things are against the rules of professional conduct. Another important point: You can always negotiate your bill. It is very common to pay less than the billed amount. Full disclosure: I'm a former W…

"Spend time finding someone you trust"

Sounds very "find a good lawyer".

How do you find someone you can trust? Or do you mean someone who appears trustworthy?

Also noting that the parent comment says that they stopped checking the bills. There are cases in business where people know this dynamic and once they aren't being checked they tend to take more chances. Hence even the person who relates "he is great and I trust him" may not be aware of what is currently happening with billing (if they are not checking).

Re: Ways That Startup Lawyers Overcharge

#18
post #8

Half of these are unethical (i.e., they violate actual, binding rules of professional ethics with actual consequences). The other half should be spelled out in the engagement letter. If you don't like it, tell your lawyer -- we really will negotiate on these issues.

"Half of these are unethical"

Which ones exactly and why? (Serious question if you are making a general statement please back it up with more information.)

Re: Ways That Startup Lawyers Overcharge

#20
post #12

Earlier quoted context omitted.

Were you doing this as an IT consultant? Where you double billing for your time? Were you changing rates without warning?

Good point. On second thought, I think the more important issue is the one 7Figures2Commas raised: If you have a lawyer who does the worst of this stuff, you have the wrong lawyer. With that said, my blood pressure would definitely climb if a client challenged a 6-minute incremental bill for a phone call that was only 2 minutes.

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