Retainers and legal fees: Costs and expenses from the lawyer’s POV

The financial accounts he kept in these early years of manhood reveal a meticulous man much given to recording every detail of his expenditures. If, when traveling on legal business, he had his clothes washed and paid a shilling to the washer-women, that fact made its way into his records. If he had his horse shod, that too was recorded. – Robert Middlekauff, on Thomas Jefferson in The Glorious Cause.

Did Thomas Jefferson write the first “costs and expenses” paragraph in a retainer letter? Because lawyers keep records of case costs precisely the way Jefferson did.

Long before computers and law programs like Amicus Attorney – Practice Management Software (which, among other tasks, keep time and cost records and print out monthly invoices), I had a temp job at a small, classy entertainment law firm that represented rock stars.

The brash rock lawyer for whom I worked spent a lot of time on the telephone. His telephone was at his left hand. At his right hand was a small box containing time slips. A clock was directly in front of him.

When he made or received a phone call he’d pick up the telephone with one hand, and with the other, simultaneously (it was something to watch!) pluck a time slip out of the box. As he began the conversation, he’d note on the time slip the client’s name and client number. When he finished the call, he’d glance at the clock, determine the time he’d spent on the call and write it down.

Knocked me out. I used to sit there laughing at him, at the greed. No wonder I later found myself devoted to lawyers whose primary passion was the case, not the billing.

Note: To lawyers, “time spent” is calculated in tenths of an hour, i.e., six minutes, at minimum. Thus, a one-minute call is charged as .10. A seven-minute call is charged as .20.

When I communicated with Miss Billy on the Skush-O’Brien lawsuit—primarily by this new-fangled thing called e-mail—I’d mentally bill myself in advance, thinking, “OK, is my question to Miss Billy really necessary, i.e., is it worth $28.50?” For $28.50 I’d often ask and answer the question myself.

But as you know, time records are not normally applied to personal injury-contingency cases since the lawyer’s time will be compensated out of the 33-1/3 percent he’ll receive at the end of the case. (Although maybe Foot Lawyers LLP are keeping proactive time records in my lawsuit, in the hopes that twenty years from now this thing explodes into a million dollar settlement after all their hard, underpaid labor. Three years and one month post-broken metatarsal, it’s not my hope.)

But any law firm, just like Tom Jefferson, does keep a detailed record of expenses for each case. At “my” law firm, I was the computer cost management program. Each month I plucked at our records, bills and credit cards and distributed the feathers to the proper cases.

And then, when a case settled, I categorized and added up all the expenses, drafted the distribution breakdown, added everything up backwards and forwards, went over my calculations with Dave the Dude—who somehow always managed to find some mistake in my calculations—and then wrote the checks.

Here again is that costs and expenses paragraph from the retainer letter:

photocopying and reproduction, messengers, long-distance telephone, telex and telecopier charges, travel expenses, word processing, special secretarial services, charges for reporters and transcripts of court proceedings, investigators, experts, witness fees, court costs, etc., as may be appropriate for this matter.

Yep. I used to gather all those costs (minus the “telex” ones; we used what was called a “fax.” Remember faxes?).

Since I once paid their bills, I know that the big ticket items in this list are human beings: court reporters, investigators, experts. But at this stage of the foot injury case, except for my own medical expenses the majority of which were paid by my insurance company, I haven’t seen one expense, paid one bill.

If I hadn’t once implemented the “costs and expenses” paragraph in the retainer agreement, if I weren’t paying monthly for the joy of suing the Skush-O’Briens, I could be lulled into financial complacency.

Next: A non-contingency, i.e., pay-as-you-go retainer agreement, such as the one I signed in the Skush-O’Brien lawsuit.

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