Jim was ready to get his will drafted. He picked a lawyer from an online search and met with him at the lawyer’s office. The lawyer quoted a fee to prepare the documents, they shook hands and Jim walked out the door confident everything would be handled.
Anyone see a problem here?
Let me help you out: There was no written fee agreement.
That is a huge red flag. When you hire an attorney for services, especially for document preparation, there should be a written fee agreement that confirms services and fees.
Here is what the fee agreement should do at a minimum.
Identify the client. This confirms who the lawyer is representing. If you are hiring the lawyer in a fiduciary capacity, such as a power of attorney agent, trustee or executor, then that needs to be stated.
Describe in detail the services the lawyer is providing. Will she prepare an estate plan, meet with your advisers such as CPAs and financial planners, draft certain documents, render ongoing advice or assist in funding a trust or changing beneficiary designations? Set it out clearly.
State how fees will be charged. Estate planning lawyers usually charge flat fees, hourly fees or a combination of the two. A flat fee is the total amount that will be charged for the services that are being rendered. An hourly fee is based on actual time spent. A combination might look like drafting and preparing the documents for a flat fee, and then charging an hourly fee for any further meetings or changes to the documents after the initial draft.
State how the fees will be paid and are earned. Many lawyers require payment of the entire flat fee up front and then describe when the fee is earned. For hourly fees, most require a retainer be paid before any services are rendered, and then it is charged against as services are rendered.
Describe the time for performance for each of you. When are you expected to provide additional information? When will your documents be prepared?
Provide for confidentiality. Your communications with your lawyer are confidential, but you may want to allow your lawyer to communicate some information with your financial advisers, CPAs or select family members. This should be set out in writing.
Explain the lawyer’s document retention policy. Some lawyers keep original paper copies of your documents, some keep electronic copies and some do not keep copies at all. You are ultimately responsible for keeping track of your own documents, so you need to know what the lawyer keeps.
Explain if the lawyer is providing tax advice. A lot of attorneys do not regularly render tax advice. You should be advised if the advice given to you includes tax advice.
Describe how you and the lawyer will communicate. You may feel secure with email communications, or you may just want snail mail. This should be addressed in the fee agreement.
Contain a State Bar-required disclosure for ethics complaints. This could also be posted in the lawyer’s office or contained in a letter, but it is required to be set out in writing.
Have a place for the date and your signature. You should read and sign the fee agreement before you pay the lawyer any money. Most attorneys will not open a client file or render services without a signed fee agreement and payment.
You have a business relationship with your lawyer. Treat it that way.
Attorney Virginia Hammerle is board certified in civil trial law by the Texas Board of Legal Specialization and an accredited estate planner. To receive her monthly newsletter, contact her at legaltalktexas@hammerle.com or visit hammerle.com. This column does not constitute legal advice.
