Policy Statement Regarding Billing and Payment Procedures
TABLE OF CONTENTS
- Terms of Engagements
- Performance of Services
- Methods of Computing Fees
- Hourly Rate Billing Procedures
- Reimbursement of Expenses
- Arbitration Clause
- Supplemental Services
- Payment Terms
- Retainer Deposits
- Termination of Engagement
- Ownership of Files
- Services for Related Entities
- Personal Guaranties
- Texas Lawyer's Creed
- Notice to Clients
- Privacy Policies
It is the policy of our firm to strive to assure that our clients clearly understand how we bill for our legal services and disbursements advanced by the firm on their behalf. Our experience shows that policy procedures for billing and payment vary from law firm to law firm. This statement is intended to explain our standard policies and procedures concerning invoices for services rendered and expenses incurred by us on your behalf as well as our policy concerning payments to the firm. We believe that understanding such matters upfront is essential to a harmonious professional relationship.
Consequently, we encourage you to ask any questions needed to obtain a full understanding of our policies which may not be understood solely from this statement.
- Terms of Engagements.
In consideration of the services we are to provide, unless other arrangements are made in specific instances, it is understood that clients engaging our firm to perform legal services have agreed to pay legal fees based on our hourly rates, in effect from time to time during the course of the engagement, for the attorneys and paraprofessional personnel of this firm who perform such services.
Copies of this policy statement will be provided to existing and prospective clients of our firm. In addition, existing and new clients of the firm will be requested to execute engagement letters acknowledging the contents of this policy statement, setting forth the terms of our engagement in particular instances and describing the manner, if applicable, in which such terms may differ from the standard policies and procedures set forth in this statement. In any event, however, unless indicated to the contrary in writing, it will be understood that services which we are asked to perform on behalf of our clients will be rendered pursuant to the terms and conditions of this statement.
- Performance of Services.
Most services required by our firm's clients will be performed by lawyers, legal assistants and administrative personnel who are employed by the firm on a full-time basis and supervised by our attorneys. All individual client matters are assigned to specific lawyers who are responsible for assuring that the matters are addressed in a timely and professional manner. The firm also has referral and working relationships with other attorneys, subject matter experts, briefing clerks and legal assistants who are occasionally requested to assist the firm's personnel in serving firm clients. The determination of the appropriate strategy for staffing individual situations from sources both within and outside the firm is based generally on considerations of experience, expertise, time availability and billing efficiency. The overall goal in such situations is to utilize the resources available to the firm in a manner which provides our clients with high quality, timely and cost-effective services which are commensurate with the client's stated objectives.
In cases where the services obtained from such sources outside the firm are expected to involve significant costs, the client's approval will ordinarily be sought in advance. Generally, fees and expenses of such referral sources will be included in the firm's bills to its clients, but statements may be rendered directly to the clients by the individual referral sources in particular situations. Ultimately, however, our firm will be responsible for assuring that services are being performed to the client's satisfaction and for addressing any questions which may arise in that regard.
- Methods of Computing Fees.
Our firm follows the canons of professional conduct regarding the reasonableness of fees charged to our clients. Under these rules, the factors to be taken into account in determining the reasonableness of fees in particular instances include the following: (a) the type of matter involved, whether it is a simple and routine matter, or whether it is a complex, highly technical matter; (b) the time and labor required; (c) the expertise of the attorneys working on the matter; (d) the amount of money involved and the results obtained; (e) the likelihood that the employment in question will preclude other employment of the lawyer; (f) fees for similar services in the local area; (g) the time limitations imposed by the client or by circumstances; (h) the nature and length of the lawyer's professional relationship with the client; (i) the experience and ability of the lawyer and whether work on the matter may be delegated to staff personnel or other less senior attorneys; and (j) whether the fee is fixed or contingent. Our firm assigns standard hourly rates to time-keeping personnel employed by or associated with the firm which have been determined by taking the foregoing factors into account.
Several methods are available to our clients for determining the fees to be charged for our services in particular instances. Generally, our fees will be calculated on the basis of the time expended on the client's matter in accordance with our hourly rates as determined in accordance with this policy statement or an engagement agreement made in advance. In certain hourly rate billing arrangements, agreements may also be made in advance that our fees will be subject to maximum and/or minimum amounts.
- Hourly Rate Billing Procedures.
The standard method of computing fees for legal services rendered by our firm with respect to particular client matters is to record in quarter-hour increments on a daily basis the time spent by each person performing services in connection with such matters (whether such services be telephone or email consultations, office consultations, research, drafting documents, travel or the like), and to total the time expended at the end of each billing month. There is then applied to the time so computed the applicable hourly rate for the respective individuals who performed service on such matters. Unless otherwise agreed in particular instances, our standard hourly rates are utilized for such purposes.
Our hourly rates change from time to time as warranted, but the current standard rates for the personnel employed by or associated with our firm are as set forth on a Rate Schedule that will be furnished upon request.
We occasionally adjust our hourly rates for some personnel to reflect particular circumstances, but our general practice is to evaluate our hourly rates for individual time-keeping personnel annually in January of each year to determine whether adjustments are appropriate to reflect additional knowledge and experience acquired during the preceding year or to reflect changing market conditions. Any such adjustments in our hourly rates are applied to services rendered during the month in which such adjustments become effective and thereafter. Unless otherwise agreed in specific instances, any such adjustments in our standard hourly rates will not be subject to prior client approval. Notice of any such adjustments in our hourly rates will be provided, however, to those clients with whom we have engagement relationships utilizing pre-set rates.
Because our hourly rate fees are based on the time expended, it is beneficial for our clients to make efficient use of our time, to be conscious of the time which may be required for particular tasks we are requested to perform and to define clearly for us the scope of the work which we are to perform at the outset of each project where our clients have preconceived budgetary notions. Where no budgetary limitations are discussed in advance, we will use our best judgment as to what efforts are necessary to achieve the desired result.
Since for the most part we base our fees on personnel time expended, our production capacity is limited by the time available to perform legal services, so it is our practice to apply the applicable hourly rates, plus travel expenses, for any time we are required to travel out of the office. This practice is based on the assumption that most companies, firms or individuals are not compensated on an hourly basis (since they are not personal service businesses) and that it is more economical for them to attend meetings at our offices. Nevertheless, if it is desirable for us to attend meetings out of our offices, we are always willing to do so and frequently do so. We retain detailed records of time spent on any matter or transaction, which are the basis on which our hourly rate statements are computed.
If, at any time, a client has questions about the basis of compilation of any statement for services or expenses, we will be happy to meet with the client to assist the client in understanding the fee computation. We urge our clients to raise questions as statements are rendered in order for us to be able to gain a mutually satisfactory feeling for our financial relationship as well as our professional relationship.
- Dispute Regarding Fees
Our Firm’s standard engagement letter includes a provision whereby disputes over most issues with our Firm will be submitted to arbitration. That arbitration agreement provides that a single arbitrator be used who is a member of the State Bar of Texas. The arbitration will be held in Parker County, Texas and will be conducted according to the rules of the American Arbitration Association. If the Firm and a client cannot agree on the arbitrator, the senior district judge of Parker County will be asked to select the individual who will arbitrate the dispute. The arbitration agreement found in our engagement letter is at the bottom of this section.
Clients must truly understand the nature and effect of this agreement whereby the clients and the Firm agrees to submit all disputes with our Firm to arbitration. There are conditions and limitations on the use of mandatory arbitration provisions. Clients are encouraged to seek independent counsel if they have any questions or need further advice on our arbitration agreement. Some jurisdictions, other than Texas, even say that consultation with independent counsel concerning the advisability of signing an arbitration agreement is required.
Thus, we want to use special care to make sure that you understand our arbitration agreement. We are not requesting an agreement to arbitrate our disputes in order to limit our liability or to shield our Firm from liability that we would otherwise be exposed to under common and/or statutory law. Such a provision and the use of arbitration agreements may not be used for such purposes.Advantages:
- Arbitration is more private than a public legal proceeding or trial.
- Arbitration may be, but is not necessarily, more efficient and less expensive than handling a dispute through litigation. Arbitration is often less formal and the costs and time of getting to a decision may be less than a regular litigation proceeding.
- The amount of time at the arbitration itself may be more abbreviated than trying a case in front of a judge and a jury since, again, there is less formality in the arbitration context.
- Arbitration may be more costly and time-consuming than a non-jury trial. An arbitration proceeding may also be more expensive due to the cost of the arbitrators, who typically charge a significant fee for their work on the matter.
- You may believe that an arbitration proceeding in front of a lawyer-arbitrator may not be as fair as bringing the dispute in front of a jury of your peers or a judge. You may believe that a lawyer-arbitrator will be more biased in favor of our Firm since some argue “lawyers favor lawyers.”
- You are waiving a significant right, that is, the right to a trial by jury. Only one person will make a decision from which an appeal may not be taken.
- There is a possible reduced level of discovery, i.e., you may not be able to gather as much information regarding our dispute as compared to a regular litigation proceeding.
- Arbitration proceedings are usually less stringent in applying rules of evidence. In other words, the arbitrator may allow more evidence, testimony and documents to be considered than a judge would allow in a court room or in front of a jury.
- You may not have as much ability to appeal an arbitration ruling which is unfavorable. The ruling may only be challenged on very limited grounds. Thus, both parties should expect the arbitrator’s ruling to be final, even if he/she makes a mistake or a ruling one side thinks is unfair or not supported by the law.
- By selecting an arbitrator, either party may find themselves in front of an individual who, due to knowing one or both parties, is biased for or against one party whereas our district judges are generally known to have good, unbiased track records.
- You must share in the payment of arbitration fees/costs whereas the expenses of the trial setting itself are less, though you will likely incur attorney’s fees in either event.
Our arbitration agreement:
At either party’s request, any and all disputes arising under or relating to Client Engagement Letter and the legal services to be rendered, including but not limited to fee and expense disputes, legal malpractice claims and claims of fraud, constructive fraud, breach of fiduciary duties, breach of contract or any others, will be submitted to a single, mutually-agreeable individual admitted to the State Bar of Texas (the “Arbitrator”). The parties shall appear before the Arbitrator in a mutually-agreeable location in Parker County, Texas. The Arbitrator shall use the rules and guidelines of the American Arbitration Association for prompt resolution. If you and Firm cannot agree upon the Arbitrator, the selection of the Arbitrator shall then be made by the senior district judge of Parker County, Texas. You and the Firm agree to be bound by this provision and the results of such arbitration.
By signing [the Client Engagement Letter], you understand and agree that you have the right to consult independent counsel regarding this provisions and that if accepted, this provision will eliminate your right to a jury trial in any and all disputes against the Firm or its attorneys. You should also understand that pre-arbitration discovery is generally more limited than and different from court proceedings. The Arbitrator’s award shall rely on evidence admissible in a district court and the substantive law of the state of Texas. Further, a party’s right to appeal the Arbitrator’s final ruling is very limited.
- Reimbursement of Expenses.
Amounts advanced or paid to third parties by us on behalf of our clients for expenditures such as photocopying and telecopying charges, postage charges, shipping and delivery charges, courier expenses, travel expenses, printing costs, filing fees, computer research costs, court reporter fees, expert witness fees, employee overtime and expense reimbursement costs and the like are considered to be reimbursable by our clients unless otherwise agreed in particular instances and are generally included in the statement sent to the client for the month in which such amounts are advanced or incurred. Certain costs which are incurred internally for items such as photocopying, telecopying and long distance telephone costs may be billed to our clients at rates comparable to third-party charges, which do not necessarily reflect the firm's direct out-of-pocket expenses and may include amounts which represent recovery of the administrative costs and investment expenses which the firm has incurred in making such services available and accounting for such expenses.
Unless otherwise agreed in connection with specific engagements, it is understood that our firm has no obligation to advance any of the foregoing costs on behalf of our clients. We may require that the clients make arrangements in advance to fund such expenses either by means of an escrow deposit with our firm or by means of direct arrangements with third-party vendors or a combination of such arrangements.
- Supplemental Services.
Our standard policy is that any involvements which our firm may have with regard to subsequent disputes between our clients and third parties involving matters with respect to which we have provided legal services, including our providing documents or testimony and responding to interrogatories or other discovery, are a part of the engagement, and that we are entitled to be paid for our time, services and expenses attributable to such activities.
Unless otherwise specified by the terms of our original engagement in particular instances or subsequently agreed in connection with the performance of such supplemental services, it is understood that our fees for any such supplemental services will be determined on the basis of our hourly rates which are in effect at the time such supplemental services are rendered regardless of the billing arrangement which was applicable in connection with the original engagement.
- Payment Terms.
As to the method of billing and payment, our practice is to bill monthly where our fees are based on hourly rate billing. We have found this procedure is desired by clients so that they will know on a regular monthly basis what their current total legal fees are and so that they will not receive any accumulated surprises. We normally close our books on or about the last day of each calendar month and render statements on or before the 5th day of the next calendar month. Unless other arrangements are mutually agreed upon in writing in specific instances, that payment of statements is due within ten (10) days after the date the statement is received.
Although our standard practice is to bill and collect monthly, on occasion a transaction may arise in which it is agreed that it would be more appropriate to defer the billing until a later date. In such instances, we reserve the right to add interest at a rate of one percent (1%) per month (or the maximum rate permitted by applicable law, if lower), compounded monthly, to all accrued and unbilled balances, beginning the first month following the month in which such charges are actually incurred.
It is also understood that we reserve the right to add interest at the rate of one percent (1%) per month (or the maximum rate permitted by applicable law, if lower), compounded monthly, to all billed and unpaid balances beginning thirty (30) days following the date upon which such charges are actually billed.
It is also understood that this firm shall be entitled to recover reasonable attorneys' fees and expenses and court costs in connection with any efforts necessary to collect amounts due and unpaid pursuant to any engagement between a particular client and our firm.
- Retainer Deposits.
We frequently will ask that clients deposit a cash retainer with us as security for payment of our fees and expenses. In addition, when representing new or existing clients on large projects which will require substantial personnel and costs over a long period of time, such as significant litigation, major real estate acquisitions and complex loan workout negotiations, we may require a project retainer. Our practice is to deposit retainers in a trust account and to transfer "progress payments" from our trust account to our operating account as segments of the work are completed or other appropriate billing stages are attained. A detailed accounting will be provided of the application of all funds so transferred. If the work for a particular client or project continues over an extended period of time, we may require and bill additional retainers monthly until the work is completed.
- Termination of Engagement.
We reserve the right to suspend or terminate any representation in progress, including withdrawal from pending litigation, in the event of non-payment of our statements within twenty (20) days after a statement is due. In the event that we exercise such right to suspend or terminate work in progress or withdraw from pending litigation, we will be entitled to receive from the client a written acknowledgment that we are permitted to exercise such suspension, termination or withdrawal right under the terms and conditions of our engagement with the client. In addition to our right to withdraw from a representation engagement at any time if the payment terms described above are not satisfied, it is understood that, subject to certain exceptions with respect to contingent fee matters, our clients reserve the right to terminate their engagement of our firm at any time, upon payment in full of fees and expenses accrued up to that time.
- Ownership of Files.
We consider the files which are generated and maintained by us in connection with services for our clients to be the property of our firm and not the property of our clients, except for documents and materials ("Client Papers") which fall within the following categories: (i) original documents and materials which are furnished to us by our clients; (ii) original documents and materials, such as executed contracts and corporate records, which are prepared by us for our clients; and (iii) other documents and materials which may affect our clients' rights or the exercise of such rights. We will assert and maintain a possessory retaining lien on all such Client Papers as security for the payment of our fees and expenses, except to the extent that retention of such Client Papers would prejudice the rights of our clients. In the event of a termination of our engagement, except as stated above, we will release such Client Papers and copies of the materials in our files to our clients only upon (i) written request and instructions from the client; (ii) payment in full of all of our unpaid fees and expenses; and (iii) payment in advance of all reasonable copying costs which will be incurred in making copies of the Client Papers for our permanent files and in making copies of the other materials in our files for the client. Client papers still in our possession after more than five years after the termination of our engagement may be destroyed if not returned to the client upon its request.
- Services for Related Entities.
It is contemplated that we may be requested on occasion to render services for individuals, partnerships, corporations and other entities which are affiliated with our principal client in a particular engagement. In such instances, unless otherwise agreed in advance, we will consider all participants in the transaction to be jointly and severally liable for the payment of our fees and expenses as outlined in this statement and the relevant engagement letter. Unless other arrangements are made in advance, however, we will render our statements to, and will expect full payment from, our principal client and will not be responsible for honoring any internal cost-sharing arrangements which may be in effect between the participants in the transactions.
- Personal Guaranties.
We understand that individuals whom we consider to be our clients may sometimes request statements for our services to be rendered to entities which they control and/or through which their business activities are conducted. In order to avoid any confusion in this regard, however, and in recognition of the fact that our services will be primarily for the benefit of the individual client, we may ask that our engagement be executed by both the entity and the individual in order to acknowledge that both the individual and the entity will be responsible for payment of our fees and expenses in connection with the engagement.
- Texas Lawyer's Creed.
We are required to advise our clients of the existence of and our obligations under the Texas Lawyer's Creed. A copy of the complete Creed is attached as Attachment A. Pursuant to the Creed, our clients are advised as follows, which advice is acknowledged by the execution of engagement letters contemplated in this policy statement:
- Proper and expected behavior of counsel is described in the Creed.
- Civility and courtesy are expected from lawyers and is not a sign of weakness.
- We will not pursue conduct which is intended primarily to harass or drain the financial resources of the other party.
- We will not pursue tactics which are intended primarily for delay.
- We will not pursue any course of action which is without merit.
- We reserve the right to determine whether to grant accommodations to opposing counsel in all matters that do not adversely affect your lawful objectives.
- You are advised that mediation, arbitration and other alternative methods of resolving and settling disputes are available to you to resolve disputes with opposing parties.
- Notice to Clients.
We are required to provide our clients with a notice that the State Bar of Texas investigates and prosecutes professional misconduct committed by Texas attorneys. This notice is required of all lawyers in Texas. A copy of the required notice is attached to this policy statement as Attachment B and is incorporated herein by reference.
- Privacy Policies.
Our firm has adopted privacy policies in accordance with federal requirements governing providers of financial services. Our policies are described in the "Notice of Our Firm's Privacy Policies" which is attached to this Policy Statement as Attachment C.
It is hoped that the foregoing discussion will anticipate most, if not all, of the issues which will arise in connection with billing and payment procedures of our firm. Clients having general or specific questions regarding the policies and procedures set forth above are encouraged, however, to raise those issues with the firm at an early date in order to resolve any such questions as soon as practicable.