Lawyers are often asked to estimate how much it will cost to pursue a given strategy or complete a particular legal project. Clients may be wary of giving lawyers a blank check when performing work, and clients often want to understand how much money they might need to pay if a matter proceeds in a certain way. Also, it can be difficult for lawyers to accurately estimate the cost of a given legal task since legal matters are unpredictable, and it can be difficult to provide an accurate estimate of cost. However, lawyers can keep some things in mind when conveying estimates of legal costs so that clients have the least likelihood of being upset at the final cost of the work.
Sometimes, lawyers wish to underestimate the amount it might cost to pursue a given legal strategy. Attorneys may believe that a client would not hire a lawyer if they think that the expense is too high, so a lawyer may wish to understate the estimated cost for services. Moreover, lawyers may be competing for legal work, and it might be better to quote a lower cost to pursue a strategy hoping that a client will pick the lawyer who said they could complete a project at the lowest cost. Still other lawyers may believe it will not be much of a big deal if the lawyer goes over the estimate so there are not too many problems to underestimating the cost of legal services.
However, whenever possible, it is usually best to give an estimate that has a range which includes a high-end figure if a particular project is exceptionally expensive to complete. This may give some clients sticker shock, and they may not wish to pursue a given strategy when confronted with the possibility that this will cost the client a bucket of money. However, clients should have as much information as possible when making choices about legal strategy, so quoting a worst-case scenario is usually the right thing to do. In addition, this makes it less likely that a client will feel upset when they end up paying more than expected at the end of a representation, which can help a lawyer establish a long-term connection with the client.
Another helpful strategy when estimating legal costs is to refrain from providing a single figure for a given legal project. Many lawyers would rather provide an estimated cost for each of the particular tasks associated with a project so that a client can digest cost information in smaller bits of information. When I was an associate at an insurance defense firm, some of the insurance companies made us prepare budgets so that they could estimate how much each matter would cost to litigate. From my experience, insurance companies were much more likely to approve larger budgets if they could see all of the tasks that would be incorporated into the representation and the cost of each task.
Usually, I would list all of the stages of litigation through discovery, dispositive motions, trial, and appeal. I would then break down these categories further into the number of depositions, types of written discovery, and other subparts. I would then provide a range of cost for each of the stages so that the estimate was completely transparent. At the end, I had a global range of how much the entire matter could cost to litigate, which I arrived at by adding all of the costs that I broke down in prior sections of the budget. Lawyers should try their best not to give clients an estimate of legal costs without breaking things down into tasks since this a much more difficult pill to swallow than understanding all of the steps involved in a matter and how much each task costs.
All told, estimating legal costs can be very difficult, and lawyers can implement a few different strategies to lessen client dissatisfaction. Usually, being transparent about worst-case scenarios and breaking down budgets whenever possible helps lawyers convey cost information with the lowest chance a client will be disappointed.
Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at [email protected].