The difference between attorney fees and litigation costs
Smith & Dietrich Law Offices PLLC is a new firm. One of the necessary tasks for a new law firm is to establish pricing for its legal services. After all we are in business and need to generate a revenue stream to cover our business costs (insurance of all sorts, office space, software subscriptions, quill pens, powdered wigs, legal pads, attorney compensation, etc). We don’t want to use 10 page fee agreements, but we do want to transparently price our services and ensure that our clients understand the complete cost of their case. Smart attorneys have already done the hard work of trimming the traditional multipage fee agreement to a more digestible length and their offerings are readily available on the web. These served a useful starting point and did a good job of describing the “attorney fee” arrangement. However, I thought that the examples did not adequately describe the additional potential financial impacts of litigation “costs” to the client. In the version we settled upon, we elaborated upon the client’s obligation to pay case costs but even that seemed abbreviated in my opinion (I can understand how these fee agreements things grew to 10 + pages!). Like I said earlier, Smith & Dietrich Law Offices PLLC does not want such clunky agreements. So, this post is intended to help our clients and potential clients better understand their obligation to pay “costs.”
Costs, in this context, refer to the price of items other than the attorney’s fee, that are incidental to client’s case. Litigation is an expensive process for the average person. For example, when you file a typical civil case in Thurston County, the clerk charges a filing fee of $240. Depending on the type and complexity of the case there may be many other filing fees required before the case is finished (Costs_TC_2016). A short deposition can cost hundreds of dollars for court reporter appearance fees and transcription charges. Remember these costs are in addition to your agreed upon legal fee, which compensates only the law firm for its service.
When litigating in the Washington state superior court system, a successful litigant is entitled, pursuant to statutes like RCW 4.84.010 to recover specified costs including filing fees, service of process fees, publication costs, notary fees, the reasonable costs of obtaining evidentiary reports and records, statutorily prescribed attorney and witness fess and some deposition transcription costs. Because of limitations in the cost reimbursement statutes, in virtually all litigated cases, the client’s actual costs will exceed the recoverable costs. Under lawyer ethics rules (RPC 1.8(e)(1)) clients must bear ultimate financial responsibility for the litigation costs although the lawyer can (and often does) pay the cost initially before seeking client reimbursement.
High litigation costs in our state court system are a fact of life and have only increased over my career. So, the wise consumer client should ask any attorney with whom they are contemplating do business to provide an estimate of the costs, if any, they will incur during the representation. Litigation cost estimates like any forecast are almost guaranteed to be wrong, but a reasonable estimate can provide essential information for the client to use in their decision making process. And, by all means, if you have any questions about potential incidental costs regarding your matter, ask us. We will gladly explain.