The cost of attorney’s fees understandably concerns most people going through or anticipating a divorce. This is because we’ve all heard horror stories about outrageous fees charged by conventional hourly attorneys. In fact, the statistically “average” divorce reportedly costs each litigant almost $20,000. Though this figure is shocking considering the simplicity of the “average” divorce, it actually represents a fraction of what you should expect to pay if you retain a typical divorce attorney in Scottsdale who bills hourly.
As part of our firm’s commitment to creating transparency in a profession that has long thrived on antiquated, anticompetitive business practices, we are going to examine real fee agreements from other law firms in Phoenix and the surrounding areas. Litigants exchange fee agreements as part of answers to uniform family law interrogatories during family law litigation.
This particular fee agreement came from a pretty simple divorce involving almost no assets and custody of one minor child. To be perfectly honest, the facts of this case made it simpler than the “average” divorce. Nevertheless, here are opposing counsel’s real billing policies:
Minimum Engagement Fee
“Attorney(s) shall receive a Minimum Engagement Fee in the amount of $15,000.00 payable date of hire (date), plus costs as listed below. The entire minimum engagement fee shall be paid to Attorneys, prior to the commencement of any work by law firm.”
So, to even accept this relatively simple case, the attorney required $15,000 upfront.
“$3,500.00 of Minimum Engagement Fee shall be non-refundable and is earned upon receipt to secure the availability of the Attorney(s) and represents approximately 8.5 hours of work. These monies secure the Attorney(s) availability and representation for a period of no less than fourteen (14) days and are designated for the initial preparation of any documents to be filed with the Court.”
In other words, the client can expect the initial pleadings, form documents likely prepared by a paralegal, to cost at least $3,500. This is absolute lunacy.
Hourly Rate and Minimum Charges
“The current hourly rate of $375.00 – $450.00 for [redacted].”
Truthfully, this hourly rate is fairly typical for a divorce attorney in Scottsdale, but we include it anyway to illustrate how quickly the fees can escalate, especially when an attorney employs minimum charges for particular tasks.
“There are minimum hourly charges for certain types of services commonly rendered and Client agrees that these are reasonable. They are as follows:
i. Initial Pleadings [1.0 – 2.0 hours]
ii. Initial File Set-Up [0.5 hours]
iii. Court Filing Preparation [0.3 hours]
iv. Court Appearances [1.0 hours]
v. Financial Affidavit [1.0 hours]
vi. Initial Disclosure Statement [4.0 Hours]
An initial disclosure statement is a fairly basic document sent to the opposing party that lists a party’s witnesses and exhibits at that time. Using this attorney’s hourly rate, the preparation of the initial disclosure statement would cost the client between $1,500 and $1,800. So, if you are keeping score at home, the opposing party in this case owed between $1,500 and $5,300 before this case really started. This total excludes administrative time, which we’ll get to now.
“Law clerk and/or litigation coordinator time, the hourly charge is $150.00 per hour.”
For those unfamiliar with what a “law clerk” is, it is generally an entry level clerical position that requires no special education or training. Often, law firms pay these individuals $10.00 – $12.00 per hour because of limited tasks they are qualified to perform. Of course, this attorney bills the client roughly ten times this rate, because, why not?
“Client understands that once a Hearing, Mediation/Settlement Conference or Trial date is set, we will require you to pay all amounts then owing to us and to deposit with the firm an additional amount of money into Attorney(s)’ trust account for preparation of said matter as follows:
$ 3,500.00 Hearings (Including Temporary Orders)
$ 3,500.00 Mediation/Settlement Conference and/or Deposition
$ 7,500.00 Trial/Evidentiary Hearing”
Summarily, this section of the fee agreement means that even the simplest divorce where the parties were unable to settle would cost at least $16,000 ($3,500 minimum engagement fee earned upon receipt + $1,500 – $1,800 for initial disclosure + $3,500 ADR fee + $7,500 trial fee) or $19,500 if the client also sought temporary orders.
Keep in mind these minimum estimates are for attorney’s fees only and exclude the client’s out-of-pocket costs. The estimates also exclude billing minimums for “court filing preparation” (whatever that even means), completing a financial affidavit, administrative tasks, and any time spent communicating with the Client, which conservatively would add a few thousand dollars to the already astounding total. Oh, and there is compounding interest on unpaid client fees.
“Client agrees to pay interest from the date of the billing until paid in full on the outstanding balance owed at the rate of 18% per annum, compounded monthly.”
That’s right. This attorney charges the client compound interest. Rather than continuing this ridiculous arithmetic, we consulted the opposing party’s Affidavit of Financial Information, which reported more than $40,000 in attorney’s fees before discovery was even completed. Opposing party’s fees may realistically exceed $100,000 before this litigation concludes. Unfortunately, these billing policies are not unusual; policies like these represent the danger of an hourly divorce lawyer.
Fortunately, there are alternatives. We offer affordable flat fees in divorces and other family law litigation that typically save our clients thousands or even tens of thousands of dollars.
Contact us by telephone, text message, or e-mail for a complimentary consultation.
Scottsdale: (480) 550-8697
Phoenix: (602) 730-6436