Legal problems happen, but unfortunately, most people think they happen to other people and so they don’t plan for them. The biggest hurdle for most people is overcoming the initial up-front cost of hiring a lawyer. Traditionally, lawyers work on an hourly basis and pay themselves out of their client’s money that they hold onto in an escrow account. Typical initial escrow account deposits are several thousands to several tens of thousands of dollars as there needs to be enough in escrow to cover all of the expected work that is to be done in a month. The lawyer then performs work and bills the client at an hourly rate. This hourly rate could be as low as $100.00 or as high as $500.00 an hour or even higher. The total bill is paid out of the escrow account and the client reimburses the escrow account by the amount of the bill.
The biggest problem with the traditional hourly model is the initial upfront cost to the client. A lot can happen in a month and the initial meeting (where the contract is signed) is when the attorney has to determine what amount the client will need to place in escrow. Because the? lawyer bills by the hour, each month will be different. One month the lawyer may only work an hour and a half and send the client a bill ranging from $150.00-$750.00?. But the next month the billable hours could increase to 20 hours with the bill skyrocketing to between $3,000.00-$10,000.00. And since most lawyers’ invoices are due within 30 days, that’s a huge difference in a month.
The way that we have addressed this problem is to bill against our clients’ escrow accounts every week instead of every month. By billing every week, we can lower the amount of money required to be in the escrow account. Additionally, by receiving invoices every week, clients get more frequent updates on what is occurring on their case.