Interviewer: How can a client be certain that a fair price is being paid for the bankruptcy case?
John’s Answer: A client cannot be overcharged in a bankruptcy case. Bankruptcy is one of the few areas in law where fees charged by the attorney are closely monitored in each and every case by the United States Trustee’s office. If the fee charged is too high, the U.S. Trustee’s office is required to see to it that a portion is returned to the client, even if that means that it needs to file a motion before the Bankruptcy Court requesting that the fee be given back to the client. The attorneys know what these pre-approved fee amounts are and are careful to stay within these reasonable limits. Charges outside these reasonable limits seldom occur. Therefore, the idea of paying too much for a bankruptcy should be an insignificant consideration.
The reason there are set reasonable amounts in bankruptcy is so that a time-consuming fee application (detailing all of the time spent by the attorney on a case) would not be needed in every single case. Instead, there is an understanding between the Court, the Attorneys, and the U.S. Trustee’s Office as to what is a fair price for a Chapter 13 case and Chapter 7 case, or some of the matters which routinely come before the court in such cases.
Interviewer: Is it a problem for a client to pay too little for a bankruptcy case?
John’s Answer: The lawyer that consistently charges well below the average price for a bankruptcy case should be a signal to a client that there may be reason for concern. Some attorneys might price themselves well below the market price for a Chapter 7 bankruptcy case so they get the client in the door. This is known as a “loss leader” in advertising. The problem is how will a law firm make up for the fact that they charged so much less? As we all know by now, you get what you pay for.
An attorney charging significantly less often will be able to do so because they are trying to have more cases go through their firm in less time. This may be good for firm profitability but may not be good for somebody who is looking for their case to be handled with the great care that they deserve. An alternative way to increase profitability would be to place a less experienced attorney, perhaps a new attorney, on such a case. If you get involved with this kind of relationship, you should expect less personal attention and time involved in answering your important questions. My office has chosen not to practice in this way. We take pride in our work and want to have our firm be well-regarded by all clients.
We hear from many of our clients who came from assembly-line type firms how disappointed they are and how they regret that they went forward with the other firm. Many will say that their telephone calls never got returned, that the attorney was only interested in them when they had to pay for their service, etc. Some say they had a different lawyer at different times on the same case and often couldn’t talk with a lawyer even when they requested one – they were forced to speak only with a secretary or legal assistant.
At John D’Amato, PLLC, my clients all receive my personal email and can quickly email me any question and obtain a response from me, personally. An assembly line approach may be good for building vehicles, but I do not think it is good for law firm practice because the cases are not all standard and the issues are too important. The importance of the outcome for the client and his or her family is too significant.