Because lawyers are expensive, nonprofit organizations often bypass these much-needed services in order to save money. But with so many options available for obtaining legal services, your nonprofit will be able to get the legal advice it needs without breaking the bank.
Lawyers charge fees in a variety of ways. While the hourly fee is still popular, many lawyers offer alternative fee arrangements to better serve clients.
Hourly fees. A popular way that a lawyer charges for services is with an hourly fee. Hourly fees usually start around $150, and are dependent on a variety of factors, including the lawyer’s experience and geographic location. Lawyers in bigger cities will charge more than those in smaller cities, and lawyers with more experience will charge more than those with less experience. Lawyers may charge a nonprofit organization an hourly fee for initial consultations, meetings, answers to legal questions by phone or email, and litigation.
Flat-fees. Many lawyers have turned to flat-fees for certain services. The benefit of a flat-fee is that the client will know exactly what they’re paying up front, without any surprises when the bill comes. Flat-fees can be as low as $50 and as high as several thousand. Flat-fees are not appropriate for every type of service, but there are several types of services your nonprofit can take advantage of. Lawyers may charge a nonprofit organization on a flat-fees basis for 501(c)(3) exemption paperwork, contracts, business formation, intellectual property, and real estate transactions.
Hybrid fees. Hybrid fees are a way that lawyers can combine hourly fees and flat fees. Lawyers tend to use hybrid fees in litigation. For example, if your nonprofit is involved in litigation, a lawyer may charge a flat-fee for preparing and filing a complaint or answer, and then use hourly fees for depositions and trial work. The amount of these fees will vary depending on the experience of your nonprofit’s lawyer, the geographic location of the lawyer, and the complexity of your nonprofit’s case or matter.
Lawyers charge for a variety of services, from answering a phone call to driving to court. Here is a breakdown of common services your nonprofit lawyer may bill for.
Research. The law is complex and lawyers likely won’t be able to answer questions off the top of their heads. The law must also be applied to a set of facts, and often comes out different depending on the facts at hand. Because of this, lawyers will often need to conduct some level of research before answering a question. That means that calling a lawyer with the hopes of getting a quick answer is near impossible. More than likely the lawyer will need to consult with your nonprofit, get the facts, research the law, and then call you back with an answer. Lawyers usually charge for research on an hourly basis.
Phone Calls and Emails. Lawyers charge for their time, and that includes time talking to you by phone, and reading and responding to your emails. Usually if you’re calling or emailing your lawyer, you have a legal question that needs answered. In that case, you may be charged for the call or email and the resulting research. Phone calls and emails are usually charged hourly, although some lawyers may include it in a flat-fee.
In person meetings. If your nonprofit want to consult with its lawyer in person, it will need to pay the lawyer’s hourly rate. Some lawyers may charge more for in person meetings rather than phone or email communication, and some even include a minimum time, such as a one hour minimum for in person meetings. If your nonprofit needs to meet with its lawyer in person, make sure both parties are prepared so as to minimize the fee. For example, if your nonprofit needs a contract reviewed, send the contract to be reviewed prior to the meeting. It will take far too much time for the lawyer to review it during the meeting.
Legal services. Nonprofits will need a variety of legal services, including business formation, contracts, intellectual property, and dispute resolution. If your nonprofit’s lawyer charges hourly for these services, it may be difficult to determine how much is involved in a task and how long it will actually take, so the lawyer will likely give an initial estimate, such as two to four hours, and that estimate may change as the lawyer begins work. If your nonprofit’s lawyer charges a flat-fee, be sure to know exactly what is and is not included in that fee. For example, if the lawyer is reviewing a contract, the flat-fee may cover the review only, not updates or changes to the contract. Those updates and changes may need to be paid for separately.
In addition to the fees your nonprofit will pay its lawyer, other costs can come up that should be considered.
Filing fees. Every piece of paperwork that your nonprofit files with a court or government office has a filing fee associated with it. When your nonprofit forms its nonprofit corporation at the state level, files paperwork with the Internal Revenue Service, or becomes involved in litigation, it will need to pay a filing fee for each. A lawyer usually won’t advance these fees on behalf of a client, which means your nonprofit will need to be prepared to pay the fee upfront.
Postage, copying, and other miscellaneous fees. Lawyers may pass the costs of representation onto your nonprofit, especially if it is involved in litigation. These costs include postage and copying, and even travel expenses if the lawyer has to travel outside of their usual practice area. As these fees can get expensive, it’s important to know what your lawyer charges for before your nonprofit agrees to the representation.
Between lawyer fees and additional costs, the expense of legal services can add up. Many lawyers, especially ones that work with nonprofits, offer different options to help deal with that expense.
Reduced fees. When it comes to representing nonprofits, lawyers may be willing to work for reduced fees. Your nonprofit may be able negotiate a lower hourly rate or flat-fee than what is advertised. Many lawyers are willing to reduce their fees when they know their services are going towards a good cause and one that they believe in.
Limited scope representation. Your nonprofit does not have to hire a lawyer to complete every task for it. Instead, look to limited scope representation, where the lawyer handles only a certain aspect of the matter. For example, when filing for 501(c)(3) exemption, your nonprofit’s board members could prepare the paperwork and then hire a lawyer for the sole purpose of reviewing the paperwork before filing. Your nonprofit will be able to save on legal fees, while still obtaining the benefit of using a lawyer.
Payment plans. Your nonprofit’s lawyer may be willing to accept a payment plan, especially when the work entails higher fees. For example, if your nonprofit becomes involved in litigation, those fees can easily run several thousand dollars. Your nonprofit may be able to pay that amount over a few months, rather than all of it up front.
Professional legal services can be expensive, but there’s no need to avoid them. By following the tips in this article, your nonprofit will be able to obtain necessary legal services without going broke.