Need a lawyer for employment contract review; how much should that cost?
December 24, 2014 8:15 AM   Subscribe

I have been recruited for a senior level management position at a startup. Things are moving fast and I'm about to hire an attorney — but I'm unsure of the fees and how much I might end up paying. Can any MeFi attorneys weigh in and tell me what a normal cost range would be for this kind of work?

So, this is the first time I've been recruited for a position so senior and so I have been advised by friends in the industry to get a lawyer. A colleague in the same industry (who has done similar high-level negotiations) referred me to his attorney for this purpose. This lawyer charges $495 an hour and is seeking a $5000 retainer. This is in New York City.

The employment contract to be reviewed is very standard, with a standard stock option grant and vesting schedule. We will probably just be negotiating to add a severance package in the contract negotiation, and possible tweak some of the language on intellectual property rights.

Here's the thing — I'm probably fine with paying ~$5000 for this attorney's services, but if it goes much over $7000-$8000 I would probably feel *less* fine. I could afford $10,000 max, but is it worth it? And I'm a little freaked out since I've never hired a lawyer before. How do I know I won't end up with a $40,000 bill that would set me way back financially for a simple contract review? I asked the attorney kind of what the ballpark for this service is and he wouldn't give me much other guidance than his hourly rate. So, freaking out a little bit, but need legal representation. What's normal?
posted by amoeba to Law & Government (13 answers total) 6 users marked this as a favorite
$40,000 would be ludicrous for an employment contract review unless you are about to be CEO of a Fortune 500 company. I don't think that is a risk.

If you are comfortable with $5,000, see if you can have it be a flat fee of $5,000. It is hard to say what is reasonable time to review your contract since I haven't seen it, but 10 hours should be pretty reasonable for review of a standard employment contract, and $5,000 would be 10 hours at his standard hourly rate. I would recommend that you provide him the contract and ask how long it should take him to review it, and then you can work out a flat rate from there. I've done contract reviews for both new and existing clients. Existing clients get my hourly rate but I do new client contract reviews for a flat fee.
posted by Tanizaki at 8:33 AM on December 24, 2014 [4 favorites]

No competent lawyer is going to take a $5000 retainer for a job they expect to cost $40K, and they aren't going to run up a $40K bill on a $5000 retainer without asking you about costs in the interm. The thing is, though, the things you're talking about in two sentences could result in hugely varying amounts of work for the lawyer depending on what you mean by them -- do you want him to directly negotiate severance while sitting in a room with your possible employers? do you want him to read the severance deal you negotiate and say whether it's okay? do you want him to make suggestions about what you should ask for in severance but otherwise remain hands off? how big are the IP changes? do they require specialized knowledge of IP law than an employment lawyer might not have? Etc.
posted by jacquilynne at 8:36 AM on December 24, 2014

$5K seems very high for a standard agreement. Shop around. From my experience, I paid about $600 total for a senior employment firm attorney to review, mark up a contract, spend 30 minutes discussing it, and suggest revised language after my discussion with the employer. The New York market *may* be double that, but definitely nowhere near $5K plus additional expenses. Caveat emptor.
posted by Atrahasis at 9:14 AM on December 24, 2014 [1 favorite]

$5,000 for this kind of service is ludicrously high, even for NYC.

I would strongly encourage you to go to Quora ( and start contacting lawyers listed there who are located in NYC and ask them who they recommend for startup employment contracts.

Startup salaries are generally much lower than those in larger companies; the lawyer you've contacted likely is used to dealing with seven-digit compensation packages for senior executives at billon-dollar companies.
posted by dfriedman at 9:25 AM on December 24, 2014 [4 favorites]

I can't speak to rough amounts, or hourly rates, and IANYL.

However, you can talk to lawyer very specifically about your cost concerns -- it sounds like there may be negotiations, which are always hard to predict, but you can ask for an estimate of how many hours it will take to review the contract and talk to you aside from negotiations. For both the review and the negotiation bit, you can ask that the lawyer call or e-mail you if it looks like the bill will be more than X so that you can talk about cost control.

If the lawyer is at a firm, you'll want to confirm who will be doing the work.
posted by joyceanmachine at 9:27 AM on December 24, 2014 [1 favorite]

Argh, missed the bit about the lawyer not being willing to talk to you about cost concerns. That is generally not a good sign. If you say to the lawyer, bluntly, "I know negotiations can be complicated, and I know documents are complicated, but I need a ballpark number for what it will cost for you to look at this and give me the lay of the land" and they won't walk you through it?

posted by joyceanmachine at 9:30 AM on December 24, 2014 [4 favorites]

Think about the cost this way: what does $5,000 represent as a percentage of your cash compensation? Don't include the possible future value of your options (you have options, right?) in this calculation. If your salary is $150,000 it's 3.333%, etc. As your salary increases and that ratio trends down below 1% (i.e., a salary in excess of $500,000 per year) a $5,000 fee for employment contract review makes sense. Not so for the salaries paid to startup employees, even senior-level ones.
posted by dfriedman at 9:34 AM on December 24, 2014

$500/hour in NYC is definitely in the normal range for a competent attorney's hourly rate. Here's some info (not too outdated) on the average hourly rates charged by lawyers.

I have no idea how long it takes to review a contract, so I'm not sure if the 5K retainer is reasonable, and I'm also concerned that the attorney can't give you some kind of ballpark - but $500/hr is normal.
posted by insectosaurus at 9:51 AM on December 24, 2014 [1 favorite]

I would call the attorney again and straight out ask them "I realize you can't give me a precise estimate, but I need to know if your services are likely to be in the 5k range or if they are likely to exceed 10k before I am comfortable retaining your services."

If he refuses to answer that question then I'd probably ask him for a referral to another attorney (obviously research anyone he refers you to thoroughly before hiring them as he is obviously not impartial here).
posted by whoaali at 10:08 AM on December 24, 2014 [1 favorite]

I asked the attorney kind of what the ballpark for this service is and he wouldn't give me much other guidance than his hourly rate.

Yeah, this is a bad sign, but I see a lot of reasons why this might happen. A big question in my mind is how senior the lawyer is in his/her firm, and how big the firm is. A junior-ish lawyer at a big firm might not necessarily have a lot of leeway to negotiate flat-fee agreements or fee caps, or might be required to jump through a lot of hoops to get it done.

Some firms (in particular the bigger ones) tend to like this kind of work, since they think it gives them an "in" to you for future work. If the lawyer is thinking about it as just a couple of hours and a standard employment contract, yeah. But "startup with potential collateral IP licensing work"... So you might actually have more negotiating leverage than you think you have.

Balance this against the potential that you might be dealing with a junior-ish person who has never dealt with a request for an AFA (alternative fee arrangement). Or who might be at a firm where all AFA's need to be presented to a committee (with all the uncertainty that offers). Or dealing with a firm with other business intake craziness.
posted by QuantumMeruit at 10:12 AM on December 24, 2014

The New York Chapter of the National Employment Lawyers Association is also a good place to find employee-side attorneys, and they are up front about their fees. I agree with others that $5,000 seems high—it's the upper limit of what you should pay.
posted by amicus at 11:29 AM on December 24, 2014

The employment contract to be reviewed is very standard, with a standard stock option grant and vesting schedule. We will probably just be negotiating to add a severance package in the contract negotiation, and possible tweak some of the language on intellectual property rights.

You say you'll "just" be negotiating, and "tweak" some of the language. Using minor-sounding words doesn't make the work as minor as you may think.

Listen to what Jaquilynne said above. You are not being clear about what you are expecting the lawyer to do for you. He may not be clear on it either.
posted by JimN2TAW at 1:41 PM on December 24, 2014 [1 favorite]

Hey Everybody — Thanks for the answers! I ended up walking away from that Attorney and engaging another NY attorney I found on for $250/hr who has been much more upfront with me about overall costs. Thanks so much for all the collective wisdom!
posted by amoeba at 3:15 PM on December 28, 2014 [2 favorites]

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