- SPECIAL REPORTS
- THE MAGAZINE
Professional engineers and surveyors are much like attorneys. These professions all require significant education and licensing, and they all serve clients by performing needed services. However, when it comes to billing for those services, vast differences are evident.
Lawyers seem to have far more options for billing than we do. They can obtain a retainer, bill on a fixed fee, bill hourly or bill on contingency. When you hire attorneys on a retainer, they will treat you like a preferred customer, even stopping what they are doing to take your call. The fixed fee is for traffic tickets and other routine matters such as wills, deeds, real estate titles, simple bankruptcies and basic contract drafting.
Attorneys bill by the hour in cases where it is difficult to determine an exact fee due to the unknowns in the case. A typical lawyer in Virginia fresh from the state bar can bill about $125-150/hour. A senior associate can bill $200-250/hour, and a principle attorney can bill $300 on up, depending on the expertise and market. This is in contrast to an engineer fresh out of college who can bill at $60-75/hour, while an engineer just after passing the Principles and Practice exam might bill at $75-100/hour. An experienced and licensed engineer can bill at $100-120/hour, while a principle can bill at $120-200/hour. (Licensed surveyors can command similar rates, but it isn’t unheard of to see surveyors making 10 to 20 percent less than engineers.)
The discrepancy becomes even larger when you consider how attorneys calculate their billable hours. They generally estimate the hours needed to complete the work and then add on miscellaneous expenses-such as time on the phone answering questions (with a 15 minute minimum charge), support assistance from paralegals, delivery charges, filing fees, court costs and administrative staff, and charges for copies of documents-before invoicing the job. This level of documentation is certainly an area where we could improve.
The really significant departure from our industry, however, is for contingency billing. A lawyer can determine your chances of winning a case and then take that case on contingency. If they win, they might get 30 percent of the award; if they lose, they get nothing. Some attorneys specialize and know their chances quite well on the front end. This is why the attorneys suing the tobacco companies were awarded fees in the billion-dollar range.
Wouldn’t it be great if we could charge on contingency? Take a raw property-say 1,000 acres-that is purchased for $10 million. If it is then subdivided into one-acre parcels with 20 percent omitted for roads, green space, etc., it would leave 800 sellable properties. If the improved properties (before building construction) sell for $75,000 each, the profit would amount to $60 million before construction. Let’s estimate that perhaps half of that goes toward infrastructure such as roads, storm and utilities, leaving a $30 million profit. If we billed on contingency like an attorney, a third of that amount-$10 million-would be our fee.
The billing fees many engineering and surveying firms charge are on a per-lot basis ranging from $500/lot in the less regulated Midwest to $2500/lot in Northern Virginia. Charging a fee of $1,500/lot would yield $1.2-2 million.
Hmmm … $2 million versus $10 million. Let’s talk about charging the public based on contingency. We know the local laws, rules and ordinances, so we can take a calculated risk. And then let’s talk about public projects in the $500 million range!
What do you think? Please share your thoughts below.