A California physician fumed when his lawyer presented a $100,000 bill for handling his divorce. Nearly half that tab resulted from work the lawyer had done to correct his own mistakes. He'd overstated the doctor's net worth in court, an error that the ex-spouse's attorney pounced on to increase her award. To get a fairer settlement, the lawyer spent days preparing an appeal - and billed his client for each hour.

He eventually cut his bill by $30,000, but only after the doctor hired a second attorney, who threatened the first lawyer with a legal malpractice suit.

Keeping a lid on legal costs can be just as difficult when a lawyer doesn't make any obvious mistakes. The traditional hourly-billing system gives an attorney every reason to count generously when he tots up his time. How do you know how long it takes to prepare an irrevocable trust or a limited-partnership agreement? Can you say with authority that it takes only 10 hours when you've been charged for 50?

Like physicians, the vast majority of lawyers are reputable and will treat you fairly and with respect. That doesn't mean, however, that you have to watch helplessly while legal bills mount. By demanding some payment parameters at the outset and by monitoring your lawyer closely, you can minimize costs.

Beware the open-ended bill

Before you hire a lawyer, find out how he or she calculates his bills, advises Theresa Meehan Rudy, program director of HALT, a legal-reform organization based in Washington, DC.

That may sound like elementary advice, but HALT hears from plenty of clients who suffered after the fact. One person never pinned down the legal fees for selling a costly property and received a $34,000 bill from his lawyer. Only then did he request an itemized bill and explanation.

The law firm claimed it had spent 112 hours on the sale and charged $125 an hour, for a total of $14,000. Then the lawyers tacked on an additional $20,000, based on a percentage of the sale. When the seller complained to HALT, it gave him the bad news: In lieu of a formal agreement, the law sometimes permits such arbitrary fees.

When a lawyer quotes an hourly rate, don't assume the figure is carved in stone. His first quote may be no more than a bargaining chip. Tough times have forced many firms to accept smaller fees, although you can't expect them to say so. "In today's climate, lawyers tend to be flexible," says Stephen Gillers, a New York University School of Law professor who specializes in lawyer-client relations. "It's foolish not to try to negotiate."

Besides spelling out basic rates, written fee agreements should list which firm members will be working on the case. A typical agreement might say that your case will be handled by a senior partner who charges $400 an hour, an associate who bills at $250, and a paralegal who costs $100. Many lawyers charge flat fees for routine legal work, such as wills or house closings. In any case, "make sure to get your fees in writing and have the lawyer insert a 'caps' clause in your written agreement," says Rudy. "A caps clause requires the lawyer to get your approval before fees and expenses can exceed an agreed upon dollar limit."

Nevertheless, don't make a final decision based solely on hourly fees. "Chances are the person who has the lowest hourly fees probably takes the longest to complete a task," says Steven I. Kern, of Kern Augustine Conroy & Schoppmann, in Bridgewater, NJ. "Associates are notoriously slow at doing many things that a senior lawyer can do quickly. Even worse, an inexperienced lawyer can spend countless hours going down dead-ends that an experienced lawyer would never begin to venture down."

"Look for a well-managed office," he continues, "where phones are answered promptly and calls are returned within 24 hours. The better an office is run, the more efficiently the lawyers probably work and the less time will be spent on your case."

In personal-injury cases, lawyers typically work for contingency fees. Many seek one-third of all winnings. But the figure's always negotiable - especially if the case looks like a cinch. Consider a sliding scale. The fee could be, say, one-third of the first $50,000, 25 percent of the second $50,000, and 15 percent of the rest.

Contingency fees provide an obvious advantage: If the lawyer loses, you pay nothing, or at worst, only expenses. But be aware that in contingency cases, you and your lawyer may have different goals. A cash-short attorney may be inclined to grab the first settlement offer, while you may prefer hanging on for a better deal.

Note that for some divorces and other confrontational cases, attorneys commonly require advance payments. If you're forced to shell out such a retainer, your lawyer should agree that some or all of it is refundable under certain circumstances. "With strong support from bar associations and courts, written retainer agreements have become much more common in the past decade," says Michael S. Gruen, of Vandenberg & Feliu in New York. "New York State now requires them in most cases."

Lester Brickman, professor at Benjamin N. Cardozo School of Law of Yeshiva University in New York and an expert on legal fees, got a call from a woman who had paid a $10,000 nonrefundable retainer to a prominent divorce lawyer. The day after she paid the fee, the woman reconciled with her husband. She reported the news to her lawyer and asked for a refund. The lawyer refused, although he had done no work on the case.

Brickman considers nonrefundable fees unethical, and in the preceding case a New York court agreed. However, while at least six states have followed New York's lead, these fees remain common in most other states.

Watch extra fees that can add up fast

Say a lawyer agrees to a contingency fee equal to one-third of the settlement. The settlement turns out to be $150,000, but the lawyer submits a bill for $75,000. The lawyer's reply: "We agreed to one-third - plus expenses. My expenses were $25,000."

That's a common complaint of a large number of legal clients who thought they had an ironclad fee agreement.

A New York homeowner sued a contractor and received a legal bill based on the hourly charges. It listed $26,000 in additional expenses, which included $2,725 for meals, $1,800 for copying, and a big tab for "miscellaneous."

To settle the fee mess, the homeowner hired attorney Michael Gruen. In the litigation that followed, Gruen discovered the original firm had charged 50 cents a page for copying, although a local copy shop would have charged less than 10 cents a page. The meal expenses covered lunches attorneys ate in their office while they reviewed the case. Miscellaneous charges included limousine service for secretaries who worked late. The client got his bill reduced only after a battle produced a settlement - and more legal fees.

Gruen says it's fair to bill clients for the actual costs of such items as copying and long-distance phone calls. But these charges should be negotiated beforehand. "The lawyer should spell out in detail what expenses will be charged and on what basis, so there won't be any surprises," he says.

If yours is a complicated case that requires considerable preparation, ask for a monthly bill so that you can monitor the progress. Some lawyers acknowledge padding bills, adding extra minutes or hours here or there. Many attorneys don't time each activity as it occurs. Instead, they reconstruct events later and provide clients with rough estimates. In that way, a six-minute phone call can become a half-hour conversation. "Not many lawyers are absolutely meticulous about their time records," says Lisa G. Lerman, a professor at The Catholic University of America's Columbus School of Law in Washington, DC.

Be on guard in a time of grief

Most states limit what lawyers can charge for handling probate. Maximum fees typically range from 2 to 8 percent of assets passing through the court. But these fees may be excessive for simple estates.

When David L. Scull, an attorney in Chevy Chase, MD, studied probate fees in Maryland and Washington, DC, he found that most attorneys billed by the hour. Yet, coincidentally or not, the final tally almost invariably reached the legal limit. Attorneys can't resist stretching out work to reach the legal maximum, Scull says. "Sometimes heirs know they're being overcharged, but they think it's shabby to argue about money just after a parent died."

To demonstrate how much heirs could save, Scull handled a simple Maryland probate case in which a son inherited $120,000 worth of stock from his mother. Most lawyers would charge $5,000 on an hourly-fee basis. Scull completed the job in three hours.

Although grieving heirs may be particularly vulnerable, the same rules of negotiating should apply in probate cases as in others. "Don't fall into the trap of using a lawyer just because he's got your father's will in his safe," Scull says. As executor of the estate, you can pick anyone you want - and negotiate the fee. Ask your parents' lawyer how much he'll charge, just as you would any other lawyer. If the answer seems vague or is unsatisfactory, go elsewhere.

Moreover, you can whittle hours off the bill by preparing an inventory of the estate's assets. Scull says lawyers sometimes exceed the legal maximums by taking a percentage of all assets, including those that aren't probated. In most states, assets such as death benefits from insurance policies don't pass through the court and shouldn't be used to calculate total probate fees. A bit of research on state probate requirements will uncover such nonbillable assets.

If your lawyer refuses to trim excessive bills, inquire about fee arbitration through your state or local bar association. Clients win their share of arbitration cases, bar associations claim, but that's hard to judge; programs don't publish data on results. Consumer groups give the programs mixed reviews.

As a last resort, if a fee seems excessive, you can hire another lawyer and sue. But this time, be sure you nail down the fee in advance. However, if you follow the advice in this article, there's no reason things should ever get that far. "If you're receiving monthly bills and looking at each one closely, you should be able to resolve any concerns immediately as they come up," says attorney Steve Kern. "The cost of a fight later on is rarely worth the amount to be saved."