Fees are one of the least discussed parts of any legal case yet are often of primary importance to both the client and the lawyer. Frequently fees are not discussed early enough, candidly enough, or in enough detail. Why?
Generally, because the discussion can be uncomfortable for both the client and the attorney. Becoming knowledgeable about the types of fee arrangements can help you to feel more comfortable about this essential part of hiring an attorney. Again, the specifics should be in writing.
The market rate for any given legal service is generally a range of fees which varies by locality. A "fair" fee is an individual decision and is likely to be based on the following factors:
- How much can you afford?
- Is it a routine matter or does it require special expertise?
- What is the range of attorney rates for this type of case in your area?
- How much work can you do on the case?
The type of fee arrangement that you make with your lawyer will have a significant impact on how much you will pay for the services. There are several common types of fee arrangements used by lawyers:
- Flat fee The lawyer will charge you a specific total fee for your case. Ask if photocopying, typing, and other out-of-pocket expenses are covered by this flat fee. Often the total bill is the flat fee plus these out-of-pocket expenses. A flat fee is usually offered only if your case is relatively simple or routine. While lawyers will not set a flat fee for litigation, they can usually give a good estimate of the costs at each stage.
- Hourly rate The attorney will charge you for each hour (or portion of an hour) that s/he works on your case. If your attorney's fee is $ 100 per hour, and he or she works ten hours, the cost will be $1,000. Some attorneys charge a higher rate for court work and less per hour for research or case preparation. If you agree to an hourly rate, you need to know how much experience your attorney has had with your type of case. A less experienced attorney will usually require more time to research your case, however, he or she may charge a lower hourly rate. Large law firms usually charge more than small law firms and urban attorneys often charge more per hour than attorneys practicing in rural areas.
Again, you should ask what is included in the hourly rate. If other staff such as secretaries, messengers, paralegals, and law clerks will be working on your case, how will their time be charged to you? Costs and out-of-pocket expenses will usually be billed in addition to the hourly rate.
- Contingency fee Under this arrangement, the attorney's fee is based on a percentage of what you are awarded in the case. If you lose the case, the attorney does not get a fee, although you will still have to pay expenses. The contingency fee percentage varies and some lawyers offer a sliding scale based on how far along the case is when it is settled. A one-third fee is common. Also, ask whether the lawyer will calculate the fee before or after the expenses. This can make a substantial difference, since calculating the percentage of the attorney's fee after the expenses have been deducted increases the amount of money you receive.
Timing of Payment of Attorney's Fee
|Fee Paid Before Expenses||Fee Paid After Expenses|
|$100,000 Award||$100,000 Award|
|- 33,333 1/3 fee*||-20,000 Expenses|
|= 66667||= 80,000|
|- 20,000 Expenses||- 26,666 1/3 fee|
|$ 46,667 Client's share||$53,334 Client's share|
A contingency fee is usually found in personal injury cases, accidental claims, property damage cases, or other cases where a large amount of money is in contention.
Referral fee On occasion, an attorney who has accepted your case may refer you to another attorney who is more experienced. Sometimes the first attorney will ask for a portion of the total fee you pay for the case.
Are there ways to reduce my attorney fees?
Yes. Remember that it is your case and that the attorney is an expert who is assisting you to resolve a problem or prevent a potential problem.
1. A Lawyer's Fee May Be Negotiable
Despite the importance of fees to both parties, consumers usually do not choose a lawyer based solely on price. Yet it is important to remember that a lawyer's fees are often negotiable.
Your lawyer is unlikely to invite you to bargain over fees. However, there are some common sense tips to consider that may allow you to negotiate without outright negotiation. For example, smaller firms usually charge less than larger firms. If your case is interesting or novel or extremely lucrative, an attorney may be willing to negotiate. If the firm is actively seeking more work or is new to your locality, it may handle a case for less as a way to build its caseload.
There are two general situations in which you may wish to raise the issue of lower fees.
First, if your case has the possibility of significant attorney's fees, you are likely to be in a strong position if you are willing to shop around and to negotiate. It's wise to negotiate, for example, in personal injury cases. Most lawyers will propose a standard contingency fee for usually one third of any damages that they win for you, nothing if they lose. Bear in mind, the contingency fee is designed to cover the risk the lawyer is taking yet some experts estimate that at least one out of every five contingency fee cases involves virtually no risk.
It makes sense to sit down with several different lawyers before choosing one. Ask each to assess the merits of the case and the likelihood that you will receive money if you are successful. The consultations will be free and you will come away with a more realistic sense of what fee arrangements you should agree to. Generally, the higher the likelihood of success in a case, the lower the contingency percentage you may be able to negotiate.
Some clients also prefer to pay their lawyers on a sliding scale. For example, 33 percent for the first $ 100,000 in damages, 25 percent for the next $ 100,000, and 15 percent above that.
Second, here are some examples of other cost-cutting fee arrangements that you may be able to negotiate:
- flat fees instead of hourly charges,
- hourly rates up to a prearranged maximum for the entire project, and
- fees based partly on the outcome.
2. Comparison Shop for Flat Fees on Simple Cases
When you need a simple transaction like a will, a real estate closing, or a power of attorney, you can comparison shop. Contracting for legal services is like any other consumer transaction in that the prices and the work product vary. Interview several attorneys and compare their answers. Only after you get a sense of the range of fees will you be able to determine which rate and which attorney best suit you and your budget.
3. Ask about the Billing Method for Hourly Rates
A written agreement specifying the fee arrangement and the work involved is the best way of assuring clear communication between you and your attorney about the total cost of the case.
Asking a lawyer to bill at 6-minute instead of 15-minute intervals can save you hundreds of dollars. For example, if a lawyer's minimum billing unit is 15 minutes, each 5-minute phone call will be billed at one-fourth of the hourly rate. At 6-minute phone intervals, a 5-minute phone call costs just one-tenth of the hourly rate.
Choose a Lawyer with the Appropriate Qualifications
Many types of legal work can be relatively routine. It often has little to do with complex legal theory or constitutional analysis. Smaller firms, attorneys charging lower rates, and less experienced attorneys are often well suited for the broad range of legal work needed by many consumers.
- Recently graduated attorneys may offer to work for a somewhat lower price to compensate for the extra risk and time involved in becoming familiar with the specific area of law. Lawyers who charge $300 an hour and up are appropriate for very sophisticated trusts and estate work, corporate litigation, or complex criminal defense work.
- Be careful if you work with a big law firms where you may be told that the young associate who has been assigned to your case (at a lower rate) is being supervised closely by the senior partners listed in the firm name. The associate may take three or four times as long as an experienced lawyer to draft the necessary papers. You might want to meet with the associate and the supervising partner before work begins to understand who is going to do what. Get an estimate as to how much the work should cost. A meeting like this may reduce the overall cost to you for the associate's on-the-job training.
- Discuss ways that you can help the attorney on the case. For example, if the attorney needs copies of birth certificates or other records, you can write the letter to request them and save your attorney the time needed to dictate and process the letter.
- Splitting the work with an attorney also can cut the cost. You can draft the document, using a standard form as a guide, and then present it to your lawyer for reviewing and finalizing the work. Make sure that your attorney is willing to do this kind of work and discuss the fee if major rewriting is needed
4. Candidly Describe Your Financial Limitations
Finally, if you have extremely limited funds, discuss the situation with your attorney. If you have a longstanding relationship, you may be able to work out a payment plan. If the situation is compelling, some attorneys may be willing to help someone in genuine need.