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Fees are often of primary importance to clients and lawyers but are one of the least discussed parts of any legal case. Frequently, fees are not discussed early enough, candidly enough, or in enough detail because the discussion can be uncomfortable.
Fee Arrangement Types
Flat Fee - The lawyer will charge you a specific total fee for your case.
- A flat fee is usually offered only if your case is relatively simple or routine.
- Generally, lawyers will not set a flat fee for litigation, but 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 the attorney works on your case.
- If your attorney's fee is $ 100 per hour, and the attorney works 10 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 but may charge a lower hourly rate.
- Large law firms usually charge more than small law firms.
- Urban attorneys often charge more per hour than attorneys practicing in rural areas.
Contingency Fee - The attorney's fee is based on a percentage of what you are awarded in the case.
- The contingency fee percentage varies.
- If you lose the case, the attorney does not get a fee, although you will still pay for expenses.
- Some lawyers offer a sliding scale based on how far along the case is when it is settled.
- A one-third fee is common.
- 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.
- 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.
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.
Negotiating the Fee
Your lawyer is unlikely to invite you to bargain over fees, but negotiating fees is an option. Consider the following general questions before negotiating the fee:
- 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?
In addition, consider the following questions. If the answer is "yes" to any of these questions, the attorney may be willing to negotiate a lower fee.
- Is your case interesting or novel?
- Is the firm actively seeking more work?
- Is the firm new to your locality and looking to build its caseload?
- Does your case have the possibility of significant attorney's fees?
- Is there a high likelihood for success?
Be aware that the market rate for any given legal service is generally a range of fees that varies by locality. A "fair" fee is an individual decision. The fee arrangement type will have a significant impact on how much you will pay for the legal services. Learn more about fee arrangements types and questions to ask an attorney so that you can feel more comfortable about this essential part of hiring an attorney.
Depending on the type of fee arrangement, you may want to ask some additional questions.
- Flat Fee
- Is 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.
- Hourly Rate
- What is included in the hourly rate? Costs and out-of-pocket expenses will usually be billed in addition to the hourly rate.
- What is the billing method for hourly rates? For example, will the lawyer bill at 6-minute or 15-minute intervals? 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.
- Will other staff, such as secretaries, messengers, paralegals, and law clerks work on your case? If so, how will their time be charged to you?
- Contingency Fee
- Will the fee be calculated 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.
- For example, if you have a $100,000 award with $20,000 in expenses, if the fee is paid before expenses, then the attorney fee is $33,333.33. However, if the fee is paid after expenses, then the attorney's fee is $26,666.33.
- Does the attorney offer sliding scale arrangements? For example in a contingency fee arrangement, 33% for the first $100,000 in damages, 25% for the next $100,000, and 15% above that.
Put your agreement in writing! After your discussion, put the specifics of the fee arrangement in writing. 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.
Comparison shop for flat fees on simple matters, such as a will, a real estate closing, or a power of attorney. 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.
Consult with several different lawyers before choosing one. The consultations should be free or at a reduced rate. These consultations will help you get a realistic sense of which type of fee arrangement best fits your needs.
- Ask each attorney to assess the merits of the case and the likelihood that you will receive money if you are successful. For contingency fee arrangements, the higher the likelihood of success in a case, the lower the contingency percentage you may be able to negotiate.
- Ask whether the attorney offers flat fees instead of hourly charges.
- Ask if you can set a prearranged maximum for the entire project.
- Ask if fees can be partly based on the outcome.
- Ask about timing of payments. For example, will you need to pay a retainer fee? If so, when will the attorney let you know when the retainer fee has been used?
- Ask about how the attorney will bill you. For example, will the attorney send you monthly invoices or will you be paying a single lump sum at the end?
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 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.
- Be aware of who will be doing the actual work. For example, if you work with a big law firm, an associate, rather than the partner with whom you initially consulted, may do the work. 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.
- 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
Candidly Describe Your Financial Limitations. 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.