Hiring a lawyer can seem very confusing to those who do not have any experience with the legal field. One question that many people forget to ask is how attorneys charge. There are many different ways that lawyers usually bill their clients:
- Hourly Fees: This is where the attorney charges based on the amount of hours of work they put into your case. This is the most common type of fee, used in both civil and criminal cases. The total amount of hours will vary greatly depending on the nature of the case. Be sure to ask your attorney for an estimate of hours if they will be charging on an hourly basis.
- Flat Fees: This is an overall charge paid up front for the entirety of the legal representation. It is usually employed when the services are more predictable, such as in criminal cases. Your lawyer should explain to you exactly which expenses and services are included in the flat fee.
- Retainer Fee: This is an advanced payment (like a down payment) when the lawyer is charging an hourly rate. The client deposits their money into the lawyer's trust account, and the lawyer will deduct fees as the services are completed. Any remaining retainer fees are generally refundable to the client.
- Statutory Fee: this is a fixed fee that is set by law or statute. Some types of legal work require the court to approve the fee.
What are Contingency Fees?
A contingency fee or contingent fee means that your lawyer will not charge a specific amount. Instead, your lawyer will earn a percentage of the judgment if any is awarded. The word contingent means "depending upon", which means that the amount your lawyer takes is dependent upon the outcome of the lawsuit.
Most contingent fees are in the amount of one-third of the judgment or settlement amount. Thus, if you awarded a sum of $90,000, your lawyer will be entitled to one third of the amount or $30,000. This percentage can be negotiated between you and your attorney depending on the type of claim. In some types of cases such as divorce cases, contingent fees are prohibited.
Contingent fee arrangements are most commonly employed in personal injury and employment cases, but they can also be found in real estate, probate, and business litigation matters, among others.
What Determines How Much a Lawyer Costs?
While the services of a lawyer are usually not free, there is a common misconception that they are unaffordable for most people. The reality is, legal professionals bill not only based on the value of their services, but by what their client’s needs are, and a myriad of other factors. It's already hard to figure out how to choose the right attorney for you, but cost is another factor that clients need to keep in mind.
Do Legal Fees Vary Depending on the Area of Law?
Lawyer fees differ depending upon the area of law. For example, fees may be different for the following types of lawyers:
- Bankruptcy Lawyer Fees
- Business Lawyer Fees
- Child Custody Lawyer Fees
- Criminal Defense Lawyer Fees
- Divorce Lawyer Fees
- DUI Lawyer Fees
- Personal Injury Lawyer Fees
- Estate Lawyer Fees
- Immigration Lawyer Fees
What Causes the Costs of Legal Representation to Vary?
One should expect to pay more for a veteran lawyer in a big city than a newly minted attorney in a rural area. In addition to the location and expertise of an attorney, there are a handful of other factors that cause costs to vary, such as:
- Type of Representation: Put simply, the more complex the matter, the more likely it is to cost more for services. This is also true for otherwise routine, simple matters that have been made complicated by aggravating factors or circumstances.
- Services Performed: If an attorney is performing multiple services, the overall cost of representation will also likely rise. However, a lawyer may offer to bundle such services at a fixed cost, keeping the overall expense of representation comparatively low.
- Fee Arrangement: Whether a lawyer is billing on a contingency fee plus an hourly basis, requires a flat fee, is retained and advises on a need by need basis, or has been hired, as in-house counsel will ultimately make a huge in the overall cost of representation.
What are the Common Fees in Different Areas?
In different areas, lawyers usually use a certain kind of fee. Below are some examples of common areas and fees normally charged for such a case:
- Injury or accident cases are usually billed by a contingency fee.
- Civil and Family law cases are usually billed on an hourly basis, which can vary greatly depending on the case and the lawyer. It is more common for divorces to be handled on a flat fee basis. In any event, expect to pay a retainer fee.
- Criminal cases are usually paid by a flat fee up front.
- Routine cases are usually paid with a flat fee, like for writing a will, a real estate closing, an uncontested divorce, or getting a power of attorney.
Should Legal Fees Be Discussed Before I Hire a Lawyer?
Yes, all costs should be discussed before hiring an lawyer. The above list is an example of costs and there may be other costs during the suit. Make sure you understand all the different costs you have to pay to prevent disagreements with your lawyer when the bill comes. If you want to keep costs under control you can also tell your lawyer that you have to approve costs over a certain amount in advance.
How is the Reasonable Standard Measured in Legal Fees?
If you have a strong case with a likelihood of a lucrative outcome you’ll have a stronger bargaining position; however the fee you’ll pay in the end will depend on several factors. Below are the factors to take into consideration when determining if the fee you pay is reasonable and fair:
- The amount of time and the effort your lawyer has put into the case;
- How difficult is the case;
- What skills are required to properly perform the legal services;
- What fees are normally charged in the same area for similar legal services by lawyers with similar skill, reputation and experience;
- How large is the amount involved in the lawsuit and what are the results obtained (a factor if you’ve agreed to a contingency fee); and
- If the rate is fixed or contingent.
What Can I Do If My Lawyer and I Have a Fee Dispute?
If you think your lawyer is charging you too much and you can’t reach an agreement, many state and local bar associations offer fee arbitration programs. They offer an out-of court forum to settle disputes that is usually cheaper than going to court. Both parties need to agree to see an arbitration lawyer or consent to mediation. In certain states arbitration is required for most fee disputes: Alaska, California, Maine, New Jersey, South Carolina and Wyoming.
Do I Need an Attorney?
When hiring a lawyer, it is important to discuss what fees the lawyer charges during your initial consultation. Although many people find it uncomfortable to discuss fees, it is important that there is no confusion between you and your attorney on this topic.