Understanding Fees

Understanding Fees

There is no such thing as a “standard fee.”

Clients and attorneys negotiate fees based on several factors, including the lawyer’s experience and reputation, the type of legal problem, and what other local lawyers charge for similar work. There may be a local “going rate” for a certain type of job such as doing a trademark search, handling an eviction, filing a bankruptcy, or preparing a living trust. But there will still be lawyers who charge more and those who charge less.

Hourly Fee

It’s most common to pay lawyers by the hour. If you’re paying by the hour, you need to know:

the hourly rates of the lawyer and anyone else in the lawyer’s office (paralegals, for example) who might work on the matter.
whether you must pay a deposit in advance (often called a retainer) and if so, how much.

Flat Fee

For some well-defined tasks, such as writing a simple will, or completing an uncontested divorce, a lawyer may charge a flat fee. The flat fee generally covers all the hours that the lawyer and any other staff members spend working on your case. Just be sure you know what’s included in the basic fee and what’s not. Often costs like filing fees are not part of the flat fee, and you need to know what to expect.

Contingency Fee

Under a contingency fee arrangement, the lawyer gets paid only if you win your lawsuit. Contingency fees are often used in personal injury and employment cases. Contingency fees reflect the fact that there can be a lot of uncertainty in litigation, and the lawyer is taking a chance on your case, including fronting the costs and spending significant amounts of time. A contingency fee can be a good deal when the attorney is taking a big risk, but not when little risk is involved. For example, if it’s clear that you or your property were seriously injured and another person who is covered by insurance was at fault, a contingency fee may be less advantageous to you. Again, it pays to talk with more than one attorney.

If you’re asked to agree to a contingency fee, you need to know:

what percentage of any award the lawyer will take
whether that percentage will change over the course of the lawsuit (some lawyers collect a higher percentage if the case goes to trial than if the case settles out of court), and
how the lawyer will collect the money and whether the fees will be calculated before costs are deducted (better for the lawyer) or after (better for you).

Also find out who will pay for expenses such as court fees, fees charged by experts, process servers, or stenographers, copying costs, travel expenses, and messenger fees. (These costs can really mount up if a case goes all the way to trial.) If you must pay for some or all of them — and it’s common for the client to do so — find out when you’ll be expected to pay them. Some lawyers in contingency fee cases will front the money for costs; if the client wins, the lawyer is reimbursed from the award, but a client who loses has to figure out some way to pay back the lawyer.