What Are the Common Types of Attorney Fee Arrangements
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One of the biggest concerns of people in need of the assistance of an attorney is how much it will cost. The type of fee arrangement that is available to a client will often have a lot to do with the type of legal issues you are bringing to your attorney. There are several common types of attorney fees and fee arrangements:
1. Consultation Fees: Some attorneys charge an upfront fee, usually on a flat rate basis, to meet with the attorney and determine whether s/he will be able to assist you with your legal issues. Many attorneys do not charge an initial consultation fee, but you will need to check in advance to make sure.
2. Contingency Fees: This is a favorite among personal injury and medical malpractice attorneys. The attorney's fee is based on a percentage of the amount awarded in a judgment or negotiated in the settlement of the case, while if you lose the case, the lawyer does not get a fee. However, should you lose, you will still often be required to pay expenses, so read your representation agreement carefully.
Contingency fee percentages vary, possibly even within the same case. A one-third fee (33 1/3%) is common. However, some jurisdictions and some lawyers adjust this rate depending on how far along the case progresses. For example, the rate may be lower if it settles before trial and higher if an appeal is required. Some courts may set a limit on the amount of a contingency fee a lawyer can receive.
Many clients request this kind of fee arrangement, not understanding the business implications to the attorney. Contingency fee arrangements only work for attorneys if there is a large sum at stake in the lawsuit. If the case is relatively small, say under $50,000, the lawyer may actually end up on the losing end of the transaction given the amount of time and money s/he may have to invest in order to complete the suit. Also, attorneys may be prohibited from making contingency fee arrangements in certain kinds of cases, like child custody or criminal defense matters. Similarly, contingency fees are almost never available in typical business law settings.
3. Flat Fees: Some lawyers may charge a flat fee for certain types of legal matters. This is usually an option if the attorney handles large volumes of a particular kind of case, allowing the attorney to drive the cases through the use of forms and standardized practices. These are usually relatively simple cases like uncontested divorces, will preparations, tenant evictions, or mortgage foreclosures.
4. Hourly Rate: This is the most typical type of attorney fee arrangement. The lawyer charges a per hour rate, and usually tracks his or her time in fractions of an hour (often 10ths of an hour / 6 minute increments). Some attorneys may charge different rates for different types of cases, so a contract preparation may be $100/hour while litigation may be $200/hour. Additionally, the attorney will also probably charge for certain paralegal fees, usually at a lesser rate than attorney fees.
5. Retainer Fees : This is not technically a separate fee, but more of a deposit paid toward the total cost of legal services to ensure that the attorney will be paid. The lawyer is paid a set fee, often based on the lawyer's hourly rate multiplied by a certain number of hours. The retainer is usually placed in a trust account and the cost of services is deducted from that account as they accrue. Many retainer fees are non-refundable, but this can be invalidated if the fee is deemed unreasonable by a court. Many attorneys use retainer fees as a means of putting that lawyer "on call" to handle a client's legal problems whenever they may arise.
6. Statutory Fee: In some jurisdictions, a statute or regulation may set the amount an attorney can charge for a particular service. Examples include probate and bankruptcy cases.
Regardless of the fee arrangement, attorney fees are normally required to be set forth in a written fee agreement. You should read such an agreement carefully, and not be afraid to ask for clarification if the terms seem confusing or conflicting. Often, costs, such as postage, copies, expert and deposition fees, and others are not included in attorney fees, so be sure to determine how these will be handled and try to get an understanding of just how much this could amount to in the course of your case.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.