How Do Attorneys Charge for their Work?

Hourly

Many lawyers charge only by the hour. Associates often yield a lower hourly rate than partners. However, associates may have to take more time to research a legal issue than a partner who has prior experience on which to rely.

Arrangements that involve hourly rates usually include a retainer that represents an upfront deposit on legal services. After the retainer is exhausted, the client may be billed on a monthly basis for legal fees.

The benefit of this type of arrangement is that the amount that the client is billed reflects the real amount of time that the attorney put into the case. If the work does not require much time, the client will not have a large bill. However, if the legal matter is more complicated than the client originally thought it was, he or she may be in for a surprise when he or she receives the bill.

The disadvantage to hourly rates is that hourly rates often cause clients anxiety because they do not provide a clear estimate of how much a particular client will have to pay when the job is finished. Also, hourly rates can encourage inefficiency as attorneys are paid more for taking more time on the matter.

Hourly rates can have disadvantages for lawyers, too. They may wind up pursuing a line of research that does not bring about results. Lawyers may work too many hours in order to make a better living. Lawyers may have greater difficulty with the case because hourly rates may cause clients not to communicate with them because they know they are being charged for such communication.

Flat Fees

Another common payment arrangement for lawyers is to charge flat fees. This type of arrangement is more common in cases and types of law that are well-defined in which the lawyer can predict with reasonable certainty how much time a case will take.

The advantage of this payment arrangement is that it removes uncertainty for clients and lawyers alike. Additionally, clients are not afraid to make contact with their lawyers because they are not charged extra for such communications. Flat fees encourage lawyers to work more efficiently because their pay is not increased by taking more time.

However, the drawback to hourly fees is that they can be bad for lawyers if a case becomes more complicated than they originally anticipated. Lawyers can wind up investing a substantial amount of time for which they are not paid any more money. Lawyers and clients may agree to make adjustments under certain conditions to keep the arrangement fair for both sides of the representation.

Contingency Fees

Another common payment arrangement takes the form of a contingency fee. This arrangement involves the attorney receiving a percentage of the client’s verdict or settlement. If the client loses the case, he or she does not owe the lawyer anything.

This type of payment arrangement is more common with personal injury law and medical malpractice cases. Clients have the advantage of getting legal representation without having to pay upfront for it. This shifts the risk from clients to lawyers because the lawyer is doing all of the work with no guarantee of payment.

The disadvantage to contingency fees is that they can cause clients and attorneys to head toward different goals. For example, a client may want to move toward a trial in hope of getting a big payout, while a lawyer may want to settle the case and get his or her share.

Contingency fees also bring about a certain degree of uncertainty. If the client does receive a settlement or verdict, his or her share may be lower than that of the lawyer because the client must usually reimburse the lawyer for litigation expenses, as well as any medical expenses that the client incurred.

Hybrid Arrangements

Many lawyers have taken stock of their clients’ needs and attempt to cater to them. Hybrid arrangements may include using an hourly rate but applying a minimum and maximum amount for legal representation.

Considerations

A number of factors can affect the amount that a lawyer charges for a particular case. For example, the novelty of the legal issues involved, whether the case would prevent the lawyer from taking on other matters, the experience of the lawyer, the amount of research that is anticipated and the geographic region can all affect the cost of legal services.

Sometimes, lawyers are prohibited from charging over a certain amount based on statutes. For example, contingency fees may be limited to a third of the verdict or Social Security claims may be limited to a certain percentage of the backpay.

Provided by HG.org

Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and.how they may affect a case.

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