About The Different Types Of Attorney’s Fees
This is a quick summary of the common types of fee arrangements used by lawyers. Any fee must be reasonable, and the client must agree to it and all other provisions of the fee arrangement.
- Consultation: This is a fixed or hourly fee that clients are charged for their first meeting with an attorney where the needs and goals of the clients are discussed and the attorney ascertains whether he or she can satisfy and achieve them on the client’s behalf. Many attorneys, such as bankruptcy and personal injury attorneys offer free, first-time consultations.
- Contingency: This fee is based on a percentage of any award that a client receives based on a successful jury verdict or settlement. If the case is unsuccessful, the lawyer does not receive any fees, but typically recoups its costs of litigation or attempting settlement. While contingency fee percentages may vary, one-third or 33 1/3 % is and has been common for decades of practice, especially in the area of personal injury law. A variation of the traditional contingency fee is a sliding scale based on the extent to which the case has progressed before settlement. Courts and statutes may set limits on the amount of a contingency fee a lawyer may charge and receive from clients. Lawyers may also be prohibited from making contingency fee arrangements in certain kinds of matters such as cases involving criminal charges and child custody.
- Flat or fixed: Flat or fixed fees are specific fees that represent the total charge for a service. These fees are common where an attorney handles large volumes of a certain kind of case, such as bankruptcy, allowing the attorney to use forms and standardized practices efficiently. A flat fee is found typically for routine matters like drafting a simple will or filing an uncontested divorce.
- Hourly Rate: This type of fee is common and straightforward. It is probably the most typical type of fee arrangement used by attorneys who are not injury attorneys. Time is tracked in fractions of an hour, usually 10ths of an hour, which are 6-minute increments. It is not uncommon for attorneys to charge different hourly rates for different types of cases. In this situation, an attorney will also probably charge for paralegal fees at a lower hourly rate than attorney fees. Firms with more than one attorney may have a different fee scale with more senior members or partners charging higher fees than associates.
- Referral: This is a fee for one lawyer referring a client to another lawyer. Keep in mind, referral fees may be prohibited under applicable state codes of professional responsibility unless specific criteria are satisfied.
- Retainer: This fee is a down payment or pre-estimate of minimum work based on an attorney’s hourly rate against which future costs are billed. The attorney places the retainer in a trust account and the cost of services is deducted from this account as they accrue. Unless unreasonable, many retainer fees are non-refundable. Retainers are also utilized when an attorney needs to be “on-call” to represent a client related to some matter, often a criminal case, over time. This type of fee arrangement may mean several different arrangements, responsibilities, and costs so it is crucial that attorneys explain retainer fee agreements in detail to clients.
- Statutory: These are fees upon which attorney nor client typically have any say as to amount. They are set by statute or court rule and usually involve an oversight process where they must receive court approval.
There are variations of the above types of fees, they include the following:
- Blended hourly rate. A law firm offers the services of two or more staff members at the same hourly rate when the staff members normally bill at different rates. A blended hourly rate may also mean the average rate charged by the attorney based on the hourly rates billed.
- Fixed or flat fee plus hourly rate. A fixed fee is charged for defined portions of the work and an hourly fee is charged for the portions of the work which may not be so defined.
- Hourly rate plus contingency. An hourly fee is charged for portions of the work and a contingency fee is established based on results related to the performance of some other service.
Most lawyers use a blend of these billing methods using each to meets their client’s needs and expectations, but attorneys also use them to ensure that they are fairly and adequately compensated for their services.
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