Understanding Attorney Fees

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It’s probably the most common question any private lawyer serving personal clients gets, “how much are your fees.”  This common question has an answer that is very much dependent on your unique legal situation.  No two legal cases are the same.  How your case will proceed and how the opposing side will respond is going to be different in every case and may drastically affect the costs of your case.  In today’s blog we look at some of the different types of attorney fee arrangements.
The Flat Fee Agreement
The flat fee is a pre-arranged amount, usually paid at the time the attorney is retained, that covers the entire cost of the legal service to be provided.  You see this type of fee in a number of different situations.  In most criminal cases, the attorney will charge you a flat fee that will include representation through pre-trial resolution (plea, dismissal, diversion etc.)  Then if you proceed to trial, the agreement will normally have another flat fee that will be charged for conducting the trial.  Another area of law that uses a flat fee system in many instances is estate planning.  In estate planning the attorney will meet with you to examine your estate planning needs and then put together a plan for you and let you know how much the fee will be to execute that plan.  For example, if you need a living will, a power of attorney, a pour over will, and an advance directive; the attorney will tell you exactly how much that will cost and you will pay that flat fee in return for the preparation of those legal documents.
The Hourly Fee
The hourly fee is what most people think of when they think of attorney fees.  The attorney tracks the amount of time he/she works on your case and multiplies it against their hourly rate.  For example if an attorney works 4 hours on your case and the hourly rate is $250/hour you will pay $1000 in fees for the services.  This fee does not include any expenses such as filing fees, postage, record copying, etc.  Attorneys like to use an hourly rate on a case when the amount of time that is going to be expended on a case is unpredictable.  The perfect example of this is family law.  Family law cases are largely unpredictable in their difficulty, complexity and length.  A divorce where the parties are amicable and agreeable may be resolved in 10 hours or less of attorney time.  However, another family law case where the parties are very contentious and require lots of court time, may take 50 hours of attorney time.  Obviously, under these two situations, it would not be fair to charge a flat fee.  In most instances when an attorney is going to charge a personal client on an hourly basis, they will require what is known as a retainer fee.  An attorney collects retainer fees in advance of doing any work and deposits the retainer fee in their trust account.  Trust account hold unearned client money.  Then, when the attorney completes work on your behalf, they will use the retainer fee money to pay for their work.  For example, if you pay a $2500 retainer and your attorney charges $250/hour, you will be covered for the first 10 hours of attorney time.  What an attorney charges on an hourly basis can vary greatly on the type of case, years of experience, and complexity of the legal issues.  It is important to know it is as important to know how your attorney bills as it is to know what their billable hour is.  Some attorneys bill in 6 minute increments, others bill in 15 minute intervals.  This can make a bid difference.  If you have a 2 minute phone call, under the first method you would be billed for 6 minutes, under the later you would be billed for more than double that or 15 minutes.  That translates in a difference of almost $40.00.
The Contingency Fee Agreement
The contingency fee agreement is most commonly used in the practice of personal injury cases.  This is the type of agreement you see advertised as “you pay nothing unless we collect for you.”  You have to read these agreements closely, as you may be on the hook for expenses regardless of whether or not you “win”.  Under a typical contingency fee agreement you will pay the attorney a percentage of whatever monetary recovery the attorney achieves on your behalf.  In a personal injury case you will commonly see two type of agreements.  One may call for the attorney to receive a certain percentage of the recovery if the case is settled pre-trial, a different percentage if recovery is after a trial, and yet a higher rate if after trial and appeal.  Under these types of agreements it is normally 33% pre-trial, 40% after trial and up to 50% if after appeal.  In other agreements you will see 33% as the attorney fee regardless as to how the case is resolved.  To use simple math, if you are awarded $100,000 pre-trial the attorney fee would be $33,333.00.   It should be noted that expenses and liens must also be paid out of this recovery.  After expenses are reimbursed and liens are satisfied (many times partial reimbursement of medical providers) the balance goes to the client.
As you can see there are a variety of fee arrangements that you may enter into with attorneys.  At Banks & Brower the attorneys are committed to working with clients to arrive at fee agreements that are workable for your particular situation.