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Types of Legal Costs

One of the first questions people ask their attorney during the initial consultation comes down to legal tender: "How much will this cost?" Price is a big concern for people seeking legal advice, as they know attorneys are expensive.

Most of the line items included in a fee agreement are typical office costs, such as postage, copying, and office staff. Some things are less obvious, like the costs of process servers and private investigators. Read on to learn more about lawyer's fees and legal fee agreements.

How You Pay Your Lawyer

Lawyers have different types of fee agreements depending on the situation and type of case. You should always have a written fee agreement, but most state laws only require written agreements for contingency fees. The standard types of fee arrangements include:

  • Fixed fees: Attorneys charge fixed fees for legal issues like DUIs, uncontested divorces, and other matters that involve paperwork and few court appearances. Other flat-fee cases include estate planning and real estate work such as deeds.
  • Retainer: People or companies who want an attorney on standby may pay a retainer fee to keep some of the attorney's time free if needed. Small businesses need attorneys for document review, regulatory compliance, and other legal matters. Having an attorney on retainer is easier than having in-house counsel.
  • Contingency fee agreements: These are used in personal injury cases and class-action lawsuits. The attorney's fees are included in the final settlement agreement. They are capped by state laws at no more than 35% of the total. Some cases, such as divorce cases, cannot be paid on a contingency basis by state law.
  • Hourly fees: Most attorneys charge hourly rates for legal work. The hourly rate depends on who does the work — the attorney, an associate, or a paralegal. Legal work is usually charged in 6-minute increments for ease of billing.

Depending on how you and your attorney negotiate your fee arrangement, you could receive a bill each month or pay an initial sum for consultation and retainer. Some attorneys have free initial consultations, and some charge consultation fees that are part of the retainer fee.

This "retainer agreement" differs from having an attorney "on retainer." The initial fee is the cost of hiring an attorney plus any initial filing fees or costs. Your attorney will deduct any legal costs from the retainer fee until you receive your first bill.

What Goes on Your Bill?

Why are attorney's fees so high? Some lawyer charges are high because criminal defense attorneys are trying to keep you out of prison. Other charges are high because of the amount of time the matter will be in court. Personal injury claims can take months or years to resolve.

When you sign the fee agreement, you should ask for an itemized invoice to see what you're charged for. Your attorney should tell you about any unusual charges upfront. Some additional expenses may include:

  • Filing fees and court costs: Court costs may include additional page costs or recording fees.
  • Process server fees: Although you can arrange for a third party to serve your court papers, it's often better to pay a professional who can complete the Notice of Service and file it with the court.
  • Deposition and court recorder costs: If your case needs a deposition, your attorney will inform you beforehand and advise you of the costs.
  • Research costs: Services like Westlaw and Lexis may be out of reach for small firms, so they may have to pay extra for research on complicated cases.
  • Expert witness fees: These might come into play if complex cases need consultants.
  • Photocopying costs: Surprisingly, photocopies are still needed in the computer age. Evidence-heavy cases may have hundreds or even thousands of pages, and the parties must provide three copies of everything — for the judge, the opposing side, and the clerk.

The Client Trust Account (CTA)

All attorneys and law firms must maintain a client trust account (CTA). The ethical rules of the American Bar Association (ABA) and state laws prohibit lawyers from using client funds, including a retainer fee, until they earn the money. If you pay your attorney a $1,500 consultation fee and retainer at your first meeting, your attorney cannot use it until they do some work.

The attorney places the money in an interest-bearing account and transfers it to the firm account as earned. In most states, the account is called an Interest on Lawyer Trust Account (IOLTA). The IOLTA transfers any interest earned on money in the account to the state bar association, which then uses it to fund legal aid for indigent individuals.

Additional Ways to Pay

Defendants in criminal cases receive a lawyer thanks to the U.S. Constitution and the Supreme Court. Unfortunately, the Sixth Amendment does not cover all legal services. For instance, the court has not found any constitutional right to a DNA test to overturn a verdict. Incarcerated defendants must pay for that themselves.

If you have a legal problem and can't afford attorney fees, legal help is available from other sources. You can start some types of cases yourself. Parties in family law cases such as summary divorces can write their own court documents. Then an experienced lawyer reviews them before filing. This can reduce your total fee.

Don't let fear of costs stop you from pursuing legal action when needed. Attorneys are usually willing to work with clients and discuss payment arrangements that will work for everyone. Attorneys would rather have you as a client than argue over the bill.

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Attorney Fees and Agreements

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