The type of fee arrangement that you make with your lawyer will have a significant impact on how much you will pay for their services.
Legal fees depend on several factors, including the amount of time spent on your problem; the lawyer's ability, experience, and reputation; the novelty and difficulty of the case; the results obtained; and the costs involved. There will be other factors, such as the lawyer's overhead expenses (rent, utilities, office equipment, computers, etc.) that may affect the fees they charge you.
The Most Common Fee Arrangements
There are several common types of fee arrangements that lawyers use, depending on the type of case.Top of FormBottom of Form
The lawyer you meet with may charge a fixed or hourly fee for your first meeting, where you both determine whether the lawyer can assist you. Some types of cases, like personal injury-related cases, most commonly, feature free consultations. Be sure to ask when you are making the appointment whether you will owe money.
When a lawyer charges for their services on a contingency basis, it means their fee is based on a percentage of the amount awarded in the case. If you lose the case, the lawyer does not get a fee, but you may still have to pay some expenses. In these arrangements, make sure to find out whether the lawyer calculates the fee before or after expenses.
Contingency fee percentages vary. A one-third fee of the overall compensation is common. Some lawyers offer a sliding scale based on how far along the case progressed before settling or heading to trial. Courts may set a limit on the amount a lawyer can receive.
This type of fee arrangement is most common in personal injury cases, property damage cases, or other cases involving financial losses. Lawyers typically cannot offer contingency fee arrangements in cases dealing with criminal charges and child custody matters. Contingency fee arrangements are typically not available for any divorce-related matters, if someone is suing you, or if you are seeking general legal advice, such as the purchase or sale of a business.
A flat fee is when a lawyer charges a specific, total fee. Lawyers typically offer flat fees for cases that are relatively simple or routine, such as creating a will, getting an uncontested divorce, or resolving a traffic ticket.
An hourly rate case is when your lawyer will charge you for each hour (or portion of an hour) that they work on your case. For example, if the lawyer's fee is $100 per hour and the lawyer works 5 hours, the fee will be $500. This is the most typical fee arrangement.
Some lawyers charge different fees for different types of work, like conducting legal research versus making court appearances. In addition, lawyers working in large firms typically have different fee scales, with more senior members charging higher fees than young associates or paralegals. You can ask for the lawyer to estimate the amount of work they will need to put into your case.
A lawyer who refers you to another lawyer may ask for a portion of the total fee you pay for the case. Referral fees may be prohibited under applicable state codes of professional responsibility unless the arrangement meets certain criteria. Just like other fees, the total fee must be reasonable, and you must agree to the arrangement. Your state or local bar association may have additional information about the appropriateness of a referral fee.
A retainer is when you pay the lawyer a set fee, typically based on the lawyer's hourly rate. You can think of a retainer as a "down payment" against which future costs are billed. The law firm will typically place the retainer in a special account and deduct the cost of services that account as they accrue. Many retainer fees are nonrefundable unless a court deems the fee unreasonable. A retainer fee can also mean that the lawyer is "on call" to handle your legal problems over a set period. Since this type of fee arrangement can mean several different things, be sure to have the lawyer explain the retainer fee arrangement in detail.
The fees in some cases are set by statute, or a court may set and approve a fee that you pay. These types of fees may appear in probate, bankruptcy, or other proceedings.
With all types of fee arrangements, you should ask the lawyer what costs and other expenses are covered in the fee. Does the fee include the lawyer's overhead and costs, or do they charge those separately? How will they charge for costs like staff, such as secretaries, messengers, or paralegals?