Understanding Attorney’s Fees
How attorneys charge their clients can be confusing, especially if you have never had any contact with the legal system before. Although all attorneys are required by the rules of professional conduct to charge “reasonable” fees, these fees can vary widely by geographical area or the type of legal matter, as well as the complexity of the matter, the experience of the attorney, and other factors. Sometimes the choice of how to charge fees is left to the lawyer, but in other cases, the manner and method of charging attorney’s fees is set by statute or by the court.
Here’s a brief guide to the most common types of attorney’s fees.
Who Pays for My Attorney?
Most often, the lawyer’s fees are paid by the person being represented, but that isn’t always the case.
Sometimes, the attorney’s fee is paid by a third party. One example is when you have insurance that covers defense fees and costs. This may occur when someone is injured in your home, or when someone is injured in a car accident involving your vehicle. In those cases, your homeowner’s or automobile insurance may cover the cost of your defense if you are sued by the injured party.
In other cases, your attorney’s fees might be paid by the opposing party if you win the case. This can occur when there is a law in place that shifts the fees to the losing party (called fee-shifting statutes).
Some attorneys charge a flat fee for their consultations, while others offer a “free” consultation. Some lawyers who charge a fee for the consultation will credit the amount of the consultation fee back to you if you hire them to represent you in the case.
Many lawyers charge their clients by the hour. In that case, the lawyer will keep track of all of the time spent on your case and provide you with bills regularly (usually monthly) detailing the amount of time expended, the work performed during that time, and the total monthly charge based on the lawyer’s hourly rate. For example, if the lawyer’s hourly rate is $200/hour and the lawyer spent 100 hours working on the case, the total fee will be $20,000. If more than one lawyer works on your case, each lawyer may charge a different hourly rate, depending on their experience.
Contingency fees are most often used in connection with lawsuits brought on your behalf for personal injuries or property damage, such as in a car accident, slip and fall, or medical malpractice case. A contingency fee is a percentage of the recovery – by verdict or settlement – received.
For example, in many personal injury cases, the standard attorney’s fee is 1/3 of the recovery, after all costs and expenses have been paid. For example, if your lawyer settles your personal injury case for $70,000 and there are $10,000 in expenses, the lawyer will receive a fee of $20,000, calculated by multiplying 1/3 by $60,000.
Flat and Task-Based Fees
Some lawyers charge their clients on a flat fee basis and will quote the fee before they take on the matter. For example, a lawyer might charge a flat fee of $700 for a real estate closing, or $2,500 for a basic will, power of attorney and healthcare proxy.
Another type of flat fee is a task-based fee. A lawyer charging task-based fees may not be able to quote a flat fee for the entire matter up front but will provide you with a schedule of fees for specific tasks that might be performed, and then bill you based on the tasks performed.
Other Fee Arrangements
In addition to the methods of calculating fees noted above, there are several other plans that your lawyer may use to determine his or her fee. For example, some lawyers will charge their fee in stages when they cannot predict what the other side might do or what might happen. The lawyer might quote a fee for the first stage of the case – doing the initial investigation and preparation, reviewing documents and filing the lawsuit. Once that stage has been completed, the lawyer will quote a fee for the next stage of the case, and so on.
Other fee options include “holdback” fees, where you, as the client, hold back some of the lawyer’s fee until the end of the matter to ensure your satisfaction. Or your lawyer may negotiate with you to receive bonuses for exceptional performance, such as resolving the case quickly or settling within specific parameters.
Occasionally, a lawyer might combine several methods of fee calculation, for example, charging a flat fee for certain services, and then charging by the hour for other services that they have less control over, such as for trial.
Additional Fees and Costs
In addition to the lawyer’s fee, there may be additional fees and costs that you will need to pay for your legal matter. These may include filing fees with the court or municipality, costs for postage, copying, transcripts, medical records and more.
Regardless of how your attorney calculates his or her fee, the lawyer should always be clear with you about how they are going to charge you, what is included in their services, and what additional fees and costs will be included in your bill and provide this information to you in writing.
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