About Fees

Flat Fees

A flat fee is a dollar amount that the attorney and the client agree on before the attorney begins work. Many attorneys favor the flat fee because it is a simple transaction and because the fee is paid up front. The attorney identifies an amount of work that the case will require and calculates a reasonable fee based on the time and effort involved. If the attorney spends less time on the case than anticipated, he may keep the excess fee amount, unless he and client agree otherwise. However, if the attorney charges a flat fee and the case requires more time and effort than originally anticipated, the attorney may not later demand more money.

Hourly rates

An hourly rate is a predetermined amount chargeable for the attorney's work. The attorney and client may agree that these fees be paid periodically or in one lump sum at the end of the case. The time that an attorney charges for legal work is called billable time, or billable hours. Hourly rates vary according to the attorney's expertise and experience. Some critics have argued that hourly rates discourage quick work and expedited resolutions.Before agreeing to payment of an hourly rate, prospective clients should ask for a written estimate of the number of billable hours that the attorney anticipates will be necessary for the case.

Contingent Fees

A contingent fee represents a certain percentage of the recovery in the client's case.For example, a typical contingent fee might be about one-third of the recovery in an action for personal injury. Attorneys use a contingent fee when the client seeks money damages. Contingent fees cannot be used in divorce cases, child custody cases, and criminal cases. The client does not pay a contingent fee until she or he wins money damages from the defendant. An attorney will offer such a fee if the client stands a good chance of winning a sizeable cash settlement or judgment.

Contingent fees are a gamble for the attorney. If the client does not win the case, or wins less than anticipated, the attorney may work for little or no pay. Contingent fee percentages vary from case to case. Common contingent fees range from 20 to 40 percent of the client's recovery. For personal injury and medical malpractice cases, laws in all states place limits on the percentage that an attorney may receive from a client's recovery. The law does not place a limit on contingent fee percentages for other cases, in which the figure is negotiable between the client and attorney.

Sometimes an attorney will mix a contingent fee with a flat fee or an hourly rate. Another common practice is to base the contingent fee on a sliding scale. A sliding scale contingent fee provides that the attorney receives a high percentage of the client's recovery if the recovery is large and a lower percentage if the recovery is small.

Retainers

A retainer is either a continuing flat fee or an advance on the fee owed for the attorney's services. Corporations and wealthy individuals usually use a continuing flat fee retainer. In return for a regular payment, the attorney agrees to be available to handle the client's day-to-day legal affairs. Most individuals do not have enough legal concerns to keep an attorney on retainer.

The term retainer also refers to an initial fee paid by the client. Attorneys who charge an hourly rate usually use retainers, but some attorneys add an initial retainer to a contingent fee.