Fee Structures for Legal Services
The Different Ways a Lawyer May Charge You for Legal Counsel
There are three different types of fee structures for most legal services:
- Flat fee – With a flat fee arrangement, you pay a fixed amount for the work done. This is most common when the lawyer is preparing and executing a document, such as a will or trust, deed or simple contract. You should be careful when entering a fixed fee arrangement, as many fees may not be refundable.
- Hourly fee – Instead of a flat fee, the lawyer may charge for their time by the hour, at a specified rate. The more time your lawyer spends, the more you will pay in fees. The attorney may ask for a “retainer” at the beginning of your case, which is like a down payment and will be applied to the hourly fees incurred. If the attorney spends more time than the retainer fee covers, you will be billed for the additional time. You should always get an estimate of the anticipated number of hours to resolve your case, and you should have a clear agreement about when the attorney needs your permission to go beyond that estimate. As with fixed fees, retainer fees are often non-refundable. Be certain to read your fee agreement.
- Contingency fee – A contingency-fee arrangement means your lawyer takes a percentage of any verdict or settlement recovered on your behalf, usually anywhere from 25% to 40%. The contingency fee does not cover administrative costs, such as filing fees, court reporter fees, and expert witness fees. It is only for the attorney’s time.
When you enter into a contingency-fee agreement, you assign your right to compensation to your lawyer. Accordingly, if you choose to replace your legal counsel before your case is resolved, the lawyers will have to work out how the contingency fee is split.
Take the Time to Read Your Fee Agreement!
Before you sign a contract to hire a lawyer, read the fine print, so that you know exactly how you’ll be billed and what you will be required to pay. Don’t let the lawyer pressure you into signing anything unless you fully understand what you’re signing. In most instances, it’s a good idea to take a copy of the contract home with you, reread it, and return to sign it only if you are comfortable doing so. When you understand all the potential costs, you’ll have a much better relationship with your lawyer.