Types of Legal Fees
Though they may perform similar jobs, attorneys have different types of fees that they charge. The fee agreements that clients sign can significantly affect how much they pay for legal services. Attorney's fees also depend on several factors, such as the lawyer's ability and experience, how much time is spent on a case and the difficulty and results of a case. Understanding the different types of fees allows clients to make well-informed decisions on which lawyers to retain for their matters.
Lawyers use consultations to learn about clients' situations and determine whether or not they can be of help. Clients use consultations to get to know the attorneys and ask questions to decide whether the attorneys are right for them. The consultation fee is what an attorney may charge for this initial meeting, although many lawyers don't charge consultation fees. The attorneys who impose the hourly or fixed charge do so because clients aren't obligated to hire them after the consultation and they need compensation for their time and resources spent.
When clients agree to pay a contingency fee, they are agreeing to give their attorneys a percentage of what they receive from successful settlement negotiations or court verdicts. There is no standard percentage that attorneys charge, and clients can discuss this amount with prospective lawyers before hiring them.
Upon receiving the awarded amount, attorneys automatically deduct the contingency and applicable expenses from the recovered amount. These expenses may be for:
- court reporters,
- expert witnesses,
- filing legal documents,
- making photocopies, and
- office staff.
If the settlement negotiations fall through and the court or jury rules in favor of the defendants, the lawyers don't get their fee. However, clients might still be responsible for paying the applicable expenses, so it's important for them to ask questions prior to signing if they don't fully understand the contingency arrangement.
A flat or fixed fee is a specific dollar amount that a client pays for legal services. Some attorneys use flat fees for relatively simple, routine legal issues such as uncontested divorces or will preparation. Lawyers can typically predict how much time they will spend on these types of cases, so they set a standard price for their services. Some attorneys switch between flat fees and hourly rates for certain services. Additionally, fixed-fee agreements don't always include court and office expenses.
Some lawyers charge clients a portion of their recovered award for referring them to other attorneys. Several state codes of professional responsibility prohibit referral fees unless the fee agreements meet certain criteria.
The rule of thumb is that lawyers can't pay other lawyers for referring clients. One reason this is viewed as unethical is because adding a go-between attorney could compromise the confidentiality and loyalty of the individual to the client. On one hand, the go-between lawyer may feel more loyal to the referred lawyer with the promise of earnings. On the other hand, the loyalty of the referred attorney might lie with the go-between attorney to land more clients.
Like other attorneys fees, clients discuss referral fees with their lawyers. They don't have to agree to an arrangement if they don't think the fee is reasonable. A lawyer also can't charge a referral fee without client consent.
Clients can think of a retainer as a down payment on an attorney's services, and it could be used in different ways. In one instance, the fee is a set amount that lawyers receive to guarantee their services even if it means they have to refuse other cases. Attorneys typically deposit the money into special accounts and deduct the cost of services as they work. The clients receive the leftover funds.
A retainer could also mean that attorneys are on call to deal with client legal issues for a certain period of time instead of for a certain case. In this instance, clients pay lawyers to be available when they need them.
Retainers usually cost more than the average fees that clients pay for the legal work they need. Most of the time, this fee is non-refundable unless the court deems it unreasonable. This means that clients can't get the money back if the lawyer doesn't perform the work promised.
The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.
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