Learning the basics of attorneys’ fees before hiring an attorney will help you avoid a common misunderstanding between lawyers and clients: money.
(For additional help, see How to Find an Excellent Attorney.)
Understanding Attorneys’ Fees
You want a lawyer who knows the subject matter of your legal problem inside and out, charges reasonably, treats you with respect, and with whom you can communicate. Though no lawyer is cheap, you probably can find lawyers all over the price spectrum who can meet your needs.
Here are some general rules to keep in mind.
- No standard fee. An attorney and client will base a fee agreement on factors such as the lawyer’s overhead and reputation, the type of legal problem, and the going rate for similar work (such as a trademark search, handling an eviction, filing bankruptcy, or preparing a living trust). However, you’ll likely have no problem finding lawyers who will work for less—especially in areas with a large surplus of lawyers.
- Cheap isn’t necessarily good. Although everyone wants to save money, the cheapest lawyer probably isn’t the best, especially if your problem is complicated or specialized. A novice who charges $100 an hour might end up costing more than an expert who charges $225 an hour if the more expensive lawyer provides better and more efficient service.
- Expensive isn’t necessarily best, either. That said, little correlation exists between a premium price and excellent lawyering. The most expensive lawyer could be selling you the image that comes with a posh address and a great view. Consider the complexity of your problem. You probably don’t need a sophisticated corporate attorney to draft a simple business contract.
- A contingency fee can be a bad idea. A lawyer who offers to take your case on a contingency fee gets paid if you win only—but it isn’t necessarily a good deal. If it’s clear that another person is a fault for your injuries, and insurance coverage exists, the contingency fee might be an overly generous cut (usually 33% to 40%). From your point of view, a contingency fee is a good deal when the attorney must take a significant risk, but not so much when little risk is involved—unless you agree on a much lower percentage, of course.
- Avoid security interests. Steer clear of any lawyer who proposes securing the right to collect a fee with a deed of trust or mortgage on your house, or who wants you to pledge other property to pay fees should you lose the case. These agreements aren’t legal in most states.
Preparing a Written Fee Agreement
Most disputes between lawyers and clients are over money — specifically, over how much money the client owes the lawyer. Some states avoid these problems by requiring written fee agreements (often called retainer agreements or representation agreements), and it’s always a good idea. It will set out the lawyer-client relationship terms and provide a record of what you agreed to pay in case you later have a dispute over legal bills.
A written agreement should include:
- Retainer. If you must pay a deposit in advance (often called a “retainer”), the contract should state the retainer amount and when you must replenish it.
- Hourly fee. The agreement should state the hourly rates for everyone who might work on the case; how often the lawyer will bill you; how much detail the bill will include; how long you have to pay the bill; discounts for early payment; penalties for late payment; and how to dispute a charge.
- Contingency fee. In a contingency fee case, the lawyer takes a percentage of the client’s winnings. The agreement should state the contingency percentage (some lawyers collect a higher amount if the case goes to trial) and the collection process.
- Costs of suit. The agreement should also explain how litigation costs—such as court fees, fees charged by expert witnesses, private investigators, process servers or stenographers, copying costs, travel expenses, or messenger fees—will get paid. A lawyer in a contingency fee case might agree to front costs and get reimbursed if the client wins, but a client who loses has to pay costs back to the lawyer. Other attorneys require clients to pay these fees and costs as the case progresses.
Other terms to include:
- whether the lawyer will represent the client for the appeal or other post-trial proceedings (such as judgment collection)
- which attorney in the office will be responsible for the case; and
- the responsibilities of the attorney and client (such as being honest and forthright); and how to end the relationship.
How to Keep Attorneys’ Fees Down
No one wants the shock of a hefty bill from a lawyer’s office at the end of the month, but it can happen. Here are a few tips to help keep your legal bills under control:
- consider whether you should sue in small claims court
- look into mediation or arbitration
- educate yourself about your matter
- keep your phone calls brief, and
- review your bills carefully.
Also, it’s important to dispute any charge with your attorney promptly. And, if you find that your attorney is delving into an area that you’re not interested in—such as negotiating a deal for property you don’t care about—contact the office immediately. Be assured that your attorney would prefer clearing up the confusion to dealing with a billing dispute.