What Does it Cost to Hire a Lawyer?
Legal assistance is not cheap. A client pays a lawyer for the lawyer’s expertise in specific areas of the law. This is a brief look at some of the most common ways in which a lawyer charges a client for the services provided.
Hourly Fees: Hourly billing is the most common type of billing lawyers engage in and is the standard practice for attorneys hired by corporations or insurance companies to defend them or their insured. It is also the standard in bankruptcy proceedings and criminal cases. The hourly charge differs based upon the type of work a lawyer is hired to perform and can differ based upon the stage of litigation a case is in. The hourly rate is often used in conjunction with a retainer, which is discussed below. A lawyer billing hourly keeps track of every six minutes (1/10 of an hour) he or she spends working on a client’s case. A client is typically expected to pay each month for the attorney’s time.
Contingency Fees: In the world of personal injury (car accidents, medical malpractice, etc.), contingency fee agreements are by far the most common. A lawyer’s standard contingency fee for a car accident is typically 1/3 of the amount the client recovers at the end of the representation. However, based upon whether a case goes to trial or must be appealed, this fee can increase to half or more of the final settlement or judgment. This kind of fee agreement is ideal for cases in which a client cannot afford to pay hourly and the amount that is at issue is not certain. The fact that recovery is not certain means that the lawyer is taking on the risk of not getting paid for his or her work. Because that risk exists, and because the attorney will pay for expert witnesses and costs to prepare the case for trial, the fee is “contingent” upon the lawyer being able to recover for his or her client.
Flat Fees or Value Billing: Some attorneys will charge a set fee for a project such as drafting a will or appearing in court on behalf of the client. This type of service based fee is becoming increasingly common for attorneys who routinely draft documents that require limited variation or do not require fact intensive preparation.
Statutory Fees: In some areas of the law, the fees are set by statute. For example, in Montana, a workers’ compensation lawyer’s fee is set at 20% of the client’s recovery. There are other examples, but this type of fee structure is fairly limited.
Retainers: Although it is not a separate type of billing, a retainer is a sum paid by a client to retain the services of the attorney. The attorney then deducts his or her fees, as they are incurred, from the retainer until it is exhausted. After the retainer is exhausted, the lawyer is typically paid hourly for his or her work. Any retainer charged by an attorney must be earned. That is to say that a lawyer cannot keep a sum of money paid to retain him or her without earning it. If the lawyer’s work concludes before the retainer is exhausted, the remaining retainer should be refunded to the client. Some attorney’s will state in agreements that they charge a “non-refundable retainer,” however doing this is ethically questionable if the lawyer does not earn the money. The retainer fee should also be placed in trust for the client, as it is the client’s money. Only after earning his or her hourly fee can the retainer money be moved from the attorney’s Trust Account to his or her Operating Account.
Consultation Fees: This is a fee charged by a lawyer to meet with a potential client to discuss the client’s case. It is fairly rare for an attorney to charge a consultation fee, but be aware that some do. Most attorneys, however, will meet to discuss a case with a client for free.