You’re at the store and you’ve just picked up an item you love. If you’re anything like me, it’s a new vinyl record to add to your collection. I’m thinking it’s the eponymous album by the Lumineers, in fact. You love it, you want it, and you’re sold on it. There’s just one problem at this point – you don’t know how much it’s going to cost you.
I’m in a better position buying this vinyl record than you are if you’re shopping for legal services because I buy vinyl records frequently and have a good sense of what this kind of purchase usually costs. You, on the other hand, may be sitting across the desk from me or another attorney and probably don’t know what to expect. It’s likely your first time shopping for legal services and hiring an attorney.
If I pick up that record and it’s $30 or so, I’m going to buy it. Imagine, instead, that it’s a special edition that costs $100 and it’s the only Lumineers record in the store. I’m surprised. I’m less likely to pull the trigger now. Worst of all, I’m not happy because I don’t like financial surprises.
Now imagine that you’re in my office and you want to hire me as your attorney. You aren’t really sure what to expect in terms of attorney’s fees, and you also don’t like financial surprises. I understand how you feel. In this article, I’m going to explain how most attorneys charge for their services so that you are better prepared and less surprised the next time you’re shopping for legal services.
Lawyers usually charge fees in 3 different ways – hourly, on contingency, or by using a flat fee.
An hourly fee is the most common arrangement when you’re hiring an attorney. The concept is straightforward – you have a problem you need an attorney to help you resolve and in order to make that happen you agree to pay her an hourly rate until it’s resolved. The rate you are charged depends upon the going rate in your local community. Generally, big city attorneys charge higher fees than rural or small town attorneys. Specialists also tend to charge more for their services than general practitioners.
When you engage an attorney in an hourly fee arrangement, he may ask you for a retainer up front to get started. This money is held in the attorney’s trust account until it’s earned. The retainer is billed against while the attorney completes his work. In short, when he earns the money by performing legal services for you, he transfers that money from his trust account to his business account.
Under hourly arrangements, attorneys need to keep detailed records of their time. When they talk with you on the phone, send you letters or emails, research your case or go to court on your behalf they are charging you their hourly rate for those services. You are also likely to be charged for services performed by the attorney’s staff, but at a lower hourly rate.
Some types of legal work are traditionally billed on a contingency basis instead of hourly. Personal injury and collections cases, for example, are typically billed in this manner.
Normally, if an attorney is billing you on a contingency basis you won’t be asked to provide any funds up front. Instead, the attorney will be compensated after the case settles or a verdict is reached. The attorney’s fee will be a percentage of your award. In general, if you are not awarded any compensation, neither is your attorney.
Contingency fees work well in cases where there is a good likelihood of recovering damages but you do not have the funds to pay the attorney’s fee as the case progresses. Attorneys who work on a contingency basis need to be skilled at evaluating cases so that they know which cases this model will work for and which cases they may only be willing to accept on an hourly basis.
The third way that attorneys charge for their services is with flat fees. Using this model, the attorney quotes you a fee to complete the work and you agree to pay that amount. Because this is the model that most closely resembles the everyday purchases that we all make, this is the model that clients are most likely comfortable with.
Attorneys who use flat fees typically have some sort of fee schedule that they rely on to give them an idea on what a particular service costs and then make adjustments for the relative ease or difficulty of the case.
Although there is nothing wrong with any of the methods outlined above, I prefer to use flat fees in my practice as much as I possibly can. I learned about flat fees early on in my career and became a believer right away.
One main reason I prefer flat fees is avoidance of the surprise issue I outlined above. I don’t like surprises when I’m shopping for records and I don’t think my clients like surprises when they want to hire me, either. Flat fees let attorneys control this to a point because the attorney and client agree on the fee up front and stick to it. Hourly rates, on the other hand, don’t tell you how many hours of work are required in-and-of themselves.
Even where an attorney uses their best judgment in estimating the time it will take to work a case to resolution, they may underestimate the time they need to spend on it and therefore the size of the bill the client will be responsible for. If I was charged $100 for my Lumineers record and thought I was only likely paying $30, I would be much more surprised and unhappy than I would be if I was just surprised at the cost in the first place.
It’s important to remember that regardless of what fee arrangement you and your attorney agree on, costs for items such as filing fees, expert reports, or advertising, etc. may be additional to your fee. Make sure you read the fee agreement closely and ask your attorney who will be covering these costs if they apply to your particular case.
At the Law Offices of Lutz & Petty, our promise to you is that we will act reasonably with regards to all facets of your case, including fees. We don’t want you to be surprised at what you’re charged.
If you’ve got a legal issue you need to resolve, we’d be happy to meet with you for a free initial consultation. You can call us at (570) 218-4888 or use the “Schedule a Consultation” feature at the top of the page to contact us.