The most common types of attorney fee arrangements include consultation fees, contingency fees, hourly fees, flat fees, retainer fees, referral fees, and statutory fees. The kind of fee arrangement that a client makes with his or her attorney determines the amount he or she will pay for the legal services.
Some of the factors that influence legal fees charged include the duration spent on the case, the attorney’s capability, reputation, and track record, case uniqueness and difficulty, case outcome, and expenses incurred. Other factors that might affect the legal fees charged are the lawyer’s overhead costs such as rent, computers, utilities, and office equipment.
Common Fee Arrangements Used By Attorneys
Consultation Fee
Some attorneys require clients to pay a fixed or hourly fee for the initial meeting. Others offer this meeting free of charge. It is, therefore, important for clients to find out whether they will be charged for the first meeting.
Contingency Fees
In this arrangement, the attorney takes a specific percentage of the settlement money obtained from the case. The amount the attorney gets depends on the outcome the attorney obtains and sometimes the stage at which a settlement is reached. If the client loses the case, the attorney doesn’t collect any fees. The client will, however, need to pay for expenses directly related to preparing and filing the lawsuit.
Contingency fees are common in property damage cases, injury cases, or other types of cases involving a huge amount of money. Courts may bar attorneys from charging these fees in specific types of cases, including child custody and criminal matters. These fees are also not available for divorce lawsuits, if a client is facing a lawsuit, or if he or she is looking for general legal advice.
Flat Fees
This arrangement involves an attorney charging a fixed, total fee. It’s common in fairly simple or repetitive matters like an uncontested divorce, wills, powers of attorney, or advanced healthcare directive.
Hourly Fees
Hourly rate is one of the most common fee arrangements. In this arrangement, the attorney charges a client for each hour that the attorney works on his or her case. If the attorney, for instance, charges $200 each hour and the attorney works for 10 hours, the fee will be $2,000. The amount charged per hour varies with different kinds of work. Moreover, the fee scales for attorneys working in big firms vary with the level of seniority. Senior members generally charge higher hourly fees compared to young paralegals or associates.
Retainer Fee
Retainer fees are basically a down payment that a client makes in anticipation of a need for legal representation in the future. When a client has an attorney on retainer, he or she pays the attorney a specific amount of money in advance. The client then can receive legal representation from that attorney when the need arises until that money depletes. A lawyer retainer fee is usually calculated by multiplying the hourly fee by a specific number of hours.
Referral Fee
An attorney who refers a client to another attorney may demand a certain percentage of the total fee the client pays for the case. The lawyer fee must be fair and the client must consent to the arrangement.
Statutory Fee
Statutory fees refer to specific legal fees set by the statute or regulation of a specific area. There is a limit to the amount that an attorney can charge for their services in specific practice areas like workers’ compensation.
