Understanding and Negotiating Legal Fees

You’ve decided that you need a lawyer. What you do next will have a major effect on the final outcome and your peace of mind.

Types of Fees

– A Consult Fee is a fee charged by a lawyer to hear a potential client’s case. This can be a flat fee, an hourly charge or no fee at all.

– A Contingent Fee means that the attorney will be paid only if you win, and will then receive a hefty percentage in the range of 30-45% of monies recovered. These typically don’t occur in certain types of cases such as criminal matters and divorce. Even where a contingent fee is possible the client is still responsible for all expenses.

– Costs vary but generally include any expense incurred not covered by the lawyer’s hourly rate. Examples include: filing fees for court documents, mileage, copies, faxes, service of papers, parking, postage, telephone toll charges, subpoena fees to name some but by no means all.

– Experts such as independent custody evaluators or small business evaluators are two examples. Each will charge for time spent including preparation, preparing of reports and testifying.

– Fees Set by a Judge involve cases in which a judge or hearing officer may establish a fee based on the complexity of the issues and the work involved. Fees in probate cases are an example.

– A Flat Fee will sometimes be accepted by a lawyer generally for cases where the lawyer can estimate with some confidence the time required for settling the matter. These occur commonly in routine service cases like drafting a simple will, real estate settlements or uncontested divorces.

– The Full Service Package including legal advice, fact investigation, legal research, correspondence and pleadings (court documents) preparation; negotiation; representation at hearings; formal discovery; trial. The client retains the lawyer who provides all services needed within the package. The scope of needed services in decided unilaterally by the lawyer who then bills the clients accordingly. This is the high priced option.

– Hourly rate charges are based on the amount of time the lawyer spends on the matter. The rate is dependent upon the lawyer’s experience or the volume of demand. Some of the work will likely be handled by law clerks, legal assistants, associate attorneys and paralegal and should be billed at a reduced rate.

– Minimum Billing Increments occur when an hourly rate is charged. You are not billed to the minute but rather in increments for time spent under an hour. Examples are increments charged by the quarter hour. That means that if 10 minutes are spent you will still be charged for 15. You pay less if the attorney bills by tenth hours. So if your attorney spends 12 minutes and bills by the quarter hour you will be charged for.25 of an hour rather than.20 if your attorney is charging by tenths. These add up over time.

– Negotiated Percentages are often used for debt collection. The fee is a percentage of the amount claimed or collected.

– Payment Arrangements or plans typically require monthly payments and vary greatly from lawyer to lawyer.

– Referral Fees are sometimes charged by lawyers who refer you to another lawyer to handle your matter. The first lawyer may ask for a portion of the total fee you may. Referral fees may be prohibited under state codes of professional responsibility unless certain criteria are met.

– Retainers are advance payments to be used toward defraying hourly fees and incurred costs. When the amount is depleted the lawyer may request an additional retainer or may simply continue to bill on a periodic basis. Lawyers must follow strict regulations for safekeeping and accounting for these client funds. Whether or not you have an established relationship and payment history with the lawyer will impact the amount and recurring nature of the retainer.

– Written Retainer Agreements between lawyer and client are legally binding once signed by both parties. You can still fire the lawyer or complain informally or formally about fees charged and services provided and the lawyer can still quit.

These agreements clearly set forth all fees and costs to be charged. As well as all other matters agreed between you and the lawyer such as a payment plan, limitation on hours, services to be provided or any other promises or understandings. All should be clearly set forth. This document will force you and your lawyer to be clear about your expectations and may save you future grief. You will need this document if a dispute does arise later.

Remember the rules that govern the ethical conduct of lawyers require that all fees be “reasonable.” This generally means that they be fair and competitive as well as reflect the skill required to obtain the desired results.

Strategies for Lowering Costs

– Ask the lawyer to be your coach while you do most of it yourself.

– Avoid, generally prepaid legal service plans. Most low cost plans only cover a few phone consultations and some basic services. After that you receive a discount for other legal work. The resulting fee has not proven to be better than what you can get by doing your homework, and interviewing several lawyers on your own. More expensive plans do cover some thing like bankruptcy or drunk driving, but few people need a lawyer more than a couple of times in their life and this may be unnecessary insurance.

– Be clear about you your expectations and what is being provided and get it in writing.

– Be willing to help out on routine tasks. You can do a lot of the work yourself like lining up witnesses, making phone calls, or delivering or gathering documents.

– Stay Informed and up to date.

– Unbundle necessary services into discrete affordable tasks and hire a lawyer for discrete tasks.

– Use a variety of professionals piecemeal as the need arises.

– Use non lawyer professionals for tasks within their expertise like accountants or tax preparers for preparation of financial documents, insurance agents for insurance advice, real estate brokers for property valuations or independent paralegals for routine form preparation.