Legal services aren't cheap, and you should know how much you are willing to spend up front. Good representation may come at a steep, but not unreasonable, price.
When you're shopping for legal services, always ask potential attorneys to fully explain their fees and billing practices. Don't hesitate to ask detailed questions and don't be embarrassed. A lawyer's willingness to discuss fees is an important indicator of client service.
What are typical fee arrangements?
Standard payment arrangements an attorney may suggest include:
Hourly rates are the most common arrangement. Under this arrangement, the attorney gets paid an agreed-upon hourly rate for the hours worked on a client's case or matter until it's resolved.
It depends on each attorney's experience, operating expenses, and the location of his or her practice. Cheaper isn't necessarily better when it comes to your legal protection. A more expensive lawyer with a lot of experience may be able to handle a complex problem more quickly. Also, an experienced attorney will be able to better estimate how many lawyer hours a particular matter will take to resolve.
Where a legal matter is simple and well-defined, lawyers typically charge a flat fee. Examples of flat fee matters include wills, uncontested divorces and simple bankruptcy filings. If an attorney suggests or has advertised a flat fee, be sure you understand exactly what that fee will and will not cover. The flat fee might not include expenses such as filing fees.
A retainer fee is typically, but not always, an advance payment on the hourly rate for a specific case. The lawyer puts the retainer in a special trust account and deducts from that account the cost of services as they accrue. During the course of legal representation, clients should review periodic billing statements reflecting amounts deducted from the retainer.
Most retainers are non-refundable unless labeled "unreasonable" by a court. If you decide to drop a case that your lawyer has worked on before the retainer has been exhausted, you may forfeit the remainder.
In certain types of cases, attorneys work on a contingent fee basis. Contingent means that the attorney takes no fee from the client up-front, but gets a percentage typically one-third (1/3) of the settlement or money upon judgment. Contingent fee arrangements are typical for:
Plaintiff's counsel in automobile accident lawsuits
Other personal injury cases
Debt collection cases.
Courts set limits on the contingency fees a lawyer can receive from personal injury suits. Of course, lawyers and clients are free to negotiate contingency fees less than the standard one-third.
Contingent fee arrangements in certain kinds of cases such as divorce, criminal cases, or child custody cases are prohibited.
How much can you expect to pay?
Rates for legal fees vary based on location, experience of the lawyer, and the nature of the matter. Believe it or not, rates may vary anywhere from $50 an hour to a $1,000 an hour or more.
In rural areas and small towns, lawyers tend to charge less, and fees in the range of $100 to $200 an hour for an experienced attorney are probably the norm. In major metropolitan areas, the norm is probably closer to $200 to $400 an hour. Lawyers with expertise in specialized areas may charge much more.
In addition, you can expect to be charged at an hourly rate for paralegals and other support staff. A good paralegal's time, for example, may be billed out at $50 to a $100 an hour or perhaps more. It would not be unusual for a legal secretary's time on things like document production to be billed out at perhaps $25 to $50 an hour.
What About Expenses and Court Costs?
Little things add up. Carefully discuss with your lawyer anticipated miscellaneous costs so that you can estimate those costs up front and avoid any unpleasant surprises. Be prepared to scrutinize court costs, filing fees, secretarial time, and delivery charges.
Keeping Track of Legal Fees
Get a fee agreement in writing. If an attorney is unwilling to put a fee agreement in writing, cross that attorney off your list. Some states require written fee agreements for most cases.
Ask your attorney to include in the fee agreement a provision for periodic, itemized billing. An itemized bill should list and describe all charges so that you can review them and compare them to your fee agreement.
You might want to arrange for a ceiling or limit on fees. You might also require your lawyer to get your approval before proceeding beyond a certain amount in legal costs. If you've hired an attorney to recover a $10,000 debt, you probably don't want to pay $8,000 in legal fees to resolve the matter.