Legal Fees

Attorney Fees and Costs

Please note -- your legal fees will be spelled out in your attorney-client retainer agreement.  Please send all questions regarding billing to the address on any bill you receive. 

Attorney fees and costs are one of the biggest concerns when hiring legal representation, and vary greatly depending on a variety of factors. Understanding how attorneys charge and determining what a good rate is can be confusing.  Understanding some basics about the costs of legal representation and how attorney-client fee agreements are usually structured before speaking to an attorney will help you ask the right questions and determine whether the rate is acceptable.

The most common forms of attorney’s fees are hourly rate fees, flat rate fees, and contingency fees.  The fees typically pay for the attorney’s time only.  In addition to the fees, you may be required to pay costs associated with your legal representation like the cost of filing papers with the court or of sending correspondence to the opposing party.  Sometimes attorneys require money down in the form of a retainer. 

Types of Fee Agreements

Hourly Rate Legal Fees

Under an hourly rate agreement, the attorney gets paid a set hourly rate for their work. 

Typical hourly rates range from $150/hour in more rural areas to $500+/hour in more metropolitan areas.  Attorneys that have extensive experience or education in a particular area will usually charge more than the average hourly rate to compensate for their specialized knowledge.  The trade-off is that attorneys with more experience in an area can often complete the legal work more quickly so you won’t be billed for as much time. Some attorneys charge different amounts for different types of work, billing higher rates for more complex work and lower rates for easier tasks.

Hourly rates have traditionally been the most common legal fee arrangement.

Flat Rate Legal Fees

Flat rate legal fees are when an attorney charges a flat rate for a set legal task.  The fee is the same regardless of the number of hours spent or the outcome of the case. Flat rates are increasingly popular with certain kinds of legal cases. 

Attorneys are more willing to offer flat rates on well-defined tasks like basic contracts, uncontested divorce, and forming business entities.  Flat-rate legal fees are usually not an option for lawsuits and other more complex tasks that can quickly expand in scope.  It is too risky for the attorney who could end up doing $10,000 worth of work for $1,000.

Be sure to ask whether the flat rate includes costs associated with the work or not.  This is a common source of confusion on flat rate legal agreements.

Contingency Legal Fees

Contingency legal fees are based on success.  Under the typical arrangement, if the attorney wins the case for the client, the attorney will take a percentage of the amount won, but if the attorney is not successful, the client pays nothing. Often, the percentage that the attorney receives depends on what stage the case is settled at.  For example, the attorney will usually obtain a smaller cut if a settlement was reached before trial – because less time and expense were expended – than if the case goes to trial.  When contingency fees are used the fees and costs of the suit are often deducted from the monetary recovery before the percentage is taken. 

Contingency fees are only utilized where there is a dispute, otherwise, there would be no objective way to determine whether the attorney had been successful.  Contingency fees are most commonly available in automobile accident cases, medical malpractice cases, and debt collection cases.

Although the percentages that a successful attorney receives, which can reach about 33% of the recovery from the dispute, seem high, contingency arrangements are often favorable for the client.  The fee taken by the attorney is often less than the client would pay if they paid hourly.  Contingency fees they remove the risk and allow the client to bring suit where they otherwise could not afford to do so.

Most states have laws that prohibit the use of contingency fees in certain types of cases, like divorce and criminal prosecutions, for public policy reasons. 

How Rates are Calculated

Attorneys have great discretion in deciding what their fees will be.  Attorneys with more credentials will undoubtedly command the highest fees, and at times, may not even be able to take otherwise strong legal cases due to their focus on current clients.  Including:

• The attorney’s experience and education;
• The typical attorney fee in the area for the same services;
• The complexity of the case;
• The attorney’s reputation;
• The type of fee arrangement – whether it is fixed or contingent;
• The client or case’s time limitations; and
• The time and skill required to competently represent the client.

Clients should consider these same factors when deciding whether they will pay an attorney’s requested fee.  For example, a client should expect to pay more if they request that an attorney step in to represent them in a legal action that requires a response within 3 days rather than 3 months.  Also, typically, most lawyers will not take on new clients when their cases have already progressed beyond a certain point.  In that case, the client might be on their own!  

Other Legal Costs & Expenses

Clients may be responsible for other required fees and costs associated with their legal representation, including:

• Cost of serving a lawsuit on an opposing party;
• Cost of filing lawsuit with court;
• Cost of filing required paperwork, like articles forming a business, with the state;
• State or local licensing fees;
• Court report and space rental costs for depositions.

In most cases, clients should expect to pay these types of mandatory fees and costs.  In contingency fees, a client is usually only responsible for these costs if they are successful, in which case these costs are taken out of the amount of money recovered.  

Clients may also be responsible for paying some of the attorney or law firm’s expenses including:

• Travel expenses like transportation, food, and lodging;
• Mail costs, particularly for packages sent return receipt requested, certified, etc;
• Administrative costs like the paralegal or secretary work.

Please refer to your particular client agreement to determine what fees may or may not be covered.

Retainer Agreements

A retainer agreement is an agreement under which the client agrees to pay the attorney a large sum up-front, usually ranging from $5,000 - $50,000 as security for future payments.  The retainer fee goes into a trust account and as the attorney earns it, it is taken out and placed in the attorney’s general operating account.  For example, if an attorney billing at $500 per hour spends 5 hours on a case, the attorney will move the $2500 he or she has earned from the trust account to the operating account.

The agreement may provide that if the amount in the trust account dips below a certain amount, the client must replenish it by putting more funds into the account. If there is money from the retainer fee remaining at the end of the representation, the attorney is required to refund that amount to the client.

Retainer agreements are typically used in two situations: (1) where an attorney expects to expend a fair amount of time on a case and wants to ensure payment; and (2) when a client wants to secure the ability to reach out to an attorney for ongoing legal services and advice. 

Retainer agreements are usually only used in conjunction with hourly fee arrangements.  They should not be confused with flat fee agreements that require advance payment of attorney fees and consider the fees earned upon receipt.