People unfamiliar with the legal system are often confused by the fees an attorney charges, and how the amount was derived. Some think that all attorneys charge ridiculous fees just to take advantage of customers, but most lawyers and firms have a specific equation for determining the price of their fees.
There are a number of factors that will determine what your attorney charges for the services rendered, many of which are governed by their ethics code.
Most states have adopted the Model Rules of Professional Responsibility and attorneys must abide by it. Rule 1.5 applies to fees charged. The general rule is that a fee must be reasonable and lists a number of factors to determine whether the fee is reasonable. Read on to learn about a few about how attorneys determine fees for their clients:
This is the most common method for the attorney to charge clients. The hourly rate varies depending on the skill, experience and market area of the attorney. Lawyers in large metropolitan areas such as Los Angeles, New York and Chicago charge a higher hourly rate than those in rural areas. The number of hours a case will take to conclude is often difficult to predict, especially if the matter is in active litigation. Factors such as the complexity of the case, the skill needed to handle the matter and the attorney’s experience in the particular area of law are considered in disputes regarding hourly fees. In any case, both the hourly rate and the number of hours performed on the case must be reasonable. A court is usually permitted to review fees for reasonableness.
Billing Rates of Others in the Law Firm
Attorneys will also bill at different rates, depending on who performs the work. For example, work done by a paralegal or law clerk is billed at a lower rate than that of an associate or partner. Paralegals and clerks normally handle the more mundane tasks and basic research while the attorney handles court appearances, conferences and negotiations.
Most common in personal injury cases, the attorney charges a few based on the percentage of recovery. If the client recovers nothing in the case, the attorney does not collect a fee, but usually can recover case expenses. In certain personal injury actions, especially medical malpractice actions, states have placed limits on the percentage an attorney can charge. The “cap” is often around 25 percent. Per the Model Rules, contingency fee arrangements cannot be made in family law or criminal cases.
This is a common method of charging for single transaction matters. An attorney may charge a flat rate for the preparation of a will or handling a real estate closing, no matter how much time the case takes to conclude. Preparation of trusts and contract preparation is often charged at a flat rate also.
Case expenses are different from attorney fees, but can have a substantial impact on the final bill of the client. These expenses include expert witness fees, travel costs, exhibit preparation, financial work performed by accountants and investigators, postage and miscellaneous expenses. The attorney can advance payment on these types of fees, but the client is usually responsible for these expenses. In contingency cases, the expenses are deducted from the recovery amount before the fee percentage is taken. For example, if a client recovers a $200,000 settlement and there is $20,000 in case expenses, the $20,000 is first deducted before the attorney fee is collected. In this example, the fee will be based on the $180,000 net recovery rather than the $200,000 gross recovery.
In any legal matter, the client should have a thorough and frank discussion regarding fees to be charged by the attorney. An estimate should be given, an explanation of anticipated expenses, and a contract should be signed. Though not required in hourly and flat fee cases, a written contract is a requirement in contingency cases. Rod Gregory, a defense lawyer in Edmonton suggests that you consult with an attorney before hiring to determine their style of payment, and which specific factors regarding your case will influence the end price.