One of the things that I try to do in this space is answer common questions to take some of the mystery out of what we do. One of the recent queries that has evidently been pursued online concerns attorney’s fees and how we charge for our services. To answer that question, first you have to understand that there are three different types of fees that attorneys charge. Here is a brief description of each of those fee arrangements:
Hourly Fees
An hourly rate is just like it sounds in that the attorney charges the client a particular hourly rate. It is not unusual to see hourly rates between $300 to $500 per hour depending upon expertise and area of practice. Examples of areas that use hourly rates include family law, corporate law, insurance defense (the attorneys that I see on the other side of cases hired by insurance companies) and property law. The usual arrangement is for the client to pay the attorney a lump sum called a retainer for the attorney to place into their trust account. Then when the attorney bills the client (usually monthly) they reduce the amount of the retainer by the amount billed. When the retainer is exhausted (or gets down to a preset amount contained in the contract for services), the client replenishes the retainer for continued representation. Hourly rates are charged for both attorney and paralegal time in these types of contracts. Usually the advantage of having a paralegal is that firms charge lower rates for paralegal time, which results in cost savings for clients.
Fixed/Flat Fees
A second type of fee agreement is the “fixed fee” or “flat fee”. In this type of fee arrangement, the attorney and client agree on a lump sum for the attorney to be paid in exchange for the legal services. Then whether the attorney works 100 hours or whether they work 10 hours, that fee never changes. This type of fee arrangement is commonly used in criminal defense work as well as for particular services such as the drafting of documents such as simple wills or contracts.
Contingency Fees
The third type of attorney fee agreement is the contingency fee agreement. With a contingency fee agreement, the attorney doesn’t make any fees unless they make a monetary recovery on behalf of the client. This is most commonly used in my area of practice, which is personal injury. In personal injury, the client has been harmed by a negligent act of another person (probably the most common example of this type of case would be an automobile collision). With these types of cases, there is usually an insurance company involved and the client hires the attorney to obtain compensation for the harms and losses they have suffered as a result of the insured’s negligent act (the most common example is a rear-end collision). With this type of case, we gather information concerning all of a client’s harms and losses and when we make a recovery for those “damages” it is usually paid out in one lump sum. When that lump sum is paid, that is the recovery upon which the attorney’s fees are based, and they are calculated based upon a percentage of the full recovery.
Mixture
While the above represents the three types of attorney’s fees, there could also be a mixture of the types of fees. An example would be that a criminal defense attorney could charge a flat fee for all work leading up to trial, but then have the contract change to an hourly rate contract if the case proceeds to trial. If you hire an attorney of any type, you should be signing a contract which spells out the type of contract and the fees you will be required to pay.
Our Fees – Family Law
Finally, I know that many people clicked on this blog hoping to find out what fees we charge for our services. If you hire us to represent you for a divorce or family law matter, our fee agreements are an hourly rate contract and the client pays us a retainer to work against. Our current hourly rate for our family law attorney is $350 per hour and $150 per hour for paralegal work (this is obviously subject to change (the last time we increased our fees was a few years ago), but again, the contract will spell out the hourly rate for attorney and paralegal time).
Our Fees – Personal Injury
For the work we do on behalf of clients in the personal injury context, my fees are 33% of the gross amount collected (that means when we make a recovery, the attorney’s fees are calculated on the whole amount recovered, not after costs and other deductions, such as subrogation of health insurance (click here for my blog explaining subrogation). I think it’s most common in my field for attorneys to charge 33.33%, but I’ve generally left mine at 33% for simplicity. The only exception to this is if the case proceeds toward trial. In that case my fees increase to 40% of the recovery that is made within 45 days of trial. The reason for this is simple. Preparing for and proceeding to trial is incredibly time intensive. I generally figure I will spend about six weeks preparing for a one week trial, it’s that time consuming. Trial is also very risky and if our client loses, so do we because if we don’t make a recovery on behalf of the client, we don’t make any fees either. Aside from my fee rate, I see other firms charge 33.33%, but it’s becoming much more common to see firms charging 40% for their services. Because of the variation in each firm’s fee structure, anyone wanting to hire an attorney should make sure they know what the fee structure is before signing a fee agreement contract so that you don’t have any surprises at the end.
If you would like more information on our services, please give us a call at 719-633-6620 and we’d be happy to discuss your legal needs and how we can help you.