Legal Fees

What is the basis for a legal fee?

Probably the most basic ingredient in any fee charged by law firms is the amount of time spent on a particular problem. In one important way, a lawyer’s professional services differ from those of a doctor or dentist; much of the work is accomplished when the client is not present.

Many clients are, therefore, often unaware that the four-page document and the advice given in a few minutes are actually the products of many hours of work. In addition, this end result may have involved time spent by other persons in the lawyer’s office, i.e., a legal assistant, a lawyer associate or a legal secretary. When you engage the services of an law attorney, remember that you really may be hiring an entire law office to work for you and provide legal services for your specific needs.

Since a lawyer is rarely confronted with two legal situations which are exactly alike, the fee will depend upon the factors involved. After you have related the facts in your case, your lawyer will give you an estimate of the fee.

How is the fee computed?

A lawyer usually computes a fee on an hourly rate. This can range anywhere from $75 an hour to more than $300 an hour, depending on the circumstances of the case as well as the experience and expertise of the lawyer.

In computing the fee, your attorney considers a number of elements, including:

1. Time. This is the basic element in determining a fee. While many attorney at law work a minimum of eight to ten hours a day, only about 65% of that time can be billed to clients. The remaining time is devoted to keeping up with the many new and changing laws; continuing legal education courses; attending bar association committee meetings and taking part in related studies and projects; and volunteering in legal services programs.

2. Ability, Experience and Reputation. Good law school training combined with later legal experience constitutes a lawyer’s legal education. An experienced lawyer may be better trained to handle your problem. If your lawyer is well known as an able lawyer in one field, a higher fee may be charged because those specific services are in special demand. This situation is similar to that found in the field of medicine when a doctor charges more for a complex operation than for a routine one.

3. The Results Achieved. In some cases, the result itself may decide the fee. An example of this is the “contingency” agreement, often used in personal injury cases. The lawyer receives no fee unless money is recovered for the client. If money is recovered, then the lawyer is paid an agreed-upon percentage of the recovery. In most states, this percentage ranges from about 25% to 50%, depending on the amount recovered, the area of the state, the circumstances of the case, and many other factors. The client, by law, is responsible for court costs such as filing fees and subpoena fees. The client must also reimburse the lawyer for any actual expenses paid out of the office funds (for items such as long-distance telephone calls, investigators, medical reports and depositions).

When no contingency fee arrangement has been made, the lawyer will expect to be paid whether the client wins or loses the case. Always keep in mind that no lawyer can guarantee the results of any court proceeding.

4. Operating Expense and Overhead. The cost of operating the average law office (including such items as rent, equipment, law libraries, supplies, professional and non-professional staff and insurance) amounts to nearly 50% of the gross annual income derived from legal fees.

What about discussing the fee?

You should discuss the cost of legal services at your first interview with a lawyer. The lawyer may not be able to determine the exact amount of time and effort required to handle your case but should be able to give you an estimate based upon past experience. Sometimes, a lawyer may quote a total charge (flat rate) for the work involved or may just give you an hourly figure for the estimated time required on a particular matter.

A written fee agreement is highly recommended for the mutual benefit of both you and the lawyer.

You should NEVER hesitate to discuss fees at any time during the handling of your legal matter. If you receive a statement and believe the fee isn’t proper, talk it over with your lawyer. Usually, misunderstandings about fees result from the fact that the client is not aware of the extent of the lawyer’s work on the case.

This is by no means the client’s fault. Clients who do not regularly see a lawyer may understandably believe that the activities of the lawyer are limited only to those evident. It is always a good idea to obtain copies of all documents and correspondence pertaining to your case. The lawyer’s obligation is to explain, if asked, how the charges were made. If you and the lawyer are not able to resolve a fee dispute, the State Bar of your state offers a fee arbitration service that either of you may want to consider.

When do you have to pay?

The time for payment of legal fees depends on the type of legal service you wish rendered. In many cases your lawyer may require a payment before agreeing to undertake the work. This is frequently referred to as a retainer. Such payment may be only to assure his availability, or it may be for credit against services to be performed or applied to costs which might be incurred. You and the lawyer should discuss this and reach a clear understanding as to which is applicable to your case.

If you want to put a legal fee or costs on a credit card, ask your lawyer attorney whether or not he or she participates in a plan for one of the credit cards you hold and whether the particular charge qualifies.

If you are not certain you will be able to pay promptly, talk it over with your lawyer. You should be able to reach an arrangement.

How can you hold down your legal fees?

1. Write down the names, addresses and telephone numbers of all persons involved as well as all the facts you can recall which pertain to the case. Doing this yourself will, obviously, cut down on the time the lawyer will have to spend gathering the information.

2. Take any papers relating to the case to the first interview.

3. Be as brief as possible in all interviews with the lawyer.

4. Do not allow emotion to color the facts given; be as accurate as you can.

5. Make full and honest disclosure to the lawyer of ALL the facts, good or bad. This is essential in making a determination about your case, and your lawyer will keep it in strictest confidence.

6. Avoid unnecessary telephone calls to the lawyer. (Understand that if you are being billed on an hourly basis, you are billed for these calls.)

7. Get legal advice before signing documents or taking legal action. Then follow the advice of the lawyer.

8. Consider the financial advantages or disadvantages of a proposed legal action by discussing it with your lawyer. (For example, would the court costs and legal fees be more than the amount of the bad debt you would like to recover?)