Attorney Fees: Everything You Need to Know
Attorney fees cover legal advice, the production of documents, negotiation, and research, specified in the agreement between the parties.7 min read
2. What do Attorney Fees Cover?
3. The Importance of Attorney Fees
4. Examples: Having Agreed Attorney Fees
5. Example: Not Having Agreed Attorney Fees
6. Frequently Asked Questions
7. Common Mistakes
What Are Attorney Fees?
Attorney fees are agreed upon the delivery of legal services for private or corporate clients. They cover legal advice, the production of documents, negotiation, and research, specified in the agreement between the parties. Attorney fees can be specified based on the project or a monthly fee of services in case of an ongoing contract.
Attorney fees consist of the following elements:
- Initial consultation meeting fees
- Contingency fees
- Monthly fees
- Flat fees for contracts
- Standard hourly rates
- Retainers for ongoing contracts
- Consultation fees
- Settlement fees
- Costs and expenses
- Referral fees
Contingency fees are generally applied in compensation cases, such as automobile accident lawsuits and personal injury claims. Courts often limit the amount or percentage rate of contingency fees. The most common contingency fee set by lawyers is one-third. This charging method is not allowed in some kinds of court cases, such as criminal or child custody court representation.
Consultation fees are charged on an hourly basis, and are based on the initial agreement between the lawyer and the client.
Most attorneys charge hourly rates, but different types of work might be charged at different rates, such as paralegal or administration services and court hearings.
Referral fees are applied when your attorney needs to refer you to another legal professional. Some states prohibit the application of referral fees in most cases, and only allow them in special circumstances.
Retainer fees are down payments for the legal services provided by the attorney, and are usually nonrefundable.
You might also need to pay statutory fees in case the court determines the cost of proceedings, for example, in bankruptcy or probate cases.
What do Attorney Fees Cover?
Attorney fees cover the services provided by lawyers to clients, in the form of advice, research, resources, time, and fees paid. They are usually specified by the attorney agreement when the customer signs up for the service. Initial fees are charged for advice and case review, while ongoing agreements have a retainer fee that covers all services on a monthly average fee basis.
Unfortunately, attorney fees are not standardized, and can range from one firm to another and vary among states. They are determined by the reputation of the law firm, the education level and experience of the attorney dealing with the case, the difficulty of the matter, and other aspects of the service.
Personal injury attorney fees regularly include a contingency fee that represents a percentage of the amount awarded to the client when the case is won. This means some lawyers do not charge upfront fees, but take a greater cut of the amount paid to the client if they win. Contingency plans are generally more expensive, as they include the risk of not winning the case. Therefore, they are set higher than the cost of legal advice and representation would be overall.
There is no rule whether a cheaper or more expensive law firm is more reliable. Some lower-cost smaller companies are attentive to client needs and will work on the case well, while more expensive large companies might neglect customers, due to their high workload.
There are different additional fees for various services and types of agreements, such as:
- Statutory fees for probates, bankruptcy, set by the court
- Postage and administrative fees
- Referral fees, if you need to see a specialist advisor or expert
The Importance of Attorney Fees
Not knowing how much a legal procedure would cost you will risk the stability of your finances. Attorney fees are usually specified by the individual agreement that is signed by the law firm and its client. Read through the contract and its clauses to ensure there are no hidden costs you are not aware of.
Attorney fees buy you the expertise of the legal adviser and the lawyer, as well as the entire team that works on your case. Paying your fees is your legal obligation. If you win your case, the other party might be made to pay your legal expenses. That's why it is recommended that you keep a record of your attorney fees and invoices. Further, if the invoice is not accurate, you can seek help through an attorney fee arbitration program for disputes.
If you cannot afford attorney fees, you have three options to acquire financial support:
- Legal aid: This nonprofit service covers civil, juvenile, and criminal cases' legal representation, provided you are eligible based on your financial situation.
- Pro bono: This service is provided free through the American Bar Association (ABA), and provides you with a fully qualified attorney without payment.
- Court-appointed help: This government-funded aid gives you court representation for defense.
In most cases, attorney fees cover more than legal representation. They give you access to advice and legal guidance, services, and the expertise of an entire team.
Examples: Having Agreed Attorney Fees
If you agree to the fees of the lawyer representing you before they take on your case, you will know exactly or approximately how much the procedure will cost you. If you agree on a payment schedule, you can also plan your finances accordingly.
If you know you will need the services of a law firm or a specific attorney for a longer period of time, you might ask for a retainer fee to be put in place, which usually gives you access to unlimited services and legal advice. This might be more cost-effective than paying every time you have a legal issue. This option also helps you budget your legal costs each month or year, depending on the schedule of the retainer agreement.
Example: Not Having Agreed Attorney Fees
If you do not have an agreed fee, you might be in for a surprise. This is true in particular in cases when a contingency plan is in place. If your attorney pushes you to accept a lower settlement amount, you might be left with a small amount of money, but the lawyer will still take their cut. However, since they know they would not get paid if they don't win, you might be made to accept a deal that is not in your best interest.
Legal cases rarely go according to plan. Therefore, if you only know the hourly rate of your attorney, and you need referrals and advice while the team works on preparing your case, your bill might rise to thousands of dollars. You will have to pay up before you can continue using the services.
Frequently Asked Questions
- Are more expensive attorneys better?
Not necessarily. Always check the reputation, experience, and qualifications of the attorney you are thinking of hiring. Arrange a time to talk to them.
- Should I consider contingency agreements?
You should not think about this unless you are sure you are better off paying later, which is usually not the case. It is generally cheaper to engage a lawyer per hour.
- How can I avoid attorneys overcharging me?
The best way to check the prices is to get different quotes and offers, talk to various lawyers in your area, ask friends how much they paid for similar legal services, and have an attorney fee agreement and schedule in place. Make sure your lawyer notifies you of unexpected expenses. Always check the fee agreement contract before you would sign it.
- When should I consider a retainer agreement?
If you need legal services and advice for a longer period, you might be able to save money with retainer agreements. Companies that constantly need legal representation and support usually opt for this fee structure to manage their budget better.
- Is there a standard fee for legal services?
There are no standard fees, and attorney service charges are not regulated. The cost will depend on where you live, how complicated your case is, how much research needs to be done, what the court fees are, and the ability of your lawyer. The fees of a top 5 percent Harvard graduate corporate attorney will be higher than those of a town attorney who generally handles divorces and public cases.
- What is the most common attorney billing method?
Hourly billing is preferred by law firms and private attorneys. You are charged based on how much time the legal professional spends on your case.
- What are the benefits of fixed fees for legal services?
Fixed fees apply to standard legal procedures, however, they do not cover additional costs that might occur, such as time spent researching and court fees. Always ask about additional costs that might be added to your final bill.
- One of the things clients should avoid is allowing attorneys to charge securities interest. This means the attorney will secure the outstanding amount of your legal bill against your mortgage. Therefore, if you are unable to pay, you might lose your home. Apart from not being ethical, this practice is dangerous for vulnerable clients.
- Choosing a contingency fee over upfront payment might be a bad idea, as it is usually more expensive overall. While some states forbid this practice, some firms still use this system of charging clients to attract new cases, even if they are unable to provide adequate service. If you lose a personal injury claim, you will still need to pay expenses.
- Not signing an attorney fee contract can have negative consequences and lead to lawyers overcharging clients. Always make sure you know exactly how much each service will cost before signing an agreement and engaging an attorney to represent you. Consult with a professional lawyer before you make a final decision and ask them about their fee structure.
- When talking to an attorney, never ask for a range of fees, but exact figures. Every case is different, and fees depend on the difficulty of the case and the time investment needed.
If you would like to get more advice on attorney fees and talk to one of UpCounsel's top attorneys, visit the resources section or post your legal needs. UpCounsel is a reputable firm employing only the top 5 percent of Harvard and Yale graduates and has several satisfied large clients including Google, Menlo Ventures, and Airbnb.