UNDERSTANDING ATTORNEY FEES VERSUS COSTS
In general, there are three types of attorney fee billing systems: hourly fees, flat fees and contingency fees. In addition, certain costs are incurred during a legal case. Regardless of which fee type applies to a particular case, the client is always fully informed of the billing process before being asked to enter into a fee agreement with our firm.
An attorney’s hourly fees are based on the actual amount of time the attorney spends working on any particular issue in a case. For instance, if the attorney researches an area of law and then prepares a legal brief or memorandum on the basis of that research, both the time spent in research and the time spent composing the document will be billed at the hourly rate for that attorney. In hourly fee cases, the attorney keeps track of his or her time and then bills the total amount to the client on a monthly basis. For some hourly fee cases, a retainer is collected by the attorney in advance of the work being performed. The work is then billed against the retainer at the attorney’s hourly rate. At the end of the case, if there is any unused portion of the retainer, it is returned to the client.
In some circumstances, a case may be fairly simple or have a routine set of forms and procedures which make the case more easily billed as a “flat fee.” If a flat fee is applicable in a particular case, that fee will be agreed upon between the attorney and the client prior to any work being performed on the client’s case.
Contingent fee agreements are most commonly used in cases when the defendant is responsible for damages and there is an expectation of a monetary recovery by settlement or judgment. This form of fee agreement is frequently used in personal injury cases. Contingency fees are also common in employment cases brought on behalf of a wronged employee. In these types of cases, the attorney will generally collect a contingency fee of between one-third and one-half of the settlement and/or verdict. In employment cases, the attorney may also be awarded fees by the court which must be paid by the defendant employer. If there is no recovery, the attorney does not collect any fee; however, the client must still pay certain costs as explained below.
In almost every case, there are costs incurred in addition to attorney fees. For example, if you have been involved in an accident, your case costs may include expenses incurred to obtain copies of your medical records and hire an expert witness. A lawyer may agree to advance these costs on the client’s behalf. However, the client is always responsible for the costs incurred, and must reimburse the lawyer at the end of his or her case. If the client and attorney have entered into a contingency fee agreement, costs advanced during the case will be deducted from any settlement or verdict obtained in addition to the attorney fees.