How Legal Fees and Expenses Are Handled
|Last Updated August 2, 2008|
For many people, fees and expenses are a major consideration when selecting a lawyer. During your initial consultation, an attorney should provide you with an estimated total cost to pursue the matter. However, in order to compare quotes from different attorneys accurately, it is important to understand the various ways in which fees are calculated.
Contingency, Hourly or Flat Fee
A flat fee is generally used in very simple matters (such as an uncontested divorce) or in cases in which the fee is set by law (bankruptcy in many jurisdictions, for example). If your lawyer will charge a flat fee, ensure that all paperwork processing and other charges are included in that fee.
A contingency fee is a set percentage of the money you collect that is charged if you win the case. However, expenses such as paperwork filing and witness depositions are usually billed separately. Find out what the charges are for these tasks and when you are expected to pay.
An hourly fee is the most common means of billing. In general, the more experienced an attorney is the higher fee she will command. Some attorneys bill different rates for office work and research than for court appearances. Make sure you understand how the work will be billed and at what rate.
Some attorneys roll all costs into a single hourly rate, contingency percentage or flat fee. More commonly, however, you will be expected to pay expenses separately. These expenses may include, but are not limited to: court costs and filing fees; witness fees and deposition fees; paralegal time; secretarial time; research costs; phone calls, faxes and postage; photocopying; and travel expenses. Ask the lawyer to provide you with a written list of standard charges. If cost is a concern, you can also request notification if expenses exceed a set dollar amount.
For flat fee cases, you may be billed upfront or a deposit at the beginning with balance due upon completion. Contingency fees are deducted from the money collected, although additional costs may be billed periodically. For hourly fee cases, billing is more complicated.
The simplest option is generally a retainer, in which you make an upfront deposit. As funds run low, you deposit additional money. However, a retainer carries two major disadvantages. One is that you may feel as if you have lost control of the money. Ask to be sent detailed statements on a periodic basis, perhaps monthly. The other disadvantage is that it can be hard to get a refund if you are unhappy with the lawyer's services. Negotiate a binding arbitration agreement in advance.
Other options include paying as you go and periodic billing. Negotiate an agreement with the attorney in advance to avoid misunderstandings. Remember that if the case is not handled on contingency, you will be expected to make regular payments.
Keeping Costs Down
If you have legitimate financial hardship, contact your local legal aid service. Many lawyers regularly donate low-cost or pro bono hours to assist those who lack the resources to pay. You must be prepared to demonstrate your financial need.
If you do not qualify for low-cost or pro bono legal services, you can still work to keep costs under control. Negotiate with your lawyer before work on your case begins to try to reduce some fees. Also express your willingness to work on your own case, from delivering documents to making phone calls. Be willing to work towards a quick settlement rather than a protracted court case.
Although any lawyer should give you a cost estimate during your initial consultation, not all estimates are the same. Ask detailed questions about additional fees and payment structures. Negotiate if necessary to find the agreement that works best for you.
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