You Want How Much?

Written by Chris Uhl
The information contained herein is only to inform the public and does not create an attorney client relationship with the reader. You should always consult an attorney when seeking legal advice.

Most lawyer stories involve the high cost for their services. Currently in the April 1997 ABA Journal, there is an article about excessive fees and lawyers caring more about the cash then the client. This kind of talk makes honest lawyers cringe. Most people do not realize that 50 to 60% of the fee paid to the attorney is for overhead costs. Now there are fees and there are FEES ! About 20 years ago, there were only three types of legal fees: the hourly rate, the contingency fee, and the paid in advance lump sum (criminal cases). In today's competitive market place there are many new fee arrangements. Two of the most widely used are the hourly rate with a cap and the lump sum fee.

The paid in advance lump sum fee for criminal cases is still in existence. Why lump sum ? Most criminal law work is very predictable and the lawyer you hire has done this work repeatedly. It is easy to accurately estimate the amount of case time involved. Of course, time is the lawyer's only commodity, so all rates are reduced to how many hours are involved in the case. The lawyer assumes all the risk with this fee structure. There are very few criminal cases where the lump sum fee would not be appropriate. Why pay the fee in full, in advance? The client may not be able to pay later because of incarceration. Lawyers do not like to sue their clients because it is bad for their reputation and business. The lawyer who does sue, must choose between lost income or a bad reputation for suing a client. In a criminal case, the standard arrangement is to collect the entire fee before you enter an appearance for the defendant.

The hourly rate fee, with a starting retainer (usually $5,000 or more) is still alive and well in today's economy. Here the client assumes all the risk. This is still the only fee structure many law firms adopt. If clients are willing to agree, then this structure is usually used. The lawyer cannot lose here, because the client will be billed for all faxes, copies, telephone calls, lawyer's time, paralegal's time, etc. The initial retainer will always be used with a future bill forthcoming. This fee arrangement may be used for all cases, even criminal. The client should be alert because recently a lawyer was reprimanded for charging $50,000 for a Drunk Driving case where the standard lump sum fee would be $3,000 to $10,000. There are some cases in which this fee structure fits perfectly (a complicated case of any type, business contract review, negotiation, difficult divorce, tax, trust, or complicated will).

The contingent fee arrangement was developed to make lawyers more available to those who could not afford them. Believe it or not most lawyers would find it difficult to afford themselves. The contingent fee agreement (contract) is used in all types of injury cases. You see advertised on TV "no fee unless we recover." A contingent fee agreement must be in writing. The client should read the contract carefully because it usually obligates the client to pay costs that could be thousands of dollars on some types of cases. Even if no recovery is made for the client, the costs incurred by the lawyer, on behalf of the client are now due and payable to the lawyer by the client. The reputable injury lawyers usually do not sue their clients to recover costs, but there are a few lawyers who do. This is all negotiable when the lawyer wants your business. At this juncture, no one knows exactly the value of your case. So negotiate! Try not to be too aggressive in negotiating the fee. Why? How would you like your boss negotiating your salary downward? The contingency contract usually allows the attorney to earn from 1/3 to 1/2 of the monetary award plus costs. This means the lawyer could end up with more money than the injured person.

The hourly rate with a cap is as the hourly rate described above except the fee will be capped at some dollar amount to pressure the lawyer to work efficiently. The lawyer takes the risk in this case unless the cap is extremely high. This type fee arrangement may work best because it lets the client know their total legal costs.

The lump sum fee is a derivative of the criminal case arrangement. You see this advertised everywhere; bankruptcy $500, simple will $300, simple divorce $400, real estate closing $600, etc. This seems to be the best arrangement to most consumers because it is what people are accustomed to in America; likened to shopping at the mall. If your legal difficulty fits into a cookie cutter application, then this fee arrangement if for you. What do you do if it does not? Then this fee arrangement would not be appropriate. Normally, what happens is that you think your problem fits the standard fee, but the lawyer tells you it does not fall under the advertised fee.

When selecting a lawyer, it is of foremost importance, to pick the person in which you feel comfortable and confident. Then work out the fee arrangement, which should always be in writing so there are no misunderstandings. There is nothing wrong with comparing fees, but you should not think you are getting a deal because the initial fee is less. In the long run it may cost you more.

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