Launching a startup? Injured in an auto accident? Considering a divorce? Need help fighting a lawsuit? Writing a will? In situations like these, you probably should hire a lawyer who can represent your best interests and give you sound legal advice. When researching lawyers in your area, you’re probably wondering about their fees. But what you need to understand is that lawyers may use different fee structures, and the same lawyer may also offer different options or use different fee structures for different kinds of legal work.
Lawyers typically charge clients a flat fee for relatively simple legal matters. This fee is a set amount that clients must pay, regardless of the time a lawyer spends on the task. Lawyers might use flat fees in legal matters that require completing forms and documents. For example, estate planning attorneys usually charge flat fees for creating simple wills and trusts.
With an hourly fee, the rate will depend on how much time the lawyer works on the case. Most lawyers break hourly fees into 10- to 15-minute increments. The number of hours a lawyer will spend on a case will significantly vary based on the case’s specific nature. Because of this, you should ask the lawyer to estimate the hours (if possible) required to complete your case to avoid any surprises later on. It’s also important to note that, in certain situations, lawyers might charge lower hourly rates for very simple tasks, such as researching and interpreting laws, compared to litigation.
A retainer fee is an advanced or down payment based on the lawyer’s hourly fee. With this fee, you put money in an account where your lawyer deducts fees for completed services. It’s your responsibility to review the account regularly. You should also know that any unused retainer fees may or may not be refundable, depending on your agreement with your attorney.
A contingency fee agreement is the most common payment structure that personal injury attorneys use. With a contingency fee, you don’t need to pay anything other than expenses related to your case unless your lawyer wins your case and you receive your settlement. Your lawyer will receive a set percentage of the judgment or settlement award. But, again, your lawyer will only receive a payment if you do.
Some states don’t permit lawyers to charge clients on a contingency basis in particular case types, like criminal cases or divorce cases. Besides personal injury cases, lawyers often charge contingency fees in employment, in business, probate, and real estate litigation matters.
When an attorney refers a client to another attorney, the referring attorney typically takes a percentage of the case’s value. The two attorneys determine an objectively reasonable referral fee, and the client should agree to it. Certain states have stringent rules governing referral fees, and some prohibit them entirely.
Why Lawyer Costs Vary
It’s common for veteran, widely-known attorneys in big cities to charge more for their services than attorneys with less experience in rural areas.
But aside from the attorney’s experience and location, these common factors can result in varying lawyer fees:
- Type of representation – Essentially, more complex legal cases are likely to cost more. This also applies to otherwise simple, routine legal matters that became more complex due to aggravating circumstances or factors.
- Fee structure – Whether your lawyer works on a contingency fee arrangement, requires an hourly rate, works on a flat fee, requires a retainer, or works when needed will ultimately have a huge impact on the overall cost.
- Services rendered – If a lawyer performs multiple services, this may likely increase the overall cost. But lawyers sometimes bundle services and charge a fixed cost to help keep the overall price fairly low.
The Importance of Understanding Lawyer Costs
Understanding exactly how much a lawyer will cost before you hire one can prevent surprising costs that you can’t afford. You wouldn’t want to burden yourself and/or your family with undue financial strain or incur debts just to afford lawyer fees. Expenses, which can also differ vastly from one case to another, could add up fairly quickly, so you should speak to any potential attorney in detail about cost and fee estimates. Obtain a written estimate of the costs, which can include court costs, delivery charges, filing fees, etc. If these are not clear in the written estimate, don’t hesitate to ask.
Most important of all, make certain that the lawyer costs are worth the cost of your case and what you could potentially recover should you win your case. For instance, if you are considering filing for bankruptcy due to a $20,000 debt, it won’t make sense to hire an attorney that costs $15,000.
This is why many reputable lawyers offer free case consultations. With a free initial consultation, the lawyer can review the facts of your case and determine if it’s even worth filing a claim or going to court. The lawyer can also suggest other steps that you may take on your own, and you get sound legal advice without paying anything at all.
Although hiring a lawyer might not cost as much as you initially thought, you can see from above that you must consider many variables when determining legal fees. The majority of the fee structures you’ll probably come across may be easy enough to understand but might still feel intimidating.
So before hiring a personal injury lawyer or signing an agreement, you should understand exactly how much you might need to pay for your lawyer’s services. Asking questions, clarifying things you don’t fully understand, obtaining a written fee agreement, and understanding everything your lawyer says should be your priority.