Billing and Fee Arrangement Information
Charging an hourly rate is the most common billing method used by attorneys. In an hourly billing arrangement, an attorney charges for their services by breaking down their rate in hourly increments, with 1/10th of an hour, or six minutes, most frequently used. The attorney keeps track of time spent speaking with you, going to court, writing legal documents, performing legal research, performing discovery, communicating with opposing counsel, and any other aspects of your representation. The attorney’s staff, such as law clerks and paralegals, will do the same, but at a lower rate. The attorney then provides you an itemized bill that breaks down all of the services that the firm provided and how much it is billing for them. The rate that attorneys charge can vary greatly depending on things like where they are located or what kind of case you have. If there is anything on your bill that you don’t understand or have questions about, let your attorney know right away so that they can explain it to you.
Advanced Fee Retainer
Depending on the circumstances of your case, your attorney may require an advanced fee retainer. This is essentially a down payment for legal services, which you deposit with your attorney before representation begins. These retainers are most often used in conjunction with hourly billing arrangements. When your attorney begins work on your case, they will keep track of everything they do, and provide an itemized bill, in precisely the same way they do in an hourly billing arrangement. However, rather than charging you directly, they will deduct payment, according to their hourly rate, from your deposited retainer. You will only be responsible for making payments directly to your attorney once the deposited retainer is used up. Once your representation is complete, if there is any amount in your retainer deposit that remains unused, it will be returned to you.
For some services, you and your attorney may be able to agree on a flat fee, which is a one-time fee, usually paid up front. Flat fees are most frequently used for simple matters such as preparing a contract, drafting a will, or a single court appearance. Your attorney may have a set fee that they charge for such services, or they may be willing to negotiate a fee with you based on how much work they estimate is needed to complete the task. Your attorney should clearly explain the flat fee to you before work begins so that you fully understand what services are and are not included in the fee. More complex, time-consuming, or unpredictable matters will most likely not be billed using a flat fee.
In some cases, your attorney may be able to take your case on a contingency basis. In a contingency fee arrangement, your attorney will be paid a percentage, agreed upon before work begins, of any money awarded to you by the court or recovered by settlement. What this means for you is that if you don’t recover anything, you don’t have to pay your attorney for their work. However, depending on the circumstances, you may be responsible for hard costs or payments to third parties made during representation. When using a contingency fee arrangement, attorneys will often charge 30-40% of the amount recovered, but it can vary based on the risk of the case or how far along the case progresses. This amount may seem high, but this is because your attorney will be the one bearing all of the risk of the lawsuit, as they won’t get paid unless you get paid. You, as the client, bear little to no financial risk. However, depending on the nature of your case, a contingency fee arrangement may not always be available, as it might not be economically feasible for your attorney or might not actually be allowed for your type of case. Contingency fee arrangements are most often used in settings like personal injury.
Depending on the circumstances of your case, your attorney may also be able to offer a hybrid billing arrangement. A hybrid arrangement can be set up in one of three ways: a combination of a reduced contingency fee and a reduced hourly rate; a combination of a larger up front flat fee and a reduced hourly rate; and a combination of a larger up front retainer and a reduced hourly rate.
In a hybrid contingency-hourly rate arrangement, your attorney will be paid a percentage, agreed upon before work begins, of any money awarded to you by the court or recovered by settlement, however, this percentage will be lower than the typical 30-40%. In exchange for this reduced contingency fee, you will pay your attorney and their staff an hourly rate for all the work they do in representing you, but at a lower rate than your attorney usually charges. The benefit here is that if you do not recover anything in your case, you’re off the hook for the contingency fee and you will only have to pay your attorney the reduced hourly rate. In this type of arrangement, your attorney will be taking on greater risk than an hourly rate arrangement, but less risk than a normal contingency fee arrangement, and thus, your attorney takes a smaller percentage as contingency.
In a hybrid flat fee-hourly rate arrangement, you will pay your attorney an agreed-upon flat fee up front, before representation begins. In exchange for the up front fee, you will pay your attorney and their staff a lower hourly rate than your attorney usually charges for the work they do in representing you. While a standard flat fee arrangement is typically limited to simple matters like drafting a contract or a will, this sort of hybrid arrangement may be available for a broader variety of matters.
Finally, your attorney may be able to offer a hybrid arrangement wherein you pay an hourly rate, lower than your attorney usually charges, in exchange for depositing a larger advanced fee retainer up front.