Whether you’re putting a will together, filing for divorce, or facing a lawsuit, it can often be worthwhile to hire an attorney to assist you with the legal process.
One of the biggest concerns that clients have, however, is cost. As a lawyer is the highest-paying social services job, many clients are fearful that they may be unable to hire a lawyer when they most need one.
It’s true that certain attorney fees can quickly add up so it’s always important to read your lawyer’s written fee agreement and have an understanding of the different types of fees your attorney might charge.
Here are six different types of attorney fees you might encounter when working with a lawyer.
1. Contingency Fees
One of the most common types of attorney fees is the contingency fee. With a contingency fee, the attorney is paid a percentage of the money that is awarded during a judgment or settlement.
This type of fee is popular among clients, as they take on little financial burden when hiring an attorney and only pay the contingency fee if their case is won. If the client loses the case, the attorney doesn’t collect the contingency fee.
The lawyer can also benefit, as they often negotiate a relatively high percentage of the amount that will be awarded—typically, between 25% and 40%.
Contingency fees are more prevalent on large injury or accident cases rather than on small cases, as the percentage earned on a small case may end up being disproportionate to the amount of time, energy, and money that the firm exhausts during the process.
2. Consultation Fees
An attorney may charge a consultation fee for an initial meeting with you, prior to both parties agreeing to work together. The consultation fee is typically a flat fee and is relatively inexpensive overall.
It’s also worth noting that not all attorneys charge consultation fees. In fact, many lawyers will offer a free consultation before you ever enter an agreement with them. Before scheduling a consultation, confirm whether or not your lawyer will be charging a consultation fee.
3. Flat Fees
While an attorney is unlikely to charge you a flat fee on a complicated or complex case, there are certain circumstances that may call for this type of fee.
Flat fees are primarily used for simple or routine cases that the attorney handles regularly. Because these cases are fairly predictable and require standard practices, lawyers generally know what to expect in terms of cost. These types of cases may include will preparations, mortgage foreclosures, or uncontested divorces.
4. Hourly Fees
An hourly fee is another one of the most common types of attorney fees, as it allows the lawyer to tailor the final cost of the work to reflect the amount of time, money, and energy that is spent on the case. The lawyer will usually track his or her time by the hour or by fractions of an hour.
Be mindful that hourly rates ultimately depend on the firm, the type of case, and the attorney’s experience. The average firm charges $100 – $300 per hour for their legal services. The top end of law firms may charge as much as $1,000 or more per hour.
Rates even vary from task to task. Paralegal fees, contract preparation fees, and litigation fees may all have very different hourly rates, so it’s important to get a full breakdown of these rates from your attorney in your agreement.
Particularly as payment will not be dependent on whether or not is won or settled (as is the case with contingency fees), it’s wise to request at least a rough cost estimate for all legal services upfront.
5. Statutory Fees
The amount a lawyer can charge a client for legal services is sometimes set by a court or regulated by a local, state, or federal statute. While not limited to bankruptcy and probate cases, statutory fees are most often seen with these types of cases.
These attorney fees are not required upfront or during the case but are instead billed for a later date.
6. Retainer Fees
A retainer fee is not a different type of attorney fee, per se. Rather, it’s an amount of money that is paid to the attorney upfront. As the job progresses and costs are accrued, the attorney will pull from this funded account—typically, using their hourly rate.
A retainer can be a convenient method of managing payment, particularly when a client has worked with a law firm repeatedly, has established a level of trust, and understands the lawyer’s fee structure.