Basic Attorney Fee Agreements

It is in your best interest to have a basic understanding of attorneys fees prior to entering into a fee arrangement with your attorney. In my experience as a paralegal, attorneys fees are a constant source of dissatisfaction for both the client and the attorney. Important to know is that all forms of attorney compensation are negotiable. I have seen numerous instances where attorneys slash fees and expenses in order to represent a client who has a straightforward, exciting or high profile case. So shop around and interview several attorneys before entering into a fee agreement for legal representation.

Lets begin by looking at four basic types of agreements attorneys use: contingency fee, modified contingency fee, hourly fee, and flat fee.

Contingency Fee - Here, the attorney is compensated for legal services based on a percentage of the recovery he projects the client will realize, plus expenses of litigation*. The typical contingency fee percentages range from 25% to 40% of the gross amount recovered. Normally, if the likelihood and amount of a recovery is small, or if the case will require significant time and effort, the contingency fee will be higher. If you want litigation expenses to be offset from the percentage of the recovery, make certain that the agreement spells that out.

Modified Contingency Fee - Attorneys also employ what is known as a modified contingency. In this situation, an hourly rate is used as well as a contingency fee, plus expenses of litigation*. Attorneys favor this agreement in cases where the probability of recovery is not great or the recovery amount may be limited. Using this type of agreement also benefits the client as it can be used as an incentive for the attorney to take a case that he might not otherwise consider.

Hourly Fee - The hourly rate that attorneys charge depends on a number of factors, including type of case, years of experience of the attorney, complexity of the matter and general overhead of the attorney, in addition to litigation expenses*. Please dont forget - the hourly rate is negotiable! The more benefit the attorney sees in representing you (whether in potential client referrals, publicity or income stream), the more likely the hourly fee will be adjusted.

Flat Fee - Flat fees are often used in criminal cases and for standard types of representation, such as incorporation, an estate plan, prenuptial agreements, or the drafting of a will. Attorneys make a projection of what he thinks the representation will cost him. In criminal matters, the attorney will obtain a fee for that amount "up front." Clients usually pay retainers at the beginning of representation but will be billed additional sums for continued representation once the attorneys time has exceeded the retainer amount, plus litigation expenses.* With the standard types of representation mentioned above, litigation expenses are generally included in the flat fee rate.
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* Such expenses include filing fees, investigation, witness fees, expert review fees, travel expenses, court reporter, copying, postage, and research