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Choosing a Lawyer - Fees and Costs

HandelontheLaw.com Staff Writer

Tuesday, October 22, 2013



Choosing a Lawyer - Fees and Costs
Lawyer Costs

This is your case and you – not the lawyers; not the judge; not the jury - will be responsible for paying these fees and costs.

First, let's cover some basic concepts. "Costs" are all expenses of your case other than the lawyer's fees. Those expenses include but are not limited to: filing fees; witness fees; stenographer's fees; process server's fees; postage; mileage; essentially any reasonable expenditure required to pursue or defend your case. Costs are usually piggy-back billed with lawyer's fees. When discussing costs with your lawyer, make sure you understand all the costs for which you will be held responsible. In addition, ask whether the lawyer is going to pay the costs and be reimbursed by you or whether you will have to pay the costs directly. In some circumstances, you can also insist that you must preapprove costs above a certain amount.

"Fees" are the compensation paid to your lawyer. Though fee arrangements can be mighty creative, lawyers typically charge several types of fees, including: fixed/standard; hourly; retainer; contingency; or statutory. A "fixed/standard fee" is usually a flat fee paid in advance for the entire matter. The lawyer commonly determines the amount based on the level of his/her expertise in this area of law, the complexity of the work, and the amount of time he/she estimates it will take him/her to complete the matter. An "hourly fee" is a set dollar-rate per hour that the lawyer charges for the time he/she spends working on a case: you and your lawyer agree to a set rate that he/she will charge per hour; your lawyer then records all the time spent on your case in increments as low as 1/10th of an hour; your lawyer bills you periodically (often monthly) for that time. A fee agreement using an hourly fee often also requires you to pay a "retainer fee," which is an advanced lump sum – a type of security deposit – against which hourly fees and costs are charged. Depending on your state, your lawyer might be required to return any unused portion of the retainer to you at the end of your case. A "contingency fee" is a portion – usually one-third - of the money received from settlement, trial or appeal of your case. You will want to ensure that your lawyer calculates his/her portion after costs are paid because that can make a significant difference in the lawyer's fees. For example, suppose you recover $100,000.00 for your case, your costs equal $20,000.00 and your lawyer's contingency fee is 33%. If your lawyer takes 33% before costs, you will pay $20,000.00 in costs plus $33,000.00 (33% of $100,000.00) to the lawyer, for a total of $53,000.00. However, if your lawyer takes 33% after costs, you will pay $20,000.00 in costs plus $26,400.00 (33% of $80,000.00) to the lawyer, for a total of $46,400.00. Catch my drift? Fortunately, some states require the calculation of contingency fees after costs. Finally, a "statutory fee" is one set by law, for example by Workers Compensation statutes. Your lawyer will know whether he/she is limited to a statutory fee, the amount and timing of the payment(s), and will include that language in your fee agreement.

Other terms can also affect fees and costs. Interest is sometimes also charged on unpaid fees and costs; consequently, you should ask the lawyer to exclude the interest provision. If your lawyer insists on including an interest provision, ask for the lowest possible interest rate and the most favorable calculation period. The flip side of interest charged on unpaid fees/costs could be a discount for prompt payment of the bill: just as you might be penalized by interest for delayed payment, you could also be compensated by discounts for early payment; therefore, ask if a provision can be included in the agreement for a prompt-payment discount of the lawyer’s billed fees and costs.

"Fees" and "costs" are normally included in a written agreement between you and your lawyer. Though you have reached a meeting of the minds with the lawyer, do not assume that he/she will begin working on your case before you sign an agreement for his/her fees and costs. In fact, some states require the lawyer to have a written agreement with you about fees and costs before the work can begin. Agreements for a lawyer's fees and costs usually have some basic elements, such as: the services to be performed by the lawyer for this case; the type of fees; the amount of fees; how the fees must be paid; a brief explanation of costs – which are expenses other than fees; how the costs will be billed; how the costs must be paid; whether the lawyer will charge interest on unpaid fees/costs; the interest rate on unpaid fees/costs; how the interest rate on unpaid fees/costs will be calculated; how the interest must be paid; your responsibilities as the client. Whatever elements are contained in the agreement make sure that you understand the agreement and feel satisfied with its terms before you sign it. If you do not like the terms of the agreement, you can ask for revisions (though the lawyer might not agree). Whether or not a written agreement is required by your state, make sure you have a written agreement so that you and your lawyer know what is expected from both of you. After the agreement is prepared and signed by both you and the lawyer, you will receive a copy of the agreement. Keep the agreement in your expandable file folder, along with your other case documents.


DO'S AND DON'TS

DON'T be intimidated by the process or the people.

DON'T assume that your lawyer will begin working on your case before you sign an agreement for his/her fees and costs.

DO make sure you have a written agreement so that you and your lawyer know what is expected from both of you.

DO make sure you understand all the costs for which you will be held responsible.

DO ask whether the lawyer is going to pay the costs and be reimbursed by you or whether you will have to pay the costs directly.

DO ask to preapprove costs above a certain amount.

DO determine whether your lawyer’s fees will be fixed/standard; hourly; retainer; contingency; or statutory.

DO request that your lawyer return any unused portion of the retainer to you at the end of your case.

DO ensure that your lawyer calculates his/her contingency fee after costs are paid.

DO ask the lawyer to exclude the provision for interest on unpaid fees/costs.

DO ask for the lowest possible interest rate and the most favorable calculation period if your lawyer insists on including a provision for interest on unpaid fees/costs.

DO request a provision in the agreement for a prompt-payment discount of the lawyer's billed fees and costs.

DO ensure that your agreement includes at least:
a. the services to be performed by the lawyer for this case;
b. the type of fees;
c. the amount of fees;
d. how the fees must be paid;
e. a brief explanation of costs;
f. how the costs will be billed;
g. how the costs must be paid;
h. whether the lawyer will charge interest on unpaid fees/costs;
I. the interest rate, if any;
j. how the interest rate on unpaid fees/costs will be calculated;
k. how the interest must be paid;
l. your responsibilities as the client.

DO make sure that you understand the agreement and feel satisfied with its terms before you sign it.

DO ask for revisions of any agreement terms that you do not like.

DO take and keep a copy of the agreement in your expandable file folder, along with your other case documents.


Kathy Catanzarite

[Note from HandelontheLaw.com: This article is to be used as an educational guide only and should not be interpreted as a legal consultation. Readers of this article are advised to seek an attorney if a legal consultation is needed. Laws may vary by state and are subject to change, thus the accuracy of this information cannot be guaranteed. Readers act on this information solely at their own risk. Neither HandelontheLaw.com, or any of its affiliates, shall have any liability stemming from this article.]


Source: Kathy Catanzarite - Handelonthelaw.com Staff Writer

Note from HandelontheLaw.com: This article is to be used as an educational guide only and should not be interpreted as a legal consultation. Readers of this article are advised to seek an attorney if a legal consultation is needed. Laws may vary by state and are subject to change, thus the accuracy of this information can not be guaranteed. Readers act on this information solely at their own risk. Neither the author, handelonthelaw.com, or any of its affiliates shall have any liability stemming from this article.





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