1) Hourly Fees
This is the default way lawyers bill their clients. They charge a certain amount per hour and multiply that by the number of hours worked on the case. It sounds simple, but there are a few things to watch out for before you enter this type of fee agreement. First, what’s the hourly rate. It’s impossible to say what’s fair, but you should try to find out how the rate compares to other lawyers in your market. You want to make sure you’re paying a fair rate based on the lawyer’s experience. Next, make sure you know what the minimum billing unit is. Most lawyers bill in 6-minute increments, but some bill in anything up to 15-minute increments. Make sure you know what your lawyer’s practice is. You don’t want to be surprised at your monthly bill.
2) Flat Fees
This is a more modern type of fee agreement where the lawyer agrees to do work for a flat fee regardless of the amount of time it takes. This allows the client to be sure what the price is before getting involved in a case. Flat fees don’t work for every type of legal issue though. While they work well for document drafting, simple negotiations, or contract review, they do not work well for complex litigation issues. This is because it is almost impossible to know in advance how long litigation will last. Flat fees are usually very client friendly, but they are only available in limited types of cases.
3) Contingent Fees
Contingent fees is often called “no win no fee.” At its most basic, a contingent fee means your lawyer will work without being paid up front in return for being paid a percentage of the settlement or judgment at the end of the case. These fee agreements are complicated though, so you need to know a few things before you sign on. First, you need to know who is responsible for the costs of the case. Depositions and expert witnesses can get expensive quickly. If you are responsible for these fees, the fact that you’re not paying your lawyer up front may not mean much. In addition, If you and your lawyer fall out, there are usually provisions in these agreements regarding how the lawyer is to be paid. Often, if you fire your lawyer without cause, you will owe him or her the reasonable value of what the lawyer did for you. Even if the lawyer chooses to end the attorney-client relationship, you may have to pay him or her a portion of the fee at the end of the case.
If you need a lawyer relies on, make sure you understand the type of fee agreement you are signing.
