| LEGAL FEES AND EXPENSES
Q. How can I be sure that my lawyer will not overcharge me?
A. The fee charged by a attorney should be reasonable from an
objective point of view. The
fee should be tied to specific services rendered, time invested, and level
of expertise
provided.
There are some broad guidelines to help in evaluating whether a particular
fee is
reasonable:
• the time and work required by the lawyer and any assistants, and
the difficulty of the
legal issues presented;
• how much other lawyers in the area charge for similar work;
• the total value of the claim or settlement and the results of
the case;
• whether the lawyer has worked for that client before;
• the lawyer's experience, reputation, and ability; and
• the amount of other work the lawyer had to turn down to take on
a particular case.
Talk About Fees
Although money is often a touchy subject in our society, fees and
other charges should be
discussed with your lawyer early. You can avoid future problems by
having a clear
understanding of the fees to be charged and getting that understanding
in writing before any
legal work has started. If the fee is to be charged on an hourly basis,
insist on a complete
itemized list and an explanation of charges each time the lawyer bills
you.
Legal advice is not cheap. A bill from a lawyer for preparing a one-page
legal document or
providing basic advice may surprise some clients. Remember that when
you hire a lawyer,
you are paying for his or her expertise and time. |
Q. Someone said that I should ask my lawyer to use the billing
method that is based on
contingent fees. What does this mean?
A. A client pays a contingent fees to a lawyer only if the lawyer
handles a case successfully.
Lawyers and clients use this arrangement only in cases where money is
being claimed--most
often in cases involving personal injury or workers' compensation. Many
states strictly
forbid this billing method in criminal cases and in most cases involving
domestic (i.e.,
family) relations.
In a contingent fee arrangement, the lawyer agrees to accept a fixed percentage
(often
one third) of the recovery, which is the amount finally paid to the client.
If you win the case,
the lawyer's fee comes out of the money awarded to you. If you lose, neither
you nor the
lawyer will get any money, but you will not be required to pay your attorney
for the work
done on the case.
On the other hand, win or lose, you probably will have to pay court filing
fees, the
costs related to deposing witnesses, and similar charges.
By entering into a contingent fee agreement, both you and your lawyer
expect to
collect some unknown amount of money. Because many personal injury actions
involve
considerable and often complicated investigation and work by a lawyer,
this may be less
expensive than paying an hourly rate. You should clearly understand your
options before
entering into a contingency fee agreement, which is a contract in itself.
Q. Are all contingent fee arrangements the same?
A. No. An important consideration is whether or not the lawyer
deducts the costs and
expenses from the amount won before or after you pay the lawyer's percentage.
Example: Joe hires Ernie Attorney to represent him, agreeing that Ernie
will receive one
third of the final amount--in this case, $12,000. If Joe pays Ernie his
fee before expenses, the
fee will be calculated as follows:
$12,000 Total amount recovered in case
-$4,000 One third for Ernie Attorney
$8,000 Balance
-2,100 Payment for expenses and costs
$5,900 Amount that Joe recovers
If Joe pays Ernie after other legal expenses and costs, the fee will be
calculated as follows:
$12,000 Total amount recovered in case
- 2,100 Payment for expenses and costs
$9,900 Balance
-3,300 (One-third for Ernie Attorney)
$6,600 Amount that Joe recovers
The above figures show that Joe will collect an additional seven-hundred
dollars if the
agreement provides that Ernie Attorney collects his share after Joe pays
the other legal
expenses.
Many lawyers prefer to be paid before they subtract the expenses, but
the point is
often negotiable. Of course, these matters should be settled before you
hire a lawyer. If you
agree to pay a contingent fee, your lawyer should provide a written explanation
of this
agreement that clearly states how he or she will deduct costs.
Q. If my lawyer and I agree to a contingent fee arrangement,
shouldn't the method of
settling my case affect the amount of my lawyer's fee?
A. Yes, but only if both of you agree beforehand. Lawyers settle
most personal injury cases
through negotiations with insurance companies; such cases rarely require
a trial in court. If
the lawyer settles the case before going to trial, this requires less
legal work. You can try to
negotiate an agreement in which the lawyer accepts a lower percentage
if he or she settles
the case easily and quickly or before a lawsuit is filed in court, though
many good lawyers
might not agree to those terms.
Q. What billing method do most lawyers use?
A. The most common billing method is to charge a set amount for
each hour of time the
lawyer works on your case. The method for determining what is a "reasonable"
hourly fee
depends on several things. More experienced lawyers tend to charge more
per hour than
those with less experience--but they also may take less time to do the
same legal work. In
addition, the same lawyer will usually charge more for time spent in the
courtroom than for
hours spent in the office or library.
Types of Fees and Expenses
The method used to charge fees is one of the things to consider in
deciding if a fee is
reasonable. You should understand the different charging methods before
you make any
hiring decision. At your first meeting, the lawyer should estimate
how much the total case
will cost and inform you of the method he or she will use to charge
for the work. As with
any bill, you should not pay without first getting an explanation
for any charges you do not
understand. Remember, not all costs can be estimated exactly because
of unforeseen
developments during the course of your case. |
Q. A friend suggested that I might want to have a lawyer "on
retainer." What does this
mean?
A. A retainer fee is a set amount of money paid regularly to
make sure that a lawyer will be
available for any necessary legal service you might require. Businesses
and people who
routinely have a lot of legal work use retainers. By paying a retainer,
a client receives routine
consultations and general legal advice whenever needed. If a legal matter
requires courtroom
time or many hours of work, the client may need to pay more than the retainer
amount.
Retainer agreements should always be in writing.
Most people do not see a lawyer regularly and do not need to pay a retainer
fee.
Sometimes, however, a lawyer will ask the client to pay some money in
advance before any
legal work will be done. Although often called a "retainer,"
this money is really a down
payment that will be applied toward the total fee billed.
Q. I saw an advertisement from a law firm that charges fixed
fees for specific types of
work. What does this involve?
A. A fixed fee is the amount that will be charged for routine
legal work. In a few situations,
this amount may be set by law or by the judge handling the case. Since
advertising by
lawyers is becoming more popular, you are likely to see ads offering:
"Simple Divorce--
$150" or "Bankruptcy--from $50." Do not assume that these
prices will be the amount of
your final bill. The advertised price often does not include court costs
and other expenses.
Q. Does the lawyer's billing method influence the other costs
and expenses that I might
have to pay?
A. No. Some costs and expenses will be charged regardless of
the billing method. The court
clerk's office charges a fee for filing the complaint or petition that
begins a legal action. The
sheriff's office charges a fee for serving a legal summons. Your lawyer
must pay for postage,
copying documents, telephone calls, and the advice or testimony of some
types of expert
witnesses such as doctors. These expenses, often called "costs,"
may not be part of a legal
fee, and you may have to pay them regardless of the fee arrangement you
use. Your lawyer
will usually pay these costs as needed, billing you at regular intervals
or at the close of your
case.
Q. What are referral fees?
A. If you go to "Lawyer A," he or she may be unable
to help but refers you instead to
"Lawyer B," at another law firm, who has more experience in
handling your kind of case. In
return for the referral, Lawyer A will sometimes ask to be paid part of
the total fee
arrangement you pay to Lawyer B. The law may prohibit this type of fee,
especially if it
increases the final amount to be paid by a client. The ethical rules for
lawyers in most states
specify that two lawyers may not divide a client's fee unless:
1. the client knows about the arrangement;
2. both lawyers do some actual "work" on the case;
3. they divide the fee to show how much work each lawyer did; and
4. the total bill is reasonable.
If one lawyer refers you to another, ask whether there will be a referral
fee and, if so,
ask about the specifics of the agreement between the lawyers.
Q. Should I "shop around" for the cheapest lawyer I
can find?
A. With legal advice, as with other products and services, you
often get what you pay for.
Although you should not expect to get good legal advice without paying
for it, you should
not pay for anything that you don't actually receive. After you and your
lawyer have
discussed fees, make sure to follow through by examining each bill carefully.
If you feel that
any charge is too high or if you do not understand a billed item, ask
your lawyer to explain it
before you pay.
Q. Is there anything I can do to reduce my legal costs?
A. Yes, there are several cost-cutting methods available to you.
First, answer all your
lawyer's questions fully and honestly. Not only will you feel better but
you also will save on
legal fees. If you tell your lawyer all the facts as you know them, it
will save time that might
be spent on the particular case and will help your lawyer do a better
job.
Remember that the ethics of the profession bind your lawyer to maintain
in the
strictest confidence almost anything you reveal during your private discussions.
You should
feel free to tell your lawyer the complete details in your case, even
those that embarrass you.
It is particularly important to tell your lawyer facts about your case
that reflect poorly on
you. These will almost certainly come out if your case goes to trial.
Q. Should I wait for my lawyer to say what he or she needs from
me?
A. No, some things should be obvious to you. Before the first
meeting with your lawyer,
think about your legal problem and how you would like it resolved. If
your case involves
other people, write down their names, addresses, and telephone numbers.
Also jot down any
specific facts or dates you think might be important and any questions
you want answered.
Bring the information with you to the first meeting, along with any relevant
documents such
as contracts or leases. By being organized, you will save time and money.
Q. If something related to my case has occurred, should I wait
until my next scheduled
meeting to tell my lawyer about it?
A. No, situations can vary from one day to the next. Tell your
lawyer immediately of
changes that might be important to your case. It might mean that the lawyer
will have to take
a totally different action--or no action at all--in your case. This could
greatly affect your
lawyer's fee.
Q. Can I reduce my legal costs if I get more involved in my case?
A. Sometimes. Stay informed and ask for copies of important documents
related to your
case. Let your lawyer know if you are willing to help out, such as by
picking up or delivering
documents or by making a few telephone calls. You should not interfere
with your lawyer's
work. However, you might be able to move your case quicker, reduce your
legal costs, and
keep yourself better informed by doing some of the work yourself. Discuss
this with your
lawyer.
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