When you first meet with an attorney a lot of words may be thrown around, and it can sometimes get confusing. The attorney will send you a written agreement with the duties he or she has taken on, your rights and responsibilities as a client, and the agreement for payment. Sometimes the terms of payment can be confusing, so this is a brief explanation of the most common billing practices.
A fixed attorney fee means that for a certain service you will pay a definite amount. For example, an attorney may charge you $1,000.00 to represent you at your preliminary hearing. Or, an attorney may charge you $2,000.00 to help you through the ARD process. Most often, fixed fees are due prior to the attorney beginning work.
Fixed fees are gaining favor among attorneys and clients alike. The method is straightforward, and the client always knows what his or her total charges are going to be. It’s a good method to use when the legal process is finite. That is, when the steps that need to be taken are well known by the attorney and when the client has a set goal in mind.
Some common times when fixed fees are used: ARD, basic criminal matters (generally not trials and appeals), uncontested divorces, adoptions, immigration visa applications, basic will drafting.
Hourly billing is the more traditional approach to paying an attorney. An hourly rate is set for the work to be done, and the attorney tracks the hours he or she spends on the work, often down to the tenth of an hour. A good attorney will also track what is accomplished during each time period, and the hourly rate may differ if the work is research and writing, time in court, or travel time. Hourly rates also vary depending on where the attorney is located and the area of law in which he or she works.
Hourly billing can sometimes seem daunting for the client because it is unknown how much the final fee will be. But some attorneys are able to make fairly accurate estimates of the time it takes to do things, especially if he or she has been working in that field for a while. Most often a client will have to pay an initial amount, called a retainer, and the attorney will use that amount to begin paying the hourly fees. The client will be asked to add to the retainer as it is depleted.
Some common times when hourly fees are used: trial and preparation for upcoming trial (whether civil or criminal), appeals work, estate planning, complicated divorce actions (disputed or when children are involved), custody hearings, motion hearings, or when projects are indefinite in scope or subject (like just keeping an attorney on retainer for business consultations).
Contingent fees are like a combination of fixed fees and hourly fees. A contingent fee means that the attorney getting paid is contingent (relies on) the client winning some money at trial or in a settlement. The attorney will take some percentage of the money won as payment; this percentage is determined at the time the client hires the attorney. Sometimes clients are required to pay for all filing fees and court costs, but otherwise the client is not responsible for any payment if the case is lost.
The hourly part comes in if the attorney is fired prior to the settlement. Then the client often owes the attorney his or her normal hourly rate for work already completed. Again, an attorney will track these hours and will often keep the client updated about how much time has been spent on the case.
Some common times when contingent fees are used: anytime there is a civil lawsuit and a money settlement is expected (car accidents, employer discrimination, civil rights claims, worker’s compensation claims).
**Note** Contingent fees are not permitted in some situations because it is considered bad for the public. No contingent fee agreements are allowed in divorce cases, child custody cases, criminal cases, and other similar issues where paying the attorney more for winning does not promote the good of all persons involved.