Attorneys' fees vary by attorney and by case. An attorney may charge a client in several different ways. The most common forms of billing include flat fees, hourly rates, contingent fees, and retainers.
A flat fee is a dollar amount agreed to by the attorney and the client before the attorney begins work on the case. The flat fee is favored by many attorneys because it is a simple transaction and because the attorney is paid at the beginning of the representation. The attorney identifies the amount of work that the case will require and calculates a reasonable fee based on the time and effort involved. If the attorney spends less time on the matter than anticipated, the attorney may keep the excess payment, unless the attorney and client agree otherwise. Conversely, the attorney who charges a flat fee may not later demand more money if the case requires more time and effort than originally anticipated.
An hourly rate is a predetermined amount charged for each hour of the attorney's work. The attorney and client may agree that hourly fees are to be paid periodically, or in one lump sum at the end of the case. The time that an attorney charges for legal work is called billable time, or billable hours. Hourly rates vary according to the attorney's expertise and experience. Some critics have argued that hourly rates discourage quick work and expedited resolutions. Before agreeing to an hourly rate, prospective clients should ask for a written estimate of the number of billable hours that the attorney anticipates will be necessary to complete the matter.
A CONTINGENT FEE is a percentage of the amount recovered by the client. A contingent fee is not paid by the client until the client wins money damages from a defendant. Attorneys offer such a fee if the client stands a good chance of winning a sizable cash settlement or judgment. Contingent fees cannot be used in DIVORCE cases, CHILD CUSTODY cases, and criminal cases.
Contingent fees are a gamble for the attorney. If the client does not win the case or wins less money than anticipated, the attorney may work for no or little pay. Common contingent fees range from 20 to 40 percent of the client's recovery. For personal injury and MEDICAL MALPRACTICE cases, laws in all states limit the percentage that an attorney may receive from a client's recovery. For other cases the percentage is negotiable between the client and attorney.
A client may retain an attorney for a specific period of time rather than for a specific project. In return for regular payment, the attorney agrees to be on call to handle the day-to-day legal affairs of the client. Most individuals do not have enough legal matters to keep an attorney on retainer.
The term retainer also refers to an initial fee paid by the client. Retainers often are used by attorneys who charge an hourly rate, and some attorneys add an initial retainer to a contingent fee.
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