There can be no automatic answer to the question of how much it costs to hire a lawyer. The cost of a lawyer depends on the nature of your case and the payment structure you and your attorney choose for your case. Some attorneys might charge substantial retainers upfront, while others receive nothing until the case is successful. The following is an overview of different attorney fee arrangements for different types of matters.
Free Initial Consultation And Case Evaluation
Most lawyers handling individual cases like personal injuries or divorces will offer a free initial consultation and case evaluation. The first no-cost conversation will help you to understand your case and your potential recovery. It will also allow the attorney, if the case will be on a contingency fee arrangement, to decide whether the potential reward in the case is worth the risk of taking it.
Attorneys who take cases on a contingency basis, as discussed more fully below, are at personal (or firm) risk for the success or failure of your case. Because a contingency fee arrangement means the attorneys taking the case bear the financial risk of losing the case, they will first evaluate the odds of success in the case before agreeing to take it.
Attorneys sell their skill, of course, but they also sell their time, a limited asset. Time devoted by an attorney to a losing case is time that the attorney could profitably devote to a more winnable case. Thus, the attorneys may reject your case if they believe there is little likelihood that you will win it or that the eventual recovery will be small.
A few attorneys may charge an upfront consultation fee, usually a flat rate, to meet with you and decide whether your case is one where they can provide you assistance. Most attorneys do not charge this fee, but you should be sure to check before going to an appointment for an initial consultation.
The most common fee arrangement for lawyers is an hourly fee. Some cases do not fit well into a set fee or contingency fee arrangement and thus will be handled on an hourly fee basis. In fact, attorneys will handle almost every type of case except personal injury and negligence cases on an hourly fee basis or a set project fee basis.
How Are Hourly Fees Set
Your attorney will set their hourly rate based on several factors.
- The lawyer’s level of experience – an attorney practicing in a particular area for twenty years is a very different value proposition than one just out of law school.
- The complexity of your case or matter – the more difficult or complex the case, the more sophisticated the knowledge of the lead attorney on it needs to be. The case will also be likely to use more hours overall, thus increasing your expenditures in terms of time as well as experience.
- The average rate in your community – the cost of a lawyer in the same field with the same experience in that field will vary widely based on simple geography. Traditionally, New York and California lawyers are the most expensive, while your local suburban solo practitioner will be the least expensive. Overall, the states with the average lowest rates are Missouri and New Mexico.
- The practice into which your case falls – although lawyers generally do not officially specialize, most concentrate their practices in particular areas of the law. Some of these areas put the lawyer at risk for spectacularly large malpractice judgments, meaning that their malpractice insurance premiums are also astronomical. For this reason, a securities lawyer, for example, will be far more expensive than a divorce or contracts lawyer. Other really expensive attorneys include patent and trademark attorneys, tax attorneys, and experienced trial attorneys. In contrast, immigration attorneys get paid less than most other lawyers, as do government lawyers.
- The nature or subject matter of the task performed – Some legal matters are relatively straightforward and do not require much time or effort from your attorney. A divorce with no children and little property, for example, will take little attorney time, and what it does take won’t need much sophistication or skill. On the other hand, an initial public offering of securities is a highly technical area of the law, with myriad rules easily broken. Moreover, if the transaction implodes, the attorneys and accountants are usually the only ones left standing to pay damages to investors in the offering. For these reasons, securities lawyers, who have very high malpractice premiums, can (outside of contingency fee lawsuits) charge hourly rates of more than $1,000 an hour. Similarly, patent attorneys, who must pass two bar exams and have an additional degree beyond their law degree, are among the most expensive, with fees of more than $800 an hour in larger metro areas.
How Can The Total Bill Be Controlled
There are simple ways to control billing costs in any firm that consists of more than one lawyer working alone. For example, if your attorney on a particular matter is a partner who bills at an hourly rate of $500 an hour, it may be possible for much of the preliminary work to be done by a more junior attorney who bills at, for example, $250 an hour.
This junior attorney can undertake initial drafts of documents, reviewing documents and other evidence submitted by other parties, preparing submissions to the court or a regulatory body, and similar jobs. Your attorney would do all of these tasks under the supervision of the more senior attorney, who will bill only for reviewing the documents rather than for producing them.
Similarly, a paralegal or legal secretary can do many clerical tasks such as compiling or copying documents much more cheaply. The costs of these professionals will be a small percentage of that of even the most junior lawyer in a firm. Paralegals can also do some kinds of legal research and document review, both under the supervision of an attorney, again substantially reducing your potential cost.
Your attorneys will also bill in some set portion of an hour each time you contact them. Some attorneys bill in quarter-hour segments, while others bill in segments as short as a tenth of an hour (six minutes). Since your attorney will always charge you for the full minimum segment of time, you should save up questions until you think you have a quarter-hour’s worth.
Think about it this way – if you have ten two-minute questions that you call in separately each time, your quarter-hourly billing attorney will charge you for ten quarter hours, or two and a half hours. On the other hand, if you make one phone call totaling twenty minutes, you’ll be charged at most for half an hour. At $500 an hour, you just saved $1000.
Also, consider emails rather than phone calls since it allows the attorney to avoid an off-the-cuff answer. It also permits the attorney to answer when most convenient. Email also allows the senior attorney to have any work or research needed to respond to your question done by a less senior staffer, again saving you money.
Some legal tasks are so similar, or simple, or routine, that attorneys charge a set fee for them. Attorneys who handle only simple, no children, no property divorces, for example, will often offer such a simple divorce for a set fee plus court costs. Court costs are the fees you pay to make use of the judicial system. They include filing fees, service fees, and transcription costs if needed.
The government limits some fees through statutes or regulations. These cases include routine probate matters and bankruptcy.
A retainer is not really a different kind of billing rate. It is, in fact, a deposit that the client pays against the total cost of the case. Sometimes, you will be required to start paying your bills once the retainer is exhausted by charges against it. Or, an attorney may ask you to put down an additional sum as an additional retainer.
Lawyers generally put retainers into a client trust account because they must return unused retainer dollars to the client upon request. At the same time, many retainers are, by agreement, deemed non-refundable. However, if the retainer is large and remains unused, you can seek a court ruling invalidating the “unreasonable” fee and may receive a refund. Clients and attorneys use retainer fees to keep an attorney regularly available to a particular client.
Contingency fees are most common in cases where the victorious plaintiff will receive a financial award. These include personal injury cases, car accident cases, medical malpractice cases, and product liability cases. The contingency fee will usually be a percentage of the final award and may include litigation expenses and court costs or not, depending on the fee agreement.
Often contingency fees will vary depending upon the stage of the case when the client and attorney achieve some resolution. Fees of one-third of the award or more are common, but some jurisdictions or agreements adjust this based on how far the case proceeds. Consequently, a case that settles early may justify a lower percentage, while a case that goes to an appeal will likely receive a higher percentage. Some courts and states set maximum contingency fee levels by rule or statute.
In addition, the American Bar Association imposes several contingency fee conditions upon its members.
The ABA prohibits unreasonable fees and defines them by the following factors:
- The time and work required, and the novelty and complexity of the case and skill required
- The likelihood that the attorney/client relationship will preclude the attorney from other work
- The customary fee in the locality
- The amount of the award and the nature of the results obtained
- Any time limitations due to the client or circumstances of the case
- Any pre-existing professional attorney/client relationship
- The skill, experience, reputation, and ability of the lawyers handling the case
Generally, these factors must work to the client’s benefit in setting the fee.
What Will My Fee Agreement Look Like?
Generally, the ABA’s canons of ethics and the state and municipal bar associations require that retainer agreements and fee agreements be in writing. Such an agreement must define the scope of the representation (that is, what the attorney will and won’t be doing) and the fees and expenses for which the client will be responsible.
The client and attorney should execute the agreement at or before the time the representation begins unless the lawyer regularly represents the client and will be charging the usual rate. Any changes to this agreement should be in writing, and the attorney must communicate them to the client.
Contingency fees have some extra features. The contract must be in writing and signed by the client. It must also state the method by which it will determine the fee. A contingency agreement must indicate the percentage that the lawyer will receive in the event of a settlement, trial, or appeal.
It must state whether and what expenses and litigation costs the law firm will deduct from the award and whether the firm will deduct them before or after the contingency fee is calculated. In other words, the agreement must state whether the attorney’s share is gross or net of expenses.
The agreement must also state whether there are fees that the client will have to pay regardless of the outcome of the case and exactly what those fees, if any, are. Upon termination of the matter, the attorney must submit a written statement to the client, showing how much the client and the attorney each received and how they calculated those figures.
You should note that there are matters where contingency fees are generally not permitted. These include family law cases and cases in which the attorney represents a defendant in a criminal case. Law firms usually handle these cases as either a set fee case, such as a simple divorce, or an hourly fee basis.