Most lawyers will tell you that the practice of law is a noble professional dedicated to the pursuit of truth and justice. But anyone looking to hire a lawyer must realize that practicing law is first of all a business. As a result, lawyers in private practice are going to charge what the market will bear in order to make a profit from their services. Understanding this and having a basic knowledge as to how lawyers charge for their services may help you to negotiate the best deal when you need to hire one.
How Lawyers Charge
Standard payment arrangements an attorney may suggest include hourly rates, flat fees, retainers or contingent fees.
Hourly rates are the most common arrangement. Here, the attorney gets paid an agreed-upon hourly rate for the hours he or she works on a client's case or matter until it's resolved.
Many lawyers are willing to charge competitive flat fees for certain types of legal work, some of which are listed below.
A retainer arrangement is usually a fee paid up front before legal representation commences.
A contingency fee is an arrangement where a lawyer is paid a portion of any recovery on a legal matter that he or she realizes for the benefit of the client. Contingency fees are usually, but not always, calculated as a percentage of the recovery. In most contingency fee arrangements, the client is not obligated to pay his or her lawyer unless there is a recovery.
Sometimes, lawyers and clients agree to arrangements that may blend one or more of these fee arrangements. For example, lawyers will sometimes be paid at a reduced hourly rate with the understanding that an additional contingency fee will be paid on any recovery.
Factors Impacting Lawyers' Fees
The fees for lawyers' services are based on many factors, including:
- Time & Effort - Lawyers charge both for time they work on a case and the amount of effort the case requires
- Geographical Location - Lawyers in urban and major metropolitan areas tend to charge a lot more than lawyers in rural areas or small towns
- Outcome - On occasion, as in contingent fee matters, the fee may depend on the outcome of the case and the risk of no recovery
- Advice - Legal opinion following research and case review
- Difficulty of Case - The fee may be higher if the case is difficult or time consuming, or if there is a risk of no recovery
- Experience - A more experienced lawyer is going to charge more
- Prominence of Lawyer - If the lawyer is well known and experienced in a particular area of law, the lawyer's rates are usually higher than those of a lawyer who is not as prominent
- Overhead - The costs associated with the lawyer's secretary, copies, books, legal research, and other items
- Preferred Client Discount - Loyalty counts when it comes to working with a lawyer. So a lawyer will sometimes discount services if the client frequently uses his or her services.
Average Law Firm Billing Rates
Hourly Billing Rates for Attorneys
Most lawyers bill by the hour. Rates vary significantly, depending on any number of factors, including those listed above. Believe it or not, rates may vary anywhere from $50 an hour to a $1,000 an hour or more. Think of it in terms of how professional athletes are paid: all of them are paid pretty well, but some make millions more than others.
Hourly billing rates also depend on the lawyer's professional experience.
In addition, law offices may also charge for the time of other legal personnel. For example, hourly billing rates for senior paralegals and legal assistants vary.
Fee Ranges for Specific Legal Matters
Flat Rates for Specific Legal Matters
The following chart lists certain types of legal matters that lawyers will oftentimes bill at a flat rate: Type of Matter Business Partnership Agreement Standard Lease Power of Attorney Promissory Note Real Property Transfer Simple Marital Agreement Simple Will Tenant Eviction/Uncontested Unlawful Detainer Trademark Application Simple Incorporation Living Trust
Retainer arrangements can take different forms:
- In some cases, a retainer is a non-refundable fee paid for the privilege of retaining the lawyer, without regard to whether services are rendered. This type of arrangement is something you might find when someone retains a high profile lawyer.
- In certain instances, the retainer may translate into a fixed fee paid on a periodic basis (for example, monthly or annually) to represent a client on routine matters. As an example, a corporation may pay a monthly retainer to a lawyer to attend board meetings and to provide advice on day-to-day legal issues that come up.
- In other instances, a retainer may take on the form of a flat fee to represent a client on a specific matter, regardless of how much time or effort is involved in the representation. This type of arrangement is typical in criminal defense matters.
- Another type of retainer is one where money is paid as an advance against future fees and costs, which may or may not be refundable if not all of it is used.
Contingency fees vary significantly depending on the type of case and how far the lawyer has to pursue the manner in order to secure a recovery. Typical fees might range from 20% if there is an early settlement to 50% if the lawyer is required to take a case to trial.
It's important to understand how out of pocket costs are treated under a contingency fee arrangement. Usually, the arrangement provides for the lawyer to recover his or her costs before the contingency fee percentage is calculated.