Attorney Fee Agreements – What You Should Know

When hiring an attorney it is very important to have a written fee agreement, just as when you hire a contractor or a plumber. This agreement must set out the services the attorney will perform for you and the type and amount of fees and costs you are obligated to pay for the services rendered. Under the California Rules of Professional Conduct, a written fee agreement is mandatory when fees and costs will exceed $1,000.00.

There are several types of fee agreements. Flat Fees are usually used in simple transactional matters, such as the formation of a corporation. When dealing with a flat fee agreement you must make sure to ask if the fee includes the out-of-pocket costs of the service. Hourly Fees are fixed rates charged based on time, for example $250 per hour. The attorney calculates his time and bills monthly. A retainer is a deposit of a sum of money that may or may not be required to be provided at the initial hiring of an attorney working on an hourly fee agreement. This amount usually varies depending on the complexity and cost of each case. Contingency Fees – you pay the attorney a certain percentage of your settlement if you win plus the out-of-pocket costs. This is a popular type of agreement in personal injury and collection matters. Contingency Fees should always be in writing. You should inquire if the costs will be calculated before or after the lawyers’ percentage of the settlement. This can be a big difference in the client’s pocket. Such contingency agreements cannot be based upon securing a divorce, or the amount of alimony or support or property settlement to be obtained in family law matters. In addition such a fee cannot be used for representing a defendant in a criminal action.  Lastly there are Statutory Fees – in certain actions the percentage of legal fees is dictated by law. For example, in a personal injury action of a minor (i.e., under the age of 18), the maximum percentage an attorney can receive as compensation is 25%.

There are situations where a combination of one or more of the fee arrangements may better suit the needs of the client and attorney. For example, in certain civil actions where my clients cannot afford to pay me hourly fees, I set up a contingency fee agreement and request that all out-of-pocket costs are paid as they are incurred.

Costs are an important factor in all types of cases. They can include Court filing fees, service of process fees, court reporter fees, expert fees and even telephone bills. Therefore, you must be sure of all the different costs you will be responsible for.

When discussing fee agreements with an attorney, keep in mind that many factors are considered in selecting the type and amount of the fees. These factors include the experience and background of the attorney and the required time and attention needed on your case. Therefore, fees vary from attorney to attorney. Ask about the type of agreement, the details on the expected costs and other charges, i.e. paralegals, associates, etc. Ask for an estimate of the total charges. Keep in mind that an estimate is merely an educated guess. Most importantly, ask what steps can be taken to reduce the fees and costs. There may be a different way to approach the same problem to reduce your legal fees.

Once your questions are answered, be certain you understand everything in the agreement before you sign it – READ THE AGREEMENT!

This column is produced by Mary Der-Parseghian, Esq. For questions or comments, please send your message to 4727 Wilshire blvd., Suite 301, Los Angeles, CA 90010; E-mail: Mary@MaryDLaw.com or call at 323-937-2727. For additional articles please visit our webpage at www.MaryDLaw.com.

© 2011. Der-Parseghian Law Group

 

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