Attorney Fees, Legal Fees and Fee Agreement

Author: Steve Dimeck

In this Part 3 of this multi part article you will have an opportunity to read about the retainer fee, contingency fee and statutory fee. Please refer back to Part 1 and Part 2 of this multi part article to learn more about the other fees.

Retainer Fee - As the name implies, this fee is paid to the lawyer, often monthly or annually, to retain or keep the lawyer available to the client. It means that your lawyer would have to turn down other cases in order to remain available for you. As a result, you will probably be billed at a higher rate. This type of fee is called a true retainer and is often paid by large corporations to make sure they have access to their lawyers whenever they need advice or representation.

However, the more common type of a retainer fee is actually a down payment or a deposit. The client would put money into a special account, and the lawyer deducts fees as services are completed. The client is responsible for reviewing the account periodically. The legal fees will be subtracted from the retainer until the retainer is used up. Then, the lawyer will either ask you to pay another retainer or bill you for the additional time spent on your case.

Another way of using a retainer fee agreement is to have the lawyer be on-call to handle your legal matters over a period of time. Some legal work would be covered by the retainer fee while other legal services would be billed separately. Your lawyer needs to explain the details of your retainer agreement to you in advance, since there are several different types of retainer agreements. The retainer fee is usually non-refundable. Also, the unused money from this retainer agreement is usually refundable. Most attorneys require retainers for most kinds of cases. Make sure you ask your lawyer what your retainer agreement covers and what is refundable.

Contingency Fee - This type of fee agreement is commonly used for accident, personal injury, medical malpractice, workers' compensation and other cases involving a law suit for money. It means that you will pay your lawyer a certain percentage (usually one third) of the money you recover if you win your case or if you settle out of court. If you lose, the lawyer doesn't get paid. However, whether you win or lose you still have to pay any court costs and other expenses, such as the cost of expert witnesses. These expenses can be quite high. In some cases, the lawyer may use the money you receive from the case to pay some of these additional costs for you when they are due. But some lawyers will ask you to pay the expenses as they arise, since there is no guarantee that you will win your lawsuit.

Make sure you get the contingency fee agreement in writing and it must spell out the percentage the lawyer will get. Also, it needs to include whether this percentage is figured before or after costs and expenses have been deducted. In some cases, the percentage could vary depending on whether the case is settled out of court, goes to trial or has to be appealed. If so, those varying percentages must be stated in the agreement. You can try to negotiate an agreement in which the lawyer accepts a lower percentage. Lawyers settle most personal injury cases through negotiations with insurance companies before going to trial, which will require less legal work. No matter what, before you enter into a contingency fee agreement, your lawyer must explain all of the details relevant to your case and you must fully understand it to avoid any un-needed disputes after the fact.

Statutory Fee - For a certain legal work the cost is set by statute of law - hence the name statutory fee. This means that the lawyer's fee is either set or must be approved by the court. Your lawyer will let you know if your case would include statutory fee.

Summary of Attorney Fees

Regardless of which fee agreement is agreed upon between you and your lawyer, always ask to obtain a copy of the agreement. While only contingency fee agreements must be in writing, it is best for you to you have a written fee agreement for your case to avoid possible misunderstanding and un-needed disputes. Besides all the things mentioned up to now, your fee agreement must mention whether you're required to pay for related matters that may come up as a result of your case which are not covered by your agreement or may not be mentioned in the agreement. Also, depending on the laws in your state of residence, your fee agreement may have to state whether your attorney's fees are set by the law or they have been worked out between you and your lawyer. 

For some cases it is impossible to know the time your lawyer would take to resolve your legal issue. For this reason you need to ask your attorney to estimate the cost and time that would take for your case and to include it in your fee agreement. Keep in mind that many unexpected factors may affect your case and the actual cost may be greater than the estimate. You may want to negotiate a limit on your total fees to protect you from these uncertainties.

If you have an hourly agreement, you might want to be billed weekly or monthly to give you a chance to review the services performed by your lawyer and to justify whether you're receiving a fair value. Ask your lawyer to provide in the bill a break down of the time spent on each task and to describe the work performed for each charge.

Don't be intimidated or afraid to talk to your lawyer regarding his or her fees or to push your attorney into disciplined routine of providing you with regular updates on your charges. Not all lawyers (as it is with people in general) are disciplined. And attorney fees as well as other legal fees are astronomical. Since these fees are coming out of your pocket, it is important that you deal with your lawyer openly and of course in a businesslike fashion until you are satisfied with the services rendered and his or her costs.


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