Jun 16

Attorneys’ Fees: The Basics

Learning the basics of attorneys’ fees before hiring an attorney will help you avoid a common misunderstanding between lawyers and clients: the matter of the fee.

You want a lawyer who knows the subject matter of your legal problem inside and out, charges fairly, treats you with respect, and with whom you can communicate. Though no lawyer is cheap, you probably can find lawyers all over the price spectrum who can meet your needs.

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Here are some general rules to keep in mind.

There is no such thing as a “standard fee.” Fee agreements are negotiable between clients and attorneys with some exceptions for when they are limited by law. Fees are based on several factors, including the lawyer’s overhead and reputation, the type of legal problem, and what other lawyers in the area charge for similar work.

Occasionally, there may be a “going rate” that most lawyers in a particular locality charge for a certain type of job, such as doing a trademark search, handling an eviction, filing a bankruptcy, or preparing a living trust. However, even when most lawyers charge about the same for doing a defined legal task, you’ll have no problem finding lawyers who charge more and can also probably find one who charges less. This is especially true in parts of the country with a large surplus of lawyers, where they are searching for you just as hard as you are looking for them.

Cheap isn’t necessarily a good thing. Although everyone wants to save money, the cheapest lawyer is not necessarily the best, especially if your problem is complicated or specialized. A novice who charges $100 an hour may end up costing more than an expert who charges $225 an hour if the more expensive lawyer has much greater expertise and experience and provides better and more efficient service. If the case calls for a seasoned practitioner, the cheapest fee might lead to an expensive disaster.

Expensive isn’t necessarily best, either. That said, little correlation exists between a premium price and excellent lawyering. More often, the most expensive lawyers are selling you the image that comes with a posh address, a thick carpet, and a great view. Consider the complexity of your problem. You probably don’t need a sophisticated corporate attorney to draft a simple business contract.

A contingency fee can be a bad idea. A lawyer who offers to take your case on a contingency fee — in which he or she gets paid only if you win — isn’t necessarily proposing a good deal. If it’s clear that you or your property were seriously injured and another person who is covered by insurance was at fault, the attorney may be proposing to take a hefty cut (usually 33% to 40%) of a sure thing. This is especially true if the attorney figures he or she can settle the case by making a few phone calls. Keep in mind that, from your point of view, a contingency fee can be a good deal when the attorney is taking a big risk but it can be a big rip-off when little risk is involved.

Avoid security interests. Steer clear of any lawyer who proposes securing the right to collect a fee with a deed of trust or mortgage on your house, or who wants you to pledge other property to pay fees should you lose the case. These agreements aren’t legal in most states, but if an attorney makes such a request, it’s a tip-off that the attorney is more concerned with getting paid than with winning your case. Some lawyers have been known to make a good living losing cases and collecting hefty fees by foreclosing on the houses of their naive clients. If you cannot otherwise afford to hire a lawyer and must consider this type of offer, at least have your case and the agreement reviewed by a second attorney.