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Legal fees: How do attorneys charge?
Generally, there are three different ways that attorneys charge fees: first, on a contingency basis; second, on an hourly basis; and, third, on a fixed fee basis. When you hire an attorney, that attorney is providing you his or her expertise and advice, and you should expect to be charged for the time that an attorney expends on your behalf because this is how he or she gives you the benefit of their counsel and experience.
Contingency fees are generally limited to personal injury types of cases or other matters of entitlement such as social security, worker's compensation, and civil rights matters. In these types of cases, there is some expectation that you will receive some financial award either by settlement or by judgment from a court or jury. However, in most cases, your financial award does not include your attorney's fees. You are responsible for paying your attorney's fees out of any financial recovery that you obtain.
In contingency fee cases, the attorney assesses whether or not he or she believes that you have reasonable chance of succeeding. If the attorney feels that you do have a reasonable chance, the attorney may take your case by investing his or her time without a fixed payment from you up front. Basically the attorney is counting on being paid from a percentage of any award which you receive from a settlement or from a court. In some cases such as social security and worker's compensation, there is usually a cap or limit on the percentage or the dollar amount that an attorney is permitted to charge. You should ask the attorney if there is such a limit and what it is. In most personal injury cases, there is not a limit on what the attorney can charge. However, generally speaking, a one-third contingency fee is the customarily accepted percentage that a lawyer will be paid from your award. If your case is lost, the lawyer is paid nothing for his or her time. However, any expenses such as depositions, filing fees, court reporter fees, and witness fees remain your responsibility to pay. Although the attorney may advance some of those costs to you if you cannot afford them, you remain responsible to reimburse your attorney for those costs whether you win or lose.
Attorneys charge a fixed fee for standard routine matters such as wills, deeds, the search of a real estate title, representing you in a simple bankruptcy, drafting a basic contract, traffic offenses, or minor criminal matters. These are some but not all of the examples of tasks for which an attorney may charge you a fixed fee.
Attorneys charge an hourly rate for almost everything else other than personal injury cases and standard routine matters. The amount your attorney charges per hour will be determined by a number of factors. The most important factor is his or her experience in the type of matter for which you are being represented. Another factor will be the generally accepted charges for similar matters in your legal community. In most hourly cases, your attorney will request that you pay a retainer fee up front against which the attorney will bill his or her time. When your attorney is charging you an hourly rate, you should always ask your attorney to periodically provide you with an itemized statement of the time which he or she has expended on your behalf.
Whenever you believe that you need an attorney, you should discuss attorney's fees during your first conference with the attorney. You must clearly understand the way in which the attorney intends to bill you for handling your legal matter. You should expect to sign an agreement with your attorney regarding fees so that both you and your attorney have a clear understanding of what to expect. In some cases, a contract of representation between you and your attorney is not required.
You should never be afraid to discuss attorney's fees or to negotiate attorney's fees with your attorney at the beginning of your representation. Having a clear understanding between you and your attorney on the issue of fees will assure a good working relationship between you and your attorney.
This information is provided as a public service by the Tennessee Bar Association. It is basic legal information and should not be considered legal advice or as a substitute for legal advice. You should consult an attorney if you have questions concerning a specific situation.