Handling the Fee Issue
You can’t make a decision about whether or not to hire a lawyer without knowing something about how a lawyer charges fees. Without doubt, lawyers are expensive. Although fee rates may vary from one part of the country to another, fees charged by lawyers in Louisiana are probably typical and close to the national average. Like any professional or businessman, a lawyer must be compensated for years of training and experience as well as expenses and office overhead. The typical lawyer may pay 50% or more of each fee for overhead and there must be enough left over to provide a reasonable income.
Lawyers normally charge fees in one of three ways:
- at an hourly rate
- by a flat rate
- on a contingency
An hourly rate is usually preferred by business clients because they may have several cases that the lawyer is working on at one time. The lawyer itemizes the time spent on each case and presents a bill, usually on a monthly basis.
Lawyers will frequently charge a flat rate when the approximate amount of work involved is known in advance or when the client needs to know exactly how much the fees will total. Flat fees are often payable in advance or in installments.
Contingency fees are based on a percentage of an award or settlement that the lawyer recovers. If the lawyer does not win the case or obtain a settlement, the client generally does not owe any fees. Contingency fees are usually one-fourth to one-third of the amount recovered. In many cases, the percentage is increased if the case goes to trial or if it is appealed.
Contingency fees have come under attack on the theory that they encourage lawyers to file lawsuits that may not have any merit. In actual fact, a competent lawyer is not about to take a case on a contingent basis unless it does have merit. This is because the lawyer ends up spending his time and paying for expenses to prepare a case without any guarantee that he will be paid. If he is successful, he may be well paid for his efforts. If he is not successful, he will have lost a considerable amount of time that could have been used on behalf of a client who is paying by the hour.
The contingency fee is also the only way many potential clients have of hiring a lawyer. If all fees were charged on a flat rate or by the hour, the man who is injured in an accident and loses his job would have no means to obtain the services of a lawyer. Most contingency fee contracts result from personal injury cases. This is because the lawyer can usually expect more of a recovery if he is successful and because the client is usually not in a position to pay any other type of fee. Lawyers will sometimes take other types of cases on a contingency basis, but there usually must be the potential for a large award. As a general rule, the harder the type of case is to win, the more potential there must be for a large recovery. In Louisiana, there are restrictions on the types of cases lawyers can take on a contingency basis, successions being one example.
Talk to your lawyer about fees. This is the best way to avoid misunderstandings.
Once the type of fee is determined, the amount, and how it is to be paid, the lawyer then prepares a contract spelling out the terms of the employment. If your lawyer does not prepare a fee contract, ask for one. This is the only way to avoid misunderstandings when it comes time to pay the bill.