Personal injury attorneys, like those who represent someone injured in an auto accident, are commonly compensated differently than attorneys handling cases in other areas of law.

5 Ways That Attorneys Receive Compensation for Services

Many people think attorneys charge high fees that the average person cannot afford, but this is not necessarily the case. Here are five common types of fee arrangements that attorneys offer potential clients:

Consultation Fees

Attorneys sometimes charge an upfront fee to meet with the client, discuss the matter, and determine whether or not they will offer the client legal representation. Many do not charge initial consultation fees, but potential clients should ask about this before making an appointment to meet with an attorney so that they will not be blindsided by any unexpected charges.

Flat Fees

Some lawyers charge a flat fee to handle certain legal matters, such as:

  • Uncontested divorces
  • Will preparations
  • Contracts
  • Commercial leases
  • Landlord/tenant evictions
  • Foreclosures

Flat fee arrangements may be the most appropriate option when a lawyer does a high volume of work in a particular area of law and is familiar with the proper forms and standardized practices. The advantages to a client entering into a flat fee agreement with an attorney include predictability of costs, speed and efficiency, and no surprises, which leads to far fewer fee disputes.

Hourly Rates

Hourly rates, in which the attorney tracks time spent on the case in fractions of an hour (typically tenths of an hour) are the most common type of attorney fee arrangements. Some lawyers charge different hourly rates for different types of matters, and paralegal work is usually billed out at a lower hourly rate than attorney time. The types of cases in which lawyers charge per-hour rates include corporate, criminal defense, and finance and securities law.

Retainer Fees

A retainer is a set deposit paid toward the total cost of legal services. The amount is typically based on the attorney’s actual hourly rate multiplied by the number of hours that the attorney estimates will be required to handle the matter. The retainer fee is usually deposited into the law firm’s trust account, and the cost of services is deducted from that account as the work is being done. Some of the matters that are handled on a retainer fee basis include divorce, real estate transactions, and insurance defense.

Contingency Fees

Personal injury attorneys, like those who represent someone injured in an auto accident, commonly work on a contingency basis. This means that their fee is based on a percentage of the amount awarded in a court judgment, or through an out-of-court settlement. If you lose the case, the attorney does not take a fee, but the client will still have to pay the lawyer’s expenses. Contingency percentages can vary, and the rate may increase if the matter goes to trial or an appeal is required.

What’s in the Actual Fee Agreement?

A legal fee agreement should discuss fees, expenses, and costs as well as when payment will be due, what services will be included in the fee, and under what circumstances the agreement may be terminated. The detail that is included in the actual agreement is generally defined by the type of case the representation is for, but all lawyers have a duty to fully communicate with the client regarding how legal fees will be collected so that the client can make an informed decision regarding representation.

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