Some situations in which you need an attorney (being accused of a crime, finding out that the IRS is going to audit you, or when someone brings a lawsuit against you) are scarier than others (starting a new business, adopting a child, closing on a home). However, one thing that’s nearly always frightening about engaging the services of a lawyer is their fees!
While it’s true that legal services can cost a pretty penny, in many cases the fear you experience when you call an attorney is due to the uncertainty and confusion surrounding their fees. It’s a good idea to understand typical legal fee structures, therefore, so that you have an idea of what to expect. Read on for a quick guide to how different types of lawyers charge their clients!
The Different Types of Attorney Fee Structures
This is the most common type of arrangement, and it works just like any other service provider who charges by the hour. The attorney has a set rate per hour, and the total you pay depends on how many hours the job takes them.
Hourly fees are pretty straightforward, but make sure to ask your attorney or any attorney you are considering hiring for an estimate of how many hours they’ll take to complete whatever task they’re taking care of for you. This can help you avoid nasty surprises down the line.
This is one of the most common attorney fee structures. Certain types of legal services are more predictable than others. A bankruptcy lawyer, living trust lawyer, or an attorney handling a basic DUI case are among those who will generally charge a flat, or fixed, fee.
Some attorneys might charge a flat fee not for the entire job, but for each phase of a project. For example, drafting and filing documentation might have a specific cost, while an appearance before a judge to finalize a matter could cost a different, but still specific, amount of money.
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You’ve probably heard of this type of arrangement, in which someone – usually a wealthy person who has frequent need of legal services – keeps a lawyer “on retainer.” That just means they’ve given their attorney a lump sum of money, akin to a down payment or even a pre-paid cell phone. The lawyer deducts their fees from that amount as they complete services.
A retainer agreement also ensures that the attorney is available, should the client require their services on short notice.
With contingency fees, which are most often charged by personal injury attorneys, the amount that you will end up owing your lawyer depends on how much money you get from a settlement or judgment. In other words, their fee is contingent upon your award.
You won’t pay any money up front in this scenario, but expect that your total award will be reduced by at least one-third, once the attorney’s fees and the costs of your case (which are different from the fees themselves) are deducted. The advantage to this arrangement is that attorneys are usually able to secure much, much more lucrative settlements for you, even factoring in the fees, than you would get by going it alone.
Alternative Ways to Secure Legal Services
Of course, there are some creative alternatives to these traditional structures. Some lawyers offer their skills on a sliding scale; others will take some cases on a pro-bono basis. If you are employed by a relatively large company, ask if they offer a legal plan as a benefit.
In other instances, you might be able to use Legal Aid services, connect with local law students, or take advantage of other community-based nonprofit legal organizations. This is especially true if you are low-income.
Final Thoughts on Legal Fees
These days, more than ever, it’s crucial to budget and to cut expenses wherever you can. Even if you are still employed during this frightening period, you just never know what the future may hold!
Knowing how to pay an attorney, should you require legal services, is a valuable addition to your arsenal of economic knowhow. Have you ever used an attorney, and if so, were the costs surprising to you? Any tips for finding a good lawyer when you’re on a budget? Drop a comment below and share your thoughts on whats types of attorney fee structures you prefer!