There are various ways in which legal fees and costs of hiring an attorney can be paid. Some options may work better for others. Understanding the various options will help you find a way to afford the cost of hiring an attorney.
How Does a Retainer Work?
It is not uncommon for attorneys to request that a client put up upfront money before the attorney begins work on a client’s case. This helps ensure the attorney that the client will be able to pay for their services. As representation goes along the attorney will send out an invoice for work done and deduct funds from the retainer. The retainer will need to be replenished if funds run low, and the attorney may not be able to continue to represent the client if there are no longer any funds. The attorney client engagement letter provides more details about how this might work. If there is money left over in the retainer after representation is completed the funds will be returned to the client. One of the problems with retainers is that not all individuals have a large amount of upfront money to put in a retainer. If that is the case, a client should ask about flat rate agreements or unbundled services.
How do Flat Rate Agreements Work?
After awhile an attorney tends to get a sense about how much time they are going to spend on a certain type of case. For this reason, it is sometimes easier to just offer a flat rate price. Clients may prefer a flat agreement because they have a fixed understanding of what their legal needs are going to cost, avoiding the unpredictability of choosing a retainer. Additionally, some attorneys will allow clients to be on a payment plan to pay off their flat rate amount. Therefore, unlike a retainer they are not initially required to put up a large amount of money. For my Firm, I have found flat rate fees to be best suited for estate planning, probate, simple criminal misdemeanors, and occasionally family law cases. I usually do not allow flat fees for divorce cases because it is difficult for me to predict how much time I am going to spend on the case. Therefore, for divorces I may require a retainer or some form of unbundled representation.
What is Unbundled Representation?
Unbundled representation is a form of a flat fee agreement, but it typically addresses a portion of a case instead of the entire case. For example, unbundled attorney services refers to situations in which a client hires an attorney to assist with specific elements of a matter such as legal advice, document preparation, document review and/or limited court appearances. The client and attorney agree on the specific tasks to be performed by the attorney and the client hires the attorney to perform only those specific tasks. The attorney may or may not enter an appearance with the court. When possible I would always recommend that a client go with full representation, as it is sometime difficult for a lawyer to jump in and only handle a small section of a case. I also think there are advantages of a lawyer working on a case from beginning to end. However, this is a good option for individuals who do not have the money for full representation.
How Does a Contingency Agreement Work?
Under a contingency fee structure the attorney will only get paid if they are successful on your behalf by getting a settlement or judgment through trial. It is not uncommon for the contingency percentage to be around 33% increasing up to 40% if a trial is required. The positive of such an arrangement is that a client is able to retain an attorney without having to put up any upfront costs. Such arrangements are more fitting for areas of law such as Personal Injury. In general, my Firm does not do contingency cases.
Hopefully, this helps clarify any confusion about the payment of attorney services. All the above mentioned options are possibilities through my office. Not all attorneys provide these options though. It is important that no matter what option you choose the attorney client engagement letter is clear about the scope of representation and how matters are to be paid for.
Let me know if you have any questions.
Luke Larson (Managing Attorney at Legal State of Mind)