Unraveling the Complexities of Different Attorney Fee Structures
Hiring an attorney can be expensive and this is something that most people expect. After all, you’re paying for legal advice and help navigating often complex local, state, and federal laws.
Even what starts as a simple accident claim can turn into a legal nightmare if you don’t fully understand the law. This means you should probably retain legal representation but covering the costs can be out of your budget.
Thankfully, some attorneys offer different fee structures to help make their services more affordable. We’re comparing different attorney fee structures so you can find a lawyer that fits your budget.
The Different Types of Attorney Fee Structures
Attorneys aren’t limited to charging only one type of fee structure, which especially applies to personal injury attorneys who have a little more leeway in fee structures than other types of lawyers.
Retainer Fees
A retainer fee is an upfront payment a client pays to their attorney. The fee may be a requirement before an attorney starts working on your claim. The retainer fee typically covers most or all of the attorney’s future services. Some clients and corporations keep attorneys around on a retainer fee basis.
Once the retainer fee is paid, the attorney works for you and this means you have specific perks like attorney-client privilege. With attorney-client privilege, you can tell your lawyer almost anything without fear of self-incrimination. Corporations often have attorneys on retainers to ensure they have legal advice the second a potential legal situation arises.
Hourly Rates
Hourly rates are precisely what the name implies. Your attorney bills you a set amount for every hour they work on your case. If you’re going through a divorce or need assistance filling out a will, hourly fees are standard. Since you’re only asking for an hour or so of work, this fee structure can be affordable.
However, costs can quickly add up if you have a complex case. Remember, your attorney is being paid by the hour and not on the type of legal case.
Flat Fee
A flat fee payment structure is similar to how retainers work. You pay the attorney a set, one-time fee for your case. Sometimes, flat fees can be a cost-effective option. This can be especially true if your case is complex or is headed to court. Regardless of how many hours an attorney puts into your case, you’ve already handled their cost.
The potential downside to this fee structure is you may end up paying more than necessary if you have a fairly straightforward accident claim. Attorneys can also increase their flat fees depending on how long they expect to be tied up with a case. This can also increase rates and make retaining a lawyer more expensive than you can afford to pay.
Contingency Fees
Not all types of attorneys can charge contingency fees. This type of payment structure is usually limited to personal injury attorneys. The reason for the limitation is pretty simple, it goes back to how the payment structure works.
With contingency fees, you agree to pay your attorney a percentage of your insurance settlement, which means you’re not paying any upfront costs. Contingency fees can make retaining legal advice more affordable for accident victims. Since the attorney is working on the promise of payment after successfully settling an insurance claim, this fee structure doesn’t work in other legal areas.
For example, a criminal defense attorney can’t work on contingency fees since their client isn’t going to be awarded a settlement. However, before you agree to contingency fees, there are a few things to consider.
Considerations of a Contingency Fee Agreement
Before entering into a contingency fee agreement, it’s a good idea to know the percentage of your potential award that goes to your attorney. On average, contingency fees range from 33% up to 50% of your potential settlement.
So, if your contingency fee agreement is for 30% and you’re awarded $100,000, your attorney receives $30,000 and you get a check for $70,000. So far, everything sounds great but don’t forget about the damages stemming from your accident.
The primary reason you’re filing a personal injury claim is to recover compensation for accident-related expenses. If your attorney is entitled to a large percentage of your settlement, you may not have enough left to cover all of your bills.
You also want to take time to discuss any additional costs. Contingency fees don’t always cover all of the costs associated with a personal injury claim. You may have costs that include record copy fees, court filing costs, and expenses relating to expert witnesses.
These costs can quickly add up and may even surpass what you owe in contingency fees. Getting everything in writing is the best way to protect yourself.
Factors Affecting Attorney Costs
An attorney in a major metropolitan area is probably going to cost more than a lawyer practicing in a small town. Location is an example of factors that can affect how much you pay for legal representation.
The attorney’s experience and reputation also factor in. You should expect to pay more for an attorney with decades of experience than one fresh out of law school, and this also applies to the attorney’s reputation. Lawyers can base their rates on their reputation among colleagues and clients. Attorneys just starting their careers tend to charge less, as this helps them attract clients and build their reputation.
If you’re looking for ways to save money on lawyer fees, going with a relatively inexperienced attorney can dramatically cut your legal bills.
Private Practice of Law Firm
Attorneys in private practice typically have a greater say in their fee structures and rates. Law firms tend to set pricing and their attorneys have very little wiggle room.
You may be able to save on legal costs by going with an attorney in a private practice. The potential downside is the attorney may not have access to the same resources as a law firm. In the long run, you may end up paying more if your attorney needs to bring in outside experts.
Before you decide on an attorney and fee structure, look at your case and budget, as this can help determine what you should expect to pay for legal representation.