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#120 Lawyer fee agreements

mp3 #120 What Can a Legal Fee Agreement Do for You? (mp3 file)

This message will discuss the following questions:

1- Why is a fee agreement important?

2- Does your fee agreement have to be in writing?

3- How do you make a fee agreement?

4- What should be in a fee agreement?

5- How does a lawyer decide what to charge?

6- Do all lawyers charge the same kind of fee?

7- What are some typical out-of-pocket costs that Lawyers charge?

8- How will you be billed?

9- What can you do if your attorney refuses your requests?

10- What if you can't pay?

11- Are there fee agreements that you can use as samples before talking to your lawyer?

This is based on a pamphlet which is part of a series by the State Bar of California that discusses what you should expect when you hire a lawyer. Because this subject matter is so broad, it also includes other topics: "How can you find and hire the right lawyer?", "How can you work effectively with your lawyer?" and "What happens when the attorney-client relationship ends?" You can obtain copies of these pamphlets from the State Bar of California by calling the Consumer Education Pamphlet Hotline at 1-888-875-LAWS.

First, why is a fee agreement important?

No matter what the amount, no one likes to pay legal fees. Therefore, it is important for you and your lawyer to agree about what you will pay the lawyer, and what services the lawyer will perform. This way, both of you will know what to expect from each other, as you work together on your case.

Next, does your fee agreement have to be in writing?

By law, fee agreements must be in writing, when the lawyer expects fees and costs to be $1,000 or more. If you do not have a written agreement, you may still have to pay the lawyer a reasonable fee for any work done -- even if the lawyer should have given you a written agreement but didn't. It is always a good idea to have a written record of what you and the lawyer agreed to do. If there is a written agreement, you should be sure to get a copy of it for your records; if you have an oral agreement, make a note to yourself of what you and the lawyer agreed to.

Next, how do you make a fee agreement?

You make a fee agreement in the same way that you would make an agreement with a contractor or other business person. Tell the lawyer what services you will want and ask questions to find out what the charges will be. You may want to ask a friend or relative to come with you, if you are not sure what to ask.

Some suggested questions to ask are:

-How will the lawyer bill for his or her time?

-Who else will be working on the case - associate lawyer, legal assistant, paralegal? How will that time be billed?

–What can be done to reduce the fees and costs?

-What is the lawyer's estimate of the total charges?

Keep in mind that an estimate is just that - a calculated guess as to how much the fees and costs will be, which is subject to change as circumstances change.

The lawyer may have a pre-printed fee agreement for you to sign. You can always ask the lawyer to change parts of the agreement or to make up a new one especially for you.

Be certain that you understand everything in the agreement before you sign it. If you are not comfortable with any of the terms, don't sign it, if you cannot work out the disagreement, you may want to look for another lawyer.

Next, what should be in a fee agreement?

Your fee agreement should set out the services the lawyer will perform for you and the type and amount of fees you will be expected to pay. The agreement should also say how costs - the other expenses of your case - will be handled, and explain the lawyer's billing practices. The agreement should also say if the lawyer is going to add interest or other charges to unpaid amounts.

A fee agreement may also include your obligations as a client. For instance, you may need to agree to be truthful, to cooperate, to abide by the agreement, and pay your bills on time.

Next, how does a lawyer decide what to charge?

Lawyers consider several factors when setting the fee they will charge. Some lawyers who are well-known in a certain field of law, might charge more than others who are not. If so, you will need to consider whether the special skills and experience will actually lead to a better or faster solution to your problem.

A lawyer also may consider the amount of time your matter will take. For example, the trial in your lawsuit may take just half-a-day. But the lawyer may have spent days, weeks or even longer preparing for the trial - researching the law, finding and interviewing witnesses, and preparing documents and arguments for the trial.

The fee also may depend on how complicated your matter is. Keep in mind that any unexpected developments that make your matter more complicated may also cost you more.

Other factors which can affect the final fee are the amount of assistance you are actually able to provide the lawyer, and how any opposing party or counsel may act.

Next, do all lawyers charge the same kind of fee?

No. There are many possible types of fee arrangements, depending on what kind of matter you have, and the practices of the lawyer you decide to hire. Here are some types of fees:

Advance fee - money paid to the lawyer before any services are performed. Lawyers sometimes request an advance fee, and draw from, it as work is done. Once this advance fee has been used up, the lawyer will charge an hourly rate for additional time spent on your case. If your case is resolved or you change lawyers before the advance fee is used up, you are usually entitled to a refund of the unused portion.

Consultation fee - most lawyers are happy to arrange a first meeting with you, to talk about the facts of your case and decide whether they can help you. Some lawyers will charge a fixed or an hourly fee to meet with you, while others will charge nothing. Be sure to find out whether you will be charged for this initial meeting.

Contingent fee - the lawyer agrees to take the fee out of the judgment or settlement in your case. The fee is usually a percentage of the amount the lawyer gets for you. If the lawyer does not recover any money in your case, there will be no fee; however, you will still be responsible for any costs. Sometimes the percentage will be different depending on whether or not the case settles without a trial. Be sure to ask the lawyer what amount the fee will be based on - the amount paid by the other side, the amount paid by your own insurance or both. You should also find out if the fee will be figured before or after costs are taken out, and whether the percentage fee will cover an appeal if one becomes necessary. If you decide to change lawyers before the case is resolved, you may have to pay a reasonable hourly rate for the work that was done by the first lawyer, if you end up receiving money when the matter is concluded. Be sure you understand how your first lawyer will be paid, before hiring a new lawyer.

Court approved fee - in some kinds of cases, the fee paid to the lawyer must first be approved by a judge. Some examples are bankruptcy cases, probate matters, and cases involving minors.

Fixed or flat fee - the lawyer charges a set fee for certain kinds of services, such as preparing a simple will, or handling an uncomplicated marriage dissolution action.

Hourly fee - the lawyer charges you a fixed amount per hour as work is done. The lawyer may increase the hourly rate, after giving you notice, particularly if your matter takes some time to resolve.

Minimum fee - this is the smallest amount the lawyer will charge to handle your case. Usually the minimum fee will pay for a set number of hours of the lawyer's time. If your case is finished in less time, none of the fee will be refunded to you. If your case needs more time, the lawyer will charge you at an hourly rate.

Minimum segment - the lawyer who charges by the hour may bill time in minimum segments such as one-quarter or one-tenth of an hour. For example, a lawyer may bill you for a tenth of an hour (which is six minutes) for only a three minute phone call.

Retainer fee - be certain that you understand what is meant if the lawyer uses this term. In most cases a retainer fee is the same as advance fee - money that you pay in advance for the lawyer's work. If the lawyer's charges do not add up to the amount of the retainer, the excess will be refunded to you. In some cases, though, a retainer fee is paid just to guarantee that the lawyer will be available to perform services for you and is not tied to any specific work. It is not refundable even if you later change your mind about having the lawyer do any work for you. This latter type of retainer is sometimes called a true retainer.

Statutory fee - in some kinds of cases, the amount of the lawyer's fee, or the way in which it will be decided, is set by law. Some examples are probate, workers' compensation, social security appeals and supplemental security income cases.

Next, what are some typical out-of-pocket costs that lawyers charge?

The lawyer will charge you for the costs of your case, in addition to the fees. You will be responsible for paying these costs, even if your case is not successful. Costs can sometimes add up rather quickly. It is a good idea to ask the lawyer for a written estimate of what the costs will be. You can also tell your lawyer that any costs over a certain amount, have to be approved by you in advance.

Here are some typical costs:

Certified shorthand reporters charge for taking down testimony at depositions and trials, and for providing written transcripts of that testimony.

Copying and facsimiles (faxes) are normally charged on a per page basis. Lawyers may also charge for secretarial time spent on these tasks, and for telephone charges.

Experts and consultants charge for their time in evaluating cases and testifying in court.

Filing fees are required by courts before they will accept legal papers.

Investigators charge for their time helping to gather facts for lawyer's clients. Investigators usually charge an hourly fee, and may also charge for expenses such as mileage, meals, and lodging.

Jury fees and mileage are paid to jurors in civil cases in an amount set by law. The party requesting the jury must pay these expenses in advance.

Postage, courier and messenger costs for mailing, shipping or personally delivering documents to you or others involved in your case.

Service of process fees charged by individuals who locate parties and witnesses and deliver legal papers to them.

Staff time for secretarial time, including overtime, word processing time, etc.

Telephone bills for toll and long distance calls.

Travel expense for the lawyer while traveling on the client's behalf. These charges can include gasoline, mileage, parking fees, meals, airfare and lodging.

Witness fees and mileage charges must be paid to people who testify at depositions and trials. The amounts are set by law. You may also need to pay travel expenses if a witness must be brought in from far away.

Your lawyer may also charge for other costs. Be sure you understand all the different costs that you will be responsible for. Also, ask the lawyer if you will be responsible for paying the costs directly, or if you will have to reimburse the lawyer for costs that he or she may pay on your behalf.

Next, how will you be billed?

By law, you are entitled to ask for a bill from the lawyer for fees or costs every thirty days. Ask the lawyer how often you will be billed, and whether interest or other charges will be added to unpaid amounts. The bill should give you the details of the services and costs you are being billed for. If it does not, call the lawyer and ask for more information.

Next, what can you do if your attorney refuses your requests?

If the lawyer refuses your request for a bill or a fee agreement in writing, your fee agreement is voided, and the lawyer is only entitled to a reasonable fee. If you would like to continue working with the lawyer, you can also seek mediation of any fee dispute. You also have the right to discharge your lawyer and seek arbitration of any fee dispute.

Arbitration is a simpler process than going to court. Call your local bar association or you can also file a complaint against the lawyer with the state bar of California.

Next, what if you can't pay?

If your lawyer's bill is accurate and proper, but you cannot afford to pay it, contact your lawyer about making arrangements to pay over time, or finding some other accommodation. You should know, however, that if you cannot reach an agreement about how to handle the problem, the lawyer may be entitled to stop working on your matter, or withdraw as your lawyer. You may also want to ask if work can be postponed temporarily, to allow you to pay the amount you owe.

If you believe your lawyer's bill contains an error, or something that you did not agree to, contact the lawyer immediately and try to resolve the problem.

Finally, are sample fee agreements available?

Yes. The state bar of California publishes sample fee agreement forms. There are two sets, one for contingent fee agreement matters, and the other non-contingent fee matters. They are on the State Bar of California website at Click on the "attorney resources" link on the left side of the home page to find the "sample written fee agreement forms."

The purpose of this message is to provide general information on the law, which is subject to change. If you have a specific legal problem, you may want to consult a lawyer.

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