Depending on the type of legal matter that you want an attorney to handle, there are several different ways that attorney's fees may be negotiated between the client and the attorney.
These commonly include the following:
1. Contingency Fee: This is the way that the vast majority of attorneys and clients prefer the attorney to represent a client on when the legal matter involves the making of a bodily injury claim, such as arising out of a motor vehicle collision or a premises liability situation. The attorney is only entitled to a fee if a recovery for the client is had. The amount of the fee is completely negotiable between the attorney and client, and commonly involves a fee of one-third to forty per cent of the recovery, depending upon when in time the claim is resolved. Many attorneys charge 40% if the claim proceeds to the filing of a lawsuit, but clients should be forewarned that the actual filing of a lawsuit does not involve a large amount of the attorney's time, at least at that point in time. If the attorney really wants the case he may agree to take the case for just a third, and sometimes for something less. It never hurts to ask.
If the matter involves the attorney representing a minor child or mentally disabled person in an injury claim, the fees usually have to be approved by the court at a hearing, and in Orange County Superior Court it is typical to allow only 25%, calculated after deducting the out of pocket costs advanced by the attorney off of the top of the recovery. Contingency fees on medical malpractice cases have maximum contingency fee limits, varying per the amount recovered, and beyond which the attorney cannot ethically charge more, even if the client consents to do so.
Costs (for photocopying, postage, filing fees, service of process, expert witness fees, court reporter charges, etc.) are separate from fees. Depending upon the contingency fee negotiated, sometimes these costs are taken off the top before a fee is calculated, while in other instances the contingency fee is based on the gross amount of the recovery, and then the costs are deducted. Costs may or may not be contingent as agreed to between attorney and client.
2. Hourly Fee: This is the way that many business litigation cases are charged. An attorney's hourly rate is usually predicated (from the attorney's point of view) on his years in practice and experience in the matter to be retained on. However, marketprice competitiveness, the type of case, and geographic locale of the attorney (expect to pay more for an attorney who has a "prestigious" business address) can also enter into the picture. Most attorneys charge a minimum hourly rate in tenths of an hour for review of documents, telephone conversations, legal research, and preparation of legal documents. Trips to the courthouse or an outside deposition location are usually charged from portal to portal. Again, the hourly rate and what the attorney will actually charge you for are completely negotiable.
3. Flat Fee: This is a flat rate that represents the only fee the client will have to pay. Most transaction work (ie., preparing a legal contract or agreement) are charged this way.
4. True Retainer: This is an arrangement where the attorney is paid a fixed fee for a fixed time period, regardless of whether or not he actually does any work for the client. The idea is that for the fee the attorney will make themselves available to the client when they are called. This usually only makes sense for large corporate clients.
5. Hybrid Fee: Many times the above fee arrangements will be combined. For example, the attorney and client can agree to a fixed fee for a certain amount, plus a contingency thereafter, with the fixed fee to be credited (or not) against the contingency fee. Another example would be an hourly fee where there would be a pre-determined ceiling, beyond which no further fee would be charged when the bill gets to that amount.
The Legal Right To Recover Attorney's Fees In Litigation: As a general rule, the prevailing party in litigation is entitled to recover certain of their costs, as defined by statute, but not their attorney's fees. However, if the matter being sued on arises out of a contract with an attorney's fees provision, or if there is a statute that allows for attorney's fees in certain kind of cases, then the client may be in a position to recover attorney's fees down the road from the opposing party. It is important in such cases to have a written agreement with the attorney as to how the recovery of such fees will affect their own fees owed to their attorney. Will their attorney look only to the opposing side for payment of the fees? Will the client get credit or reimbursement on their bill if attorney's fees are recovered?
THE BOTTOM-LINE: Talk to your prospective attorney, don't be afraid to negotiate, and whatever you agree to, GET IT IN WRITING.
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