One of the most important questions a person can ask a lawyer before hiring that lawyer is how the lawyer gets paid-- or "what are the attorneys fees?". Before hiring an attorney, it is important to know about the various types of attorneys fee agreements.
Contingency Fee Agreements
This is the type of agreement that most people hear about. The basic premise of the contingency attorneys fee agreement is that the lawyer's recovery of a fee is "contingent" upon a recovery by the client. No recovery, no attorneys fee. These types of agreements are common in cases involving personal injury, but can also be used in other types of cases including contract cases, construction cases, and even insurance bad faith cases. In entering this type of attorneys fee agreement, a lawyer is agreeing to work on a client's case and zealously represent that client all the while accepting the risk that at the end of the case there may be no recovery for anyone, including the lawyer. In exchange, for accepting the risk and agreeing to work on the case, the client agrees to give the lawyer a percentage of the total recovery. That percentage can be negotiated, but the amount usually depends on the type of case, the amount of work that is anticipated, and the amount of risk involved.
Hourly Rate Agreements
These attorneys fee agreements are, as they sound, agreements to pay an hourly rate to an attorney for services provided. In many instances, contingency fee agreements do no make sense. For instance, if there is a case where the liability is difficult to prove, thus the risk is too high. Or, if a person or business is sued and requires a legal defense, there would be no damages to be recovered. Thus, the typical fee agreement in these situations is an hourly agreement. The rate depends on the attorney and the region.
Hybrid- Hourly/Contingency Agreements
These are a mixture of the contingency type of agreements and the hourly type agreements. An attorney's recovery is contingent upon a recovery by the client at the end of the case. However, the attorneys fees are not a percentage of the total award. Instead, the attorneys fees total an amount for the services provided on an hourly basis. So, the attorney must keep documentation of the time spent on the client's matter and the Fee Agreement will stipulate to an hourly rate to be charged for the attorney's services. However, the recovery is contingent upon a recovery in the case at a later time. These types of agreements are generally used in cases where there is a statute that permits the client to recover attorney's fees (such as a breach of contract case, construction case, or a DTPA case). These types of agreements are not generally used in personal injury cases where attorney's fees are not recoverable by the client.
As the name would suggest, this type of agreement calls for payment by the client to the attorney a specified amount for the legal services performed. These types of fee agreements are generally used in smaller civil matters, traffic court cases, or in some criminal cases. Of course, there are other situations where these types of fees are utilized, but generally, don't expect a lawyer to accept representation on a complex and time consuming legal matter on a flat fee basis. These types of agreements are useful in cases where the time expended on the case can be reasonably anticipated at the beginning of the matter. For instance, when the attorney will only have to appear at one hearing on a traffic matter, it is more realistic to provide a flat rate for those services. From the client's perspective, if a complication or delay arises in the case, this type of rate can usually work to limit the amount of fee exposure.