A lot. There is no denying the fact that legal services are costly. Effective representation typically comes at a steep, but reasonable, price.
Like buying a home or hiring a surgeon, retaining an effective attorney is expensive, important, and ultimately valuable if you make the right choice. However, your lawyer should always inform you up-front, in writing, how you will be billed for his or her services.
Attorneys usually charge clients via one of the following standard payment arrangements:
(1) hourly rate fee;
(2) flat fee; or
(3) contingent fee.
The hourly rate fee is the most common payment method. Under this arrangement, the attorney charges an agreed-upon hourly rate for all time spent working on a client's case until it is resolved.
Hourly rates vary based on attorneys' experience, expertise, prestige, operating expenses, and the local market. Nationally, lawyers' hourly rates range from as little as $100 to as much as $1,000. Here in Ponchatoula, the spread is more like $150 to $300. Paralegals’ services are also billed under this method, usually costing between $40 and $90 per hour.
Hourly rate fee agreements typically require the client to pay the attorney an advanced payment called a "retainer." The lawyer deposits that payment into a special bank account, the IOLTA client trust account, and deducts from that account the cost of services as they accrue. For example, a local divorce lawyer may charge $175 per hour while requiring at least $2,500 to be paid up-front.
Less common than the hourly rate fee is the flat fee arrangement, which is usually reserved for relatively simple, predicable, and well-defined matters such as wills, contracts, uncontested divorces, basic bankruptcies, and some criminal defense matters. Under this arrangement, the attorney and client agree upon a fixed amount of payment. For example, the flat fee for a basic will might be $500 and a criminal defense flat fee could be $5,000, regardless of the time the lawyer ultimately takes to complete the matters.
In certain types of cases, lawyers work on a contingent fee basis. Under this arrangement, attorneys' fees are only paid if a favorable result is achieved (i.e., "no win, no fee"). This means that the lawyer requires no up-front money from the client, but instead the attorney gets a percentage of the eventual recovery, typically 33-40% of any settlement or judgment collected.
Contingent fee arrangements are typical for plaintiffs in auto accident claims, medical malpractice cases, and other personal injury matters, as well as debt collection and some commercial cases. However, contingent fees are legally prohibited in criminal and family law matters.
The contingent fee arrangement provides access to the courts for those who cannot otherwise afford to pay attorneys' fees. Contingent fees also provide a powerful motivation to the attorney to work diligently on the client's case with a results-oriented emphasis.
Under the hourly rate fee, flat fee, and contingent fee models, in addition to payment of attorneys' fees, lawyers require reimbursement for any out-of-pocket case-related expenses, such as court costs, filing fees, postage, court reporters, copies, etc. Clients are not, however, billed for attorneys' general overhead expenses.
In general, when you consider the importance of your legal needs and the costs and risks undertaken by practicing lawyers, the high price of attorneys' fees are reasonable. In addition to basic overhead costs all businesses pay -- payroll, rent/mortgage, insurance, taxes, etc. -- lawyers invest a considerable amount of their time and money to become attorneys in the first place. For example, according to the Tulane and LSU websites, the current sticker price for the seven years of college and law school this author obtained to become eligible to practice law is over $350,000. Some lawyers have paid much more. The upshot of the legal industry's expensive and time-consuming barrier to entry is that all private practice attorneys' charge relatively steep prices. In most situations, that is unavoidable.
Given that attorneys' fees are typically high but reasonable, use your understanding of the various arrangements for payment to negotiate a written fee agreement that best suits your needs.