What is the difference between fees and costs?
FeesFees are what you pay your attorneys and paralegals for their time and expertise. If your case is being handled on a "contingency" fee agreement, that means that you will not pay any fees to the attorneys unless or until they get a recovery for you. If there is a recovery, the contingent fee agreement will dictate the percentage of that recovery that will be paid to the attorneys for their work on the case. If there is no recovery, a contingent fee agreement usually will state that no fees will be charged to you.
If your case is being handled on an hourly basis, you will receive a monthly bill detailing the time spent by any of the attorneys or paralegals on your case, and the rates for each of those people may vary. You should receive a disclosure at the time you sign your fee agreement as to what each person's hourly rates are. On an hourly fee agreement, you will be required to pay your bills each month, even if you do not get a good outcome with your case.
CostsCosts are different from fees. Costs/expenses are the funds advanced on your behalf in order to prepare your claim. Costs accrue in cases without regard to whether the client has an hourly or contingent fee agreement. With a contingent fee agreement, you will repay the law firm for your costs at the end of the litigation, usually out of the recovery that is obtained for you. If you are on an hourly fee agreement, you may be required to pay the costs monthly, as part of your monthly bill.
How costs are handled by law firmsFirms handle costs in different ways.
Some firms will ask you to give some type of collateral to cover the costs of your litigation--up to and including taking a lien on your house. If you give a lien on your home to cover the costs of your case, and you do not pay those costs back to the firm who holds the lien, that firm could foreclose on your home and take it away from you. Firms with strong financial resources generally do not engage in this practice.
As such, BE VERY CAUTIOUS when hiring an attorney, that you carefully read the fee agreement, so that you clearly understand what the costs arrangement really is. Not all firms require their clients to give title to their homes or put up other forms of collateral to cover the costs of pursuing their claim--so it is very important to do your homework before hiring a law firm to handle your case.