Here’s what you should know about legal fees, costs, progress reports and what to expect from your attorney. Avoid billing disputes with good communication.
When you hire an attorney, you have a right to expect updates on the progress of your case, to be involved in decisions about your case, and to be fairly billed for the attorney’s services.
But what happens when your idea of regular updates and fair billing isn’t the same as the attorney’s?
Communication failures are the most common cause of complaints against lawyers in the United States, and many of those complaints involve billing. ¹
Save yourself the aggravation of a billing dispute by getting clear on the “ground rules” during your initial consultation with the attorney.
Here’s what you need to know about different types of attorney billing, legal costs, and communication styles.
How Attorneys Charge Their Fees
Fees are the wages paid to an attorney for their work. Depending on the type of legal work to be done, the attorney can charge a flat fee for their services, charge by the hour, or agree to be paid out of money they recover for you.
Legal costs are the expenses that come up while working on your case. Costs are separate from the attorney’s legal fees and are often paid by the client.
Understanding Contingency Fees
Almost all personal injury attorneys will represent clients on a contingency fee basis. Personal injury attorneys work on car accident claims, slip and falls, medical malpractice, and other types of injury cases.
Injury attorney’s fees are contingent – they depend upon the attorney settling your claim with an insurance company or winning at trial or arbitration.
With a contingency fee agreement, your attorney will be paid a percentage of your compensation. Typical contingency fees are 33 to 40 percent of your settlement or verdict award. The attorney’s fees do not include payment for costs that add up while working on your case.
If negotiations fail and your case loses in court, you won’t owe any attorney fees.
In personal injury cases, legal costs, as well as your medical bills, are paid out of your compensation in addition to your attorney’s fees.
You can negotiate the contingency fees with your attorney at your initial consultation. Depending on the complexity of your case and work you may have already done, the attorney may be willing to lower or adjust their fees.
Flat Fee Arrangements
You’ll generally pay a flat fee to hire an attorney to prepare a will, review a contract and other limited services. You may be asked to pay up front, or after the service has been completed.
Hourly Fee Arrangements
Other than personal injury attorneys, most attorneys charge by the hour. For example, lawyers who specialize in probate, taxes, criminal defense, family law, and contract disputes typically charge hourly rates.
Attorneys who charge by the hour, usually require a down payment, called a retainer. The retainer fee is usually non-refundable. Attorney fees are deducted from the retainer until it’s exhausted.
You will receive monthly statements itemizing the number of hours the attorney and their staff worked on your case, how much of your retainer remains, and the balance you might owe.
Before signing an hourly fee agreement, be sure to read it carefully. It’s important to know the hourly rates for work done by the primary attorney, and other attorneys and paralegals who might work on your case.
Law firms often assign a less experienced (and less expensive) attorney to handle cases under the supervision of a senior attorney. You have the benefit of the senior attorney’s knowledge while paying a lower hourly rate.
You should never be billed for:
- Two attorneys doing the same task
- Training time
- Billing and collections (you don’t have to pay for their time preparing your bill)
- Administrative work done by secretaries or receptionists
- Unexpected rate hikes
Monthly invoices for hourly-billed cases should detail:
- The legal services provided to you in the previous month
- Who performed the services
- The hourly rate charged for those services
- The total amount of time spent on your case
- The remaining amount of your retainer
- The balance due
Although an invoice lets you know exactly what you’re being billed for, it doesn’t give you much insight into what’s really going on with your case. For that, you’ll need a progress report.
Tracking Progress on Your Case
Whether you’re being billed by the hour, or have entered into a contingency fee agreement, you have a right to know what’s going on with your case.
Before signing a fee agreement on a personal injury case or other civil case, be clear on how your attorney will keep you informed of the status of your case. Don’t accept a vague explanation.
Define exactly what “good communication” looks like for you.
Request weekly or bi-weekly calls, letters, or e-mails with a status update, even if the status has not changed. Updates from a paralegal are acceptable, so long as you get your questions answered.
You always want to be contacted immediately when a decision needs to be made, for example, if the insurance company makes a settlement offer.
Keep in mind, unless you have a contingency fee agreement, you’ll be billed hourly for any communications you have with the attorney or paralegal. Charges for weekly calls, letters, or e-mails can add up in the long run.
It’s up to you to balance your need to stay informed with your desire to save on hourly billing.
Clarifying the method and frequency of communication in personal injury cases has another benefit. If you know you’ll be hearing from your attorney consistently, you’ll be less stressed and more comfortable with the progress of your case.
Avoid Surprise Fees and Expenses
Whether yours is a personal injury case based on a contingency fee or a civil case on an hourly rate, you must ask your attorney at the beginning of the case about circumstances that could significantly raise the amount you must pay to resolve your case.
Your attorney has a legal obligation to look out for your best interest, but it’s up to you to make sure you understand exactly how your attorney’s fees will be calculated, and how the deduction of costs and medical liens will affect your final payout.
Hourly attorneys will bill for costs as they occur. A personal injury attorney might not tally up the expenses of your case until it’s time to deduct costs from your compensation.
Every legal case has some expense, such as copy costs, document fees for police reports, medical records, and the like. Serious injury cases often require paying for a medical expert, accident reconstruction, and other expert costs.
Ask if your attorney anticipates any additional expenses, including costs for:
- Expert witnesses
- Private investigators
- Court reporters
Expert witnesses, private investigators, and court reporters all charge for their time, and the cost is always passed on to the client.
Will Your Case Go to Trial?
You should have a general idea of whether your case will be litigated. Make sure your lawyer consults with you before filing a lawsuit. A lawsuit can substantially increase the time and expenses needed for your case.
Lawsuits cost more money. While an out-of-court settlement may not require expert witnesses, investigators, or depositions, a trial requires all of them. If your case is based on a personal injury, the costs of litigation can substantially diminish your final compensation.
The same is true for hourly rate cases, although instead of a settlement deduction, you’ll be paying the additional trial expenses out-of-pocket.
Settling a claim without filing a lawsuit can save money. There’s always a chance of losing at trial. Even if you win, the additional trial costs could result in a net loss.
Although you should trust in your attorney, you have the right to have your lawyer explain your options before filing a lawsuit. In many personal injury cases, once a lawsuit is filed the insurance company will quickly offer enough money to settle your case satisfactorily.
On the other hand, proceeding to trial gets expensive. You might lose your case. Or, the jury could enter a large verdict in your favor, only to have the at-fault party’s insurance company file an appeal. Your attorney will help you weigh the pros and cons of litigation.
Dealing with legal issues in a personal injury claim can be stressful. With an attorney in your corner, you don’t have to tackle difficult issues on your own.
The best attorney-client relationships start with good communication. Speak up, ask questions, and know what to expect while your attorney fights for you.
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