Attorney Fee Agreements: A Cheat Sheet for Clients

If you hire a lawyer to represent you, then chances are pretty good that the lawyer will expect to get paid for his or her services.

You need to get the payment arrangement worked out at the very beginning.

There are 3 typical types of attorney fee arrangements:  hourly, contingent and flat fee. Sometimes the agreements are a hybrid of these 3.

An hourly fee agreement means the attorney charges you by the hour at a set rate; e.g. $250 per hour.  The attorney keeps time records and periodically provides you with an itemized bill.  This type of agreement is commonly used for business matters, contested family law cases, and most civil litigation.

Typically you are also responsible for paying any out-of-pocket costs, such as filing fees.

A contingent fee agreement means that you agree to pay the attorney a percentage of the money the attorney recovers for you.  This type of agreement is commonly used in personal injury cases, eminent domain and some high- dollar litigation matters.  The percentage may vary with the stage of litigation.  For example, your agreement may state that the attorney will receive 30% of the recovery if the case settles before jury trial and 40% if the case actually goes to trial.  The contract should provide whether the costs of the case are deducted from the total amount of the settlement or only from your share.

A flat fee agreement means that the attorney agrees to do certain tasks for a set amount of money.  This type of arrangement is typically used for drafting documents such as wills or deeds, or for defending run-of-the-mill criminal cases like DWIs or misdemeanors.  Costs may or may not be included within the flat fee.

Sometimes an attorney will negotiate the fee amount or type or agree to cap an hourly fee.

Be forewarned, however:  most experienced practitioners will not negotiate.

What should a fee agreement include?  It should identify the client and the law firm.  It should describe the scope of work that will be done by the attorney and how the fee will be calculated.    If it is a flat fee, it should state when that flat fee is payable and when it is considered earned by the attorney.  It should describe the categories of expenses you will be expected to pay.  For hourly matters, it should say how often you will receive a billing statement and how quickly you will be expected to pay any amount due.  If there is more than one client, then the attorney should outline any possible conflicts and require that the clients waive them.

Of the 3 types of arrangements, only a contingent fee agreement is required to be in writing and signed by the attorney and client.

Most attorneys will also put the hourly fee and the flat fee agreements in writing and require a client’s signature.  If your attorney does not volunteer a written fee agreement, then you should either insist on one or hire a different attorney.

Virginia, a 1982 SMU law school graduate, has advised clients for over 35 years.  For more information, visit hammerle.com, and for newsletter sign-up, email legaltalktexas@hammerle.com.  This column does not constitute legal advice.