Contingency vs. Hourly Attorney

Attorneys can be paid in more than one way.

Attorneys can be paid in more than one way.

Before you hire an attorney, you should understand how attorneys charge for their services. Two means of charging for legal services are on contingency and as an hourly rate. A third method is a hybrid of contingency and hourly: This method is flat fee. While attorneys in the same community base their rates on the going rate for the area, you may find a huge discrepancy between small legal firms and large, prestigious firms.

Hourly

The most common method of charging for legal services is hourly. An attorney negotiates an hourly fee for services rendered. This fee may fluctuate from client to client based on the complexity of the case, the type of case and the prevailing rate charged in the community. The client is billed in agreed-on increments, such as by the quarter hour, hourly or even every 10 minutes. Each time the attorney takes your phone calls, does research or otherwise works on your case, he will bill you for the time spent. The attorney's assumed risk of not getting paid is limited to the creditworthiness of the client.

Contingency

An attorney may choose to work on a contingency basis. Cases taken on contingency are a gamble because the attorney does not get paid unless he wins the case. The fee charged is typically a percentage of the expected judgment. This type of fee is often associated with civil cases in which the client anticipates a sizable judgment and the evidence is favorable for a win. When agreeing to accept a case on contingency, the lawyer will draw up a contract spelling out what costs are covered by the contingency, such as court costs, expert testimony fees and travel expenses.

Hybrid

Charging a flat fee for services is kind of a hybrid of contingency and hourly fee billing. When charging a flat fee, the attorney quotes a fee that covers all the costs he anticipates will go into the case. If he spends more time than anticipated on the case, he ends up working for less than his normal hourly rate. On the other hand, if the case is simple, he can earn more than his normal rate. Attorneys working for a flat fee may be reticent to do extra work you may feel is necessary to prepare the case if he failed to quote an adequate number of hours for the job.

Retainers and Mixtures

Many attorneys offer a mixture of fee types. He may take a case on contingency for the time committed to the case but choose to bill clients directly for travel and court costs. He can also ask the client for a retainer before he starts work on the case. The retainer is applied against his billable hours. When the retainer is used up, you are expected to pay more funds before additional legal services are provided. This method of prepayment provides a steady cash flow for the attorney and reduces the odds of incurring bad debts from delinquent clients.

 

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