How to Negotiate Attorney Fees

Negotiating Flat Fee and Hourly Services

Understand the difference between a flat fee and an hourly rate. Two of the ways that attorneys bill for certain types of cases are by a flat fee or an hourly rate. Generally, a flat or fixed fee is charged for routine legal work, such as drafting a simple will. Criminal lawyers may also charge flat fees for routine cases (e.g., expungements). You will see flat fees for criminal cases because it is often hard to get paid once a client goes to jail. With an hourly rate, an attorney charges you for every hour or portion of an hour that the attorney or other staff members work on the case. Attorneys who handle divorce cases may charge an hourly rate. When retaining an attorney for an advertised flat fee, you should be aware that the advertised flat fee may not include all of the expenses associated with the case. Hourly rates may vary based on your location, the difficulty of your case, or whether you choose a solo practitioner or a large law firm.

Compare flat fee rates. When choosing an attorney to represent you in a routine legal case for a fixed fee, it is important that you contact other attorneys in the area and identify the rate that they charge for the same legal work. By identifying the acceptable fee range for legal services, you are in a better position to negotiate a reduced fee from an attorney that charges more than his or her competitors.

Meet with the attorney and discuss fees. For many attorneys, you will not get a good sense of their hourly fee structure until you meet with them to discuss your case. As part of your initial interview with the attorney, when you are discussing fees, costs, and billing, consider asking the following: What does it typically cost to handle a case like mine? What are the factors that could make the case cost more or less? Are you able to outline a budget that explains the legal fees and costs for the first 6 months that you handle my case? How do you bill for correspondence and legal research? Will you be able to explain the costs in the case to me and tell me how they benefitted my case? Will the attorney take property in lieu of cash? A lot of attorneys are willing to accept property (e.g., artwork or even homes) instead of cash. If you are strapped for cash but have valuable property, you might offer the property as payment.

Ask what is included in the hourly rate. For most cases, the lead attorney will only handle certain aspects of the case. For example, an attorney should not be making his or her own photocopies and billing you at the higher attorney rate. You should ask the attorney who else will be working on your case and at what rate each person bills. Ask your attorney whether his or her time is billed differently for trial work versus preparation. Some attorneys charge a higher hourly rate for court appearances. It is important to fully discuss the range of fees that the attorney may charge for handling your case. Ask the attorney to identify the type of work that is typically handled by people in the office other than the attorney. Ask the attorney how much experience they have handling your case. While a more experienced attorney may charge a higher hourly rate, he or she may be able to conclude your case more quickly. Ask to provide your own fees upfront. Oftentimes, attorneys will charge higher rates if they have to pay for court and expert fees on your behalf. If you are willing to pay these fees yourself, you may be able to negotiate a smaller hourly fee.

Inquire about how you can assist the attorney. Depending on the type of case, there are things that you can do that may reduce your overall costs. For example, rather than have a paralegal or legal secretary request medical records and then bill you for that task, you can request the records yourself. You can also reduce the costs of your case by being completely honest with your attorney about all of the facts in your case. This helps the attorney better prepare your case and not waste time responding to issues to which he or she was unaware.

Negotiate cost cutting arrangements. Depending on your case or need for legal services, you may be able to negotiate a number of cost saving fee agreements. For example, you can negotiate the intervals at which an attorney bills, specify that certain aspects of the case be handled for a fixed fee rather than an hourly rate, and you can limit the number of hours that an attorney can work on your case. If you are negotiating an hourly fee agreement, you can ask that the attorney bill at 6 minute intervals rather than the more standard 15 minute intervals. By establishing a 6-minute billing interval, an attorney who makes a 5-minute phone call does not get to bill for 15 minutes, or 1/4th of the attorney’s hourly rate. A second cost saving technique is to negotiate certain fees at a fixed rate and others at an hourly rate. For example, if you are going through a divorce your attorney may handle the divorce on an hourly rate but draft your new will at a fixed rate. If you hire a law firm or an attorney for a project, you can negotiate the total amount of hours that the law firm can bill you to work for the completed work.

Review your retainer agreement closely. Once you and your attorney have agreed upon a fee structure, all of the information will be contained in a retainer agreement. This document acts as a contract for payment and services between you and your attorney. Before you sign your retainer agreement, consider the following: Does it contain all of the fee-related agreements that you made during your negotiation? Does it state how often you are billed? Does is specify the increments at which a lawyer calculates his or her time (6 minutes versus 15 minutes)? Does it state whether people other than the attorney will work on your case and at what rate they will bill?

Negotiating Contingent Fee Agreements

Understand a contingent fee arrangement. In a contingent fee agreement, an attorney agrees to accept a fixed percentage of the amount recovered in your case. The percentage may be between 33% and 40% of the amount recovered. Typically, personal injury cases are handled on a contingent fee basis. In a contingent fee arrangement, you will also be responsible for paying the costs of the case from any recovery. However, if the lawyer loses you will not owe the lawyer any money for the time spent working on your case. Some of the costs related to a case may include: The cost of an expert witness. The cost of depositions. The cost of trial materials. The cost of court filing fees.

Gather relevant documents. Before you meet with an attorney, gather all of the relevant materials for the case, such as medical records, police reports, earnings information, and other information that demonstrates your injuries and your damages. You should bring these documents with you to your first meeting. This will allow the attorney to better understand the particulars of your case and save the attorney time in gathering all of this information. If you have gathered most or all of the documentation relevant to your case, ask the attorney to lower the contingent fee percentage. Because of the work and time that you have saved the attorney, an attorney may be willing to take your case for a 33% fee rather than a 40% fee.

Propose a reduced fee arrangement. Even if you haven’t gathered any documents, you should attempt to negotiate for a lower contingent fee. An attorney is unlikely to offer to reduce the fee without prompting from a potential client. If the attorney thinks that you have a strong case with a likely positive outcome, the attorney may agree to reduce the fee.

Discuss a reduced “settlement negotiation only” fee. If you have a strong case that is likely to settle, you could negotiate for a two-part contingent fee agreement. If the case settles and the lawyer only had to negotiate a settlement without having to take the case to trial, you can suggest a 25% fee. If the attorney has to begin trial preparations and take the case to trial, you could negotiate a fee between 33% and 40%. An example of a case likely to settle is an automobile case where you were rear ended while you waited at a red light. An insurance company will want to settle that case as soon as possible and unless you are claiming outrageous and unsupportable damages, the case will most likely settle.

Request a reduced fee up to a specified settlement amount. If your case does not have the possibility of generating a large recovery, you can try to get the attorney to have a structured fee agreement that is based on the amount of your recovery. For example, you can negotiate that the attorney only takes a 25% fee if your settlement is 10,000 or less but if the settlement is greater than 10,000, the lawyer will get a 33% fee. These negotiations can unfold in many different ways. For example, some attorneys may want a larger chunk of smaller awards and a smaller chunk of larger awards. In addition, if punitive damages are in play in your case, you may be able to keep a larger percentage of your regular judgment in return for giving up a larger portion of your punitive damages award (and vice versa). Negotiate with the attorney and see what works.

Establish when the costs are deducted from your recovery. In addition to negotiating the percentage of the fee, you should also negotiate when the attorney deducts the costs of the case from the recovery. Specifically, request that the costs of the case be deducted before the attorney takes his or her fee. For example, if you recover $12,000 and the attorney takes a 1/3rd fee, the attorney receives $4,000 and the remainder is $8,000. If you deduct $2,100 in fees, you are left with a recovery of $5,900. If you deduct the fees first, you will be left with a greater recovery. For example, a $12,000 recovery less $2,100 in fees leaves you with $9,900. If you deduct the attorney’s 1/3rd fee ($3,300) you are left with a recovery of $6,600. In this scenario, you and the attorney share a portion of the costs of the case versus the client paying the entire portion. You can also ask to pay the court and expert fees yourself. If you do this, you will not have to worry about taking the fees out of your reward. In return, you could ask that the attorney take a smaller percentage of the winnings.

Negotiate a sliding scale for fees. If you have a case that is likely to produce a very large recovery, you can negotiate a sliding scale for the fees. This allows you to retain more of your recovery while the attorney is still well compensated for his or her effort. An example of a sliding fee would be that you agree that the attorney is entitled to 33% of the first $200,000 recovered. Beyond 200,000 the attorney would be entitled to 25% of any recovery from $200,000 to $400,000. You could state further that any amount recovered beyond $400, 000, the attorney is only entitled to 15% of that amount.

Taking Steps to Protect Your Legal Rights Regarding Attorney’s Fees

Understand a lawyer’s professional responsibility. As part of the legal profession, attorneys are required to follow certain legal rules. Courts recognize that attorneys are in a better position to negotiate for their fees versus most individuals seeking an attorney. Therefore, attorneys are prohibited from seeking an unreasonable amount for attorney’s fees and expenses. When determining whether a fee is unreasonable, a court will consider: The skill and labor required to handle the case, including whether it was a novel or difficult legal issue. The fee other attorneys in the area generally charge for similar legal services. The amount involved in the case and the outcome of the case. How long the client and attorney have been working together. The reputation and experience of the lawyers. Whether the fee is fixed or contingent.

Request an itemized bill. Once you have entered into a retainer agreement for legal services, you should request an itemized bill. If you are working under a contingent fee agreement, you can ask for a statement of costs generated in the case thus far. If you entered into an hourly agreement, you should receive an itemized bill when the attorney is seeking payment. You can also request an itemized bill to show how your retainer was used. Your bill should list every cost in the case and every increment that an attorney worked, including the attorney’s name, what the attorney was working on and the date of the work.

Review your bill carefully. Once you receive your bill you wanted to review it very carefully. You are looking for any improper charges, duplicate billing or excessive fees. Some examples of improper billing practices include: Charges for office overhead, administrative charges and/or clerical services. You should not be charged for secretaries, receptionists or photocopy operators. Any charges for time spent on billing or collections. If you and your attorney have a conversation to discuss a disputed bill, you should not be charged for that call. Non-itemized bills. Bills that reflect excessive time to complete a task. While some tasks may take longer than others, an attorney should not need an excessive amount of time for legal writing or researching. Courts have ruled against attorneys for billing for excessive time. Excessive staffing. If you have a small legal matter, it is unlikely that there should be several attorneys working on the case, in addition to paralegals or other legal service personnel. Failure to delegate. The highest paid lawyer should not be handling routine legal research and writing but should delegate that task to a junior attorney who is less expensive. Double-billing. A lawyer cannot bill multiple clients for a one-time effort that was used in multiple cases. Rate changes that were unannounced. An attorney cannot start billing at a higher rate than what you originally agreed upon. Time spent for training new lawyers in a new area of law.

Discuss billing questions with your attorney. If you think a bill is unfair or you question a charge, you should contact your attorney and discuss the bill. By discussing the bill directly, you may more quickly reach a resolution. An attorney can realize that there was a mistake and correct it or agree to reduce the charges that seem overly high. At worst, your attorney can state that the final bill amount is correct and you have to decide what, if any, steps you want to take.

Take part in alternative dispute resolution. If you and your attorney cannot come to an agreement regarding a disputed bill, you can seek an alternative to court to resolve your case. Generally, there are two alternatives that you may choose to pursue, mediation or arbitration. In mediation, you and the attorney retain a neutral 3rd party, often a retired judge, to help your reach an equitable settlement. The mediator will talk to the parties together and separately and share his or her viewpoint as to the strengths and weaknesses of each position. If a settlement is reached, the mediator will draft a settlement agreement and both parties will sign it. In arbitration, often the parties cannot reach a mediated settlement so they agree to present their cases to a neutral-third party. The arbitrator will hear testimony, review legal briefs and even hear testimony from expert witnesses. The parties agree beforehand to be bound by the arbitrator’s decision. The arbitrator generally drafts up his or her decision that outlines a settlement amount, if any.

Report your attorney to the state bar association. If you believe that you were charged excessive fees, that your attorney took money from you to which he or she was not entitled, or any other illegal activity, you should report the attorney to the bar association in the state where the attorney is licensed. State bar associations investigate disciplinary issues and have the power to sanction or even prohibit an attorney from practicing law in the state.