BASIS FOR A LEGAL FEE
What is the basis for a legal fee? Probably the most basic factor in any fee charged by a lawyer/law firms is the amount of time spent on a particular problem. In one important way, a lawyer’s professional services differ from those of a doctor or dentist; much of the work is accomplished when the client is not present. Many clients are, therefore, often unaware that the four-page document and the advice given in a few minutes are actually the products of many hours of work. One of the best analogies used for a client to understand what legal work may entail is to think about when he or she had to complete a research project in high school and/or college, and then had to give a presentation about the research paper. Do you remember how much time it took? Quite a lengthy amount, right.
In addition, client results may have involved time spent by other persons in the lawyer’s office, i.e., a legal assistant, an associate or a legal secretary. When you engage the services of an attorney, remember that you really may be hiring an entire law office to work for you and provide legal services for your specific needs. Since a lawyer is rarely confronted with two legal situations which are exactly alike, the fee will depend upon the specific circumstances involved with your case. After you have related the facts in your case, an attorney may give you an estimate of the fee, but this estimate is just that, and not a guarantee of total attorney's fees and case costs.
How is the fee computed? A lawyer usually computes a fee on an hourly rate. This can range anywhere from $75 an hour to a shockingly $1,800 per hour, with the $300-$600 range being typical for Southern California, in particular Orange County, and the fee(s) depend on the circumstances of the case as well as the experience and expertise of the lawyer. In computing the fee, your attorney considers a number of elements, including:
1) Time. This is the basic element in determining a fee. While many attorneys work a minimum of eight to ten hours a day, only about 65% of that time can be billed to clients. The remaining time is devoted to keeping up with the many new and changing laws; continuing legal education courses; attending bar association meetings; taking part in related studies and projects; and volunteering in legal services programs. Plus your attorney is human like you, and just like you deserves to live life to the fullest and enjoy aspects of non-working life.
2) Ability, Experience and Reputation. Good law school training combined with later legal experience constitutes a lawyer’s legal education. An experienced lawyer may be better trained to handle your problem. If your lawyer is well known as an able lawyer in an area of law, a higher fee may be charged because those specific services are in special demand.
3) The Results Achieved. In some cases, the result itself may decide the fee. An example of this is the “contingency” or "hybrid contingency" agreement, often used in lucrative employment law cases. The lawyer does not receive a fee or receives a much lower if no recovery is achieved for the client. If money is recovered, then the lawyer is paid an agreed-upon percentage of the recovery. In most states, this percentage ranges from about 1/3 to 1/2 or 33.33% to 50%, depending on the amount recovered, the area of the state, the circumstances of the case, and many other factors. Typically, the client is responsible for court costs, such a court fees, deposition/court reporter expenses, copying costs, etc. When no contingency fee arrangement has been made, the lawyer will expect to be paid whether the client wins or loses the case. Always keep in mind that no lawyer can guarantee the results of any court proceeding.
4) Operating Expense and Overhead. The cost of operating the average law office (including such items as rent, equipment, law libraries, supplies, professional and non-professional staff and insurance) amounts to nearly 50% of the gross annual income derived from legal fees.
What about discussing the fees and costs? You should discuss the fees and costs of legal services at your first consultation with a lawyer. The lawyer may not be able to determine the exact amount of time and effort required to handle your case but probably will be able to give you an estimate based upon past experience. Sometimes, a lawyer may quote a total charge (flat rate) for the work involved or may just give you an hourly figure for the estimated time required on a particular matter. A written fee agreement is highly recommended for the mutual benefit of both you and the lawyer. You should NEVER hesitate to discuss fees at any time during the handling of your legal matter. If you receive a statement and believe the fee is not correct or proper, first discuss it with your lawyer.
Often misunderstandings about fees result from the fact that the client is not aware of the extent of the lawyer’s work on the case. This is by no means the client’s fault. Clients who do not regularly see a lawyer may understandably believe that the activities of the lawyer are limited only to those evident. It is always a good idea to obtain copies of all documents and correspondence pertaining to your case. The lawyer’s obligation is to explain, if asked, how the charges were made. If you and the lawyer are not able to resolve a fee dispute, the State Bar of your state offers a fee arbitration service that either of you may want to consider.
When do you have to pay? The time for payment of legal fees depends on your contract for legal representation with an attorney, which typically depends on the type of legal service you wish rendered. In many cases your lawyer may require deposit before agreeing to undertake the work. This is frequently referred to as a deposit or retainer deposit. Such payment may be only to assure the lawyer's availability, meaning a pure retainer, or it may be for credit against services to be performed or applied to costs which might be incurred, meaning a true deposit. You and the lawyer should discuss this and reach a clear understanding as to which is applicable to your case. If you want to put a legal fee or costs on a credit card, ask your attorney whether or not he or she accepts payments via charge card and whether the particular charge even qualifies to be charged to a credit card. California law is particular pertaining to whether an attorney can accept payment for case fees and/or costs using a credit card. For more information, read the State Bar of California Standing Committee on Professional Responsibility and Conduct's Formal Opinion No. 2007-172.
What if you owe your attorney money and cannot pay an invoice in full? If you are not certain you will be able to pay promptly, talk it over with your lawyer. You should be able to reach an arrangement, such as a payment plan.