Billing & Fees
As Abraham Lincoln said, “A lawyer’s time and advice are his stock in trade.” Lawyers do not sell a product, as such; they sell their time and advice based on their education and experience, just like a doctor or accountant.
In establishing a fee arrangement, the lawyer factors in his office overhead and expenses such as: personnel costs, rent, insurance, maintenance, utilities, etc. Most of the money received for fees goes to pay overhead and expenses.
The actual cost to handle a legal matter will vary from case to case. However, there are three mechanisms for charging fees: hourly basis, flat fee, and contingency.
Hourly Rate. The typical way of charging for a case is to bill the work by the hour. The Allen Law Firm bills in tenths (0.1) of an hour, i.e six minute increments. The time spent on a case is then multiplied by the hourly rate of the person doing the work and a bill is sent at the end of the month. Generally, a retainer will be requested and this amount is placed in the firm’s trust account and the fees are billed first against this amount and, if it is exhausted, the bill is sent to the client. From time to time, we will request additional deposits be placed in the trust account to cover future work. All bills are due upon receipt.
Flat Fee. Many cases can be handled on a flat fee basis. In flat fee cases a certain scope of work is spelled out in advance and a set fee is paid. The client incurs no additional attorney fees unless the scope of the work changes. The Allen Law Firm charges personal Chapter 7 and Chapter 13 bankruptcies, contracts drafting, incorporations, and many immigration procedures on a flat fee basis.
Contingency Fee. Contingency fees are generally charged in personal injury, wrongful death, or medical malpractice cases. In contingency fee situations, no attorney fees are paid up front, but the attorney collects a percentage of any recovery. This percentage ranges from 33% to 45%.
You will hear case expenses being referred to separately from attorney fees. Expenses are fees paid to Courts for filing fees, etc. or to third parties such as court reporters or expert witnesses. These expenses are not included in the attorney fee arrangements. By law they are the responsibility of the client and must be paid by the client. Generally, these fees are paid through the attorney’s trust account so the attorney can track litigation expenses for the client and because many courts and third parties will not accept payments from clients but only from attorney trust accounts. Any expenses deposited and unused at the end of the case will be applied to outstanding attorney fees and, assuming those are paid in full, will be promptly refunded to the client.
Engagement & Retainer
The Allen Law Firm enters into a written representation agreement with all clients. This agreement will spell out the scope of the representation and the billing basis for the case. Except in contingency cases, no work will be performed until a retainer is paid. A retainer is a deposit of funds against which we bill our time. In general, we strive to always keep enough money on retainer to cover anticipated upcoming billings. If a case settles and the retainer is not used up, the remaining unused retainer will be promptly refunded to the client at the end of the case.