Attorney Fee Structures
When you hire an attorney, you will likely sign a fee agreement ranging anywhere from a page to a dozen pages (or more!). In spite of the seemingly excessive terms and conditions – all of which have a purpose, even if that purpose isn’t inherently obvious – most clients are primarily concerned with the fee that they will be paying to their attorneys. (You should always ask if there is a provision of a fee agreement you do not understand, even if it seems inconsequential.)
Generally speaking, the fee that you pay to your attorney will take one of three primary forms: (1) flat fee, (2) hourly fee, or (3) contingency fee. There is a fourth way to structure a fee agreement, combining any two of flat fee/hourly/contingency into a “hybrid” agreement.
Attorney fee agreements must be fair, reasonable, and fully explained to the client. (Alderman v. Hamilton (1988) 205 Cal.App.3d 1033, 1037.) Attorneys also have a “professional responsibility to make sure clients understand their billing procedures and rates.” (Severson & Werson v. Bolinger (1991) 235 Cal.App.3d 1569, 1573.) An attorney may not recover a fee in excess of that which was explained to the client, and to which the client has consented. (Id.) Moreover, an attorney may not charge an unconscionable fee. (Cal. Rules. Prof. Conduct 4-200.)
Before addressing fee structures, it is also important to note that another component of your attorney-client fee agreement is the “costs” portion of the agreement. Costs include everything from court filing fees to deposition transcripts to faxes, copies, and postage. Some attorneys, generally on contingency fee cases, will pay the costs (or “front” the costs), to be reimbursed at the conclusion of the case. I will front costs on occasion, however a wise attorney (and past president of the San Diego County Bar Association) once advised me that it is important for clients to “have a stake” in the outcome of the case, and to pay costs as a case proceeds. I have heeded this advice, and have found that it is important for clients to understand, and pay, the costs as they are incurred.
One final note on costs: as indicated above, some attorneys will charge for faxes and copies, on top of their other fees and costs. To me, such charges are nickel-and-diming the client, and are excessive. Yes, attorneys incur costs for faxes and copies, but those costs are negligible. When the client is charged $1.00 per page for these services, the costs are no longer negligible, but rather are a revenue stream for the attorney. (If there are 1,000 pages of discovery in your case, at $1.00 per page the attorney could buy 33 reams of paper (at $30/ea.) for the $1,000 you have paid for your two reams ($60) of paper.)
As far as fee structures are concerned, criminal cases are generally charged on a flat fee basis. Based upon the allegations leveled against you, the skill and experience required to defend those charges, and amount of time that will likely be required, the attorney will decide how much he/she is going to charge to defend you to the conclusion of your matter. The fee is generally required to be paid up front, and if the matter resolves the day after you pay your fee or a year later, you still pay the same fee. Flat fees in civil cases are rare.
An attorney may take a case on a contingency, generally 25% to 40% of the gross recovery, if it appears to be a case of clear liability and if the damages are ascertainable and adequate to compensate both client and attorney. Generally speaking, civil plaintiff’s cases can be taken on a contingency basis. Defense cases generally are not suitable for a contingency as there is no prospective recovery at the conclusion of the case. Similarly, certain cases, such as breach of contract cases, may have multiple prospective goals, including but not limited to monetary recovery. Therefore, plaintiff’s breach of contract cases are often taken on an hourly basis.
Civil defense cases and certain categories of civil plaintiff’s cases – including breach of contract cases, as set forth above – are generally taken on an hourly basis. Hourly fees generally run from $200-750, depending on the experience level and subject matter expertise of the lawyer. Hourly fee cases are generally charged in 6-minute (or 0.1/hour) increments. Some lawyers will bill in minimum 0.2 (7-12 minutes) or even 0.3 (13-18 minutes) increments, meaning that reviewing an email or talking briefly to opposing counsel is going to cost you several times the actual time spent. My belief is that fees should be billed in 0.1 (0-6 minute) increments; similarly, if you are told that you will be billed in 0.1 increments and then your bill reflects all charges of 0.2 or greater, the attorney has misrepresented how you will be charged and, in my opinion, is guilty of misrepresenting the terms of the agreement, and also of charging an unconscionable fee.
Finally, some cases may call for a unique, hybrid fee arrangement. Generally this will take of the form of a reduced hourly rate (say, half of the attorney’s standard rate) plus a reduced contingency percentage (again, half or thereabouts) of the gross recovery at the conclusion of the case. I saw one fee agreement in which the attorney, on a false arrest case, charged a hybrid fee of $350/hr. plus 40% of any recovery. In other words, there was no reduction in either the attorney’s hourly or his contingency, leading to the strong likelihood that the attorney would bill in excess of the value of the case. I have taken hybrid cases when there is a possibility (but not a strong likelihood) of recovery at the end of the case, and in cases where there is both a defense component and offense component to the case, which can occur in breach of contract litigation.
If you have a concern about the fee your attorney is going to charge you, you should either ask your attorney or seek out alternative representation. If it feels like your attorney is looking at you as a blank check, and/or if you receive a bill and realize that the attorney saw you as a blank check, then it’s probably in your best interest to seek alternative representation.
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