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Contingency Fees and Hiring a Lawyer

The following is reproduced from the Federal Trade Commission website:

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Payment Arrangements

Remember the most expensive lawyer is not necessarily the best one for you. Nor is a "bargain" rate always a great deal. Look for the best balance of experience and cost. You may want to ask your lawyer if a junior lawyer or paralegal can perform some of the work to lower your costs. You also may want to ask if there are tasks you could perform yourself to save time and money. For example, you might be able to copy, pick up or deliver certain documents. A lawyer may charge you a flat fee for a particular service or offer alternative methods of payment. Each has benefits and risks.

Contingency fees

A contingent fee arrangement means that your lawyer gets a percentage of whatever money you receive as resolution of your case. If you receive no money, then your lawyer collects no fees. However, you may owe charges for court fees, copying, and hiring expert witnesses. If you have very little money to pay hourly fees, it may be appropriate to negotiate a contingency fee with your lawyer. But before agreeing to a contingent fee, consider that:

The size of a contingency fee, usually a percentage of any money you receive to resolve the case, is always negotiable. Sometimes you can negotiate a sliding scale fee (for example, 30 percent of any recovery up to $10,000; 20 percent of any recovery up to $50,000, etc.). Remember that there's no particular percentage of a consumer's recovery that constitutes a "standard" or "official" fee.

The size of the contingency fee should reflect the amount of work that will be required by the attorney. Some cases are straightforward; others can be novel or uncertain. You may want to ask whether the case is likely to settle quickly and whether government agencies will gather significant amounts of evidence. A fee arrangement sometimes can be negotiated with a lower percentage for a quick settlement and a higher percentage if it goes to trial. Be sure you know exactly what is covered in your agreement. Your state also may have rules about maximum contingency fees; check with your state's bar association.

Flat fee

You pay the lawyer a set dollar amount for a particular service, like writing a will. If the matter is simple and straightforward, say, an uncontested divorce or a simple bankruptcy filing, many lawyers often charge a flat fee. Be sure to find out exactly what the flat fee includes.

Hourly rates

The lawyer charges a set fee per hour. Your final cost will depend on how long it takes to complete your work. Hourly rates vary according to a lawyer's expertise and experience. An experienced lawyer may charge a higher hourly rate but may complete the work more quickly. Because the hours worked on your case can add up quickly, you should ask for a written estimate of the number of hours necessary to complete your case to get an idea of what your final bill might amount to.

Retainer

Your lawyer may ask you to pay a fee up front. A lawyer can use this fee — often called a retainer — as a down payment on expenses and fees. It is important to review your account from time to time to understand how your money is being spent.

Public Legal Services

Depending on your financial situation, you may qualify for free or low colow-cost services through special organizations. For example, you may be eligible for free representation in landlord-tenant or divorce cases. Look in your local telephone directory for legal services organizations or legal clinics associated with accredited law schools.

Pre-paid legal plans

Some organizations offer pre-paid legal plans that work like an insurance policy. In exchange for a monthly fee, you receive certain legal services as you need them. However, the fees charged and the services covered vary with each state's law and the particular plan. Check out any plan carefully to be sure you know what's covered and whether it makes sense for your situation.