Home Page

Areas of Practice

ATTORNEY CLIENT FEE AGREEMENTS - CALIFORNIA

Attorneys and clients may structure the attorney fees in various ways. The most common are:

1.  Hourly fee;

2.  Fixed or flat fee;

3. Contingency fee;

4. Hybrid fee (that is, a combination of 1, 2, or 3 above).

Attorney-Client agreements may be anywhere from one to ten pages or more.  They contain many terms, conditions, and provisions.  If you don’t understand any part of the agreement, ask the lawyer to explain it.  This article briefly discusses the attorney’s FEE provision of such agreements.


1. HOURLY FEES

Hourly attorney fees frequently range from $175 to $750 per hour or more.  $250 to $350 per hour is within the range of common as of the time of writing this article. The rates vary from attorney to attorney and from law firm to law firm. 

Fee Amount Factors:

- Experience, knowledge, and skill of the attorney or firm;

- The type of case;

- The prevailing market and other factors. 

Minimal Charges:

Hourly fees are usually charged in minimum increments per the agreement.   For example:

A lawyer may bill in minimum:

- 6-minute (or 0.1 / hour) increments;

- 12-minute (or 0.2 / hour) increments;

- 18-minute (or 0.3 / hour) increments. 

Thus, depending on the agreement, a 1 minute talk on the telephone could cost you, for example, 0.2 / hour x $300 per hour = $60, that is, more than the actual time spent for the actual call. 

Some justify this expense because the attorney has to spend collateral time related to the call (pull the file, write a memo to file documenting the call, enter the call into the billing log, etc.)

I believe that the 0.1/hour minimal increment standard is the most fair. 

Some attorneys do not, in certain instances, charge or bill for a quick telephone call or a brief email even though they technically can per most fee agreements.

Types of Cases commonly handled on an hourly fee:

- Civil litigation defense cases;

- Transactional matters sometimes;

 

2. FIXED OR FLAT FEES:

Fixed or flat attorney’s fee arrangements are a set amount of fees for an agreed specified set of tasks. 

Fixed Fee Factors: Such prices are set based on:

- The skill, knowledge and experience required to handle the matter;

- The range of time likely to be required to complete the matter;

- Whether the lawyer or firm “cuts corners” (i.e. the quality of the work);

- Prevailing market rates and other factors. 

The fixed or flat fee is sometimes required to be paid up front depending on the type of case.

Types of Cases commonly handled on a fixed or flat fee basis:

- Bankruptcy cases;

- Criminal cases;

- Transactional matters that are more routine in nature.

 

3. CONTINGENCY FEES

Contingency fees are fees whereby the attorney receives a percentage of the amount recovered regarding your legal claim. 

Fee Percentage Amount:

The fee may range, in general, from 25% to 40% of the gross recovery before costs and unpaid medical expenses are deducted.

Less frequently, the percentage will be calculated from the net recovery after costs and unpaid medical expenses are first deducted.

Fee Percentage amount factors:

- The skill, knowledge and experience of the attorney or law firm;

- Degree of risk and/or difficulty proving liability (fault) and/or damages in relation to the perceived value of the case;

- Prevailing market rates and other factors. 

Factors in Accepting Case:

Attorneys who accept contingency fees typically prefer cases where:

- Liability or fault of the wrongdoer appears clear or strong;

- The wrongdoer(s) has / have insurance and/or adequate assets to cover the loss; and

 - Adequate damages so that the recovery is sufficient to compensate both the client and attorney. 

Types of Cases commonly handled on a contingency fee basis:

Personal injury;

Wrongful termination or discrimination employment.

 

4. HYBRID FEE

Hybrid fee arrangements are less frequent but sometimes used. 

Classically, hybrid fee agreements combine a reduced hourly rate plus a reduced contingency percentage (Example: $150 per hour plus a 15% contingency). 

Sometimes this agreement is practical where the client can afford to pay some but not all of the hourly fees, and the case has a possibility (but not as strong of a probability) of recovery at the case’s conclusion. 

 

5. COSTS:

“Costs” are charges in addition to attorney’s fees. 

Examples of common costs typically charged:

Hard costs include: court filing fees, deposition costs, private investigators, cost to obtain medical records and billings, expert witness costs, and other litigation and other costs.

Other costs include: Travel costs (lodging, mileage, parking, etc.), and sometimes costs such as faxes, photocopies, and postage (although some rarely charge for faxes, etc. unless the cost is extraordinary). 

In contingency fee cases, many lawyers will advance (as an interest-free loan) all or some of the costs (i.e. pay costs up front), and will be repaid or reimbursed when the case concludes. 

Sometimes, with fixed fee services, all of the costs are built in the fixed fee. 

Always read the lawyer-client contract to determine what costs you will be charged for and whether or not the attorney will advance some or all of the costs.

 

6. REIMBURSEMENT OF ATTORNEY’S FEES:

“If I win the case, does the opposing party have to pay or reimburse me for my fees?” 

Generally, the American Rule is that each person must pay his or her own attorney’s fees and costs. 

But there are exceptions.  For example, sometimes you can recover your fees and/or certain statutorily allowed costs from the opposing party in:

- Certain contract matters;

- Many types of civil rights type of matters; and

- Some types of employee rights cases, among others.

 

7. REGULATION OF LAWYER’S FEES:

Many states or courts regulate the type of fee and the amount or percentage that can be charged in certain types of cases.  For example:

Some states do not permit contingency fees in family law (divorce, support, child custody) cases. 

Some courts limit the percentage a lawyer can collect in a personal injury case involving a minor child. 

Federal courts monitor and regulate fees charged in consumer bankruptcy cases.

California restricts the type and maximum percentage of attorney contingency fees in medical malpractice and workers’ compensation cases.

California further regulates home loan modification (or forbearance) attorney fees by generally not permitting advance / up-front fees.

SEE "NOTES" BELOW.

 

8. SUMMARY: The way the lawyer fees are structured may vary depending on the type of case, the client’s ability to pay the fees, and other factors. 

Sometimes, some attorneys are willing to modify the terms of an agreement including the manner, rate, and/or amount in which the fees are paid.

Whatever the type of case, read the attorney-client agreement and, furthermore, ask the lawyer to explain the terms to you before you sign the agreement.


NOTES:

California Business and Professions Code requires that a written fee agreement be used when fees and costs will exceed $1,000.00 as well as contingency fee agreements.

See other requirements at BUSINESS AND PROFESSIONS CODE SECTIONS 6146 (medical malpractice), 6147 (contingency fees), 6148 (hourly and flat fees) AND 6149 (confidentiality of fees) Click here to read the above-referenced code sections.

Disclaimer and Notice: The materials in article have been prepared for general information and educational purposes only, whose accuracy is not warranted or guaranteed, and does not constitute legal advice.  Laws frequently change.

Author:  MB Tozer Esq.

Copyright 2013


Home Page

Areas of Practice