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How lawyers calculate their fees

When people are going through legal problems, many worry how they are going to pay a lawyer to help them resolve their issues.

What they should know is that people can come to fee agreements with their lawyers and that it’s not absolutely necessary that they pay an hourly fee upfront. Though some lawyers charge on an hourly basis, others calculate their fees differently.

What are some fee arrangements?

Contingency fees

Contingency fees are a percentage of money awarded to the client that the lawyer charges if the case was successful. If the client loses then the lawyer usually gets nothing except disbursements – but those can be costly as well.

A lawyer will usually charge between 20 – 45 per cent of the monetary award which is awarded by a court, a tribunal or reached in a settlement. The reason lawyers often charge a high percentage is because contingency agreements present a risk to them if they are not successful, as they may get nothing for work completed.

Nowadays this fee agreement is often used in personal injury cases. When it comes to criminal cases and some family law matters it is often forbidden for lawyers to charge based on contingency.

Flat fee

For some non-complicated matters some lawyers charge flat fees. This fee arrangement is often reached where a lawyer has a good idea of how many hours he or she is going to spend on a case.

For example, some real estate lawyers charge flat fees for clients who purchase or sell homes as long as the transaction doesn’t become complicated.

Such flat fee arrangements are usually reserved when the lawyer is performing a specific task, such as writing a will for a client. However, the scopes of the lawyer’s legal services are most often limited to situations where flat fees are involved.

The lawyer should let the client know, by letter or in person, what services are and are not included in the flat fee arrangement.

Usually, the lawyer will also outline that if the case goes beyond the scope of the services outlined, there will be extra fees added to the bill.

Hourly rate

Where a lawyer charges an hourly rate, it is sometimes possible to negotiate a payment plan but you will need to approach it with the lawyer whose services you want to obtain.

For serious litigation matters and complex legal cases often an hourly fee cannot be avoided. Though a lawyer may be able to estimate approximately how much time has to be spent on a file, unfortunately he or she cannot know for sure. The final tally of how many hours a lawyer may spend on the case are unknown, because the number can increase or decrease depending on the complexity of the case.

However, a lawyer has to maintain records on how much time was spent on a case, called billable hours and is required to give you a detailed bill showing how many hours were spent and what disbursements were charged.

The hourly rate of a lawyer is usually set based on the lawyer’s experience and the complexity of the case.

What are disbursements?

Disbursements are expenses other than legal expenses that the lawyer incurs in working on your case. Such expenses typically include: photocopying fees, court filing fees and phone calls. They can also be specific to the type of legal issue you have. For example, during a trial the lawyer may have to pay for expert reports and will bill the client for those, or when buying a home, the buyer client will be charged for land title fees that the lawyer usually pays on the client’s behalf but for which the client is later billed.

If you are going to engage the services of a lawyer, make sure to discuss fee arrangements.

Read more:

Understanding Lawyer Fees

How lawyers and paralegals calculate their fees