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How Should I Be Charged?
by Michele McPeak Cromer
Before you think that this is a racy column on criminal law, I need to set the record straight... I am using “charged” as to money, not as to a crime. Not quite as racy, but an important subject nonetheless.
Unfortunately for you (fortunately for me) the complexity of our lives leads us to seek legal counsel more today then ever before. We are injured in car accidents, involved in business disputes, sued by our neighbor, charged with drunk driving, presented with an employment contract, named Executor of an Estate, need to update our Wills, etc. The list goes on. As there are so many different types of issues which bring you to an attorney’s office, there are almost as many types of fee arrangements. If presented with a legal issue, it might help you to review this column so that you are knowledgeable as to the different fee arrangements and can know what to expect and/or what to negotiate. Regardless of the fee arrangement, please note that it should ALWAYS be confirmed in writing. I have seen bills from attorneys for a lump sum with no explanation when the case was to be charged on an hourly basis. This is unacceptable. The fee arrangement needs to be in writing and adhered to. Regardless of whether we are going to charge on a percentage basis, contingency fee basis and/or an hourly basis, the client should understand the arrangement and sign the fee agreement.
Many people have heard Edgar Snyder’s advertisements which boast “You don’t pay unless we get money for you!” This is what is known as a contingency fee. These are typically used in a personal injury action and the client does not pay the attorney any money unless the attorney recovers money for the Plaintiff’s injuries. The attorney will then receive a percentage (typically from 33 1/3% to 40%). Costs are also reimbursed to the attorney after moneys are received. This sounds attractive and as such, many often request a contingency fee arrangement in other types of cases. For the attorney who is a good business person, the answer is usually no. The contingency fee case is reserved for the “sure thing”, the personal injury action where a client is rear ended or the clear victim of medical negligence. It is not for the divorce case where the client may or may not get a lump sum. It is not for the real estate dispute, where the client is willing to pay you if you are successful. You get my point. Typically cases involving litigation are charged on an hourly basis. Typical hourly rates can range anywhere from Two Hundred ($200.00) Dollars and up. It is customary for an attorney to secure a retainer to be placed into the client’s account. That way, you will receive monthly statements itemizing the work performed and a balance due. That balance due will be taken from your retainer account. When the retainer account is depleted, you will be required to make another deposit.
Some cases are actually charged on a flat fee basis. These are typically simple Wills, Powers of Attorney, Living Wills and/or Deeds, as well as some criminal matters. For a complicated estate planning matter, expect to be charged on an hourly basis. However, for simple Wills and the like, a flat fee may be used.
There are also situations where an attorney might charge a percentage. This is typically for estate administration. An attorney might charge up to five (5%) percent of the gross estate. This is deductible on the Inheritance Tax Return and the Executor is also entitled to a five (5%) percent fee. Many attorneys are now charging estates on an hourly basis. The type of fee revolves around the complexity of the estate and the client’s wishes.
So, if you have a legal issue requiring counsel, peruse this column and see what your options are. Talk to a friend who has gone through a similar situation. Know your rights and what arrangement will work best for you. As the Army says (or Marines?) Be Prepared! Good luck!
