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LAW OFFICES OF KEVIN M. HEALY | |
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Personal Injury |
Attorney fees are primarily determined either on an hourly fee basis for the services or on a percentage of the value received for the client (better known as a contingency fee.) They are generally set both by law and the Rules of Professional Conduct (ethical rules). The appropriate ethical rule is set copied at the end of this page for reference. Contingency Fees The most major benefit to a client opting for the contingency fee is that the fees are paid at the end of the case and not while their case is ongoing. Under a contingency fee, the attorney will take an agreed percentage of whatever is recovered for the client. Most clients retain or hire their attorneys to work on a contingency fee basis on personal injury cases. While these fees are actually negotiable, the attorney is not required to accept a fee percentage which is too low. You will find that the larger the potential outcome, the more willing the attorney might be to negotiating a lower fee. It is not uncommon to see fees as low as 20% or as high as 50%, with one-third (1/3) being most common. This is not to say that the attorney may not be hired on an hourly basis for personal injury cases, but contingency fees for personal injury cases are the most common. There are some cases where it is illegal for an attorney to charge on a contingency, and those include criminal matters or family law cases. In such situations, an hourly fee must be charged. It is also legally unethical and prohibited for attorneys to "buy" a personal injury contingency fee case or pay all the costs of a case. Under the law, the client will always be ultimately responsible for the costs of their case (such as for records, depositions, fees, etc.). What the attorney has at risk from contingency cases is that if you have no recovery is or loose your case, the attorney will not be paid for his/her time. Therefore, if an attorney ever tells you that he or she will cover everything, you should report them to the State Bar as this is plainly illegal and misrepresents the obligations. Sadly, there have been many clients who have jumped at phone book or broadcast ads which suggested that the client will never be at risk for their case, and then get stuck with a surprise bill at the end. While it might scare away cases or clients to say this, Mr. Healy believes it important to highlight this fact before engaging in any representation to make sure that there are no misunderstandings as the case progresses. Special Contingency Fees Under certain special situations, such as the representation of a minor or incompetent person, fees are set by rule of court at or below 25%, and hearings are required to confirm the fees at the end of the case. This is all to protect the public and make sure that those with the greatest need are having as much of their settlements applied to their benefit and not to the attorney. Additionally, in estate situations, there will be a flat fee based upon the total value of the estate, and that would not be changed by the court except in exceptional situations. Also, there are certain other limited situations where the fees are set as a matter of law, to include many veteran actions or claims against the government. You should discuss your situation with your attorney before entering into any fee agreement to ensure that you understand exactly how your fees will be set in your case. Hourly Fees Hourly fees are exactly as you would expect; pay for each hour of the attorney’s time. Depending upon your fee agreement, you may find that the attorney charges in units of 6 minute blocks of time (or a tenth of an hour). What is becoming more common is to charge a minimum amount, even if an activity takes a relatively short period of time, as there will be even more time dedicated to the documentation of that "short call" or "brief visit." Reference to your fee agreement will tell you how your attorney is charging. Just as with medical professionals, legal professionals charge a significant amount to account for their costs of overhead, training, experience, and the value of their services. As such, the fees will also vary even for the same attorney depending upon the type of work the attorney is doing for you. It may not be uncommon for the attorney to be charging as low as $150/hour for relative simple matters, or $250/hour for complex matters. Some attorneys are even charged hundreds of dollars per hour for on line legal research, all of which must ultimately be borne by the client. The benefit to the electronic legal research is that it reduces the overall costs to the client as the attorney is spending much less time working on the case and the attorney has the benefit of some of the most updated information. A good example of this would be your medical doctor spending time "on line" to research the medical journals to best treat your condition. You would want your doctor to be best informed to treat you and you would expect to be charged for that expense in our care. Attorneys routinely spend tens of thousands of dollars each year updating their computers and libraries to best serve their clients. These costs must be worked into the cost of representation if you want your attorney to be available to protect you. We are very lucky in the Sacramento area in that our hourly fees are relative low. While the going rate for Family Law in Sacramento is between $150 -$250 per hour, I have seen it as much as $450 per hour in larger cities. You will find that most ethical attorneys will work with you to reduce your bill. Never be afraid to ask what you can do to help keep your costs down. I known that I appreciate this as the client is more involved in his or her case, and the client saves the money in the long run. Blended Contingency Fees Under certain appropriate circumstances, the attorney and client may agree on what is referred to as a blended contingency fee. Here the attorney takes a limited hourly fee and only takes a small percentage of the case when it resolves. This would be a good situation where the client can afford to pay some of the fees while the case is going on and there is a strong belief that the case will resolve for a high amount. This also distributes the risk of the case resolving in the client’s favor. Let’s look at a situation where a case is expected to resolve for $120,000 and it will take 50 hours of work by the attorney. Under a pure contingency, the client pays on average 1/3 or: $40,000 Under an hourly fee of $200 per hour, the client will pay: $10,000 Under a blended fee of $75/hour and only 20% contingency, the
client will pay: 20% of $120K = $24,000 = $27,750 total Blended Fee Rule Of Professional Conduct #4-200. Fees for Legal Services (A) A member (Attorney) shall not enter into an agreement for, charge, or collect an illegal or unconscionable fee. (B) Unconscionability of a fee shall be determined on the basis of all the facts and circumstances existing at the time the agreement is entered into except where the parties contemplate that the fee will be affected by later events. Among the factors to be considered, where appropriate, in determining the conscionability of a fee are the following:
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