If you're dealing with a legal issue or lawsuit, hiring a lawyer is almost always a good idea. Lawyers have the knowledge, skills, and experience to get you the best possible outcome in your case. But accessing legal expertise typically isn't free.
As you weigh the costs and benefits of working with a lawyer, here's what you need to know about how lawyers get paid:
- Most civil lawyers charge an hourly rate or work on a contingency fee basis.
- Your fee agreement with your lawyer should be in writing.
- Ask your lawyer to send you an itemized bill every month or two. Most lawyers are honest, but it doesn't hurt to check for improper billing practices.
- You'll likely be on the hook for expenses, like court filing fees, associated with your case. Check in with your lawyer regularly about these costs to avoid unpleasant surprises.
- You may qualify for free or low-cost legal assistance.
Is Hiring a Lawyer Worth the Money?
Legal issues vary widely in terms of significance and severity, but legal services aren't cheap. So right up front, you should think about how much you're comfortable spending to resolve your issue. This is an important practical consideration in any kind of civil case. Of course, you'd like to have your car repaired properly, or to have that construction defect fixed, but are you willing to spend what it takes to get a court to rule in your favor?
Only you can decide if hiring a lawyer is worth the money it'll cost you. Estimating the net value of your claim (value of the claim minus the cost of pursuing the claim) will help you make an informed decision. For example, let's say you're suing your mechanic over a negligent car repair. You estimate the value of your claim to be $6,000. But you know the case involves a complicated legal issue and you're pretty sure the mechanic will be stubborn, so a quick settlement is unlikely. A fair estimate of legal costs is $5,000. Is it worth battling over $1,000? What if you spend $5,000 and get nothing?
When you're shopping around for legal services, always ask for a full explanation of the lawyer’s fees and billing practices. Don't hesitate to ask detailed questions. A lawyer’s willingness to openly discuss fees is an important indicator of the type of service you can expect to receive.
Understand How Your Lawyer Charges Fees
In most civil cases, an attorney will be paid under one (or a combination) of the following fee arrangements:
- hourly rate
- flat fee
- retainer, or
- contingency fee.
Lawyers' Hourly Rates
Hourly rates are the most common arrangement. Here, the attorney gets paid an agreed-upon hourly rate for time spent working on a client's case. Lawyers typically charge their hourly rate in 6-minute intervals (by the 10th of the hour).
A lawyer’s hourly rate depends on the lawyer’s area of practice, experience, operating expenses, and geographic location. Attorneys' fees can range from $100 per hour to well over $500 per hour.
As tempting as it may be to hire the lawyer with the lowest hourly rate, cheaper isn't necessarily better. A more expensive lawyer with a lot of experience may be able to handle a complex problem more quickly. An experienced attorney will also be better able to estimate how long a particular matter will take to resolve, so you'll get a better sense of what to expect.
Flat Fees for Legal Services
Flat fees pay for a lawyer's time and expertise with a predetermined, up front cost rather than by the hour. Examples of common flat fee matters include wills, uncontested divorces, and simple bankruptcy filings. If an attorney suggests or has advertised a flat fee, be sure you understand exactly what that fee covers. The flat fee might not include expenses such as filing fees.
Hiring a Lawyer on "Retainer"
A retainer fee is an advance payment on an attorney's hourly or flat fee rate. The lawyer puts the retainer in a special trust account and deducts from that account the cost of services as they accrue. If you've paid your lawyer a retainer, you should regularly receive billing statements that show deductions from the retainer.
For example, a lawyer may charge you a $1,000 retainer fee. If the lawyer's hourly rate is $200, the retainer covers the lawyer's services for up to five hours. The lawyer then bills you for additional hours of work or the lawyer may require you to replenish the retainer to keep working on the case. If the case is wrapped up in less than 5 hours, you will receive a refund of the unused amount.
Read your retainer agreement carefully. The retainer agreement is a contract that binds both you and the lawyer.
Learn more about attorney responsibility for client funds.
Hiring a Lawyer on a "Contingency Fee"
In some types of cases, lawyers work on a contingency fee basis. When you hire a lawyer on contingency, the lawyer’s fee is dependent on the outcome of the case. If you win, the lawyer takes a percentage of the settlement or court judgment you receive, typically 33-40%. If you lose, you don’t owe your lawyer a fee, but you may still be on the hook for certain costs and expenses.
Contingency fee arrangements are typical in personal injury cases, including:
- automobile accidents
- dog bites
- medical malpractice, and
- premises liability.
Most states prohibit contingency fee agreements in criminal law or divorce cases where the fee is contingent on getting a certain result. Courts may set limits on contingency fee agreements in certain kinds of cases.
Factors Impacting Lawyers' Fees
So, what are the most important indicators of how much you can expect to pay for legal services? The most influential factors—especially when it comes to a lawyer’s hourly rate—are:
Geographic location. Lawyers in major cities and urban areas tend to charge a lot more when compared with lawyers in rural areas or small towns.
The complexity of the case. The cost of legal representation will be higher when cases are particularly complex or time-consuming. For example, a medical malpractice case involving a traumatic brain injury is going to cost more than a simple slip and fall at the grocery store. Lawyers typically have to jump through many procedural hoops before they can even file a medical malpractice lawsuit and they expect to be compensated for the difficulty of the work.
The lawyer’s experience and reputation. A more experienced, higher-profile lawyer is typically going to charge more than a lawyer fresh out of law school. You’ll have to decide if an experienced lawyer who charges a higher rate may be able to get the job done faster than a less experienced lawyer who will take more time (read: billable hours) to get up to speed on unfamiliar legal and procedural issues. A lawyer who is well respected in the legal community will likely get you better—and faster—results.
Overhead. The lawyer’s cost of doing business—rent, salaries, advertising costs, business expenses—has an impact on rates. The higher the costs, the more the lawyer will have to charge to cover expenses and make a profit.
Case Costs and Expenses
The fee you owe your attorney is separate from case-related costs that crop up while pursuing your case. Carefully discuss with your lawyer any anticipated case-related costs so that you can plan for them up front and avoid unpleasant surprises. Be prepared to talk about who will cover expenses, such as:
- court filing fees
- copying costs
- investigators
- expert witnesses, and
- deposition fees
You’ll also want to ask about the cost of paralegals and other support staff. A good paralegal's time, for example, may be billed at $50 to $200 an hour or more. Your agreement should clearly state whether your attorney is absorbing these costs as part of representation, or if you will be billed for these services.
Learn more about costs in a civil lawsuit.
Get Your Fee Agreement In Writing
Take notes when you talk to a lawyer about fees, so you know what you and the lawyer agreed to. Then ask for your fee agreement in writing. If an attorney is unwilling to put the agreement in writing, cross that attorney off your list. Many states require written fee agreements in some cases.
The lawyer may have a pre-printed fee agreement for you to sign. Make sure the form includes all of the terms you and the lawyer agreed to. If it doesn’t, ask the lawyer to change the language to accurately reflect your agreement.
Be sure the agreement requires the lawyer to regularly send you itemized bills. An itemized bill should list and describe all charges so that you can review them and compare them to your fee agreement.
You might want to negotiate for some control over fees and expenses. Will the lawyer agree to a ceiling or limit on fees? Do you want the lawyer to notify you when fees and expenses reach a certain limit? If you've hired an attorney to recover a $10,000 debt, you probably don't want to pay $9,500 in legal fees to resolve the matter.
Identify Improper Billing Practices
While most lawyers will bill you fairly and according to your fee agreement, there are some lawyers who will try to maximize their profit at your expense. Here are some of the most common improper billing practices.
Double billing. Lawyers shouldn’t charge two different clients for work performed during the same time period, such as drafting a memo for one client while traveling for another. Similarly, law firms shouldn’t bill you for two lawyers to attend a deposition when one lawyer could have handled the hearing alone.
Block billing. Block billing is the practice of assigning a one-time charge to multiple tasks. An example looks like this: “February 23: Telephone conference with client, legal research for summary judgment motion, document review—4.00 hours.” Block billing is disfavored. Each separate task by the lawyer should have a separate detailed description in the bill.
Not adjusting the hourly rate. Lawyers shouldn’t charge their hourly rate for work that could be done by non-lawyers, like delivering documents or making copies. At big firms, senior attorneys should delegate work to lower-level attorneys (who bill at lower rates) when possible.
Overhead costs. You shouldn’t be paying directly for your lawyer’s office, internet service, or other costs of doing business, though these costs might be reflected in higher hourly rates.
If you suspect that your lawyer is charging you unfairly, you can dispute the bill. Your first step should be to talk to the lawyer and try to work it out informally. If that doesn’t take care of the problem, you can ask for fee arbitration through your local or state bar association.
Will My Insurance Company Pay For My Lawyer?
If you're suing someone, your insurance company isn't going to pay for a lawyer to represent you. But the situation is different if someone is claiming that you caused them the kind of harm that's covered under an insurance policy you purchased.
Insurance companies have what’s referred to as a “duty to defend” when a policyholder is sued over an incident that's covered by their policy. Generally, any time a successful lawsuit over the matter would result in the insurance company covering damages, they're going to have a duty to defend the policyholder.
Most liability insurance policies include a duty to defend clause, including:
- car insurance policies
- homeowners insurance policies, and
- business insurance policies.
For example, your homeowner’s insurance will cover a slip and fall in your home and the insurance company will pay the cost of hiring an attorney to defend you in a lawsuit over the incident. The insurance company would also pay other costs associated with the lawsuit, such as filing fees, fees for obtaining transcripts and records, and the cost of hiring any necessary expert witnesses. In addition, if a judgment is entered against you, or if a settlement is agreed upon, your insurance company will pay the full amount, up to the specific limits established in your policy. This is referred to as a "duty to indemnify." Once a settlement or court award reaches the dollar limits established in the policy, the insurer's duty to indemnify ends.
Free or Low-Cost Legal Services
If you’re accused of a crime, you have a constitutional right to a court-appointed attorney. Civil cases are different. You don’t have a right to an attorney in a civil case. But low-income people may qualify for free or low-cost representation in certain types of civil cases, including cases involving housing, employment, public benefits, and restraining orders.
Law school clinics and other organizations in your area may provide free or low-cost legal services in other areas like immigration. Some attorneys and firms also dedicate a small percentage of their practice to pro bono work—legal work performed by lawyers without pay for the public good. Contact your state's bar association for a pro bono directory, or search online.
Learn more about legal aid and pro bono representation and how to find it.
Other Ways to Pay for Legal Expenses
Some people use savings to cover legal fees. Others borrow money or work out a payment plan with their lawyer or law firm. You may be entitled to help with your legal expenses from other sources.
Unions
Many unions provide free legal services to their members. If your case is work-related, talk to your union representative.
Advocacy Groups
Finally, certain advocacy groups might want to get involved in your case. For example, if you are challenging an unlawful deprivation of your civil liberties or an infringement of your right to free speech, an organization such as the American Civil Liberties Union may be interested in helping you.
Next Steps
Money isn't the only consideration when you're looking for legal help. Learn more about the attorney-client relationship, and who works at a law office. You should also prepare to meet with a lawyer so you can use your time with the lawyer wisely.