This type of fee structure allows for legal representation without paying the attorney upfront. The attorney is paid a percentage of any monies obtained through a settlement or other monetary award; in many instances it is one-third. *
Attorneys take a risk in such cases, as there is no guarantee of the amount the attorney will be paid, or when it will be received.
The contingency fee system is most commonly used in personal injury, workers’ compensation and other insurance type claims. Without this mechanism of payment, many people would be unable to pursue claims due to the cost.
* Case expenses, such as filing fees and the cost of medical reports, are typically paid in addition to the contingency fee.
The attorney is paid a set rate per hour for the work performed on the case. Attorneys are free to set their own hourly rates.
If an attorney is engaged on an hourly rate basis, the client is free to ask how many hours the work will likely take to perform in order to gauge the total cost. Typically, hourly rates are charged in business related matters that require the attorney to draft contracts, wills or other documents, as well as divorce or family law cases.
An attorney who performs work on an hourly basis may require the client to pay a retainer. See below.
A retainer is a sum of money that is paid to the attorney upfront to secure their services. This amount is then credited against the work that the attorney performs.
An attorney may require a retainer in cases where a great deal of work is needed initially to review the file and prepare the case. Cases which are particularly complex, or which have already been ongoing for a period of time may result in higher retainers.
The attorney charges one fee for the work to be performed. Depending on the situation, the attorney may require the fee to be paid upfront or may agree to wait until the case is partially or totally concluded.
Flat fees are charged in cases where the attorney is fairly confident about how much work will be involved in the case ahead of time and where there are usually no unexpected issues that will be encountered.
Flat fees may be encountered in some types of divorce or family law work, estate-planning issues, unemployment matters, and some business related cases.
Limited Assistance Representation (LAR) allows clients to work with a lawyer on an as needed basis. Attorneys who engage in limited assistance representation usually charge by the hour, but do not require a retainer (upfront payment). Some areas of law are well suited to this type of representation, such as divorce and business related matters.