HOW TO PAY YOUR LAWYER!!!
Most disputes between lawyers and clients are over money — specifically, over how much money the client owes the lawyer. To avoid these problems, it’s advisable that you understand how lawyers charge fees and you should also ensure that there is a written record of what you agreed to pay the lawyer, in case you later have a dispute over legal bills. This advisable documentation will also allow both parties be on the same page on the agreed scope of work.
Generally lawyers charge for their time through hourly billing, flat-fee, contingency or retainers. Our focus this week is on these models of payment and how to choose a model that works well for both Client and Lawyer.
HIRING A LAWYER
In deciding to hire a lawyer, a key consideration should be what the services will cost however it is worthy of note that the best representation does not always come from the Lawyer charging the highest fees. Nonetheless, Lawyers operate in an open market, and a Lawyer’s rates tend to reflect his or her experience, reputation, resources, and previous success.
FEE MODELS
Flat Fees- A flat fee is a fixed amount that the Lawyer and the Client agree on before the Lawyer begins work. Many Lawyers favor the flat fee because it makes things simpler for both parties. The Lawyer identifies the level of work required and calculates a reasonable fee based on the time and effort involved. It is however expected that if the Lawyer charges a flat fee and the case requires more time and effort than originally anticipated, the Lawyer may not later demand more money unless in peculiar circumstances.
Hourly Billing- This model is not so common in Nigeria and as the name implies the lawyer charges an hourly rate for a predetermined scope of work. With this model the scope of work is broken down into tasks and number of hours that will be needed to carry out each task. Hourly rates vary and depends on experience and previous success, for instance a big firm can assign a partner charging $500/hour to highly specialized tasks whilst associates charging $150/hour will perform the mundane tasks. The Lawyer and Client may agree that these fees be paid periodically or in one lump sum at the end of the case/transaction. The time that a Lawyer charges for legal work is called billable time, or billable hours.
Some critics have argued that hourly rates discourage quick work and expedited resolutions. Before agreeing to payment of an hourly rate, prospective clients should ask for a written estimate of the number of billable hours that the Lawyer anticipates will be necessary for the case.
Contingent Fees- A contingency arrangement is where a lawyer waits until the case/transaction is over, then takes a percentage of the amount coming to the client. If the client hits the jackpot, the lawyer’s fee climbs proportionately. If the client loses, the lawyer doesn’t get a fee. This method of payment allows lawyers to represent people who have been wronged but can’t afford to pay a lawyer.
The idea is that the client will pay for just the expenses (e.g. filing fees) whilst the risks and rewards will be shared by the Client and the Lawyer. With this model it is important that the Client and the Lawyer fully discuss and document the way in which expenses are to be paid during the case.
If you’re paying a contingency fee, the agreement should indicate what percentage of any award the Lawyer will take, whether that percentage will change over the course of the case/transaction and how the Lawyer will collect the money.
Retainers- Some corporations and individuals prefer to retain a Lawyers services to handle their day-to-day legal affairs. The idea behind such a retainer is that a legal relationship is created between the Lawyer and the Client. With this model the Lawyer charges a lump sum payable per annum or as agreed with the Client, in return the lawyer is available to deal with the Clients Legal needs at all times.
Retainers are most useful for business that need constant legal work, but do not have enough money to hire a lawyer full time. Also, individuals who are likely to need a lot of legal work might want to have a lawyer on retainer.
