There's a saying that cheap advice is never good and good advice is never cheap. But, really, how much should a person expect to pay for an attorney?
To answer the question, it is important to distinguish different common ways that attorneys are compensated for their services:
> Hourly Fees - In an hourly fee arrangement, an attorney charges an agreed hourly rate. Hourly fees are common in open-ended situations such as litigation and business matters where it is unknown at the outset how much work will be involved. A more experienced attorney will typically demand a higher hourly fee than a less experienced attorney.
The higher fee may be justified because the more experienced attorney can do the work in less time and with a greater likelihood of success. An hourly fee will vary based on the nature of the case, with attorneys who practice in certain fields being paid more than attorneys in other fields. In hourly fee cases, the attorney is generally entitled to payment regardless of the outcome of the case.
It is common for law firms to charge different hourly rates for various attorneys or support staff working on the same case, with the greater part of the work being done by less experienced personnel under oversight of a more experienced attorney. My experience is that most attorneys on the Western Slope charge between $150 and $350 per hour and between $75 and $115 per hour for support staff.
> Contingency Fees - A contingency fee arrangement is one where the attorney takes an agreed percentage of any amounts recovered in the case as compensation for the attorney's services. Under this arrangement, the attorney is typically not paid unless the attorney recovers for the client through settlement or collecting a judgment. Contingency fee arrangements are common in personal injury cases. A typical contingency fee is 1/3 of the gross recovery, but higher and lower fees are also common. Contingency fee arrangements are not allowed in certain kinds of cases such as divorce and criminal defense.
> Flat Fees - A flat fee is simply an agreed fee for given work. Flat fees are most common in routine transactions such as simple bankruptcy filings where the attorney can gauge ahead of time how much work will be involved.
An attorney's fee is always a matter of negotiation with the client. Attorneys should be able to explain to potential clients different possible fee arrangements, put the details in writing, and scrupulously account for all charges during the case. It is difficult for attorneys to estimate how much work will be involved in certain matters, particularly litigation, but they should be able to give a ballpark range.
Attorneys distinguish between fees and costs. "Fees" are payments directly for legal services, such as the hourly fees paid to an attorney. "Costs" are all other expenses of the case, such as court filing fees. In most cases, attorneys will expect clients to pay costs in addition to fees. Particularly in contingency cases, attorneys sometimes pay the costs initially for the client; however, they are then deducted from the client's share of any recovery. Attorneys often ask clients to pay a "retainer," which is an advance deposit for costs and fees to be incurred in the case. The attorney holds the retainer in a special trust account and then deducts charges as they accrue.
In brief, the cost for an attorney is a matter of negotiation based on the nature of the case and the experience of the attorney. We've all heard the jokes about how much attorneys charge, but a good attorney leaves a client thinking it was a fair deal.
The Mountain Law column is written by Noah Klug, a local attorney whose practice
emphasizes real estate, business, and litigation. He may be reached at 970-468-4953 or Noah@TheKlugLawFirm.com.