We know they make a lot of money, but how are lawyers paid, exactly? Read on to find out!
If you need to hire a lawyer, aside from ensuring they are qualified, reputable, and successful, you will obviously be interested in how much their services cost. It can get a little confusing when you are looking at the fees involved in working with different lawyers because they often use different fee arrangements from one another.
How Are Lawyers Paid?
To help you get to grips with what you can expect when you start looking into law firms, we have outlined the most common fee arrangements below, so the next time somebody asks you “How are lawyers paid?” you’ll know just the right answer. All in all, there are 4 ways:
Hourly Rate
One of the most common ways a lawyer may charge for their services is based on a fixed dollar rate for every hour (or period) they spend working on your case. Different firms and individuals charge different hourly rates, so it is always important to ask any you are interested in hiring.
As well as asking how much lawyers are paid by the hour, you should ask if they can tell you an estimate for the number of hours they expect to work on your case. As some lawyers will often get help from their employees and partners, you need to ask what their hourly rate is too.
Fixed Fee
Typically, lawyers charge fixed fee rates for very routine matters, like the writing of a straightforward will or real estate closing. You should always check exactly what the fixed fee covers before signing any contracts so that you know you are not going to be stung with additional fees further down the line. Note that this option is usually limited to not-so-profitable cases: with millions (and more) at stake, very few (if any) lawyers will charge a fixed fee, preferring
Contingency Fees
A contingency fee is a charge that is most frequently associated with personal injury and accident cases if you are looking to sue the person responsible. As the name suggests, the charge or fee you make is contingent or based on your lawyer winning a monetary settlement or award on your behalf.
If they do win, they are entitled to take a percentage of the winnings. However, if you are unsuccessful and you do not walk away with any money, either through the courts or through an out of court settlement, the lawyer normally does not get paid.
This sounds like a great deal for you, but one thing you need to keep in mind and to discuss with the lawyer offering a contingency fee is whether or not you will be expected to pay any of the expenses for litigation (like expert witnesses) or court costs, as that is normally the case.
If you win, the court fees and litigation costs would normally be taken from the money you won. It’s also crucial that you check the percentage the lawyer gets from the award/settlement and if their fee is expected to be paid before or after the costs of courts and other aspects have been deducted.
Retainer Fees
You’ve probably heard of retainer fees, even if you have never had to pay them. This is when individuals and usually businesses hire a lawyer with money upfront that acts as a down payment towards the full price of their services. Based on this arrangement, the business or individual has a lawyer working for them on anything related to legal matters.
Do you know about any other (legal!) ways in which lawyers are paid? Share them in the comments!
