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What Lawyers Charge and Use as Billing Rates
Hourly rates - The attorney is paid an agreed-upon amount for each hour he or she works on a client's case. A factor that impacts the hourly rate is the minimum block of time that is billed. Most attorneys bill at a rate of 1/10th per hour. This means if they spend 30 second reviewing a letter they bill .1 hours. If the attorney's rate is $200 per hour, the charge is $20, or $20 per billing unit of 1/10th of an hour. Some attorneys have a minimum billing time of 15 minutes, and others use 30 minutes. In our example, the respective charges for reviewing the letter would be $50 if the smallest billing increment is 15 minutes, and $100 if the smallest billing increment is 30 minutes. A hourly rate at 1/10th per hour is the most common billing arrangement.
Flat Fees - An attorney may agree to bill a set amount for the matter, and the amount does not change no matter how much, or how little time the attorney spends.
Contingency Fees - The lawyer is paid a percentage of any recovery. In most contingency fee arrangements, the client is not obligated to pay his or her lawyer unless there is a recovery. This is a common arrangement for plaintiffs - people suing - because they cannot afford an attorney. Although the defendant - the person being sued - may also not be able to afford an attorney, on the defense side there is no fund of money hoped to be recovered from which an attorney may be willing to be paid out of. Contingency fees typically range between 20 percent and 50 percent. A factor that impacts the contingency fee is how costs are paid. Costs, which are litigation expenses such court fees, can either be reimbursed to the attorney before the contingency fee is determined, or after. For example, a plaintiff recovers $20,000, has a 25 percent contingency with their attorney, and there are $5000 in court costs. The client recovers $11,250 if the costs are paid before the contingency is determined, and $10,000 if the contingency is determined before costs are reimbursed.
Blended Rates - A combination of hourly, flat, and/or contingency rates can be agreed to. For example, an attorney may agree to a reduced hourly rate if they also receive a contingency.
Retainer Agreements - All or a portion of the legal fee is paid up-front. This helps the attorney know that they will be paid for their work. In some cases, a retainer is a non-refundable fee paid for the privilege of securing the attorney's services. In other situations the retainer is refundable if the amount finally charged is less than what was paid as a retainer.
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