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Consumer Pamphlet: Attorney’s Fees

Note: This pamphlet is available online only.Attorney's Fees

Table of Contents
Determination of Fees
Cost Deposits and Retainers
Types of Attorneys’ Fees
How to Hold Down Legal Costs
Fee Arbitration

DETERMINATION OF FEES

Lawyers base their fees on different facts, including the difficulty of a particular legal task, the amount of time involved, the experience and skill of the lawyer in the particular area of law and the lawyer’s cost of doing business. The cost of doing business, referred to as overhead, usually includes rent, equipment, salaries and the cost of maintaining the lawyer’s level of professional skills and education. A lawyer’s overhead normally is 35 percent to 50 percent of the legal fees charged.

A lawyer’s services normally involve research, investigation and case preparation. Most of the work is done after the client leaves the lawyer’s office and can be very time-consuming. As a result, the client is often unaware of the amount of time a given legal matter will actually take.

A client should always discuss the prospective charges at the first meeting with the lawyer. At the initial meeting, the lawyer and the client should discuss the time anticipated to resolve the case, the difficulties likely to be encountered, and the complexity of the legal issues in the particular case. An early agreement concerning fees will prevent surprises and misunderstandings for both the client and the lawyer. You should be prepared to decide how much money you can afford to invest in the resolution of the problem. The lawyer/client relationship involves a mutual commitment. Both parties have a need from the outset to have a full and complete understanding of the commitment.


COST DEPOSITS, RETAINERS AND NONREFUNDABLE RETAINERS

Under the Rules of Professional Conduct for the legal profession, lawyers are prohibited from engaging in frivolous lawsuits. Therefore, many lawyers require an advance on fees, a cost deposit or a retainer before they will take a case.

Lawyers sometimes charge an advance on legal fees for services to be performed in the future. Lawyers must hold advance fees in trust and bill against those fees as the lawyer earns them. A cost deposit is different from the lawyer’s fees to be charged in a case. A legal matter may involve costs such as filing fees, expert witness fees, copying charges, travel expenses or other costs. Your lawyer may ask for additional monies if the costs exceed the original deposit or if your lawyer earns all the advance fees while the case is still ongoing. In the initial conferences with your lawyer, you should ask for an estimate of total costs for your type of lawsuit. A lawyer should refund to the client the remainder of any advances on fees or costs not used by the lawyer for the case.

Your lawyer will deposit advances on fees and costs into a special bank account called a trust account. A trust account is a separate account that a lawyer maintains specifically for clients’ funds. A record of the costs in your case will be kept by your lawyer and is available to you for examination.

A retainer is a special fee that is payment for the lawyer’s availability to a client for legal matters.

You must give written consent that you agree to be charged, if any part of the fee is not refundable. Nonrefundable fees and retainers are earned by the lawyer on their receipt and are not held in a trust account.


TYPES OF ATTORNEYS’ FEES

There are several distinct types of legal fees. As stated above, a client must realize when considering a lawyer’s fee that many factors, such as time, ability and experience, may determine an attorney’s fee.

Fixed fees or flat fees: For frequently performed services such as drafting an uncomplicated will or assisting with an uncomplicated real estate transaction, many lawyers may charge a fixed fee that can be readily quoted to you. The lawyer’s fee may be set to average out all costs for such uncomplicated services handled by the attorney. Flat fees are also often charged in immigration and criminal law cases.

Hourly charge: Many lawyers establish a fixed hourly charge for their services. The lawyer’s fee is computed by multiplying the fixed hourly charge by the number of hours the lawyer spends working for the client. The final fee may still include other direct out-of-pocket expenses, such as court filing costs, photocopying charges, long-distance telephone charges, travel costs or other expenses directly related to a particular case.

When retaining a lawyer on an hourly basis, you may wish to ask for an estimate of the costs for the requested service. Also, you should understand what complications might arise in your case and the effect they will have on your fee. Hourly rates of lawyers will vary depending on a lawyer’s experience and involvement in a particular area of the law. No set hourly rate for lawyers or services exists. Rates do vary among lawyers.

Contingent fees: In certain types of lawsuits ─ such as personal injury, collections and auto damages ─ the lawyer who represents the person suing may agree to accept a part of the money the client recovers as the fee for services. This is called a contingent fee. Under the lawyer’s ethics rules, the lawyer and client must enter into a written fee agreement at the outset of the representation, stating what portion of the recovery the lawyer will receive. The fee is generally fixed at a percentage of the recovery. An additional percentage may be added if the matter is tried again or appealed to a higher court.

In a contingency fee contract, you and your lawyer agree that the lawyer will not get paid any fees unless you win your case. However, you may be charged for costs such as court filing fees or expenses paid to witnesses. If you win, these expenses may be deducted from your share of the recovery. You will have to pay these costs, even if you lose your case, unless your contract specifically says that you do not owe the costs if you lose.

The contingency fee contract must be in writing and signed by the client and any lawyer or law firm who will be paid under the contract. The contract must state what percentage of the recovery the lawyer may keep, other expenses that will be deducted from the recovery and how these expenses will be deducted.

How much the attorney will be able to keep as a contingency fee (remember, this does not include costs) will depend on what stage of the case you are in and how much is recovered.

The following limitations are contained in the Rules of Professional Conduct and apply only in cases involving personal injury or property damage that occurred as a result of tortious conduct such as auto accident or products liability cases. These limits also apply in medical malpractice cases if you have agreed to waive your right to the amount of a recovery provided for in the Florida Constitution. You and your attorney may agree to a lesser percentage than those listed below. However, if you and your lawyer want the fee to be greater, you must go to court before your case is filed or at the same time your complaint is filed to get the percentages increased. Lawyers who charge more than the amounts below are presumed to be charging an excessive fee unless they have prior court approval to do so.

  • 33 1/3 percent of any recovery up to $1 million if you and your lawyer settle your case before the filing of an answer or demand for appointment of arbitrators or if you settle before the time for filing the answer or demanding appointment of arbitrators expires,
  • 40 percent of any recovery up to $1 million if you settle or win your case at any point after the filing of an answer or demand for appointment of arbitrators or after the time expires for filing and answer or demanding arbitration through the entry of judgment.
  • In addition to the above fee, your lawyer may charge up to 30 percent of any additional recovery between $1 million and $2 million either by settlement or trial verdict.
  • In addition to the above fees, your lawyer may charge up to 20 percent of any additional recovery above $2 milion either by settlement or trial verdict.
  • At times, the person you are suing may admit that they are liable but may disagree with you on the amount of damages that they owe you. If all of the defendants admit liability when they file their answers and only want a trial on the question of damages, the lawyer may charge up to 33 1/3 percent of any recovery up to $1 million, 20 percent of any recovery between $1 and $2 million, and 15 percent of any recovery over $2 million.
  • If after the trial or settlement your case is appealed or your attorney has to seek post-judgment relief or file an action to help you collect your judgment, an additional 5 percent of the recovery may be added to the fee.
  • In addition to fees, you may be responsible for paying costs and expenses if this is what your agreement requires. These will have to be paid even if you lose your case and your lawyer does not collect a fee. At the end of your case, your lawyer must give you a written statement of the outcome of the case. If there is a recovery, the lawyer must give you a written statement of the amount recovered and how it is calculated, plus an itemized bill showing all of the costs and expenses. This statement must be signed by you and the lawyer(s) who represented you. If you have any question on any of the charges, ask your lawyer.

Medical malpractice cases: Article I, Section 26 of the Florida Constitution limits the amount of the contingent fee that a lawyer may charge in a medical malpractice case. The constitution provides that a client is entitled to no less than 70 percent of the first $250,000 in damages excluding costs, and 90 percent of all damages over $250,000, excluding costs. However, lawyers who represent clients in medical malpractice cases may charge a fee that is more than the constitution’s fee limit with your consent, which must be signed by you and notarized.

The Rules of Professional Conduct require that a lawyer who charges a contingent fee in a medical liability case provide you a copy of the constitution’s fee limitations.

The lawyer is also required to tell you that these limits apply unless you waive the constitutional limitation on the fee. The lawyer must also advise you that you may consult with another lawyer before signing a waiver and that you may ask for a hearing before a judge to explain the waiver.

If you choose to waive your right to receive the percentage of the recovery that is provided by the constitution, the lawyer must provide you with a detailed waiver form.

By signing this form, you agree to an increased fee and waive your right to the fee limit set forth in the constitution. The amount of the fee will be limited by the Rules of Professional Conduct instead of the Florida Constitution.

The waiver also states that:

  • You understand that signing the waiver releases an important constitutional right.
  • You were advised that you could speak to a separate and independent lawyer before you signed.
  • You may ask to have a hearing before a judge to explain the waiver.
  • You have selected the lawyer.
  • You would not be able to hire the lawyer unless you waived your constitutional right.

Division of fees: At times, the lawyer that you hired will hire a lawyer in another firm to help with the case. You must agree to the hiring of this other lawyer. If that happens in a case involving personal injury or property damage resulting from wrongful conduct, then this agreement must be in writing, and the lawyer with primary responsibility for your case is entitled to a minimum of 75 percent of the fee and the attorney with secondary responsibility is entitled to a maximum of 25 percent of the fee. If the attorneys of the different firms participated equally in this type of case, they will have to go to court to determine how the fee will be split. The splitting of fees between the law firms should not affect the amount of money that you receive. If another law firm is hired in a case in which you are charged an hourly fee, the fee may be divided in one of the following two ways: The fee can be divided based on the work done by each lawyer or law firm, or you and the lawyers can agree in writing as to how the fee will be divided.

Fees set by a judge: There are more than 200 Florida statutes that allow for an award of attorney’s fees in certain legal actions. In most instances, such a fee would be set by a judge.

In all probate matters, which includes guardianships, fees are either set by the court or are subject to review and approval by the court either periodically or at the time the matter is finalized.

The amount of attorney’s fees set by a judge can vary greatly, depending upon various factors. The guidelines for the judge setting such fees are provided by the attorney’s Rules of Professional Conduct, Rule 4-1.5(b):

  • the time and labor required, the novelty, complexity, and difficulty of the questions involved, and the skill required to perform the legal service properly;
  • the likelihood that the acceptance of the particular employment will preclude other employment by the lawyer;
  • the fee, or rate of fee, customarily charged in the locality for legal services of a comparable or similar nature;
  • the significance of, or amount involved in, the subject matter of the representation, the responsibility involved in the representation, and the results obtained;
  • the time limitations imposed by the client or by the circumstances and, as between attorney and client, any additional or special time demands or requests of the attorney by the client;
  • the nature and length of the professional relationship with the client;
  • the experience, reputation, diligence, and ability of the lawyer or lawyers performing the service and the skill, expertise, or efficiency of effort reflected in the actual providing of such services; and
  • whether the fee is fixed or contingent, and, if fixed as to amount or rate, then whether the client’s ability to pay rested to any significant degree on the outcome of the representation.

A survey of judges has indicated that they give the most weight, in setting a fee, to the results obtained by the lawyer. Also considered is the fee customarily charged for similar services in that same locality. The need for having a judge set the fee, and the resulting uncertainty to the client, can usually be avoided by the client and attorney entering into a contract that sets the fees and requires the judge’s approval. Often, it is granted.

Fees awarded by the court: In some cases, a client may receive an award of attorney’s fees as part of the client’s recovery. This is an amount that will be owed by the opposing party to the client. The amount awarded by the court may be more or less than the amount that you already have agreed to pay your attorney. These possibilities should be provided for in the initial fee arrangement.

Fees for divorce cases: Divorce or dissolution of marriage cases merit special discussion, because legal fees for this type of work may include one or a combination of all the fee arrangements already mentioned, except that lawyers may not charge contingent fees in divorce cases. In a dissolution action in which the husband and wife already agree on all matters ─ such as support, property and custody ─ a lawyer can set a fixed fee, provided that the matter remains uncontested until completion of the case. Since legal fees are partly determined by services rendered, it usually is not possible to determine in advance the total fee for a case that may have contested issues. In such a case, a lawyer may advise the client of the lawyer’s minimum fee ─ as the least it would cost ─ and, additionally, of the hourly charges for time that might be expended beyond the minimum time given in the lawyer’s original estimate. Certain complications often arise in family law cases such as divorce. For instance, the court may order one spouse to pay all or a part of the fees and costs of the other spouse. In addition, the court can order a spouse to pay fees to his or her own attorney should a fee dispute arise.


HOW TO HOLD DOWN LEGAL COSTS

Before meeting with your lawyer:

  • Gather all information together in a logical order.
  • Be sure you have current correct telephone numbers and addresses of interested parties and witnesses, if applicable.
  • Prepare a written statement of your problems and what you want done.
  • Make photocopies of everything and offer originals or photocopies to your lawyer. Let your lawyer decide if originals or the copies are needed.

During your initial consultation:

  • Present an overall view of your position.
  • Share all relevant information; let your lawyer decide what is not in your favor. It is much better for your lawyer to know rather than be surprised later.

Discuss legal fees and related costs during your initial consultation:

  • There are several ways in which legal fees can be computed. It is not always possible for lawyers to give you an estimate of their fees, since they cannot control the other side of an issue. However, you should be prepared to discuss how much you are willing to invest in the resolution of your problem.
  • In addition to the fee charged by your lawyer, there will probably be certain associated costs, such as costs paid to the court for filing fees, sheriff fees and costs for a court reporter. Most of these costs are set by third parties and usually cannot be controlled by your lawyer.
  • If your lawyer requests a fee deposit or advance on fees, ask whether any part of it will be refunded if you do not proceed. Lawyers sometimes mistakenly call an advance fee a retainer. If a lawyer is charging you a retainer, make sure you understand whether it is a true retainer ─ a payment for the lawyer’s availability to you ─ or an advance fee or flat fee (whether nonrefundable or refundable). Money accepted for the payment of costs will be placed into your lawyer’s trust account, and any unused portion will be refunded to you. Fees can be refundable or nonrefundable. Be sure you understand this point. Lawyers should refund the unused portion of an advance fee after reimbursing themselves for any services actually performed. Lawyers may, but are not always required to, refund all or part of a retainer or nonrefundable fee.
  • If the fee your lawyer will be charging is going to be substantial, suggest a monthly payment arrangement. This will allow you to spread out the expense. Few people can afford one very large fee, but most can afford the fee when it is broken into monthly payments. If your lawyer agrees, inquire if interest will be added to the outstanding balance. This practice varies from lawyer to lawyer, but you have the right to know up front what the policy is. Lawyers can accept payment by major credit card; inquire whether your lawyer offers that payment option.

FEE ARBITRATION

Arbitration clauses in fee contracts:

An agreement with your lawyer that requires arbitration of fee disputes must contain the following language in bold print:

NOTICE: This agreement contains provisions requiring arbitration of fee disputes. Before you sign this agreement you should consider consulting with another lawyer about the advisability of making an agreement with mandatory arbitration requirements. Arbitration proceedings are ways to resolve disputes without use of the court system. By entering into agreements that require arbitration as the way to resolve fee disputes, you give up (waive) your right to go to court to resolve those disputes by a judge or jury. These are important rights that should not be given up without careful consideration.

Fee Arbitration Program:

In spite of efforts to understand a lawyer’s legal fee or billing practices, some disagreements may arise. You should first discuss any disagreement you have about fees or costs with your lawyer. Most complaints specifically regarding fees are not addressed by the lawyers’ Rules of Professional Conduct and are therefore not within the scope of The Florida Bar’s disciplinary authority. When a client indicates that a dispute involves an illegal or clearly excessive fee, the Bar may investigate that claim through its regulatory system. Otherwise, The Florida Bar provides a statewide, uniform Fee Arbitration Program to resolve disputes between lawyers and clients over legal fees. The arbitration program is voluntary, so both parties must agree to arbitrate. The arbitration process can be initiated by either the client or the lawyer. Once an Agreement to Arbitrate form has been signed by both and returned to the program administrator, both parties are legally bound to arbitrate the dispute and to accept the decision of the arbitrator(s).

The program administrator will assign the matter to a sole arbitrator if the matter involves $15,000 or less, or to a three-member panel, made up of at least one lawyer and at least one nonlawyer, if the amount in controversy exceeds $15,000. The decision of the arbitrator(s) will be rendered, in writing, within 10 days after the close of the hearing. If arbitration is not an option, a fee dispute may require resolution through the courts.

 

The material in this pamphlet represents general advice. Because the law is continually changing, some provisions in this pamphlet may be out of date. It is always best to consult a lawyer about your legal rights and responsibilities regarding your particular case.

 

[Updated August 2018]