ATTORNEYS’ FEES: FLAT vs. HOURLY RATE?
By W. Lee Allen, III
Flat fees are an all inclusive fee for an attorney to handle a certain matter. A flat fee can be a one-time payment or several payments. It may include certain costs and expenses, such as postage and copying, or it may not. Costs for court and private investigators or court reporters are generally not included. The amount of time actually spent on the matter does not change the amount of the fee.
Some family law attorneys use flat fee arrangements under certain circumstances. The attorney will try to estimate the amount of time necessary to resolve the matter when setting the fee. However, this is only a guess; there is a risk to both client and attorney when the flat fee arrangement is used. The client’s risk is that he or she will pay more than what would have been paid if an hourly fee arrangement had been used. The attorney’s risk is that he or she will collect less than what would have been collected under and hourly fee contract.
The main advantage to a client under the flat fee arrangement is knowing up front how much a matter will cost. There is no need to try and guess or predict how much a matter will cost each month or in total. The main disadvantage is that the flat fee will typically result in a larger up-front charge than an hourly rate arrangement.
In an hourly rate fee arrangement, an attorney charges a client for the time spent working on his or her matter. The hourly rate is dependent upon the identity of the person or persons performing the work. Firms typically charge for the time of most employees, but charge different rates for each person. For example, an attorney with 20+ years of experience who is a board certified family law specialist will cost more per hour than a paralegal. Costs and expenses are usually charged in addition to the attorneys’ fees in hourly rate situations.
Usually a family law attorney will require client to pay a deposit when using an hourly rate arrangement. This deposit is placed into the attorney’s trust account to be billed against each month for the costs and fees incurred that month. When the deposit is depleted or falls to a certain level it is required to be replenished. At the conclusion of the representation, any money on deposit that exceeds the last bill is returned to the client.
The amount of the deposit is determined by various factors, including the hourly rates of the attorney(s) and staff involved. Most family law attorneys do not require a deposit amount large enough to cover the total cost of the matter. An amount sufficient to cover the first month or so of the litigation is more typical, although it varies.
The advantages to an hourly rate fee arrangement are that the client only pays for the time spent working on his or matter and the initial up-front cost is usually lower than under a flat fee arrangement.
Discuss the various fee arrangements offered by the family law attorney you consult and choose the option that works for you.