How a lawyer computes fees
The purpose of this document is to explain how your lawyer computes fees and to discuss the meaning of such terms as retainers, advances, hourly charges and contingent fees. The information should be of help to you in discussing fees intelligently with your lawyer.
What will happen during my first visit with my lawyer?
Explain to the lawyer why you have made the appointment. After you have explained your problem, the lawyer will point out any laws or legal procedures that will be involved in handling the matter for you. You should ask a lawyer any questions you may have about your problem or the law relating to it.
During the first visit you should discuss with your lawyer what the fees will be. Many times the exact amount cannot be determined in advance, but the lawyer will at least explain to you how he or she plans to compute your fee, and may be able to give you an estimate of what the charges will be. You have the right to ask that the fee arrangement be put into a letter to you so that there will be no questions about the fees at some later time. Be sure to find out if the time spent in your initial consultation will be billed to you.
If your lawyer requests a deposit, sometimes called a "retainer" or "advance", ask whether any part of it will be refunded to you if you do not proceed. The amount of the retainer will vary, but it should be a fair amount to cover the initial work and disbursements. On occasion, lawyers may refund an advance or retainer after reimbursing themselves for services actually performed, although traditionally, a "retainer" is considered nonrefundable.
If at some later time you have a question regarding your lawyer’s bill, ask him or her to explain the charges. Most lawyers today maintain detailed records of the time they spend working for each client. This usually serves as a basis for their fees. Questions and problems concerning fees can result because you may be unaware of the extent of the work a lawyer has actually done. Reaching an early agreement as to fees will lessen the chances of any future misunderstanding.
How does a lawyer set fees?
Many of the services provided by your attorney are performed when you are not present. Sometimes a document prepared for you or advice given to you follows many hours of work done by the attorney in your absence.
An attorney will charge you in one of three ways:
Other factors that may enter into an attorney’s fees are as follows:
What are hourly charges?
Most lawyers establish a fixed hourly charge for their services. A lawyer’s fee is computed by multiplying this fixed hourly charge by the number of hours a lawyer spent working for you. The lawyer then may add direct out-of-pocket expenses such as court filing costs, long distance telephone charges, transportation costs, photocopy charges, costs of experts engaged in other professional fields, and the like.
When retaining an attorney on this basis, you may wish to ask for an estimate of the charges for the requested services, and to request an explanation of what complications might arise and what effect the complications will have on your fee.
Hourly rates of lawyers will depend upon the lawyer’s experience and the demand for his or her services. There is no set hourly rate, and the rates vary. For example, some new lawyers may charge about $50 per hour while some more experienced lawyers may charge more than $150 per hour.
Remember that only part of the hourly fee is actually for the lawyer’s services - much of the fee goes to pay his or her business expenses as described above.
What is a contingent fee?
In some types of personal injury and damage cases, an attorney may agree to a contingent fee arrangement. In this situation, the fee is paid for the attorney’s services if, and only if, there is some financial recovery. If there is none, the attorney is not entitled to collect any fee, but the client must pay court costs and other expenses directly related to the case. Contingent fees will usually be a percentage of the recovery. If you have a matter for which such an arrangement might be appropriate, your lawyer will discuss the possibility with you when you talk about the fees during your first visit. Contingent fees will usually be substantially more than fees based on hourly rates yet are often attractive to the client because the fee is not payable unless there is a recovery. Contingent fee agreements should be in writing.
How to hold down legal costs
A few suggestions to help reduce the cost of legal services are:
When will I have to pay?
The time for payment of your lawyer’s fees depends on the type of service and the fee arrangements. Your lawyer may require payment of a retainer prior to beginning work, as indicated above. If you are not sure that you will be able to pay promptly, talk it over with your lawyer.
After the first payment, the remaining fees may be due periodically upon receipt of billing from the lawyer, or upon completion of the work. Remember, discuss specific fee arrangements with your lawyer.
Can I trust my lawyer with a confidential matter?
Your lawyer’s professional relationship with you is quite similar to your relationship with a doctor or a clergyman. Without your consent, your attorney cannot reveal anything that you say as part of that relationship, unless ordered by the Court, or under other limited and exceptional circumstances.
What should I do if I have a complaint against my lawyer?
A lawyer’s conduct is closely governed by the Rules of Professional Conduct. If you believe your lawyer has acted unethically or improperly, you can address a complaint to The Disciplinary Board, an agency of the Supreme Court of the State of New Mexico, 400 Gold SW, Suite 800, Albuquerque, New Mexico 87102, (505) 842-5781.
Keep in mind, however, that no lawyer can guarantee results. The mere fact that you are unsatisfied with the results of your case is not sufficient grounds for the filing of a complaint.
A clear understanding of the fee arrangement with your lawyer at the beginning of your representation is the best single way to avoid future misunderstandings about fees.
This pamphlet has described some basic types of fee arrangements that lawyers customarily use. It has also mentioned some of the questions that you may wish to discuss with your lawyer when you first arrange employment. Careful attention to the above subjects will aid in establishing a good relationship that will be enjoyable and beneficial for both you and your attorney.
Special Note - This information has been issued to inform and not to advise. It is based on New Mexico law in effect at the time of writing. The statements are general and individual facts in any given situation may alter their application or involve other laws not referred to here. You should always seek advice from an attorney if any questions arise. This document is intended as a public service and is not an endorsement of any attorney or law firm.