What You Need To Know About Billing Types

Gone are the days when clients only had one choice of how to be billed. Sure, the hourly rate continues to be actively used. But the reason is because it makes sense, based on the type of case. Other cases are better suited for other types of billings. Learn about billing types for clients and why they may - or may not - make sense based on the type of case.

Hourly Rate

The hourly rate is still very widely used. The rates will vary depending on the type of law, the complexity of the case, and the work being done by the attorney. As an example, researching the law for your case is likely billed at a lower rate than litigation or court appearances. Similarly, a complex divorce case that is contested that includes children, multiple assets, and crosses geographic area is more expensive than an uncontested divorce where children are not present. Obviously, the needed skill and experience level of the attorney varies by the type of case and therefore, so does the cost. 

Remember, there may well be multiple rates charged by the law firm. A paralegal or legal assistant bills at a lower rate than the attorney, generally speaking. There are certainly cases where an experienced paralegal hourly rates is higher than a new attorney. 

The point to all of this is to be sure you understand the various rates that may be charged, based on the details of your case. Be sure to seek out the deciding factors on each of the hourly fee options.

Flat Fee

As you may imagine, a flat fee is a one time fixed cost. The rate will vary by geographic area and type of law. As an example, bankruptcy cases use a flat fee, most often. However, that flat fee will vary depending on the actual elements of the case.

Be aware that even though a flat fee is agreed upon, there are exceptions. In the fee agreement, there are details as to the limitation of that flat fee. If certain events happen that would break the typical process for the case, the attorney can charge additional fees, either hourly or fixed. The key here is to understand the terms of the flat fee, as well as any potential exceptions.

Typically, a flat fee case is paid in advance, prior to the start of the matter.

Flat Fee Recurring

Similar to the Flat Fee, this is most commonly used as a subscription method. So, just as you may have a membership to a gym, there are monthly fees during the agreement. This is a newer offering these days so you may not be familiar with it. 

Based on the subscription type, there is typically a guarantee of some level of service or hours. In our experience, the law firms that offer a subscription model generally over-serve their clients in terms of the hours spent monthly. If you have ongoing legal issues, look for a law firm that offers a subscription service in the areas of law you need. 

On some occasions, an attorney may use the subscription model to space out payments of a flat fee case, when upfront payment is difficult. This is certainly an exception. If this is something that would make the process easier for you, discuss the option with your attorney. Particularly with the current state of the world in general, this can be helpful for you as the client, as well as the attorney, as long as terms are agreed to and upheld. 

Contingency

Some cases, such as personal injury, most commonly use a contingency billing. In this approach, the attorney earns an agreed upon percentage of the final settlement if their client wins. If the client does not win the judgment, the attorney earns nothing. Obviously, this is a risk for the attorney. As such, the rate can be higher than you may consider. Rates vary but typically range between 25% and 40%. 

Generally, contingency fees are used for personal injury, collections, patent litigation, real estate tax appeals, among others. Ask your attorney if you are unsure.

Other Fees

There are several other fee types, including consultation fees and statutory fees.

Consultation fees are paid to the attorney when the first meeting is held to learn more about your case and determine the best way forward. Some law firms offer a free consultation. Be certain to ask your attorney prior to setting up your first meeting if any fees are involved and what they may be. Depending on your case, it may be a simple 30-minute discussion or much more.

Statutory fees are those established by the courts, such as a probate fee or in a bankruptcy case. These are required by the courts and vary based on your geographic area.

The best way to understand the potential costs of your case is to discuss it with your attorney. It's always a good idea to consult with more than one attorney, to get additional insight and understand the various approaches. Be certain to be 100% clear with your attorney so they can provide you with the best possible estimate, as well as lay out possible additional fees. Always, the key to a good outcome on your case is open and clear communication with your attorney.