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Practical Information Attorney Fees

Outten & Golden LLP

This page provides answers to the following questions:

1. Will a lawyer charge me for an initial consultation? If so, how much?

2. Do I still have to pay the consultation fee if the lawyer tells me I don't have a case?

3. How does my lawyer get paid if I retain (hire) one?

4. How does paying my attorney by the hour work?

5. How does paying my attorney on a contingency basis work?

6. What is a modified contingency arrangement?

7. If I win my case, how will my lawyer's fees be paid, and who will pay them?

8. How will I receive the attorneys fees from the other side?

9. Is it possible for my lawyer to get more money than I do from the lawsuit?

10. Do I have to pay taxes on the fees that my lawyer receives?

11. If I lose my case, how will my lawyer get paid?

12. If I canít afford the fees, what about companies that 'invest' in my lawsuit and pay the costs and fees, then get paid back only if and when I win?

13. If I lose a lawsuit, will I have to pay the fees for the other side's lawyers?

14. Is any of this different if my case is a class action?

15. If a lot of work has to be done before the lawsuit starts - initial consultation and strategy conferences, an EEOC charge, or settlement negotiations that fail - and then I file a lawsuit and win, can I get paid back for all the fees and costs that were spent on the preliminary work?

16. If I have a lawsuit with a number of different claims and win on only some of them, does it affect the attorneys' fees I can recover from the defendant?

17. If I have a 1/3 contingency retainer arrangement with my attorney, can I get her fees paid based on the same method, rather than hourly, after I win my lawsuit?

18. If my lawyer and I part company before I win my lawsuit, do I still have to pay him?

1. Will a lawyer charge me for an initial consultation? If so, how much?

Some do, some don't. It may also depend on whether you were referred to the lawyer through a referral service that has a special arrangement with that lawyer for a lower consultation rate. Many lawyers charge their regular hourly rates for a consultation, calculated in tenths of an hour (six-minute intervals) or quarter-hours. Others have a special, lower rate just for consultations.

Sometimes a lawyer will ask a flat fee regardless of the length of the consultation; a few give free consultations, but they usually are very selective about whom they see for a consultation. Free consultations are rare because employment cases are very difficult to evaluate and also very difficult to win, and often a consultation is all the individual needs in order to learn his or her rights and decide what to do.

Ask about the consultation fee before you make the appointment. Also ask whether the fee needs to be paid at the time of the consultation, and whether checks or credit cards are accepted.

2. Do I still have to pay the consultation fee if the lawyer tells me I don't have a case?

You can expect to pay the consultation fee even if the lawyer tells you that you have no case. You are paying for the information and advice you get, and it can be very valuable to hear this early, before you spend a lot of time, money, and energy on a case you are not likely to win.

3. How does my lawyer get paid if I retain (hire) one?

Again, there are many different arrangements possible, depending on the individual attorney's practices. The main types of arrangements are:

hourly

contingency; and

modified contingency

4. How does paying my attorney by the hour work?

The attorney asks for a retainer fee up front, which represents an advance against expected fees and costs. Depending on what the attorney is retained to do and how much it is expected to cost, the retainer fee may be a few hundred dollars or it may be much larger, in the thousands or even tens of thousands.

5. How does paying my attorney on a contingency basis work?

The term contingency means that the lawyer's fee is contingent upon recovering some money for you, through winning or settling your case. If the lawyer is unsuccessful and you get nothing, your lawyer also gets nothing. A common contingency fee is 1/3 of whatever you receive, after any out-of-pocket expenses are paid back to whoever advanced them.

6. What is a modified contingency arrangement?

There are different structures, but the general idea is a reduced hourly rate, and then an enhancement if the lawyer gets a recovery for you, and no enhancement if she does not. For example:

The attorney may charge half their usual hourly rate; the other half is contingent upon a recovery for you, and if the lawyer gets nothing for you, the 50% rate is all you pay.

On the other hand, if they do recover something for you, they will take the other 50% of the hourly rate from the recovery, plus a 'bonus' of 20% of the net recovery after fees, to compensate them for the risk of not getting fully paid.

Another version might involve charging full hourly rates with a cap of $5,000 or $10,000, and 10% or 15% of anything recovered above a certain amount.

Another, in an appropriate case, might be a flat fee to negotiate an employment contract or a severance agreement.

There are many other possibilities. Make sure you understand what your lawyer is proposing and how it would work if you settle, if you win, and if you get nothing.

7. If I win my case, how will my lawyer's fees be paid, and who will pay them?

Almost all civil rights laws, including employment discrimination laws, have a fee-shifting provision saying that if the plaintiff wins a lawsuit under one of those laws, his "reasonable attorney's fees" must be paid by the employer or other entity that was found to be at fault. The purpose of this provision is to enable people to get competent representation even if they are not rich, and even if they could not find lawyers to represent them on contingency because the amount at stake is not large enough. Lawyers who take these cases, in which they help individuals enforce the civil rights laws, are considered "private attorneys-general."

8. How will I receive the attorneys fees from the other side?

When the lawsuit is over and you have won, your attorney will file with the court an application for attorneys' fees. The application has to include his time records and an affidavit describing his relevant legal experience and justifying his hourly rate. The application must calculate the fees based on an hourly rate multiplied by the number of hours, regardless of what kind of arrangement you have with your lawyer - even if it is pure contingency.

The defendant's lawyers will do their best to reduce the amount the court will decide to award, attacking your fee application by arguing that your attorney's hourly rate is too high, he was inefficient, he did not have to assign so many associate lawyers to do a given task, or your case was only partly successful. The judge will usually reduce the fee application somewhat. The defendant then has to pay the final amount to you or to your lawyer, depending upon whether you have already paid your lawyer.

9. Is it possible for my lawyer to get more money than I do from the lawsuit?

Yes. It is not unheard of for the lawyer representing you to receive more money than you do. This is because your lawyer's fee is based on how many hours he or she worked to win your case, while your recovery is based on what you lost as a result of discrimination or other wrongful conduct by your employer. If your damages are low, but your lawyers had to work long and hard to get them for you, they may receive more than you do. Any other rule would discourage competent counsel from taking cases with relatively low damages or working hard to win them.

10. Do I have to pay taxes on the fees that my lawyer receives?

Ultimately, no. The law has recently been changed so that although you initially pay taxes on your attorney's fees (they are considered non-wage income to you and should be reported on a Form 1099), you can then deduct them when you file your income tax return. For more information, see our site's page on taxation.

11. If I lose my case, how will my lawyer get paid?

That depends on your retainer arrangement with your lawyer. If she is to be paid on an hourly fee basis, you are responsible for any fees still due. If she is to be paid on pure contingency, you are responsible only for any out-of-pocket costs that your lawyer advanced, but you do not owe any fee. If there was some other arrangement, it will govern.

12. If I canít afford the fees, what about companies that 'invest' in my lawsuit and pay the costs and fees, then get paid back only if and when I win?

Some of these companies may not be reputable. You can contact your local Better Business Bureau, but if the company you are asking about has been the subject of complaints and changed its name, the BBB may not have information about it. Ask the company for references and call the references before making the commitment to go this route.

13. If I lose a lawsuit, will I have to pay the fees for the other side's lawyers?

If your lawsuit was not frivolous, meaning completely without merit and brought just to harass the defendant, you will not have to pay the other side's attorneys, even if you lose.

14. Is any of this different if my case is a class action?

Class actions are always brought only on a contingency fee basis. Class members do not ordinarily have to contribute to attorneys' fees or costs before settlement or judgment.

15. If a lot of work has to be done before the lawsuit starts - initial consultation and strategy conferences, an EEOC charge, or settlement negotiations that fail - and then I file a lawsuit and win, can I get paid back for all the fees and costs that were spent on the preliminary work?

Generally, yes. There may be a question of whether the preliminary work was necessary, but work done in the EEOC before bringing a federal lawsuit is clearly necessary, since filing a charge with the EEOC and getting a Notice of Right to Sue is required before you can file a lawsuit in federal court alleging discrimination based upon sex, race, age, religion, or national origin.

16. If I have a lawsuit with a number of different claims and win on only some of them, does it affect the attorneys' fees I can recover from the defendant?

If you do not succeed on all your claims, it may well affect the fees that are recoverable. If you recover nothing for yourself except "nominal" damages such as $1 for hurt feelings, there is a real risk that you may not be granted any attorneys' fees at all from the defendant. Although the calculation of fees should not be based on a formula, there are some cases in which courts have apportioned the fees based on the proportion of successful claims to unsuccessful claims. For instance, if your lawsuit had five claims and you prevailed on only two, such a decision would grant you only two-fifths of the fees requested - perhaps with further reductions for inefficiency, supposedly inflated hour rates, etc. There are other cases in which courts have even cut the attorneys' fees they award because the plaintiff sought large damages but obtained only a smaller amount.

17. If I have a 1/3 contingency retainer arrangement with my attorney, can I get her fees paid based on the same method, rather than hourly, after I win my lawsuit?

No. A court will grant attorneys' fees, to be paid by the losing defendant after you win, only on an hourly basis. If the hourly total is more than 1/3 of your recovery, the attorney is paid in full and you keep your full recovery. If the hourly fees granted are less than 1/3 of your recovery, the attorney receives the amount granted by the court, and any shortfall between that and 1/3 of your recovery comes out of your recovery - unless you and your lawyer have made a different arrangement in your retainer agreement.

18. If my lawyer and I part company before I win my lawsuit, do I still have to pay him?

The retainer agreement might say that under some circumstances you owe your lawyer nothing. On the other hand, it might say that if you discharge him without a good reason, or if he withdraws from representing you because you are not cooperating or following his advice, he is entitled to the full hourly value of the time he spent on your case, even if you would otherwise pay him only on contingency. Read the retainer agreement carefully.

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