How Do Lawyers Bill?
Following are questions that arise frequently and the corresponding answers in plain English. It is not the intention of this web site to provide legal advice specific to any individual problem; if you have a problem, you should see a licensed attorney to discuss your particular case. The law offices of Roderic A. Carucci are not creating an attorney client relationship through the use or reference to this website.
Q. Do lawyers have more than one method of billing clients?
Q. What billing methods are most commonly agreed upon between lawyers and their clients?
A. Flat fee, hourly, and contingent fee.
Q. What is a flat fee agreement?
A. The lawyer agrees to perform the agreed upon services or to handle the matter to a conclusion (as defined by the parties’ agreement) for one flat agreed upon amount of money regardless of the time expended to conclude the matter.
Q. What is an hourly fee agreement?
A. The attorney charges an agreed upon hourly rate for his or her time to handle the legal matter for the client. The attorney should keep contemporaneous records of activities performed on behalf of the client and the attorney should send periodic billings to the client which details these activities.
Q. What is a contingent fee agreement?
A. Generally, the lawyer invests his time in a case for a fixed percentage of the recovery at the end of the case, either through settlement or trial. The percentage can vary depending upon the complexity of the case and issues. Normally, an auto accident case would have a lower contingent fee percentage than a case requiring special expertise such as medical malpractice. The client is responsible for out of pocket expenses incurred on behalf of the client by the attorney. Such out of pocket expenses include filing fees, court reporters, expert witnesses, investigators, deposition transcript costs, long distance telephone, copies, fax, etc. If the attorney advances these costs, then the client will ulitmately have to reimburse the attorney out of the client’s share of the recovery.
Q. If I retain a lawyer should I have a written retainer agreement with the attorney?
A. Yes, in all cases. However, the rules governing lawyer conduct only require a written retainer for contingent fee cases.
Q. Is a contingent fee agreement a billing device which can be used for any civil type of legal matter?
A. No. Lawyers are forbidden to handle family law matters (e.g. divorce, custody, visitation, etc.) on a contingent fee basis. Although we are not dealing with criminal matters in this section, it should be noted that criminal cases cannot be handled on a contingent basis by the attorney either.
Anatomy of a Lawsuit
What actually happens?
Why does it take so long?
Why does it cost so much?
Most of you have never been sued or sued anyone. Good. But, if you are looking for an attorney, you probably are thinking about suing someone or, worse yet, you have been served with a summons and complaint.
The most frequently asked question is: “Why does it takes so long and cost so much?” To answer this question it is necessary to explain what happens in a law suit. You are not alone, we are constantly asked about the details and costs of a civil law suit — especially when we tell some one that their suit is financially worth bringing. Believe it or not, the process is not like you see on Ally McBeal, or other TV shows (except maybe small claims court).
In this brief article, I’ll explain, in plain English, what my law professors took years to get around to telling me and all the other lawyers, that is: Why? What? Where? and How much?
WARNING: IF YOU HAVE BEEN SUED:
First, if you have received a summons and complaint — DO NOT IGNORE IT! Unless, of course, you’re homeless and destitute, and plan on remaining that way, permanently. Then, who cares anyway? If you are more representative of society, then you will care because you automatically lose if you fail to respond.
Nevada gives you 20 days to respond. California, a bigger State, generously gives you a bigger 30 days to respond.
WHY WE HAVE LAW SUITS:
Well, its a civilized way to settle our differences of opinion or decide who owes what to whom. Prior to the formation of courts of law, if you were bigger, stronger, richer, or had a bigger army, you were, without exception, always right and could do as you pleased with anyone not as powerful. While this is still the case today with government, there is some hope for equality before the law.
I think it was Winston Churchill, the great British statesman, who said that our system of justice is the worst one on the planet — except for all the rest. Still, with our system, attorneys are often required to ask just how much justice can you afford?
THE MECHANICS OF A LAWSUIT:
You complain to your attorney that Joe, your next door neighbor, built his fence on your lot. Or, an appliance retailer thinks you owe them $1,000 for a fridge. Or, the new car you bought is a lemon. Or, you are convinced that your soon-to-be ex-wife is sleeping with your best friend.
Whatever you complain about, there is almost always a legal remedy available — except if you want to sue your employer because he treats you like human excrement. Unfortunately, there is no law that says your boss need treat you fairly or with the same respect he lavishes on the guard dog. Sorry, but remember that when you vote next time!
DO YOU NEED TO HIRE A LAWYER? AND HOW DO YOU PAY FOR HIM/HER OR THEM?
If your complaint is small potatoes, you don’t need an attorney to drag someone into court.
Small Claims court is wonderful. Unlike most courts, small claims is just like Judge Judy on TV. Without an attorney or his fees, you get to tell a judge about your complaint in your own words. The other guy (called the defendant) gets to tell why you’re wrong. Often, when you don’t have tangible evidence (like a witness or documents to prove your case) the judge might, as King Solomon of Biblical fame, did, “split the baby.” You get less than you asked for and the other guy pays more than he wants to.
The good part of small claims is that it’s cheap and fast. Complaints are usually on a printed form with lots of instructions. There is usually a small claims adviser to help you complete the form. Filing fees are minimal. The bad part is that you are limited to a maximum of $5,000 in Nevada. Also, small claims cannot settle things like land disputes, grant divorces or lots of more complicated matters.
If you have a bigger case or one that small claims cannot handle, you probably need an attorney. You can pay them by the hour or you can try to convince them to take a percentage of the recovery they get (called a contingency fee).
There are no set fees for attorneys, except in a some rare areas like probating a will. In most cases, attorneys charge by the hour. Fees tend to range from about $200/hr. to mega charges for BIG FIRM partners in excess of $500/hr. Oftentimes you get what you pay for. Sometimes you are paying for fancy paneled offices and enormous overhead.
Lots of personal injury attorneys (sometimes referred to as TV lawyers) will make a contingency deal with you. They get one third to one half of whatever recovery you get, plus the costs of the law suit. They become, in effect, your partner in the law suit. This should only happen if the attorney evaluates your case and he or she believes that the work the attorney has to do will be compensated enough to make it worth the attorney’s time and effort.
The state bar requires that you are responsible for the “costs” of the suit, whether you win or not. Costs are things like filing fees, copying, postage and court reporters. Cost can be considerable in a highly contested case, often amounting to tens of thousands of dollars.
You might be able to make a contingency deal with your attorney in some cases that do not involve personal injury, such as wrongful termination, or a contract dispute. Remember, the attorney must believe that your recovery from whatever source is going to cover the time he or she will have to put in on the case, or the attorney will have little interest in the case. Remember, an attorney’s interest in your contingency case is usually proportional to the amount of money he or she can make from it.
OKAY, YOU RETAINED YOUR ATTORNEY, WHAT HAPPENS NEXT?
If you are the one suing, you are called the plaintiff. Your attorney writes a complaint, after he has looked up the law and knows that you have a case. This is a document that supposedly, states what Joe or the retailer who sold you the fridge, or the car dealer or the soon-to-be ex-wife did to you, or sometimes, what they failed to do, like fix your car under warranty.
In most states, complaints are supposed to be written in plain English, to put Joe, Macy’s and the soon-to-be ex-wife on notice of what they did or did not do that they should have done. But, in our decades of experience, the number of well written complaints that we have seen would not require us to take off our shoes to have to count — So, if you ever get served with a complaint, don’t think you’re too dumb to understand it.
Complaints also must contain some legal mumbo-jumbo, such as unnamed “Doe” defendants, in case you need to sue someone that you don’t know about yet. There are lots of technical rules which, after you go to law school and practice for some time, actually begin to make some sense.
One last thing about complaints. Some things that you may want to complain about have really short time fuses. For example, if your lawyer in Nevada blows your case because he’s off in the South Pacific with his secretary instead of taking care of business, you only have two years to get your complaint on file or you are S.O.L. forever. This is called the infamous “Statute of Limitations.” Be diligent — get to it ASAP!
Now, the complaint, along with a “summons” (a kind of cover sheet that says fun things to scare you like: “you have been sued — respond or else!”) must be “served.” This is called, appropriately enough: “Service of Process.” Our Constitution demands that if someone is suing, or you’re being sued, formal “notice” of the law suit must be made, by an adult, not a party to the suit, by giving the person being sued a copy of the complaint and summons. The folks that do this for a living are called: “Process Servers.” This can be a risky line of work. People sometimes think that shooting the messenger will make them feel better.
Once “service” has been accomplished, the clock begins to run. The suit’s vile villain, is called the “defendant.” The person suing is the “plaintiff.” The defendant must respond by filing an “answer” within the time limits specified on the summons. An “answer” is a technical document which formally says: “I didn’t do it,” whatever “it” is.
If you don’t file an answer, your “default” can be taken. This means that you automatically lose the suit. Don’t let your default be taken without consulting with an attorney first. You could lose lots more than you think.
The person being sued may have things to complain about the plaintiff too. So, along with the answer, the defendant’s attorney writes a counterclaim or counter suit. For example, Joe, who erected his fence on your property, complains that your new Gazebo is on his property or after the retailer sues you for the $1,000 on the fridge purchase, you counter claim that the fridge they sold you caught fire and destroyed your kitchen.
DISCOVERY, OR NOW THE ATTORNEY BILLS START MOUNTING:
Lots of potential clients come in and tell us that “all we have to do is file a complaint and the other side will just settle and payoff,” so their case should be cheap to pursue. And, maybe you’ll win the lottery too, but do not plan your retirement around your winning the lottery.
Most attorneys try to settle cases. But, we tell our clients that we must be prepared to take the case through trial –because few cases settle until you have done enough work on them to show the other side that you have a very good chance of winning.
This is especially true if the other side is defended by an insurance company. How do you do that? By a device called “discovery.” Discovery consists of the formal investigation of documents and the formal questioning of the other side’s witnesses.
In order to ensure the highest probability of success at trial, you will want to know about every important document and everything that the important potential witnesses will say. You especially want to know what the other side’s witnesses will say. You do this by first asking for every document the other side has that tends to prove their case. Then, when you’ve read everything, you take depositions.
A deposition is a formal questioning procedure in front of a court reporter. Both side’s attorneys get to argue with each other as well as ask the witness an occasional question and the court reporter gets to charge you around $3.00 per 25 line page to transcribe the questions and answers In law, talk is not cheap. Depositions are expensive. They cost hundreds and sometimes thousands of dollars, especially if there are lots of potential witnesses in a case. It is not uncommon to spend between $500 and $1,000 for a transcript for a one day deposition transcript, before attorney’s fees.
Depending upon the complexity of the case and the amount in controversy, discovery is where the attorney bills really can mount. No matter what the rules, the opposite side tries every trick in the book to keep you from finding out the weaknesses in their case. (All cases have weaknesses.) Sometimes you have to go to court and ask the judge to rule on some discovery dispute, whether a witness must answer a particular question that he not want to answer.
After all of the discovery is done, you prepare for trial. Trial preparation is very much like presenting a dramatic play. The attorneys read all the depositions and the important documents and make up some sort of script. The witnesses are the actors — though they are sworn to tell the truth. It often takes almost as much time to prepare for a trial as it does to rehearse a play — because you want your trial to be interesting and as easy to understand as possible
For example, the gruff, mean and nasty witness might need a karma transplant, so that what he has to say is not colored by his unpleasant disposition. There are specialists in witness preparation, who are much like drama coaches. More time, more money.
Obviously, simpler cases do not require extensive and expensive discovery. Costs should be in proportion to the subjective “value” of the case, i.e., what will one party be required to pay to the other party. Unfortunately, being “right” is not rewarded in law. The law only compensates for “damage” or “injury.” All attorneys are trained to try to analyze the amount of money that the case will generate.
Often the a judge in your particular court will hold a ‘settlement conference.” This is where the judge tries to get both sides to listen to reason and agree to a compromise. Often this works. You and the defendant agree to something in writing and do it in front of the judge – – that way it’s difficult for either side to back out. If you can’t agree, you go to trial.
There are two types of trials. One has a jury to decide the facts. The other lets the judge decide the facts. In both cases the judge decides all questions of law.
Jury trials are more complicated, formal and cost lots more in attorney time. Choosing a jury that is most likely to see your point of view has become an art form. There are entire companies that specialize in jury selection because jury trials are where the BIG judgments are awarded.
Non-jury or judge trials are less formal and lots cheaper because the judge has lots of experience, is not too impressed with attorney theatrics and can ask his own questions if he likes. Judges, as a group, tend to be much more conservative than juries, so they are much less likely to award big judgments.
Trials are like mini theatrical presentations designed to persuade a judge or a jury that your position is the one that they should believe. The more compelling your “play” is, the more likely others will believe it.
The most common misconception is that a party thinks that he or she can just tell their story in court, usually like some TV drama they have seen. Except for small claims, this never happens. The parties are only permitted to answer questions posed by the trial attorneys, period.
Judges will not permit the parties or their witnesses to just talk about what they want to say. This is most disappointing to parties that are convinced that they have been morally wronged. All we can say is that courts of law do not decide moral questions. They simply redistribute money or decide ownership or custody questions.
This is a particular source of frustration to litigants in a divorce action. The parties are angry at one another and they want the judge to get angry by telling the judge how awful their spouse is. Judges rarely get angry at one party, because it’s not their job to be angry, but to be fair under the law.
Sometimes one party writes the other party a check, or moves his fence, or whatever and the case is over. Often, the other side wants the judge to grant another trial because of some perceived or real mistake in the trial.
If the judgment is significant, you can count on the other side filing an appeal to the next higher court. Everyone has a right to appeal, however, courts of appeal do not tolerate frivolous appeals. In other words, just because you don’t like the outcome, does not mean you should appeal.
Appeals are almost always not covered in your original retainer agreement with your attorney. Often, your attorney will not want to handle the appeal because appeals can be very specialized.
Appeals are expensive. The entire record of everything that happened in the trial court must be made up in a form the court of appeal will read. It usually takes at least one year to be decided and often takes several years.
Litigation is expensive, time consuming and uncertain. If you and your attorney can find a way to resolve your case without