Types of Attorney Fee Agreements

Hiring a lawyer can be an unnerving prospect and certainly a big commitment. And while there are many variations, the most common types of fee arrangements are hourly, contingent and flat fee.

Hourly fee agreements dictate that the attorney will be paid for the time spent on the matter. Hourly rates vary based on expertise, experience, and frankly, how busy an attorney is.  While straightforward, there are a couple of issues to consider beyond the rate. First, are there additional fees packed in as “administrative” or “overhead” charges. A seemingly simple 5% administrative charge raises a $225 per hour lawyer’s actual rate to $236.25 per hour.  Second, is there a minimum time charge?  A minimum .25 hour charge will add up significantly faster than a lawyer that charges in .1 hour minimums.

Flat fees are charged for many services for which the time involved is predictable. These are such things as drafting Wills or deeds, or handling a simple criminal matter or divorce. The fee is generally based on an attorney’s rough approximation of the time involved to typically handle the matter. Many clients like the certainty of knowing the price up front and many attorneys like not having to track their time for flat fee matters.

Contingent fees provide the lawyer a percentage of recovery, typically 1/3.  The attorney in a contingent fee agreement is taking a risk in that they will not get paid unless the client prevails. Thus, many attorneys will not take a case on a contingent fee unless they see a legitimate chance to make money at a higher rate than they otherwise would if they handled the matter on an hourly basis.  Individuals who have small dollar amount claims or who have hard cases to prove will likely have difficulty in finding an attorney to take their case on a contingent fee.   Even if a contingent fee agreement is entered into, clients are still responsible for paying the costs (filing fees, etc) involved in bringing litigation.

Regardless of the fee arrangement used, clients should insist on a written fee agreement and should make sure they are clear as to the types of charges they will be responsible for.

Michigan Legal Intelligence is authored by W. Jay Brown, a Midland Michigan based civil litigation attorney. The foregoing is intended to be for general information purposes only and is not intended to be specific legal advice and does not create an attorney-client relationship between W. Jay Brown PLC and you. Individuals with legal issues are advised to consult an attorney of your own choosing for advice specific to your situation.

Do I get attorney fees if I win?

The American system of justice generally requires litigants to pay their own legal fees. Whether or not you agree, the rationale is that this system is necessary to allow fair access to the courts for litigants of lesser economic might.  Meritorious cases may not be brought if the penalty for losing is financial ruin.

With that said, there are times when a successful Michigan litigant is entitled to attorney fees. First, some statutes (usually those designed to protect the "little guy") specifically allow a successful plaintiff to recover attorney fees. These include actions brought under the Consumer Protection Act and civil rights acts.

Second, attorney fees are recoverable where actions or defenses are frivolous.  Note that losing is not the same as being frivolous. Frivolous occurs where there the party's positions (a) have no arguable legal merit, (b) are based on facts for which there is no reasonable basis for believing, or (c) where the primary purpose of the litigation is for an improper purpose, such as to harrass the other side. 

Third, there are times the rules of civil procedure allow the risk of attorney fees to be placed on the non-settling party. Parties who reject offers of judgment or case evaluations are placed at risk of attorney fee sanctions unless they do better at trial than if they had settled.


Michigan Legal Intelligence is authored by W. Jay Brown, a Midland Michigan based civil litigation attorney. The foregoing is intended to be for general information purposes only and is not intended to be specific legal advice and does not create an attorney-client relationship between W. Jay Brown PLC and you. Individuals with legal issues are advised to consult an attorney of your own choosing for advice specific to your situation.

How to Save Money on your Lawyer

Let’s face it – attorneys are expensive. No matter how well you may be doing, an extra large monthly bill will cramp just about anyone’s style.  However, there are significant things clients can do to help keep their lawyer bills to a minimum.

1.      If you make your lawyer your therapist, you have an expensive therapist.  Yes, you need to make your lawyer aware of the relevant facts.  But remember that many discussions, such as how unfair a situation may be or how rotten the opposing party is, have limited use to the outcome of your case.

 

2.      Stay on top of the case. Clients who understand what is going on and make sure to do things when they are asked save money.  If your lawyer has to ask you more than once to do some task or provide some documents, you are wasting money.

3.      Be the organizer.  Clients have control over how they present information to their lawyer.  I recently had a client that presented a binder with labels, table of contents, and explanatory notes. With everything clearly laid out, it saved me an enormous amount of time to learn and understand the case.  Yes, it takes time - - but unless your time is worth more than your lawyer charges, it makes sense to make that investment.

4.      Volunteer.  Clients can sometimes do some of the legwork, like gather witness addresses and phone numbers. Ask if there is anything you can do to save money.

5.       Be on time and on task.  If you make your lawyer wait for you to get to court or a deposition, it costs money.  Likewise, taking another call while sitting in your lawyer’s office does not stop the billing clock.  Turn off the cell phone and focus.

6.      Take the first cut.  There is nothing magical about writing agreements. Why not list out the items you want in an agreement before giving it to your lawyer?

7.      Use email. Emails are simply more efficient that communicating by phone and snail mail.

Michigan Legal Intelligence is authored by W. Jay Brown, a Midland Michigan based civil litigation attorney. The foregoing is intended to be for general information purposes only and is not intended to be specific legal advice and does not create an attorney-client relationship between W. Jay Brown PLC and you. Individuals with legal issues are advised to consult an attorney of your own choosing for advice specific to your situation.

Case Evaluation Explained

 Case evaluation is an alternative dispute resolution (ADR) process that is often scheduled in a case after a matter proceeds through discovery. It is conducted before a panel of 3 lawyers, each of whom (at least in concept) play a specific role. One lawyer has a plaintiff orientation, one has a defense orientation, and one is a neutral attorney.

The process involves attorneys for the parties submitting summaries two weeks before the proceeding. These are intended to inform and persuade the panel as to the merits of the party's position in the case.

At the appointed time, attorneys for each of the parties appear before the panel and briefly present their case. The process is informal with give and take between the panel and the attorneys.  After both sides give their presentation, the panel usually meets individually with each lawyer to try and determine what each party expects in order to settle the case.  Thereafter, the panel issues an award which will be phrased as a dollar amount in favor of the plaintiff.

After an award is issued, the parties have 28 days to either accept or reject the award.  If both parties accept, the plaintiff is entitled to a judgment for the amount of the award.  If either party rejects the award, the case does not resolve and instead heads to trial.

There are built in incentives to accept a case evaluation award.  A party that rejects a case evaluation award must do 10% better at trial or be subject to potential sanctions.  The sanctions are the opposing party's legal fees incurred after the rejection.  An example explains this best.  Suppose an award is $100,000 and the plaintiff rejects the award.  In that situation, the plaintiff would have to recover more than $110,000 at trial or be subject to the sanction.

DISCLAIMER-- Michigan Legal Intelligence is authored by W. Jay Brown, a Midland Michigan based civil litigation attorney. The foregoing is intended to be for general information purposes only and is not intended to be legal advice and does not create an attorney-client relationship between W. Jay Brown PLC and you. Individuals with legal issues are advised to consult an attorney of your own choosing for advice specific to your situation.

The Life Cycle of a Michigan Civil Case

On TV dramas, an entire case is wound up  in an hour.  In real life, cases move along in “lawyer time.”Small cases can take months to resolve. Most circuit court cases take a year or more to be tried.  This doesn’t mean anyone is delaying – it is just the process. So what takes so long?

Pleadings. Once a complaint is filed, it must be served on the defendant. While this usually happens quickly, it may b delayed more than a month. Once service is made, the defendant has three or four weeks to answer.

           

Discovery.  Once the pleadings are in place, a pretrial order is issued setting the timeframe for conducting discovery, disclosing witnesses and exchanging exhibits. The initial 90-180 day period set by the Court is often extended by the parties with the Court’s permission.

Alternative Dispute Resolution (ADR). After discovery ends, the matter is typically scheduled for case evaluation or other ADR procedure. This period lasts about 6 weeks to know if the ADR will settle the case.

Trial Scheduling. After the period of ADR closes, an initial trial date is usually scheduled between four and 12 weeks out.  Trials are often adjourned by the parties or the court. A typical delay caused by an adjournment of trial is one to two months.

Michigan Legal Intelligence is authored by W. Jay Brown, a Midland Michigan based civil litigation attorney. The foregoing is intended to be for general information purposes only and is not intended to be specific legal advice and does not create an attorney-client relationship between W. Jay Brown PLC and you. Individuals with legal issues are advised to consult an attorney of your own choosing for advice specific to your situation.

The Economics of Hiring a Lawyer

Legal services clients should look at hiring a lawyer as an investment. As with any investment, you need to address three questions:

1.      How much does it cost?

2.      How much is the return on the investment? (ie – what can I expect if I succeed?)

3.      How much the risk involved? (ie- what is the likelihood of success)?

This economic analysis should be in the forefront of a client’s mind when choosing to hire a lawyer.   It is one thing to invest $10,000 with a lawyer when you have a 75% chance to obtain $50,000.  It is quite another to spend the same $10,000 if you have a 25% chance to obtain $15,000.  

I think every client should expect their lawyer to provide answers to these questions.  Sometimes the answers are unknown at the outset of the representation. In those cases, a client should expect the lawyer to tell them how much it will cost and how long it will take to determine the answers.

The same analysis applies regardless of whether you are bringing an action or defending one. If the question is one of defense, the analysis concerns what you have to lose instead of what you have to gain. There are exceptions to the economic analysis - - one of the most common are those instances where it is necessary to “stand on principle.”   For instance, a client may need to stand up to a bully or avoid setting precedence.