No matter which state you live in, or how well you know your attorney, you should always enter into a written representation agreement (sometimes called a fee agreement) with your lawyer. These contracts normally set out the terms of the attorney-client relationship as well as the fees and compensation that the attorney is due.
While some attorneys may use very formal contracts for a representation agreement, often running many pages in length, other lawyers will use simple, one page letters. The length and complexity of the contract doesn't matter as much as the content. The agreement should carefully outline and explain certain issues, such as how much and when the lawyer will be paid, who is responsible for the court fees, and who will work on the case, whether it is a paralegal or a lawyer.
The simple reason to have a written agreement with your attorney is to make sure that both parties to the contract know what is going on. Most disputes that arise between lawyers and their clients are about money, whether it is how much the attorney is owed, or how much the client is owed as a refund. In order to resolve these disputes quickly and without the need for court intervention, it is best to have a written contract in place that can clear up these issues. It is highly effective to be able point to a specific part of a written contract in order to prove your point.
There are other reasons (unrelated to money) to have a written representation agreement. For instance, if you only want licensed attorneys work on your case, and not paralegals, then this can be put in the terms of the contract.
These representation agreements are also a great way of laying out how the client wants his relationship with his attorney to work. For example, more "hands-on" clients may wish to have his or her attorney call with a status update once a week. This can be added into the terms of the agreement.
Finally, putting the agreement in writing forces both client and attorney to be very clear about what is expected of each other. Oral representation agreements may be subject to different interpretations, depending upon the side. However, a written representation agreement makes both attorney and client explicitly aware of the terms and scope of the contract.
Your representation agreement should clearly include the attorney's fees. associated costs, and how and when this money is to be paid. In addition, lawyers work on different pay structures, so be sure that this term is included in the agreement. In general, attorneys will either work on an hourly, fixed or contingency fee basis.
Hourly fee -- For many types of cases, this is the most common way that an attorney will be paid. Just like paying an hourly employee, clients will be expected to pay their attorney for each hour, or part of hour, that the lawyer works on the case. Rates typically vary from as little as $75 per hour to more than $500 per hour. In addition, a client should be expected to pay for time spent on the case by other people in the office, such as paralegals. The rates for these workers will normally ring in between $40 and $80 per hour.
If you and your attorney have agreed upon an hourly fee arrangement, then the representation agreement should lay out some of the terms. For instance, the contract should state how often the lawyer will be paid (weekly, monthly, yearly, after the case is over, etc), and how much detail the bill will include (what time was spent on what matter). In addition, there should also be some mention of how the client could go about challenging the attorney's time spent on some task.
Fixed fee -- This is a fairly new method that attorneys sometimes use to bill their clients. Under this fee structure, an attorney will charge a client a fixed amount for a certain type of case. This is generally used by attorneys that do one type of case or transaction multiple times. For example, an attorney may charge a client $5,000 for handling a rear-end collision case. For this type of arrangement, the representation agreement should include terms that do not allow the attorney to charge more than the agreed upon amount.
Contingency fee -- This type of fee arrangement is often used in personal injury cases. This is great for clients that do not have a lot of money to pay attorneys up front. Instead, the attorney agrees to take the case in exchange for a certain percentage of whatever award is issued at the end of the representation. If the client loses the case, then the attorney does not get paid.
If you have agreed upon a contingency fee arrangement, you representation agreement should include terms that set out what percentage of the eventual award or settlement the attorney will receive. Common contingency fees range from 20% to 40%. As well, some attorneys change their percentage depending on whether the case goes to trial, or if the case is settled beforehand. This should also be included in the agreement.
Costs and fees -- You representation agreement should also include clauses that cover certain costs and fees associated with your case. These costs can include things like court fees, witness fees, travel expenses, filing and copying fees and more. It should be no shock that litigation can be quite expensive, even excluding the costs that an attorney charges.
These fees must come from somewhere, and your representation agreement should specify from where. If you are expected to pay for all filing fees, then that should be in the contract you have with your lawyer. Attorneys working under a contingency fee basis will often front all of these costs and fees and simply deduct them from the eventual award.
Other terms -- Even though fee arrangements and terms dealing with money are the primary reason for having representation agreements, there are other, no less important, terms that should be included as well, such as: