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Different Fee Structures for Lawyers

Fee structures differ from law firm to law firm.  Many will work with you and give different options – and recommendations – pending the type of case you are going to be involved with.  Below are the different fee structures, and a few advantages and disadvantages of each setup.

Hourly

This is pretty self-explanatory.  Hourly rates charge you for each minute of time being used on your case.  From research, to a phone call, in the courtroom – every minute will be added to your bill.

Advantages: You can see where your time is going.  The initial estimates might be pending the nature of your case.  The hourly rate structure does allow your lawyer for more flexibility to put in as much time as needed in order to give you an advantage in your case (Remember, they lawyers have a reputation and want to succeed in the case, not just rack up hours for your case).

Drawbacks: You really don’t know how much time is needed.  For instance, if you have a straightforward case, but then there’s a random fact that comes in to play such as a pregnancy in a divorce case, that can be an issue.  What might have been relatively simple – an advantageous hourly rate case – turned into a potential long-hours due to extending the case until the baby is born.  The lawyer needs to revisit the case, and do much of the prep work a second time.

When your case is planned to be lengthy, it involves more time overall.  A set fee structure or retainer fee might be a better option because you can get a lower rate, while still having the work being done.

When hourly works:  We suggest using an hourly rate when your case is simple, and should wrap up in a short time period.

Set Fee Structure

A set fee is one price for your case, from start to finish.

Advantages: You know the total cost of your case.

Drawbacks: On the cover this seems like a no-brainer.  In reality, this might not be the best option.  Whenever there is a set fee/retainer, you are trying to accomplish your goal in as little time, effort and money as possible.  What this does is it potentially causes lawyers to rush to get your case through the system as fast as possible, making a better profit margin.

Lawyers don’t really know how much time a case will take.  There are so many variables that could appear in a case – although unlikely in a majority of them.  With the knowledge that these variables do exist, when bidding on the case you will inherit the extra risk when going for a set fee.  A case that might have taken 30 hours might be bid at 45 hours for extra buffer room in case something goes wrong.

When a set fee structure works:  If you have a budget that you need to adhere to, a set fee structure is your best option.  This will give you insight on how a lawyer is going to project your case involvement, which could lead you to request an hourly rate instead (with the knowledge that the set fee structure is overbid, and the cost is in your budget, you might opt to an alternative structure).

Retainer Fees (Retainer and Hourly)

Retainer fees are an allotment of time to complete your case.  This could also be a set bid.

Advantages: Retainer fees are much like a hybrid of set fee structures and hourly.  They can be structured in a variety of ways.  Retainer fees are a popular option because you understand going into the case the expectation of time and money involved, which helps keep your rates lower, while also having the flexibility to put in more time if needed.

Disadvantages: What stops this from being essentially an hourly estimate?  Not much.  It’s something you have to trust your law firm that the retainer is accurate, or will get you to a reasonable point in the case.

Retainer fees are also an educated guess on how long your case will take.  This will likely be cheaper than a set fee; however, what incentive does a lawyer have to make sure the case is being resolve in a timely fashion?  If you have a trustworthy lawyer who will be honest and upfront with you on how your case will be handled, this won’t be an issue.

When a retainer fee works: We suggest going with a retainer fee when you are price-sensitive, but your case is expected to take a longer period of time.  The retainer fee is a good balance of outlining expectations for pricing, while giving you the flexibility to put in more time to help your case.

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