For anyone who needs to hire an attorney, one of the biggest worries is that you can’t afford one. People often avoid hiring an attorney altogether for fear that they won’t be able to manage the attorney’s fees. This is an expensive and often unnecessary mistake.
Most attorneys offer various fee arrangements depending on the type of case and the work to be done. Other variables include the level of risk involved, the difficulty of the legal issues and the certainty of the damages. The three common fee arrangements in the employment law context are hourly, flat and contingency, although, don’t be surprised if you are presented with a hybrid agreement.
Contingency fees are the primary fee arrangement for employees suing their employers for discrimination or labor code violations. With a contingency fee, the attorney charges a percentage of the unknown and uncertain financial recovery, usually 33-50% depending on the risk involved or the stage of litigation at which the matter is completely resolved. Tiered contingency fees will usually increase with each landmark of the case, namely, filing a lawsuit, engaging in discovery and defending a dismissal motion. In most cases, similar to personal injury, the attorney does not get paid unless the client recovers. This means that the client does not pay the attorney anything up front except for litigation costs such as investigator, consultant, and court reporter fees. When multiple attorneys work on a contingency case, they share the fee without charging the client more, as distinguished from the hourly fee.
Hourly fees are exactly what they sound like. The attorney charges the client by the hour for all work performed on the case, including phone calls, emails, research, drafting, etc. The only real variation on the hourly fee depends on whether other law firm personnel are working on your case. For instance, if a senior partner and a first year associate are both working on your case, you should be billed a much lower rate for any work performed by the first year associate. The same goes for a paralegal or other litigation support staff. In any event, the hourly rates of all of these staff members should be clearly outlined in your fee agreement.
Hourly fees are most often utilized when the client does not stand to recover a sum of money. Typical employment cases which fit into the hourly fee paradigm are defense matters (attorney represents the employer being sued), compliance matters (attorney advises and counsels employers on their legal obligations), and contract negotiations (attorney negotiates employment contracts). When there is not a possibility of financial recovery, there is no amount on which to anchor a contingency fee.
Like hourly fees, flat fees are paid up front, regardless of the outcome of the case but the client is assured of the total cost in advance. Employment attorneys will often set up flat fee arrangements when there is a limited and identifiable scope of a case. Many times, an unemployment appeal, Labor Commissioner hearing, or other administrative proceeding will warrant a flat fee. These matters generally follow a very specific path with discrete tasks to be completed. The attorney will base the flat fee off of the average number of hours it takes to complete a similar case.
Regardless of whether you and your attorney enter into a straight or hybrid fee agreement, be sure that you understand the implications of the fee arrangement and that it is always in writing. If you have any questions about what you will be obligated to pay, have the discussion with the attorney in advance of signing an agreement and know that each case is different.