What is the difference between contingency fee, hourly fee and flat fee?

Lawyers are generally paid in three different ways.

First - Hourly Fees. This is pretty self-explanatory, but generally what an attorney will do is agree to accept your case billing the client for the work they handle.

Hourly fees are typical in domestic situations. Generally, what an attorney will ask for is a advance legal fee deposit up front to be billed against the agreed hourly rate. A average attorney fee rate in Hampton Roads for a mid-career level litigator is $250/hr. So in a scenario where we would agree to handle your divorce, we would ask you for a $5000 advance legal fee deposit, and then keep a time and accounting record of all time spent on your file. If the advance legal fee deposit becomes exhausted in the course of the representation, then the client has to advance further deposits to cover future work. Conversely, if the case ends prior to the entire deposit being earned, the client receives a refund. Second - Flat Fees - In many cases, attorneys will charge a client a flat fee to handle the case. This means the client pays the attorney a one set fee to handle the case from start to finish. No time and accounting records are maintained, and the fee is deemed earned when the case concludes. Flat fees are very common in bankruptcy, criminal defense, minor civil cases and wills trusts and estates. A good example of a flat fee would be charging a client $1000 to handle a DUI case. Or $1500 to handle a bankruptcy case.  Generally flat fees will cover all of the costs to handle the case as well, however, this may vary by attorney.

Third - Contingency Fees - These fees are generally set in personal injury type cases. Contingency fees are very good for a client who needs an attorney but does not have the ability to afford one out of pocket, while at the same time incentivising an attorney to maximize the recovery available. Typically attorneys will charge 1/3 of a award in a personal injury case. This means that if your case settles for $30,000, the attorney would take $10,000 (1/3) and the balance would go to the client. The other nice thing about a contingency fee is the attorney takes all the risk. If no award is recovered the attorney gets no fee nor does the client have to pay a fee. In Virginia, contingency fees are restricted. For instance, a lawyer cannot charge a contingency fee for divorce or criminal cases.   What is important to know about fees, is that the free market theories apply to attorneys. Do not be affraid to ask an attorney to sharpen his pencil and give you a discount. At the same time, do not be affraid to compare fees with other attorneys. While price is not the only factor, you want to make sure you are not overpaying for services that you could receive from another attorney. Also, before selecting an attorney, check the Virginia State Bar (www.vsb.org) website to see if the attorney has ever been discplined or sanctioned for misconduct. No matter how many "google" reviews an attorney may have, if the bar has sanctioned an attorney for previous misconduct, you should consider that in determining if you wish to create a business relationship with the attorney. Attorney Timothy V. Anderson 757-301-3636

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