A Few Thoughts About Attorney's Fees and Litigation Costs

One stereotype about lawyers: we are all rich.  Several times, non-lawyers have wildly overestimated my income.  While there is some truth to the stereotypes, there are also some misconceptions, based on the attorney's hourly rate.  This post is aimed to shed some light on hourly rates and fees versus costs.

"I can't believe what you charge per hour!" is a frequent comment, whether the attorney charges $150 or $450 per hour.  One reason is because when people think of hourly rate, they typically think of it on a 40-hour per week basis.  If the attorney received $150 per hour for 40 hours a week, every week, that would indeed be a terrific living -- $6,000 a week, or more than $300,000 per year.  While some attorneys make that amount -- usually seasoned attorneys -- most do not.  

Instead, an attorney's hourly rate is based on doing actual attorney work.  This includes attending hearings, drafting pleadings, holding meetings with the other party, and more.  Here is the important thing: if an attorney sits in the office for eight hours, but only spends six hours doing attorney work, the attorney charges for six hours, not eight.  Moreover, if the attorney is new and takes longer to draft a pleading than an experienced attorney, if the new attorney is ethical, he or she will shave time off of the total amount of time taken.  Otherwise, the new attorney could end up making more money for the same tasks than a seasoned attorney would.  

As for why the hourly rate is so high, it often comes down to the fact that attorneys may not have many cases.  Certain types of cases take weeks or months and require a lot of attention.  Therefore, it would not be a good idea for the attorney to have a high volume of cases, as the attorney would have less time to attend to each one.  Yet the attorney still needs to earn a decent living, so he or she needs to charge a certain hourly rate.

The same idea works with flat rates.  Those who hire bankruptcy attorneys who charge $500 for a Chapter 7 may think they are getting a wonderful deal, but it could come at the expense of quality representation.  An attorney who charges such a low flat rate may try to make up for it with high volume -- either a high volume of bankruptcy cases or of other cases.  That could mean handing the details of the case over to a paralegal, or otherwise not giving it the attention it needs.

Now that doesn't mean there are no attorneys who do quality work for a $500 flat rate, or no attorneys with large caseloads who still charge high amounts.  But too often cheap prices equal less care and attention.

Another thing I wanted to discuss was the difference between fees and costs.  The hourly rate mentioned above is for attorney's fees, which are separate from the actual costs of litigation.  Litigation costs include costs of filing a complaint in court, serving papers on the other party, and setting up a deposition.  Some attorneys that do cases on a contingency basis still require the client to pay for the costs of litigation, prompting an outraged: "I thought you wouldn't get paid unless you won!"  It's true that the attorney won't get paid attorney fees unless the client wins, but costs can be charged throughout the case.  Some firms will pay the costs if they sense the case is a good one and can afford it, and then bill the client for the costs later.  However, not every firm is in a position to do this.  Plus, some attorneys believe that clients are more responsible and attentive when they have "some skin in the game."

So hopefully this sheds some light on attorney's fees and costs.  Just because an attorney has a certain rate does not mean he or she is trying to gouge the client.  The attorney -- especially a solo attorney -- is more than likely just charging the amount that will help him or her earn a decent living.

If you need a Contra Costa bankruptcy attorney or a Bay Area employment law attorney, contact the Wild Law Office today.

The above should not be construed as legal advice.