When you choose to hire an attorney, most will ask you to sign a contract known as an Attorney-Client Retainer Agreement. What’s the point of this agreement and, more importantly, how does it affect you?
The main purpose of an attorney-client agreement is to outline the relationship between you (the client) and the attorney – primarily, how the client will be billed for what services.
In general, billing can occur in a number of ways – hourly, contingent, flat fee or a mix of these methods. Flat fees are obviously the easiest to interpret since you’ll know up front what most of your costs will be. Flat fees are typically found in uncontested divorce cases where the attorney can clearly define what tasks and services he or she will perform.
Contingent implies that charges or fees will be billed only under certain circumstances or when a particular event occurs. For example, the attorney-client retainer could state that 10% of your settlement will be due and payable to the firm. If there’s no settlement in your favor, there would be no 10% to pay. For the most part, contingent billing is considered to be unethical in divorce cases but are often seen in alimony cases or matters concerning unpaid child support.
Hourly billing can easily be the most expensive since you have limited control over the number of hours that are spent on your case. In addition, the method used to break down time increments can vary from firm to firm.
For example, many attorneys bill in tenths of an hour (.10) which is the equivalent of six minutes however some lawyers may bill in fourths, such as .25, .50, .75 and 1.0. What this means for you is that a two-minute phone call can either be billed as one-tenth of an hour (6 minutes) or one-fourth of an hour (.25) which can make a difference in your overall bill.
All agreements cover the basics such as charges for photocopies, telephone conversations and the like (all of which you will be charged for) and they will (or should) also spell out any additional charges that might accrue and any minimum billing requirements that might be in place. These agreements should also cover an ancillary charges such as mileage, parking and mailing fees. Domestic phone calls are billed by the hour for example, however any long distance fees will be added to the bill on top of the amount charged for the attorney’s time.
When an Attorney-Client Retainer Agreement is signed, the client (that’s you) is required to place an agreed upon amount called a “retainer” into an escrow account of sorts as payment for upcoming bills. This ensures that the bills will be paid and when the retainer amount runs low, you’ll be required to add additional funds to continue the attorney-client relationship.
To make sure you fully understand the agreement you’re about to sign, you’ll want to read it thoroughly and ask questions if you don’t understand any portion of the contract. Most attorneys will be happy to give you time to read through the agreement and are equally as happy to answer any questions you might have.
If they’re not, keep looking.
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