Fee arrangements can be negotiated
If you’ve decided to retain a lawyer to obtain a better termination package you should be aware of the different fee arrangements lawyers may use. First, many lawyers will provide a short initial consultation either free or for a modest fee, but if you don’t ask you’ll never know. Beyond the initial meeting there are many fee arrangements that can be employed.
Alan Shanoff, Special to QMI Agency
Fixed hourly rate:
Many lawyers prefer to charge a fixed hourly rate. They will bill at their hourly rates whether you win or lose. To ensure payment many will insist on up-front payment of retainers. Rates can vary dramatically so know the hourly rate from the outset. If it’s too high you may go elsewhere or, better yet, ask if the lawyer will represent you at a lower rate or using a different fee arrangement.
Some lawyers will act on a contingency fee arrangement, where clients pay only if they win and the amount to be paid will be a fixed percentage — often about 25% — of any settlement or judgment. These arrangements can create a conflict between the lawyer and client. The lawyer may strongly recommend a settlement which the client feels is too low. The client may push for a higher settlement or insist that the case go to trial knowing that his exposure to legal fees is limited by the contingency fee arrangement.
Remember, even if there is a contingency fee arrangement the client calls the shots. The lawyer may not settle without the client’s express authority.
Contingency fee arrangements must be in writing and may be highly technical. Even though it’s your lawyer who has given you the written fee document, don’t sign unless you understand all of the terms. For example, understand if disbursements — these are additional expenses incurred by the lawyer for fees paid to third parties for such things as transcripts, mediator fees and court filing fees — are covered by the contingency fee. The disbursements may be in addition to the contingency fee and can be substantial.
Whether you start off with an hourly or contingency fee doesn’t mean you’re stuck with it. If a conflict arises it may be wise to seek to change the arrangement. Also, just because you’ve signed off on a contingency fee arrangement doesn’t mean you must stay with the lawyer. If a conflict arises you can fire the lawyer, although this can create some complexity.
Some lawyers will agree to act using a success fee arrangement. Under this scenario clients pay a lower hourly rate but the lawyer will receive an agreed upon additional fee if the settlement or judgment exceeds an agreed upon figure.
A deferred fee arrangement may involve monthly or other periodic fees during the course of the litigation or deferral of a percentage of the fee to be paid upon conclusion of the case.
Clients may discuss alternate fee arrangements at any time. You’ve got nothing to lose by raising the topic. If your case is in small claims court and you’ve retained a paralegal the same considerations regarding fees applies.
— Alan Shanoff was counsel to Sun Media for 16 years and is currently a freelance writer and teaches media law.