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Chapter 3: Attorney Fee Agreements and Bills:
You will most certainly sign a fee agreement when you hire an attorney. Your fee agreement will cover the following issues:
Type of Fee(s) charged: The agreement should detail how your attorney plans to charge you. Will it be contingency? Hourly? Will there be a retainer? See Attorney Fees for more information about the different types of fees charged by lawyers.
Rate and Billing Segment: If the fee is hourly, the agreement should set out the hourly rate for each legal professional involved in your case (including junior attorneys, senior attorneys, paralegals, law clerks, and legal secretaries). If there is a retainer, the retainer amount should be specified. If there is a flat fee, the fee should be specified.
Lawyers who charge an hourly typically charge by billing segment. What is that? A billing segment is the minimum slice of time for which a lawyer will charge for his or her services. It could be a quarter or a tenth of an hour. For example, if your lawyer is charging $150 per hour at a minimum billing segment of a quarter of an hour (or 15 minutes) and makes a 10-minute phone call to opposing counsel involving your case, you will be charged for 15 minutes of his/her time (even though the phone call only took 10 minutes). That phone call will cost you $37.50.
Costs: The agreement should specify the costs that will be billed to you. It is not unusual to find the following types of costs in your agreement: copying (billed at cents per page), incoming and outgoing faxes (also billed per page), court fees, courier costs, postage, notary fees, fees for other professional services used to support your legal matter (such as fees to pay for an outside patent search in relation to a patent application you want your patent attorney to file for you), and legal research fees for online legal research services. Yikes! All that could add up to more than the attorney fees themselves!
Estimated Fees and Costs: The agreement should give you a ballpark figure for total fees and costs based on the attorney’s prior experience. You should ask for notification to be built in to your agreement so that you are notified when the fees and/or expenses have reached a certain limit. This gives you more control over the overall costs.
Billing Practices: This portion of the agreement will outline the attorney’s billing cycle. It should also specify whether or not interest will be charged on unpaid amounts, and if so, at what rate.
When negotiating the fee agreement, be sure to ask about the billing statement. The following level of detail should be present: Hourly rate, work done (as detailed as possible, for example “Legal research on the issue of contributory negligence” is preferable to “Legal research”), and itemized expenses (for example, 200 copies at $.05 per copy).