Most clients still elect to pay for legal services pursuant to a fixed hourly billing rate. However, to keep pace with the changing nature of legal services and the budgets necessary to manage them, The Dearing Law Firm offers clients a variety of alternative fee arrangements. Alternative fee arrangements are essentially designed for clients interested in a fee structure other than fixed hourly billing. The types of fee arrangements vary and would be tailored to the needs of the client, the client’s goals, and the nature of the case. Some examples are discussed below.
Fixed or Flat Fee
This typically involves arrangements where the lawyer handles a matter or group of matters for fixed sum. Fixed fees can be paid up front with an overall cap, or they can be a fixed amount per month with no cap. The specific arrangement would depend upon the nature of the matter. This type of arrangement can be particularly attractive for large entities seeking legal representation for a specific scope of matters and want budgeting certainty.
Task or Unit-Based Billing
In this arrangement, identified tasks or components of the litigation are used to measure the fee. This arrangement may also be used in complex litigation where budgeting is required by the client.
A percentage fee is based on a schedule of fees related to the amount involved in the matter being handled. The amount may be predetermined, such as a percentage of a loan amount being negotiated or the value of real estate being purchased. The percentage rate may be consistent or graduated.
Pure Contingency Fee
A pure contingency fee arrangement is where the lawyer receives a fixed or scaled percentage of any recoveries in a lawsuit brought on behalf of the client. In some situations, the client pays the costs of the litigation. This type of fee arrangement can be suitable in complex commercial litigation cases involving significant monetary damages. Commercial contingency fee arrangements provide for a targeted case specific approach that is suitable for large and small business entities.
Partial Contingency Fee
This arrangement combines hourly billing and a contingency factor as the client and lawyer are sharing risks. The lawyer receives a portion of its hourly rate plus a smaller percentage of any recoveries in the lawsuit. This arrangement reduces the cost of the litigation to the client, while still aligning the client’s and lawyer’s incentives.
Fixed Fee Plus Hourly
In cases where parts of the lawyer’s engagement cannot be clearly defined, a portion of the services to be rendered may be charged on a fixed or flat-fee basis, and the undefined portions charged on an hourly rate basis.
Fixed Fee Plus Success Fee
This arrangement combines a fixed fee for the work performed by the lawyer, and a success fee in the event of a favorable outcome. An example would be reduced fixed fee with a lower success fee in the event of a favorable outcome. This arrangement would be used when there is a good understanding of the services required and the client and the lawyer are willing to share in the risks associated with the matter.