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Understanding attorney fees in the Vail Valley, elsewhere

Rohn Robbins
Vail, CO, Colorado

There may come a time when you need a lawyer, whether in the Vail Valley or elsewhere. You’re sued, you’re getting a divorce, a business deal needs putting together or taking apart, you’re buying a new home or business, or creditors are howling at your door.

There are probably more times and circumstances where using a lawyer may be more helpful than you may realize. But lawyers don’t come free. In fact, particularly in lawsuits, legal fees can be downright expensive.

And so, in this age of tightening budgets and an economy contracting like a mollusk into its calcifying shell, understanding how lawyers bill, if not quite equal in importance to distribution of the TARP funds, may still be worth tucking away in your store of useful things.

Costs and fees

First, a fundamental distinction is required, dividing lawyer charges into “costs” on one hand and “fees” on the other. Costs are expenses incurred by the attorney in your representation and can range from the mundane ” postage, copying and long-distance telephone charges ” to more substantial costs. Those can include filing and recording fees, as well as significant expenses including investigative fees, depositions, expert witness fees and more. There are, potentially, as many costs, experts and services to be paid as imagination allows depending upon the particulars of the matter at hand.

Some attorneys pay the mundane charges, such as long distance phone charges, without seeking reimbursement. Few to none pay for costly items such as expert witness fees. Some law firms add a premium or percentage their to costs, adding, say 10 or 15 percent for photocopying and such. Many do not.

Many firms will ask a client to pay cost items directly to the vendor or will not incur the charges on the client’s behalf until the client has deposited sufficient funds with the lawyer to cover the anticipated expense.

Fees are what the law firm itself charges for its work. Firms generally charge for attorney time, paralegal and legal assistant time, secretarial and research assistant time.

Breaking down fees

There are three main ways that law firms charge for their time: hourly, contingent fee and fixed fee or project basis.

An hourly basis for the attorney’s representation is likely the most common. The attorney charges for his time devoted to the representation on an hourly basis at a fee agreed upon between the client and the lawyer. Larger firms will often provide a schedule of fees, detailing the hourly rate of partners, senior associates, junior associates, paralegals, legal assistants and secretarial. Smaller firms, or sole practitioners, will disclose what they charge and for what.

Most commonly, time is recorded by the attorney in either tenths or quarters of an hour. Many firms have a minimum charge for work performed for a client. For example, while time may be recorded in tenths of an hour, there may be a minimum five-tenths of an hour charge for any work performed.

A second common way of billing for an attorney’s services is on a contingent fee basis. Generally, but not always, contingent fee arrangements are entered into in personal injury cases. In this case, a lawyer takes an agreed-upon percentage of any settlement or judgment. Typically, if a matter settles before trial, the attorney will take 33 percent of the settlement amount. If the matter goes to trial, the attorney’s percentage will be 40 percent and, if the matter is taken on appeal, the percentage rises to 45 or 50 percent. If the case is not successful, the attorney generally gets nothing.

In contingent fee arrangements, the client remains liable for all out-of-pocket expenses or costs. There are many circumstances where a contingent fee basis of representation is either impractical or not allowed, such as in contract formation or divorce.

A fixed fee, or project basis of representation is precisely what it sounds like. The attorney and client agree that the attorney’s fee will be fixed to perform a certain scope of work. Commonly, fixed fees are found where the likely scope of the work is easily ascertainable, such as the formation of a business entity such as a corporation or limited liability company.

Most attorneys invoice the client on a periodic basis, most often, monthly. Most attorneys also require retainers, which are generally of one of two flavors. An attorney may request a retainer which he applies to the billing.

Alternatively, and more and more frequently, an attorney may “hold” a retainer in his trust account and apply it to billings only if payment is not made. In these greening account retainer arrangements, the client is expected to replace the retainer amount if it has been applied to billings and the retainer is returned to the client at the end of the representation.

Any competent attorney will provide the client with a representation agreement at the beginning of the client’s representation. The agreement should lay out in detail what the lawyer charges, what will be reimbursable costs, the terms of his late payment policy, his retainer policy and other matters relevant to the attorney-client relationship.

While people are, understandably, reluctant to employ attorneys, not only are there times you must, but other times, the nickel”of prevention may be worth a king’s ransom of cure.

Rohn K. Robbins is an attorney licensed before the Bars of Colorado and California who practices in the Vail Valley. He may be heard on Wednesday nights at 7 p.m. on KZYR radio (97.7 FM) as host of “Community Focus.” Robbins may be reached at 970-926-4461 or at his e-mail address: robbins@colorado.net.


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