Key Things To Know About Fee Agreements

In California, fee agreements between a client and their lawyer must be in place if the lawyer anticipates fees and costs for the case will be more than $1,000. It’s rare for a case to fall under that threshold, so you’ll likely need a fee agreement if you’re hiring a lawyer. 

If you’ve never signed a fee agreement before (or even if you have), it’s important to brush up on what’s included, what to expect, and what to look out for when your attorney sends you a fee agreement. 

What is a Fee Agreement? 

So, let’s start with the fundamental question – what is a fee agreement? 

A fee agreement is a binding contract between an attorney and their client. It essentially outlines:

• What services will be provided
• How much those services will cost
• How disputes will be resolved
• How the contract can be terminated

Don’t sign the fee agreement until you are totally comfortable with the terms included in the contract. 

Common Types of Fee Agreements

It’s crucial to understand your financial obligations in the contract, specifically how you will pay your lawyer. Different lawyers set up different fee arrangements based on the scenario. 

Here are some common fee agreements: 

• Flat Fee – A one-time charge for work on a specific project or matter.
• Retainer Fee – An upfront fee for ongoing services (this varies depending on the agreement structure).
• Hourly Fee – You pay your lawyer (and possibly their staff) per hour of work on your case.
• Contingency Fee – if your matter settles successfully, you owe your lawyer a portion of your monetary award as compensation. If you don’t win your case, the lawyer does not receive any compensation. 

Arbitration Causes in Fee Agreements 

One vital thing to consider is whether or not your fee agreement has an arbitration clause. An arbitration clause essentially states that disputes between the parties must be resolved through arbitration.

The arbitration process is conducted by an individual known as an arbitrator. The arbitrator is a neutral third party who listens to the parties’ claims and then uses that information to make a decision regarding those claims. The arbitrator’s decision is called an arbitration award. 

The challenge with an arbitration clause is it often benefits the attorney, rather than the client. Attorneys have in-depth knowledge of the arbitration process, whereas clients don’t have the same expertise in that area. Some courts recommend that if a fee agreement contains an arbitration clause, the client should consult with a separate attorney on whether or not they should enter into the fee agreement.

How to Dispute an Attorney Fee Agreement

Disagreements over attorney fees or fee agreements do arise, so what happens if you find yourself challenging fees or your contract with your attorney? 

You might pursue a  legal malpractice claim stemming from improper billing, breach of contract, mishandled cases, or other circumstances. Pursuing a legal malpractice case means hiring a separate attorney to represent you against your former attorney. Legal malpractice cases are complex, so your attorney in the malpractice case must have extensive experience. 

The McGonigle Law Team has decades of experience in legal malpractice cases and attorney-client fee disputes. If you have questions about a fee agreement or want to pursue litigation, our team can review your situation and discuss your options, so contact our team for more information. 

The information contained herein is for general purposes only and does not constitute legal advice.