Although you should always memorialize your attorney-client fee agreements in writing, there are some limited circumstances in which an oral agreement covering attorney fees is legally permissible. How many of those circumstances can you identify?
It’s natural that clients want their attorneys to give them at least some idea of the likely outcome of their cases. Certainly it’s part of the attorney’s job to give the client a sense of whether the matter is likely to be resolved successfully or it lacks merit. But attorneys should never give a guaranty.
Many times you can anticipate related services that you don’t intend to provide under the existing fee agreement with the client, but that the client might want provided. Like when you’re retained to negotiate a dispute, but not to litigate it. Or a settlement may have tax consequences for the client, but you won’t be giving tax advice. Be fair to the client and protect yourself by stating any excluded services in your fee agreement.
Among the several alternatives to the traditional hourly fee arrangement, contingency fees have been commonly used for decades. Under a contingent fee agreement, the attorney and client agree that the attorney will receive a particular percentage of the client’s recovery or of the savings obtained for the client as a fee for legal services, if there is a recovery. The attorney takes on the risk with the potential for significant reward. Not surprisingly, there are statutory requirements for these types of agreements—and failing to comply with them is risky, too.
Hourly billing for legal services has been criticized for, among other things, discouraging attorney efficiency and providing the client with no predictability of cost (see, e.g., ABA Commission on Billable Hours Report 2001-2002) and has even been declared dead. But traditional hourly billing is still the most common type of fee arrangement in many types of practices. If you go the hourly route for at least some of your practice, review these points to be sure you are following best practices and are in compliance with the law.
When, in a noncontingent matter, a third party is paying all or some of the attorney fees for your client, do you know how to deal with the issues that can arise? Short answer: Address them upfront in your fee agreement. Here are sample provisions to get you started.
Law firms are getting more aggressive about suing clients for unpaid legal bills. As the New York Law Journal says, what used to be “unseemly” may become routine. But bringing a breach of contract action against a client for unpaid fees is a very tricky business: first, you have to get out of the attorney-client relationship, and then you have to invoke your (hopefully) enforceable fee agreement.