Lawyer Fees for Your Small Claims Suit - dummies

Lawyer Fees for Your Small Claims Suit

By Judge Philip Straniere

It is a good idea to understand lawyer fees for your small claims suit prior to procuring legal counsel. Although lawyers and billable hours have become somewhat of a point of scorn over the years, lawyers need to be paid for their services like everyone else. Some options have advantages for you, others favor your lawyer.

Contingency agreements for smalls claims

If a lawyer takes a case on a contingency basis, it means the lawyer gets paid only if he’s successful in getting you money. The lawyer usually doesn’t receive any fee in advance, but instead receives a percentage of the monies you receive. The most common fee is one-third of the recovery whether by suit, settlement, or otherwise.

The idea behind contingency fees is that you hire the best lawyer available irrespective of your ability to pay him as opposed to selecting the lawyer who’s willing to bankroll the lawsuit. The lawyer has an interest in getting you the best recovery possible because he’s getting a piece of the recovery.

Check out these two examples on the extreme ends of contingency settlements:

  • Big bucks for little work: You hire an attorney on a contingency basis to represent you for injuries you received in a car accident. After you leave the office, he calls the insurance company and settles the case for $100,000. If the contingency agreement provided for the lawyer’s compensation as one-third whether by suit, settlement, or otherwise, the lawyer gets $33,333.33 for the phone call.

  • Lots of work and no pay: That same attorney spends four years preparing the case and representing you vigorously all the way through a six-week trial. The jury brings in a verdict in favor of the defendant. The lawyer gets nothing because you got nothing.

In every case, as the client you’re responsible for all fees and expenses incurred. Some typical fees other than those related to filing the case may be for medical records, expert reports, or witness fees.

Make sure your retainer provides for the lawyer to inform you about any costs and disbursements being incurred as you go along, so you don’t end up with surprises. In fact, a discussion of what are some likely anticipated expenses before you start the case is essential. You wouldn’t want to go home at the end with a recovery that is less than what you paid for litigation expenses.

Pay by the hour for small claims

Hourly agreements are what have given billable hours a bad name. You pay an attorney hired on an hourly basis as services are rendered based on the number of hours he says he’s worked for you. Most contract and matrimonial litigation is done on an hourly basis.

You pay the lawyer an initial retainer, like a down payment, and the lawyer performs services calculated and billed on an hourly basis. As the retainer money is used up, the lawyer sends a monthly bill and you advance some more money. The amount of the retainer is no guarantee as to what the total cost may be.

No lawyer can know in advance how much litigation will cost on an hourly basis. A lawyer almost never caps the cost at a certain amount. The lawyer will make a good faith estimate as to what your problem will cost to solve based on prior experience, but if the other side decides to contest every issue and has unlimited financial resources, it can be expensive ride.

This kind of litigation can get very expensive for a client, especially if it is a difficult case, and you’re going against parties who have the financial ability to keep paying the lawyers.

If you don’t keep up with the payments, the lawyer may be able to stop performing services for you. If the case is in litigation and you don’t pay, the lawyer can go to court, make an application to the judge, and get an order allowing him to be removed as your counsel.

You may then find yourself going it alone or trying to find another lawyer to take your case. Finding another lawyer will be time-consuming in the best-case scenario and totally frustrating in the worst case scenario.

Flat fees for small claims

Most lawyers realize that compensation based on an hourly rate would not be feasible in small claims court because the amount being sued for is so small and the amount of time spent on the case can quickly exceed any recovery. In a flat-fee agreement, the lawyer is paid a set amount of money unrelated to the potential recovery or the amount of time involved.

Flat-free agreements are common for simple small claims cases. The lawyer anticipates having the matter disposed of quickly and without providing too many hours of service. Another instance where flat-fee retainers are commonly used is in the buying and selling of real estate, making a will, and some other relatively simple transactions.

Free legal services for small claims

If you don’t have enough money to pay a lawyer but would still like to talk to one, you can look into getting free legal services. Unfortunately, it’s extremely rare for the government or third-party agencies to provide free legal services for civil lawsuits like those found in small claims court.

Some states and private agencies provide free legal services in housing matters or in domestic disputes, but these resources are very limited in the type of cases they take on. Generally, if money is the primary object of the litigation, free legal services are not available.

Many lawyers who frequently appear in small claims court work for less than they charge for work in other forums because they anticipate that they will be done quickly, and — believe it or not — they consider helping people in small claims court part of their obligation to the profession to provide legal services for the public.