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How to Avoid Fee Disputes

**Utahbar.org is moving! The Utah State Bar Website will be moving to a new home this spring. The open house starts March 15, 2003. Come see it at http://silk.utahbar.org and update your bookmarks. We hope to go live on Monday April 1st, 2013**

Ask for a Written Fee Agreement

Lawyers are usually willing to negotiate a written employment and fee agreement with a client at the beginning of the attorney/client relationship. Ask as many questions as necessary to make sure you understand all of the terms of the agreement and what is included in the fee. Clients sometimes mistakenly believe that the retainer fee is the total fee charged for the matter, or that they do not have to pay the attorney if the results of the representation are not satisfactory to them. Also be sure you understand who is responsible for paying out-of-pocket costs, and when.

Billing

Attorneys often send interim billings to clients so the client knows what the fees are as they accrue Ask your attorney how often he or she sends billing statements and whether the statements include an account of how the attorney is spending time on the case. If the attorney sends regular billing statements, review them promptly and contact the attorney with any questions you have about the services for which you are being billed. Remember that errors can be corrected more easily if they are addressed right away.

Fee Dispute Resolution

Even with a clear written fee agreement, disputes sometimes arise. When this happens, there are several ways to resolve the dispute.

Ask your attorney to explain the work performance and the time spent on each task. If the results of the work were unsatisfactory to you, ask the lawyer to explain the reason for the result. (Remember, unless the matter is billed on a contingent basis, you may be obligated to pay the fee even if you lose.) Discuss your concerns about the fee, and try to reach a resolution with the attorney.

Consider asking another lawyer to review the matter to advise you concerning whether the fee is fair. Remember that if the review is going to be meaningful, you should provide billing statements and other records for the second attorney to review before giving an opinion.

If you and the attorney cannot resolve the dispute informally, your options are to pay the fee, or seek fee arbitration. Paying the fee certainly resolves the matter quickly without more expense. Refusing to pay the fee could result in a lawsuit against you by the lawyer, in which case you might have to engage another lawyer to defend your position. The third alternative often results in some kind of compromise.

The Utah State Bar sponsors a Fee Arbitration Program. Fee arbitration involves an informal, out-of-court hearing before a panel of volunteer arbitrators who listen to what each side says, review the records presented, and decide what the fee should be. Both you and your lawyer must agree to submit to the arbitration in advance, and the decision is binding immediately. This is a quick and inexpensive means of resolving a fee dispute; there is a minimal filing fee, but you need not have counsel to represent you at the hearing. Call the Utah State Bar at 531-9077 for more information about this program.

What an Attorney Costs & How The Amount is Determined

Lawyers use a variety of methods to set fees, and many require a retainer. As you consider hiring counsel, the things you need to think about is the type of fee arrangement, the total cost of the representation, and whether the attorney require new clients to pay a retainer. Make sure you understand the terms of the fee arrangement; don’t be embarrassed to ask questions and make alternative suggestions. Remember that you do not have to agree to everything the attorney proposes, and if you not comfortable with any part of the proposed agreement, you need not hire that particular attorney

What Is a Reasonable Fee?

Remember that the value of most services is determined by the marketplace. Nevertheless, an attorney is not permitted to charge or collect an illegal a clearly excessive fee. Factors to consider in determining the reasonableness of a fee include:

  • The time and labor required, the novelty and difficulty of the questions involved, and the skill needed to perform the legal service properly
  • The likelihood that accepting a particular case will preclude other employment by the lawyer
  • The fee customarily charged for similar legal services.
  • The amount involved and the results obtained.
  • The time limitations imposed by the client or circumstances.
  • The nature and length of the professional relationship with the client.
  • The lawyer’s experience, reputation, and ability.
  • Whether the fee is fixed or contingent.

What is a Retainer?

A retainer is an advance payment to cover the in work involved in the representation if the attorney is charging a fixed fee or by the hour. Although some attorneys describe retainers as “non-refundable" if the client fires the attorney or decides not to pursue the legal matter, you may be entitled to a refund for fees you have paid that the attorney did not actually earn.

Fee Arrangements

  • Hourly Rates: Many attorneys bill for their time by an hourly rate.The attorney keeps track of the amount of time spent on the case, including telephone conferences, document preparation, and legal research. Some attorneys charge more per hour for certain kinds of activities, such as going to court. You are entitled to know the amount of the hourly rate. And if you are not a regular client of the attorney and the reasonably foreseeable total amount fees will be more than $750, the attorney must communicate the rate of the fee to you in writing, either before or within a reasonable time after the representation begins. It’s a good idea to ask the attorney for a written fee agreement that spells out what the attorney will do for you, and how much you will pay per hour for the attorney’s services and when you are expected to pay the bill, and whether the attorney charges interest if the bill is not paid within the agreed-upon time. That way, you will have something to refer to later if you have a question about the rate.
  • Contingent Fees: Some attorneys accept cases on a contingency fee basis. This means that the attorney collects a fee only if the case is successfully resolved and money collected on your behalf. Attorneys are not allowed to collect contingent fees in divorce cases and criminal cases. The kinds of cases for which attorneys sometimes agree to work on a contingent basis include civil lawsuits such as personal injury cases and collections actions. The amount of the percentage may be less if the case is concluded in its early stages. Contingent fee agreements must be in writing and the agreement must identify the percentage that the lawyer will collect. The agreement must also specify whether the expenses paid by the attorney (such as the cost of hiring someone to serve papers on the opposing party) be deducted before or after the contingent fee is calculated. The agreement should also address how the fees will be calculated if the attorney/client relationship ends before the conclusion of the case.
  • Fixed Fees: Other attorneys charge a set, or fixed amount for particular services. Fixed fees are sometimes called “flat fees.” The types of cases attorneys sometimes do this include criminal cases, estate planning, uncontested divorces, and personal bankruptcies. If you are not a regular client of the attorney and the fixed fee is more than $750, the attorney must communicate the amount of the fee to you in writing. Again, it’s a good idea to ask the attorney for a written agreement that spells out what the attorney will do for you, how much you will pay, and when you are expected to pay. Fixed or flat fees, similar to ‘non-refundable retainers’ must be earned; any unearned portion must be refunded.
  • Fees Set By Court Order or By Statute: Sometimes a court or a statute sets the amount of the fee. This can happen, for example, in probate matters. A court may order one party to pay the attorney fees of the other party. Ask your attorney whether this possibility exists in your case, either for you or against you. If the possibility does exist, ask your attorney how this possibility affects your obligation to pay your own attorney.
  • Costs: Attorneys usually charge clients for expenses that the attorney must pay out-of-pocket in connection with the representation. Examples include court filing fees, witness fees, mileage, sheriff’s and constable’s fees, deposition expenses, investigative expenses, expert witness fees, copying costs, and long distance telephone charges. If the attorney is collecting a contingent fee, you may not have to pay these charges until the case settles, but some attorneys require the client to pay these expenses as they are incurred. Be sure you understand what will be required of you and when. Also, be aware that in some kinds of cases that go to trial, the loser is required to pay the winner’s costs. Ask your lawyer to assess whether there is a risk in your case, and if so, what the attorney estimates the amount might be.
  • Legal Insurance: Some people have legal insurance that would pay a portion of their legal fees. Check with your employer to find out whether a benefit of this sort is available to you.

Terminating the Attorney — Client Relationship

Many people mistakenly believe that they cannot fire their attorney.This is not the case: you may terminate the relationship at any time.

Your attorney, on the other hand, may not simply abandon the representation. The circumstances under which an attorney may withdraw, and the procedures that must be followed are governed by the Rules of Professional Conduct, by statute, and by the rules of procedure established for the courts. If the attorney is allowed to withdraw from representation, the lawyer must take steps to the extent reasonably practicable to protect the client’s interests, such as:

  • giving reasonable notice to the client,
  • allowing time for employment of other counsel,
  • surrendering papers and property to which the client is entitled, and
  • refunding any advance payment of fees that has not been earned.

Regardless of which party terminates the relation­ship, the client is still responsible for paying for the services already provided by the lawyer.

Resolving Other Types of Disputes With Your Lawyer

Often client dissatisfaction with lawyers results from lack of communication from the lawyer about the status of the client’s case. If you have not heard from your lawyer in some time, or if you have questions­tons, write to the attorney to ask for information. The Rules of Professional Conduct require attorneys to keep clients reasonably informed about the status of their matters, and to promptly comply with reasonable requests for information. Lawyers also must explain matters to the extent reasonably necessary to enable the client to make informed decisions regarding the representation.

Delays

A common source of friction and misunderstanding between lawyer and client concerns the speed with which a matter is pursued.To protect the rights of all parties, our system of justice is sometimes necessarily slow. From a client’s perspective, the delay may seem unreasonable. Often times, this is beyond the control of an attorney. Sometimes it is not.

If you believe your attorney is unduly delaying your case, or is inattentive to the representation, discuss your concerns and dissatisfactions. If your concerns are not addressed promptly and the attorney is a member of a law firm with other lawyers, you might consider speaking to another attorney at the firm. Another alternative is to call the Utah State Bar’s Consumer Assistance Hotline at 531-9077. The Bar’s Consumer Assistance Coordinator attempts to resolve disputes between attorneys and their clients that do not necessarily arise to the level of professional misconduct. If the inattention continues, you always have the right to fire the attorney and retain new counsel.


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