How Do Attorneys Set Their Fees?

If you've ever hired a lawyer (or looked into hiring one), you may be wondering why he or she charges so much -- typically in the hundreds of dollars per hour. How do lawyers set their fees?

One place to look is the American Bar Association's rule on attorney's fees. Rule 1.5 states, "A lawyer shall not make an agreement for, charge, or collect an unreasonable fee."

So what exactly is a reasonable fee, and how do lawyers determine how much to charge?

Different Type of Fees for Different Type of Cases

The type of case often determines the type of fee that attorneys charge. For example:

For DUI defense cases, many attorneys charge a flat fee to represent a DUI client. Since not all DUI cases go to trial, attorneys may charge one fee for services leading up to trial and another fee for the actual trial.
For personal injury cases, the situation is typically a bit different. Since recovery amounts in personal injury cases vary greatly from case to case, attorneys often charge contingency fees. This means they won't charge you if you don't win, but if you do, attorneys will take a percentage of the judgment. Lawyers will often charge a high contingency fee if they think your case will require more work.
For family law and other civil cases, attorneys will often charge an hourly rate. This is because the amount of work in family law and other types of litigation can be as little as a few hours to months or even years. In determining an hourly rate, lawyers will consider many factors, as set out below.

Factors of a Reasonable Fee

ABA Rule 1.5 lists the following consideration for determining a reasonable fee:

What is the time, labor, and skill required by the case?
If the lawyer takes your case, will he have to forego taking other cases?
What do other lawyers offering similar services charge?
What was at risk in the case, and what was the result achieved?
What are the time limitations? Will the lawyer have to work overtime?
What is the experience, reputation, and ability of the lawyer?

While these factors are a guideline for lawyers to determine how much to charge, the answer is sometimes as simple as whatever the client is willing to pay.

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