(DGIwire) When consumers become legal clients for the first time, they are usually presented with a version of a fee agreement that is completely new to them, full of concepts that are unknown and unfamiliar. Even movies and television, which often portray unrealistic pictures of what lawyers do, never bother discussing the employment contracts between lawyers and their clients. Hardly the stuff of dramatic intrigue! But for the sake of people who likely feel uncomfortable around lawyers in the first place, whether a fee agreement is fair or foul is important.
Janet Sobel, longtime attorney and author of Litigation – Insult to Injury: What Judges and Lawyers Know About the Legal System That You Don’t, explains that the common provisions in attorney fee agreements are strange and foreign to the first-time client, who is left without any ability to understand, let alone negotiate, the main terms of a contract that may be required before hiring the lawyer. Sobel notes, “This is not to say the fee agreement is necessarily unfair to the client, but clients should certainly know what they are signing.” In fact, Sobel continues, “the fee agreement defines the rights and obligations of both the client and the lawyer and could become critically important to both of them if a conflict or dispute arises.” If a lawyer’s agreement is unfairly worded, then the client should continue the search for a lawyer.
According to Sobel, the novice client should become familiar with what the terms of the contract mean before signing on the dotted line. The future of the case could depend upon it. Sobel has included an entire chapter in her book describing the purpose and pitfalls of the fee agreement, and here are some of the main points:
- The agreement should specifically describe the nature and scope of the legal assignment. This is as much for the lawyer’s benefit as the client’s – and a clearly defined scope of work lets the client know what the lawyer is not going to be doing.
- The nature of the compensation, i.e., how the lawyer will be paid, is a crucial term. Compensation can be hourly, contingency, flat fee, or a hybrid of any two. Before the fee agreement is signed, there must be no confusion as to the lawyer’s compensation. Each form of compensation has its pros and cons, and questions should be raised. After the contract is signed is no time to seek clarification.
- Besides the lawyer’s compensation, there are “costs,” which are the incidental expenses of the case. If it involves litigation, those could be as little as $2,000 or more than $2,000,000. Obviously, says Sobel, the nature of the case will drive the costs, but someone has to pay them. Sometimes the lawyer will “front” them as they come due and sometimes not. The fee agreement should describe the costs that are anticipated and the authority of the attorney to incur them. The client may ultimately be required to pay them, so the matter of costs needs to be understood.
- The timing and detail of billing statements should be in the agreement, as should a procedure for resolving disputes between attorney and client. Finally, if the case involves litigation, the fee agreement may provide “lien” rights to the lawyer, which is a procedure the lawyer uses to ensure payment if the lawyer exits the case. This is a very complicated process that protects the lawyer’s right (and rightly so) to be compensated for all work performed before the end of the relationship. But the assertion of a lien can upset the client’s apple cart.
Neither lawyer nor client is benefited if the client is confused about the fee agreement. The client should accept responsibility for understanding its terms because the lawyer, who also has rights under the contract, cannot be expected to watch out for both sides to this fee contract, for obvious reasons. Sobel’s website is www.judgingthelaw.com.
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