Attorney Client Fee Arrangements in Employment Cases

Delaware Attorney Ron Poliquin talks about Attorney Client Fee Arrangements in Employment Cases.

Attorney Client Fee Arrangements in Employment Cases

Ron Poliquin your Delaware Employment Attorney

I'm coming at you today because I wanted to explain the difference between the fee arrangements that the clients have with attorneys. For the most part with employment law there's three type of fee arrangements. There’s hourly, it basically means what will happen is the client will give a retainer amount which will be put into a trust fund. Sometimes that'll be $4000 can go up to $8000 depending what type of case. Retainer - in the beginning of the case $4000 let's say that's what the retainer is. $4000 will go into a trust fund that the attorney has that is separate, that he cannot touch, he cannot touch that trust fund until he has actually earned that money. Okay he usually bills hourly and what will happen is each time the client will get a statement at the end of the month saying I've billed 5 hours. Let's say $300 an hour $1500 dollars was taking out of the retainer, this is the amount you have left. Once that retainer amount is done with, then that the attorney will ask for that retainer amount be replenished with usually the same amount of money if not some more. So, let’s say first month initial $4000 is initial retainer so let's say the attorney earns $2000 alright, so the remaining amount would be $2000 dollars in the retainer. At that point it should say .45 hours spent on this, .3 hours spent on that, it should be a complete breakdown and the attorney earns at before he takes it out of your retainer trust account.

Obviously with employment law there may not be practical for someone who just lost their job so there's other types of fee arrangements that can be worked out. There's the contingency fee, this is the classic fee arrangement where the attorney does not get any money, it’s not based on hourly. It’s usually based on a percentage of whatever he recovers for his client. Meaning sometimes it's a 1/3, sometimes people make it 33 1/3 plus cost. Meaning cost would be taken out of the client side of it, the client would be responsible for that final cost of anything coming out of the final award. Let's say the settlement is $15,000 (I know this is bad handwriting. It is all messy, got it, got it, got it) I think it might be $4000 close to $5000 but might be $4095 minus $500 dollars in cost, whatever that would come to, that's ultimately what the client would get at the end of the day. If the attorney recovers nothing, then he gets nothing.

There's also a third type of contingency fee agreement, it can be a hybrid. Meaning it's a cross between contingency fee or an hourly retainer. Meaning the attorney will say I want the client got some skin in the game. So, let's say he charges an initial $2000 retainer and they will be a contingency after that. It might be $2000 to review the case or write a demand letter. It could be to represent the client throughout the Department of Labor EOE investigation. Maybe you work it out where there's a contingency fee, let's say you recovered $20,000, (oh my handwriting...this is bad). The $2000, you would take the contingencies, but you at least put up $2000 for initial retainer.

I was listening to the podcast recently with famed attorney Mark Geragos. He said put it like this, if your attorney wants to take it on a contingency fee basis and he is eager to do it that way then he really believes in your case. If he takes it on the hybrid basis that means he kind of believes it your case. If he takes on an hourly basis doesn't believe in your case at all. I don't think that's quite true, there are all sorts of reasons why an attorney decides a different fee arrangement. Some attorneys just will do hourly that's it. Some attorneys will always be contingency fee. Most attorneys do not like to have all contingencies the case, so it just might be a timing thing. Attorneys have cash flow issues, so they might need $3000 to get them through tell to justify working on your case. They might also be flush with cash, so they are willing to take it on contingency fee and they really hyped up on your case, they really believe in it. Maybe it is just that you really believe in your case. But if the attorney doesn't see a lot of money in it for him or there is limited damage, at the end of the day he charges hourly, an hourly fee. That can happen.

There’re all sorts of reasons, be sure to read over the fee agreement. Discuss the fee arrangement with your attorney, make sure you understand especially with the hourly rate that $4000-$5000 gets used up fast and you're gonna be responsible for replenishing it. Ask your attorney how much you think this is case is going to cost from soup to nuts, so you have some kind of idea. Anyways, that Ron Poliquin, shoot me a question I'd be happy to answer it on one of these videos. Thank you!

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