Understanding Employment Attorney Fees

Read this before you hire a lawyer

Even as a lawyer myself, when I was shopping around for an employment lawyer I found it confusing and overwhelming. I would tell my story over and over again, only to find out I was not speaking to the right lawyer for me. I was surprised to learn there are many different ways that attorneys can charge for their services. For example, some lawyers only litigate on contingency while others only work hourly. So here are a few tips to keep in mind about how fees work as you look for representation.

Contingency fees. You pay the lawyer a percentage of the settlement. This is temping because it appears that you don’t pay anything up front and you only pay if you win. However there are several caveats to keep in mind.

First, if you are planning to litigate, there are many costs that lawyers expect you to pay along the way, from filing fees to depositions to expert witnesses. These can add up and if you lose, you are out all that money.

Next, lawyers who operate on contingency are very selective, rejecting some 90 percent of cases that come their way. So odds are that you will be rejected for “not having a good enough case” to litigate. However, if all you want is more severance, the bar is much lower, so it’s important to keep your goals in mind. (Some lawyers only litigate and don’t do severance negotiations at all.)

Also note that if you have already been offered a severance or settlement, your lawyer should only take a percentage of whatever amount they can get you ON TOP of what you have already been offered.

Finally, you must consider the percentage of your award the lawyer will take. While I don’t know the going rates in other parts of the country, in California, I have heard as high as 50 percent. That’s right, some lawyers will take HALF of YOUR money, regardless of how much work they put in to get it. Now, some lawyers will take less money if they settle the case “pre-litigation”, say one-third but it’s still a HUGE chunk, especially when you realize you will owe taxes too. Also note that some lawyers will ONLY take your case to try and settle it PRIOR to litigation, meaning they will drop you if they cannot settle it. Are you OK with that? Relatedly, if you don’t understand something in the contract you’re signing with an attorney, be sure to ask so there are no surprises later on.

Hourly rates. Pretty straight forward, but can vary widely. I have heard of some employment lawyers in California charging as much as $800 an hour!

Also most lawyers will require a retainer up front, sometimes as high as $5,000. In California, this retainer is required to be held in a trust account and the lawyer then bills you against that amount. Any unused funds must be returned to you and the lawyer should provide an accounting of the hours they billed.

Also it’s important to get clear on what exactly they charge you for. I was surprised once by a lawyer who charged me for “seeing my email”. Seriously.

I personally text a lot with my clients and don’t charge for that time because who can keep track of texting? But I am solo and can do whatever I want.

Hybrid fees. An attorney will charge you something up front and then take a smaller percentage of the back end. It can be a nice compromise between not having to pay a lot out of pocket but still keeping most of your settlement money. But again, the rates can vary widely so shop around.

Flat fees. Some lawyers will charge one flat amount for a set amount of work, for example to review (or negotiate) your severance agreement. The benefit is that it’s predictable; just be sure you understand what you are getting for that fee.

My approach. I personally prefer to charge a reasonable hourly fee because I don’t want to take any of your severance, that is your money.

I also usually charge a nominal amount for an initial intake. I did not do this for a long time but I found that I was giving away too much good advice for free and I would never see the client again. While some attorneys offer a “free consultation”, often they don’t give you any advice, they just assess if you a have a “good enough case” for them to take on a contingency basis.

But I don’t care about how good your case is, although I will assess for that too. I only care about getting you to your goal as quickly and and as safely as possible.

Here is the bottom line: if you know you want to file a lawsuit, a contingency lawyer may be the way to go because paying hourly is just too expensive. But if you just want a lawyer to negotiate your severance, then you might assess if paying hourly will get you the “return on your investment”. A good lawyer will be honest in that assessment.

Questions? Let me know. Need assistance? Start here.