You may have a great wrongful termination case, but you will need to hire a lawyer to pursue it. If you just lost your job, you probably can’t afford to pay hundreds of dollars an hour for legal help. Do you have to abandon your rights and just live with the wrongful termination? Not if you do some leg work to find a lawyer who will take on your case for a fee that you can afford.
There are a variety of attorney fee structures, usually dependent on the type of representation you need. Here are brief descriptions of some of the more common methods lawyers use to get paid for their services.
Every attorney has an hourly fee: a set amount the attorney charges for each hour of work under hourly fee arrangements. These hourly rates vary a great deal from city to city and lawyer to lawyer. But, in general, hourly fees range from a couple hundred to several hundred dollars or more.
An hourly fee arrangement may make the most sense if you're shopping for a single, isolated service. For example, if you just want to have a lawyer look over a severance agreement, you can expect to be charged an hourly rate for that limited and relatively brief consultation.
A recent trend in legal fee arrangements is called “unbundling” of services. In the past, clients often hired a lawyer “on retainer,” to provide services as needed. This was more common with business clients, but sometimes even an individual would hire a lawyer to help with all aspects of a problem, such as a wrongful termination. For example, perhaps the client wanted assistance appealing a denied claim for unemployment insurance or dealing with other administrative agencies, as well as with investigating possible legal claims and filing a lawsuit.
You can elect to hire a lawyer for a particular service (such as filing a claim for unpaid wages with your state's labor commissioner) without retaining the lawyer for any other services relating to your termination. You have the option of hiring a different lawyer for other services, or expanding the services of the original attorney (with a new fee agreement), if the attorney agrees to take on the new work. Lawyers generally charge hourly fees for unbundled services.
If your case justifies filing a lawsuit, the lawyer may agree to a contingent fee, with or without a retainer. A contingent fee is essentially a percentage of your recovery. If you win, the lawyer gets a cut. But the lawyer receives no fees if you get no damage award or settlement.
The most common contingent arrangements are percentages of either an award of damages after trial or of a pretrial settlement amount. As with hourly fees, the percentage a lawyer charges differs from location to location In general, however, a contingent fee of one-third of any pretrial recovery is quite common. Often, the lawyer's percentage increases once a trial date is set or at some other demarcation of the beginning of litigation. The reason for the increase is that the attorney’s hours increase dramatically once a lawsuit is about to start.
At times, the lawyer will want a retainer, or lump-sum payment of fees, at the outset of the contingent fee arrangement. This is the lawyer’s “down-side” protection: a modest amount of money for taking the case on a contingent basis.
Lawyers charge retainers in many types of fee arrangements, not just contingent fee retainers. Sometimes, a lawyer will ask for a “refundable” retainer, meaning that you will get credit for the payment and the retainer amount will be subtracted from the lawyer’s contingent fee (if you win or settle). Sometimes, a lawyer will ask for a retainer against hourly fees, then withdraw only those fees actually earned from the retainer amount with an accounting to you of the amount withdrawn and the amount remaining. If any money is left in the retainer at the end of the lawyer’s representation, you will get a refund of the unpaid balance.
Or, the lawyer may want a “cost retainer” to cover non-fee expenses, such as filing fees, costs of depositions, expert witness fees, and the like. Generally, the lawyer will withdraw from the fund as needed to pay costs that come up, with an accounting to you of the amount withdrawn and the amount remaining in the account.
You may never have hired a lawyer, but you likely have hired other service providers. A lawyer is simply a professional you hire to provide a service, and you definitely have the option of negotiating the lawyer’s fees. If the lawyer refuses to negotiate and insists on a particular fee structure, you can decide whether you’re willing to accept that or want to shop around.
How do you know what fee structure is best? You have to do some homework by evaluating your losses and the best way to maximize your possible outcome under the circumstances.
What are your losses, also called damages, from the termination? Typically, these will include lost pay, lost benefits, increased medical expenses, and possibly emotional distress. Lost pay encompasses the period of unemployment until you are or expect to be rehired at the same rate of pay. Benefits encompass medical plan coverage, bonuses, stock options, 401K or matching plans, and the like. Calculate an estimate of your losses in each category.
If you have a strong case and significant damages, you are in a better position to negotiate a contingent fee arrangement, because the lawyer could get a percentage of a sizable recovery. If you have a strong case but low damages (maybe you immediately found a new job at a higher rate of pay), you and the lawyer may want to discuss another arrangement. For example, some lawyers will accept certain cases on a mixed reduced hourly fee/reduced contingent fee arrangement. Under such an agreement, you would pay a low hourly rate for work done and the lawyer would get a small percentage of anything recovered for you. Or, you may decide that an unbundled service approach is best and hire the lawyer to represent you in a labor commissioner proceeding for a set fee.
Another element to keep in mind is costs: the non-attorney expenses referred to above. These vary greatly depending on what sort of action you decide to take. If you hire a lawyer to write a letter seeking pretrial settlement, the costs will be few or none. If you and your lawyer file a lawsuit, costs through trial will run to many thousands of dollars. You will likely have to pay all or some of these costs as they arise.
The key to a successful attorney/client relationship is communication. And, that communication starts with the fee discussion. Make sure you understand all terms of your attorney retainer agreement before you sign. If you don’t, ask your lawyer to explain the terms. If the lawyer can't clearly explain fees or wants to proceed with the representation without a clear, written fee agreement, it's a good sign that you should take your business elsewhere.