Today we're going to talk about how employment lawyers get paid. If you think you have an employment law problem, one of the questions you are probably asking is “how can I afford to handle this?" "I have just lost my job, my family may be in dire financial circumstances, or frankly, it may just be very expensive for me to pursue this. So, how does this work?”
The answer to this question can vary, as different firms and different lawyers handle these kinds of cases very differently. Some firms will charge you by the hour to pursue your employment discrimination or employment litigation claims as far as you like. The way that this works is they'll say something along the lines of "it turns out that you may have some kind of legal claim here arising out of your termination. Your options are many including filing a complaint with the EEOC or filing a lawsuit. This will cost you $300 an hour and we are going to need a $20,000 retainer in order to move forward.” You may think to yourself “Wow! That's really expensive. How can I possibly afford that?”
Another way that lawyers get paid is by saying to the client something along the lines of "We've evaluated your case. We think that you have a strong case of [for example] sexual harassment. We are willing to take your case on a contingency fee arrangement. What this means is that we will work on your case, we will put in the time necessary to take your case to a point where we think we can get you a successful resolution [which, frankly, may be early on or may be following trial], and we're willing to do that without charging you by the hour. In exchange for that, our fee is going to be a portion or percentage of any recovery that we obtain for you." The common percentage is one-third; if there is a settlement of $90,000, the fee would be $30,000, and the portion fo the client would be $60,000.00.
The upside of that for someone in the position of having to hire a lawyer is the knowledge that she can pursue a claim and have an attorney working for her, without the concern over receiving monthly bills. The client will not get billed she calls the office, sends an email, or asks a question. The upside from the attorney's perspective is knowing that they're not taking money from someone who probably doesn't have a lot to spare. One of the biggest problems facing individuals in employment discrimination or sexual harassment cases is that they have often lost their jobs, and they have a family to support, and the prospect of spending a lot of money to pursue a claim, even if they were wronged, is really intimidating for them. So, the contingency fee agreement helps to alleviate some of those concerns.
The third option is a flat fee arrangement where the client might pay a specific amount of money for a specific service. For example, if the attorney says, “We think we can file a complaint with the EEOC or the New York State Division of Human Rights and we're willing to do that for you for a flat fee of [a certain number of dollars].” This is another way to control the cost and prevent the client from having to be concerned about the stress of billing.
There is also the prospect of a mixed fee arrangement, where the client may pay a bit upfront and then the fee may shift to contingency as the case proceeds; which allows the client to have some measure of comfort or security that the fee is going to be capped in terms of the out of pocket expense.
The other frequent question relates to consultation fees. Different firms handle this differently and the reality is that employment cases are complicated, and for an attorney to properly evaluate your situation, it may take a while. It may require extensive review of documents; it may require a meeting; it may require legal research. Because of this, attorneys may feel the need to charge a consultation fee because frankly, if they didn't and they just gave free consultations to everyone, they may very well go out of business because they would have no revenue coming in. So, it's really a balancing act.
Our firm does not have a blanket policy. We generally handle cases on contingency or some version of a mixed contingency - flat fee arrangement. We do this because it offers clients the opportunity to work thru their case and pursue a wrong without having to undertake a large amount of risk personally. It's nice when they have some skin in the game, so to speak, and they have paid something, so they have invested interest, but we don't ordinarily charge by the hour for the entire case because we don't think it's the best way for us to build a good attorney-client dynamic.
If you have questions about an employment matter, fill out the contact form on this page to contact us today.