Legal fees can be tricky, even for us lawyers. If you go to see a lawyer, they may quote you a “fee”, but what types of legal fees is it that they are asking for? You need to make sure you understand the fees you are paying a lawyer – what they are and what they aren’t. Here is a quick rundown of the fees that divorce lawyers in North Carolina will typically charge. If you live in another state, this list may be a helpful starting point, but you will need to check with a lawyer in that state for more information.
In North Carolina, there are four basic types of fees that a lawyer can charge. They are: flat fees, trust advances, retainers, and contingency fees. Divorce lawyers in North Carolina rarely charge contingency fees, so I’m going to focus the rest of this article on the other three types of fees. I’ve written about these fees previously on my website.
Types of Legal Fees charged by North Carolina Divorce Lawyers
- Trust Advances (hourly fees). Although there is a growing trend to move away from hourly billing in the legal industry, this still remains the most common fee arrangement for most lawyers. This is also typically referred to as a “trust deposit”, because that is what it is. The fee that is earmarked for future services and is placed in the trust account when the client hires their lawyer. As the lawyer begins to work on your file, they will keep track of their time and send out periodic invoices to the client for services rendered. As these fees are earned, the lawyer is obligated by ethical rules to transfer the funds from their trust account to their operating account.
- Retainers. This is a fee that is paid to reserve the services of your attorney. By accepting a retainer, the attorney will forego opportunity to represent your spouse or, if they are extremely busy, other prospective clients. Clients will sometimes put a lawyer or firm on “retainer” even when there is no legal work yet to be performed. This gives the client peace of mind that they know that they are a client of that firm or lawyer when the time comes that they will need legal help. The retainer is earned immediately and placed in the operating account of the firm.
- Flat Fees. A flat fee is a set price for specific legal services. You may frequently see a firm charge a flat fee for items such as obtaining an absolute divorce, preparing an uncontested separation agreement, or drafting a QDRO. Unlike the trust deposit, a flat fee is a set or fixed amount that is agreed to in advance of the representation. The lawyer will treat this fee as earned immediately and deposit this fee their firm’s operating account. The flat fee provides both benefit and risk. The attorney obtains the benefit of treating the money earned immediately, but runs the risk that a given case may become more complicated and involve more time than originally anticipated. The client has the benefit of knowing, in advance, how much their case is going to cost. However, in exchange for the risk that the lawyer takes that the case may become more complicated and involve more time than anticipated, the flat fee for litigation cases may be much higher than if the client had just paid the lawyer for their time.