Attorney fees are negotiated between the attorney and client, subject to any limits imposed by state law and the general principle that an attorney fee must be reasonable. Although fee agreements in most cases can be oral agreements, it is good practice for lawyers to enter formal written fee agreements with their clients, and to clearly describe how fees are calculated.
Hourly rates The range of fees charged by lawyers varies widely from one city to the next. Most large
law firms in the United States bill between $200 and $1,000 per hour for their lawyers' time, although the fees charged by smaller firms are much lower. The rate varies by location as well as the specific area of law practiced. Typically insurance defense firms have lower hourly rates than non-insurance firms, but are compensated by having steady, regular paying work provided. Regional urban centers such as
Salt Lake City will average $150 per hour for an associate's time on a basic case, but that fee will increase for larger firms. Within large firms in the United States, billable hours are considered a measure of productivity with a minimum of about 1,800 required or expected of associates. In the United States, lawyers typically earn between $100,000 and $220,000 per year, although earnings vary by age and experience, practice setting, sex, and race. Solo practitioners typically earn less than lawyers in corporate law firms but more than those working for state or local government. Many surveys of hourly rates are done. The
American Intellectual Property Law Association (AIPLA) commissions a survey of its members every two years and it publishes these in what it calls a "Report of the Economic Survey". The latest one is dated June 2007. Rates are collected for 14 geographic areas and by associate or partner. Many courts have followed the rates shown by these AIPLA surveys and they are highly regarded for intellectual property litigation. The
State Bar of Oregon and the
Colorado State Bar have published surveys of rates for various areas of their states which are available online. Perhaps the most widely followed set of rates are what is called the
Laffey Matrix available from the
United States Attorney's Office for the District of Columbia. These have been available since 1982 and are updated annually. Hourly rates are shown by years of experience. For June 1, 2006, to May 31, 2007, the rates are as follows: 20+ years of experience, $425 per hour; 11–19 years, $375; 8–10 years, $305; 4–7 years, $245; 1–3 years, $205; and
paralegals and
law clerks, $120. The Laffey Matrix appears to be growing in acceptance by many courts throughout the United States, but the matrix must be adjusted to account for higher or lower costs for legal services in other areas. Hourly rates are increasing almost every year and some lawyers charge substantially higher than the rates shown by the Laffey Matrix. The first American attorney to regularly charge a four-digit hourly fee ($1,000 and higher) was
Benjamin Civiletti in late 2005.
Contingent fees A contingent fee, or contingency fee, is an attorney fee that is made contingent on the outcome of a case. A typical contingent fee in a
tort case is normally one third to forty percent of the recovery, but the attorney does not recover a fee unless money is recovered for the client. States prohibit contingent fees in certain types of cases. For example, most states forbid contingent fees in criminal cases. States typically require that a fee agreement that involves a contingent fee be reduced to writing and signed by the client.
Other fee arrangements With the ongoing recession of the 2000s, corporate clients began driving attorneys increasingly toward alternative fee arrangements (AFAs), which can include flat fees (per matter), fixed fees (for a "book" of matters), success bonuses, and other options. Recent studies suggest that when lawyers charge a fixed-fee rather than billing by the hour, they work less hard on behalf of clients and client get worse outcomes. In other cases, attorney fees may be subject to review for reasonableness. For example, in
class action cases the court in which the case is resolved will review the attorney fees of class counsel for reasonableness. In a landmark 1985 decision,
Walters v. National Association of Radiation Survivors, the
U.S. Supreme Court held that statutory restrictions on attorney's fees are subject only to highly deferential
rational basis review, when challenged as limitations upon the
First Amendment right to freedom of speech and the
Fifth Amendment right to
due process. In other words, if the legislature can articulate
any rational basis for restricting attorney's fees, the court must defer to the legislature's considered judgment, and it would take an "extraordinarily strong showing" for a court to decide otherwise. Long before the
Walters case, conservatives in the United States had begun to put forward
tort reform proposals to restrict attorney fees, which gained traction in the 1970s. Medical malpractice tort reforms often include maximum limits on plaintiffs' attorney fees, such as the percentage schedule in California's
Medical Injury Compensation Reform Act of 1975. In 2004,
Florida passed a constitutional amendment limiting contingent fees in
medical malpractice cases. Although some people have objected to these laws as an unfair restriction on
freedom of contract, Justice
William Rehnquist rejected that argument in his majority opinion for the
Walters court. Rehnquist implied that there was no principled way for the Court to overturn such laws as a violation of freedom of contract without returning to the now-discredited paternalism of the
Lochner era, in which the Court had routinely invoked freedom of contract as an excuse to overturn laws regulating
minimum wages and
child labor. Justice
John Paul Stevens filed a
dissenting opinion in which he specifically attacked the majority opinion on that point, among others; he began and ended his dissent with the accusation that the majority "does not appreciate the value of individual liberty". ==Who pays==