Understanding Legal Fees, Payment Plans, and Other Costs of Military Divorce (Part 2)

If an attorney quotes you a small retainer fee, he probably is not planning on doing much work for you. Ask yourself, how much work can a lawyer do with $500 if most lawyers in your area charge about $300 per hour?  If you have a complicated case, you should expect that it will require a great deal of work and the retainer fee will reflect that.

A lower initial retainer fee does not mean the attorney will charge you less money.  Often, a client will hear the retainer fee quoted and assume it is a flat fee.  Most retainer agreements state that when the retainer fee is used up, then the client must deposit more money in the client’s escrow account. An attorney may ask for a small retainer fee at the beginning of the case with the intention of asking for more money later (or withdrawing from the case).  Ask what the attorney plans to do on your behalf and how many hours he or she estimates the entire representation will take.

Hourly Billing Rates Analyzed:

Another important issue concerns how you will be billed for the lawyer’s time.  Not all hourly fees are the same. Ask whether the law firm is going to bill you in quarterly-hour or 1/10 hour increments. The difference could be very expensive. 

For example, if two attorneys both charge $300 per hour but one bills in ¼ hour increments and the other bills in 1/10 hour increments their charges will differ wildly for the same amount of work. A five-minute telephone call will cost you $30 if the attorney charges you based on 1/10 hour increments and $75 if he rounds up to the nearest ¼ hour.  A brief letter or e-mail that took him 18 minutes to write will cost you $90 (as 3/10 of an hour) or $150 when rounded up to ½ an hour. Now, imagine that every charge is rounded up to the nearest ¼ hour in this way.  A lawyer can go through a $2,500 retainer fee much quicker when he rounds up every charge to the next ¼ hour.

It’s a simple question, but one you should ask: “do you bill in 1/10 hour increments?”

Financing the Retainer Fee:

Some lawyers will allow you to finance the retainer fee. Because the retainer fee represents the estimated costs of the representation for the entire case, you may be able to negotiate a payment plan to finance the retainer agreement over a period of several months.

For example, if the attorney estimates your child custody case will cost approximately $10,000 and take about six months, he or she may be willing to accept $5,000 at the start of the representation and payments of $1,000 per month for the next five months.  You may have more leverage to negotiate a payment plan if you have long term employment (in the military or government service). The long term job provides some assurance that the attorney will be paid each month.