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Contract Lawyers: Top Legal Fee Issues

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Legal fees usually constitute a top concern for potential clients who wish to retain a St. Paul contract attorney.  In this essay, I would like to point out the top three legal fee issues that are usually associated with retaining a contract lawyer in St. Paul, Minnesota.

1. Payment Structure

There are three main models of payment that St. Paul contract lawyers use: hourly fee, contingency fee, and flat fee. The most common payment structure is hourly fee. This arrangement occurs where a contract attorney is paid based on how much time he spends on a case. If you’re paying your St. Paul contract lawyer by the hour, the agreement should set out the hourly rates of the business attorney and anyone else in this attorney’s office who might work on the case.

The contingency fee is relatively rare in a contract litigation setting, and virtually non-existent in the contract drafting and negotiations. This payment structure is characterized by payment to a contract lawyer of a mutually-agreed percentage of recovery (or contract amount) at the end of a case.

In a flat-fee arrangement, you pay an agreed-upon amount of money for a project Flat-fee payment is often used by St. Paul contract lawyers only in certain contract drafting situations. Usually, these situations are characterized by predominance of one party over another (for example, in employment context) or there has been an established consensus among parties (for example, in partnership agreement context). Flat fee, however, is less used where contract negotiation is required, and this payment structure is almost non-existent in contract litigation context (unless, a very large retainer is involved). Generally, flat fees are disliked by St. Paul contract attorneys due to its inflexibility. On the other hands, I have seen how a combination of a flat fee payment structure with hourly fees appeals to many clients while it reduces the inflexibility inherent in a simple flat-fee context.

Finally, as I just hinted above, it is possible to merge various payment structures to create a fee arrangement most agreeable to the parties.

2. Timing of Payment

Where hourly-fee arrangement is used, St. Paul contract lawyers usually bill their clients on a monthly basis. In a flat-fee arrangement, a contract attorney would prefer to receive at least half of the payment before he begins to work on a project. In any case, a retainer is usually required by St. Paul contract attorneys.

3. Retainer Fee

Most contract lawyers in St. Paul require their client to pay a retainer. Retainer can mean two different fee arrangements. First, retainer may be the amount of money a client pays to guarantee a contract lawyer’s commitment to the case. Under this arrangement, the retainer is not a form of an advance payment for future work, but a non-refundable deposit to secure the lawyer’s availability. Second, a retainer is simply the amount of money a St. Paul contract attorney asks his client to pay in advance. In this scenario, the lawyer usually deposits the retainer in a client trust account and withdraws money from it for the work completed according to the fee agreement. The fee agreement should specify the amount of the retainer and when the lawyer can withdraw money form the client trust account (usually, on a monthly basis).

Conclusion

Obviously, the three issues discussed above do not cover all of the issues associated with legal fees when you are hiring St. Paul contract lawyers. These three issues, however, are likely to provide the necessary background for you to understand the basics of the legal fee arrangements with your St. Paul contract attorney.

One of the key areas of our practice at Sherayzen Law Office is contract law. We are highly experienced in the matters of contract drafting, negotiation, and litigation. We also regularly offer our contract review and consultation services to our clients throughout Minnesota.

Contact Sherayzen Law Office NOW to discuss your contract with an experienced contract lawyer!

Understanding Your Contract: Top Seven Questions to Ask Yourself Before Signing a Contract

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The standard definition of a contract states that: a contract is a promise or set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. Therefore, an enforceable contract, whatever its type or form, inevitably creates rights and obligations. This is why it is so important to make sure you understand the contract before you sign it. Therefore, ask yourself the following questions before you bind yourself to an agreement with another party:

1. Do I understand exactly the extent, timing, and nature of my contractual obligations?

2. Do I understand exactly the extent, timing, and nature of the other party’s contractual obligations?

3. Do I understand exactly my rights under the contract and when I can enforce them?

4. Do I understand exactly the other party’s contractual rights and when they can enforce them?

5. Am I personally liable (i.e. your personal assets are at risk) for the promises made in the contract?

6. Is the contract enforceable?

7. If the contract is enforceable, where and under which state’s or country’s laws can it be enforced?

There are many more detailed questions that should be asked before you sign a contract. Never, however, sign a contract without at least positively answering these seven questions.

Obviously, it is best if a contract attorney reviews your agreement before you sign it. Sherayzen Law Office has extensive experience in drafting and reviewing a wide variety of U.S. and international contracts, including but not limited to: confidentiality agreements, disclaimers, distributor agreements, sale of goods contracts, personal services contracts, general employment contracts, independent contractor agreements, franchise agreements, manufacturing agreements, non-compete agreements, lease agreements, licensing agreements, operating agreements, partnership agreements, and sale/purchase of business contracts.

Call Now at (952) 500-8159 to discuss your contract with a Minnesota and international contract lawyer.

Fee Agreement Arrangements with Contract Lawyers in Minneapolis: 5 Most Important Issues

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In this article, I will discuss five most important issues that you need to know before you sign a fee agreement with contract lawyers in Minneapolis.

1. How is the lawyer’s fee paid? There are three main models of payment that lawyers use: hourly fee, contingency fee, and flat fee. The hourly fee is the most common form of contract lawyer compensation and it is fairly simple – the contract attorney is paid only based on the time he spends on the case. If you’re paying your contract lawyer by the hour, the agreement should set out the hourly rates of the contract attorney and anyone else in this attorney’s office who might work on the case. The contingency fee, where the contract attorney takes a percentage of the amount the client wins at the end of the case, is almost never used by contract attorneys in Minneapolis. In the unlikely case that this latter type of fee arrangement is used, the most important issue to understand is whether the contract lawyer deducts the costs and expenses from the amount won before or after you pay the lawyer’s percentage. Obviously, you will pay more in attorney fees if your contract lawyer deducts the litigation costs based on the latter scenario (i.e. after you pay the lawyer’s fee). Finally, in a flat fee arrangement, you pay an agreed-upon amount of money for a project. For example, you pay $3,500 to your contract attorney to create a standard independent contractor agreement. While a flat fee arrangement is possible in a small project, it is generally disliked by contract lawyers in Minneapolis because it often lacks the necessary flexibility to account for the client’s individual legal situation. Usually, some sort of an additional payment arrangement is built into such fee agreements to make sure that the balance between the client’s legal needs and the contract attorney’s fees is maintained.

Remember, usually, you will have to pay out-of-pocket expenses (e.g. long-distance calls, mailing costs, photocopying fees, lodging, etc.) and litigation costs (such as court filing fees) in addition to your contract lawyer’s fees.

2. Does the agreement include the amount of the retainer? Most contract lawyers in Minneapolis require their client to pay a retainer. Retainer can mean two different fee arrangements. First, retainer may be the amount of money a client pays to guarantee the lawyer’s commitment to the case. Under this arrangement, the retainer is not a form of an advance payment for future work, but a non-refundable deposit to secure the lawyer’s availability. Second, a retainer is simply the amount of money a contract attorney asks his client to pay in advance. In this scenario, the lawyer usually deposits the retainer in a client trust account and withdraws money from it for the work completed according to the fee agreement. The fee agreement should specify the amount of the retainer and when the lawyer can withdraw money form the client trust account (usually, on a monthly basis).

3. How often will you be billed? Most contract attorneys in Minneapolis bill their clients on a monthly basis. Sometimes, however, when the project is small, the fee agreement will specify that you will be billed upon completion of the case. In a flat-fee scenario, it is likely that the client will be obligated to pay either a half or even the whole amount immediately as a retainer. It is wise for a client to insist in paying some part of the fee upon completion of the case to retain a degree of control over the case completion.

4. What is the scope of the contract attorney’s representation? Most contract lawyers in Minneapolis will insist on defining their obligations in the contract. The most important issue here is to state what the contract attorney is hired for without defining it either too narrowly or too broadly. Usually, a fee agreement should specify that a new contract should be signed if you decide to hire this contract lawyer to handle other legal matters.

If you are hiring a large or a mid-size law firm, beware that the partners in a law firm often delegate some or all of their obligations to their associates or even their staff. While the partners retain full responsibility for the case, there is a danger that important parts of it may be delegated to far less experienced associates. Besides the potential quality issues, there is also a concern that you would be paying a large hourly fee for a first-year associate’s work. It is important to insist that the fee agreement specifies what, if any, type of work is being delegated to the associates, the corresponding billing rate of each associate involved, and who carries the responsibility for the whole case.

5. Who controls what decisions? Whether this information should be included in the fee agreement really depends on the case and on an attorney. Generally, contract attorneys in Minneapolis let the client to make the important decisions that affect the outcome of the case (such as: acceptance or rejection of a settlement offer, commencement of a lawsuit, financial and personal contractual issues, et cetera). All of the decisions with respect to the legal issues (such as: where to file a lawsuit, what motions should be filed, what should be in the contract, negotiation tactics, etc.) are usually taken by the contract lawyers. If there are any changes to this arrangement (for example, you want your lawyer to make certain decisions with the respect to the outcome of the case), you should insist that these modifications be reflected in the contract.

Generally, before you sign the fee agreement, contract lawyers in Minneapolis will discuss with you many more topics than what is covered in this article. The five issues explained here, however, are crucial to your understanding of how the business relationship with your contract attorney will work. Before you sign the fee agreement with your lawyer, you should ask at least these five questions and make sure that the answers are complete and to your satisfaction.

Contract Lawyers in Minneapolis: Three Most Important Questions You Should Ask

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When you are about to hire a contract lawyer to help you with a contract issue, there are three fundamental questions that you need to ask him.

1. What percentage of the practice is devoted to the contract law? The purpose of this question is two-fold. First, you will figure out whether this contract lawyer likes handling cases in your area of law. If a Minneapolis attorney devotes more than 15-20% of his practice to contract law, you know that he likes this area of law and will be enthusiastic about your case. This means that, in addition to his general due diligence obligations, this contract lawyer will have a professional interest in your case. Second, generally, a contract lawyer who devotes 20% or more of his practice to contract law is likely to have good experience in this area.

2. How will I be billed? Generally, Minneapolis contract lawyers will bill you on the hourly basis. They will provide you with a general estimate of your future expenses, which, understandably, will vary with the progress of the case. In contract drafting situations, a contract attorney may also offer a flat fee option, but, usually, there will be an additional charge when contract modifications are likely. Flat fees are almost never used in contract litigation.

The more important issue with regard to this question is the manner in which you will be billed. Here, the practice varies among contract lawyers in Minneapolis. Some contract attorneys may require you to supply a large retainer which is later deposited in a client’s trust account; if the retainer is depleted, your lawyer may ask you to replenish it later. Other contract lawyers will require a smaller retainer and will then bill you on a monthly basis. If the latter option is proposed by your contract lawyer, you should ask for a sufficient time period (usually 10-14 days) to pay your bill. A mix of these options is also available. Finally, in a contract drafting situation, some contract attorneys require a large flat fee right away with modifications paid for later upon completion of the contract. You will find that contract lawyers in Minneapolis, especially solo practitioners, are rather flexible in their choice of the payment mode, but, once the fee agreement is signed, they tend to be firm in insisting that you comply with the terms of the agreement.

3. Will the contract lawyer devote his personal attention to your case? This question is very important, especially in the context of mid-size and large law firms, because in those firms the partner with whom you singed the agreement will generally delegate some of his responsibilities to his associates, who are generally less experienced in the area than the partner. In this case, you should insist that the contract attorney with whom you signed the agreement devotes his personal attention to your case and delegates only marginal matters to his associates. Generally, contract lawyers in Minneapolis who operate as solo practitioners or in small firms do not have similar problems.

The other important issue involved in this question is whether your contract attorney is generally responsive to your calls and keeps you up-to-date with respect to the progress of your case. Most contract lawyers in Minneapolis are very busy people; yet, you must insist that you would be able to communicate with them. In my practice, I devote a great deal of energy and time to make sure that my clients do not feel neglected and have the latest information about their case. For example, my firm has a rule of returning most calls within two hours after the client calls. I also make sure that the communication details are discussed during the first meeting. Usually, in additional to bi-weekly phone updates, I also send out a monthly written update, which generally includes a brief summary of events and copies of all relevant documents and materials, including communications with the other party.

In conclusion, by asking these three questions to contract attorneys in Minneapolis, you will make sure that the contract lawyer you are choosing is congruent to your interests and character.