Hourly, flat and contingency fees: what the terms mean

Illinois lawyers usually charge in one of three ways. Rule 1.5 of the Illinois Rules of Professional Conduct requires every fee to be reasonable and the basis of the fee to be explained to you, preferably in writing.

Hourly

You pay for the time spent on your matter, usually billed in fractions of an hour. Rates differ for partners, associates and paralegals. Hourly billing is common in family law and business disputes. Ask for the rate of everyone who may work on your file and how often you will be billed.

Flat fee

One price for a defined piece of work, such as a will package, an uncontested matter or a residential real estate closing. Ask exactly what the price includes and what happens if the work turns out to be bigger than expected.

Contingency fee

The lawyer is paid a percentage of what you recover, and usually nothing if there is no recovery. Contingency fees are common in personal injury cases. Under Rule 1.5(c), a contingency fee agreement must be in writing, signed by you, and state how the fee is calculated and how costs are handled. Rule 1.5(d) does not allow contingency fees in criminal cases or in divorce cases where the fee depends on securing the divorce or the amount of support or property.

Workers' compensation fees are capped by statute (generally 20 percent of the compensation awarded) and approved by the Illinois Workers' Compensation Commission.

Retainers

A retainer is money paid at the start. Depending on the agreement it may be an advance against future hourly bills, held in the firm's client trust account until earned, or a fee that secures the lawyer's availability. The agreement should say which kind it is and whether any unused part is refunded.

Practical tips

• Get the fee arrangement in writing before work starts.
• Ask what costs are separate from the fee.
• Keep every invoice and ask about anything you don't understand.

General information, not legal advice. Source: Illinois Rules of Professional Conduct, Rule 1.5; Illinois Workers' Compensation Act, 820 ILCS 305/16a.