This blog very briefly discusses an attorney’s fee agreement including contingency fee agreements.
When a client approaches an attorney seeking legal advice and services, the attorney is entitled to charge the client a fair and reasonable fee for professional legal services. The fee charged by the attorney will depend on a number of factors, including but not limited to, the attorney’s experience, the urgency of the work; the difficulty of the work requested to complete and whether the attorney specializes in the type of law that the client is seeking the legal advice in. The urgency of the matter could also determine the agreed fees charged out to the client.
There are many different types of fee agreements, but the two most common types are based on:
- an hourly rate; or
- a no win/no fee basis known as a contingency fee agreement.
A fee agreement is also known as a mandate agreement. It is a signed contract and it regulates the payment terms between the attorney, the attorney’s firm and the client.
Hourly Based Fee Agreement
The first type of fee agreement that will be discussed is a fee agreement based on an hourly basis.
The attorney and the client would agree to a fee arrangement on an hourly basis. The fee agreement will clearly stipulate what the attorney’s hourly charge is. The attorney is entitled to charge for time spent per hour or pro rata thereof on a particular matter, including but not limited to, research; appearances in court; time travelling to and from court; meetings; time on the telephone with clients and third parties; drafting and perusal of pleadings, documents and letters.
The fee agreement will further indicate and require that all third party payments and an attorneys out-of-pocket expenses, also known as disbursements, be paid by the client. These fees are most commonly advocates fees, sheriff fees and correspondent attorney’s fees. The client’s attorney will be charged separately by the third party for the service provided to them and these fees will be passed on to the client and will be set out in the invoice. This disbursement is added to the attorney’s invoice and the third party invoice is usually attached to the attorney’s invoice when presented to the client for payment.
Before an attorney commences on a matter, the client may be requested to deposit a certain amount of money into the attorney’s trust account to ensure all fees and disbursements will be covered. This is known as a retainer or a deposit. As soon as the retainer has been depleted the attorney may request further payments to continue with the matter.
An attorney may present an invoice to a client on a monthly basis, when a milestone has been achieved or even at the end of a matter. The agreed fee agreement will explain to the client when he or she will be invoiced and when payments are due.
Should a client disagree with payments due, or their invoices are too general, clients are entitled to request an itemised bill from the attorney’s firm. It is important to thoroughly check any fee agreement when signing, as some fee agreements allow for attorney’s to recover higher costs should costs in an itemised bill be more than the original invoice.
Contingency Fee Agreements
The second type of fee agreement discussed is a contingency fee agreement.
The attorney may agree to take the client’s matter on a contingency in terms of the Contingency Fee Act, Act of 66 of 1987 (the “Contingency Fee Act”). The Contingency Fee Act allows an attorney to act in proceedings of any nature, but specially excludes all Family Law matters and Criminal Matters. In other words, no attorney may conduct a Family Law or Criminal Law matter on a contingency fee basis.
The contingency fee concept is simple. The attorney may charge a success fee not more than 100% of the attorney’s normal fee for legal services rendered in a particular matter, or up to a maximum of 25% of the capital sum awarded (if sounding in money) only if that matter is successful. Some contingency fee agreements may require disbursements be paid by the client upfront. However, an advocate may agree to provide his or her services also on a contingency fee basis.
In the constitutional case of Ronald Bobroff & Partners Inc. v De La Guerre; South African Association of Personal Injury Lawyers v Minister of Justice and Constitutional Development CC  ZACC 2 ruled that for a contingency fee to apply between an attorney and a client, the attorney and the client are required to enter into an prescribed format agreement as set out in the Contingency Fee Act. A copy of the contingency fee agreement as prescribed by the Contingency Fee Act, can be found on the Legal Practice Council website here.
Paizes Attorneys Fee Agreements
All matters taken on by Paizes Attorneys are done on a Fee Agreement basis, and thus we take deposits before the commencement of any matter. Paizes Attorneys provides clients with detailed invoices on a monthly basis that are itemised.
For any further queries, kindly contact Paizes Attorneys.