FTC FACTSfor Consumers

SERVICES

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FEDERAL TRADE COMMISSION FOR THE CONSUMER

www.ftc.gov

oing through a divorce? Launching a business? Hurt in a car

accident? Writing a will? Facing a lawsuit? In any of these

situations, you may consider hiring a lawyer to advise you or

represent your interests. The Federal Trade Commission (FTC) offers the

following advice to help you be smart when you choose — and use — legal

representation.

Know Who Youíre Dealing With

Many lawyers specialize in a particular area of the law. Be sure your attorney has

relevant experience. An attorney who regularly drafts wills may not be the best

choice to represent you in a courtroom if the subject is an auto accident. If

family, friends or co-workers have hired a lawyer for a similar reason, ask them

for recommendations. If not, check with your state and local bar associations.

Some groups offer lawyer referral services for their members.

Need a Lawyer?

Judge for Yourself

G
Facts for Consumers

Do Your Research

Try to talk with more than one lawyer before

you choose the one to represent you. But find

out if you will be charged for an initial meeting.

Be prepared to describe your problem in a brief,

clear summary. Ask the various lawyers about

their experience, their fees, what your options

might be, your chances of success, who will do

the work, and when the problem might be

resolved.

Know The Real Deal

Once you decide to hire a lawyer, be sure you

understand what you’ve both agreed to. How

often will the lawyer update you? What information will you be required to provide? Do you

understand all your options? What will the total

cost be? If you’re not clear on exactly what the

lawyer is doing, ask for clarification. Although

your chances of success can’t be guaranteed,

discuss approaches to your case. You should be

comfortable with your lawyer’s approach to

your case. Be up front with your lawyer on all

the facts and circumstances surrounding your

situation. You may want to get the agreement

with your lawyer in writing.

Fees and Costs

Before any work begins, ask what the cost will

be for the lawyer’s services and whether you

will be responsible for other fees and charges.

State ethics rules require lawyers to charge a

reasonable fee. The American Bar Association

advises that lawyers explain their fees, preferably in writing, within a reasonable time after

beginning to represent you. And some state bars

require that lawyers put their fees in writing

before they take a case. Your lawyer may charge

you extra for copying documents, courier services, court filing fees, or research services. Be

sure you understand what you will be charged

for and how much.

Payment Arrangements

Remember the most expensive lawyer is not

necessarily the best one for you. Nor is a “bargain” rate always a great deal. Look for the best

balance of experience and cost. You may want

to ask your lawyer if a junior lawyer or paralegal can perform some of the work to lower your

costs. You also may want to ask if there are

tasks you could perform yourself to save time

and money. For example, you might be able to

copy, pick up or deliver certain documents. A

lawyer may charge you a flat fee for a particular

service or offer alternative methods of payment.

Each has benefits and risks.

Contingency fees. A contingent fee arrangement means that your lawyer gets a percentage

of whatever money you receive as resolution of

your case. If you receive no money, then your

lawyer collects no fees. However, you may owe

charges for court fees, copying, and hiring

expert witnesses. If you have very little money

to pay hourly fees, it may be appropriate to

negotiate a contingency fee with your lawyer.

But before agreeing to a contingent fee, consider

that:

• The size of a contingency fee, usually a

percentage of any money you receive to

resolve the case, is always negotiable.

Sometimes you can negotiate a sliding scale

fee (for example, 30 percent of any recovery

up to $10,000; 20 percent of any recovery up

to $50,000, etc.). Remember that there’s no

particular percentage of a consumer’s recovery that constitutes a “standard” or “official”

fee.

• The size of the contingency fee should

reflect the amount of work that will be

required by the attorney. Some cases are

straightforward; others can be novel or

uncertain. You may want to ask whether the

case is likely to settle quickly and whether
Facts for Consumers

government agencies will gather significant

amounts of evidence. A fee arrangement

sometimes can be negotiated with a lower

percentage for a quick settlement and a

higher percentage if it goes to trial. Be sure

you know exactly what is covered in your

agreement. Your state also may have rules

about maximum contingency fees; check

with your state’s bar association.

Flat fee. You pay the lawyer a set dollar

amount for a particular service, like writing a

will. If the matter is simple and straightforward,

say, an uncontested divorce or a simple bankruptcy filing, many lawyers often charge a flat

fee. Be sure to find out exactly what the flat fee

includes.

Hourly rates. The lawyer charges a set fee per

hour. Your final cost will depend on how long

it takes to complete your work. Hourly rates

vary according to a lawyer’s expertise and

experience. An experienced lawyer may charge

a higher hourly rate but may complete the work

more quickly. Because the hours worked on

your case can add up quickly, you should ask for

a written estimate of the number of hours necessary to complete your case to get an idea of what

your final bill might amount to.

Retainer. Your lawyer may ask you to pay a

fee up front. A lawyer can use this fee – often

called a retainer – as a down payment on expenses and fees. It is important to review your

account from time to time to understand how

your money is being spent.

Public Legal Services. Depending on your

financial situation, you may qualify for free or

low cost legal services through special organizations. For example, you may be eligible for free

representation in landlord-tenant or divorce

cases. Look in your local telephone directory

for legal services organizations or legal clinics

associated with accredited law schools.

Pre-paid legal plans. Some organizations offer

pre-paid legal plans that work like an insurance

policy. In exchange for a monthly fee, you

receive certain legal services as you need them.

However, the fees charged and the services

covered vary with each state’s law and the

particular plan. Check out any plan carefully to

be sure you know what’s covered and whether it

makes sense for your situation.

Keep Good Records

Chances are your lawyer will ask you for documents that relate to your case. Keep copies if

you give your lawyer the originals. Ask for

copies of all other important documents. When

you get a bill from your lawyer, review it carefully and ask about any charges that are unclear

to you.

Class Actions

In a class action, a court decides that a group of

people — a class — may have been harmed in a

similar way. You may receive notices asking

whether you want to be part of the lawsuit.

Read the notice carefully. If you take no action,

you typically become a member of the class by

default. If that’s the case, you are bound by the

outcome of the class action lawsuit; you can’t

bring your own case; and you won’t have direct

control of the lawsuit. But you could raise some

objections about any settlement or the amount of

the attorney’s fees. Should you choose not to

become a member of the class, you preserve the

right to bring your own case and control it

directly. But you’ll have to hire — and pay for

— your own lawyer and you won’t share in any

benefits that may be won in the class action.

Service

If you’re not happy with the work your lawyer

has performed on your behalf, you may fire him

or her at any time. In some kinds of cases, you

may need the permission of a judge to do this.
Federal Trade Commission

Bureau of Consumer Protection

Office of Consumer and Business Education

June 2002

F C EDERAL RADE OMMISSION T FTC OR HE ONSUMER

1-877-FTC-HELP www.ftc.gov

Facts for Consumers

Weigh the costs and benefits of starting over with

a new lawyer. Your case may be delayed and

could cost you more. Lawyers are subject to

state ethics rules and are required to charge

reasonable fees; if you think your lawyer didn’t

treat you fairly, represent you adequately, or

charged you too much, communicate with him

and try to work out some resolution. If trying to

resolve the matter directly with your lawyer is

unsuccessful, consider filing a complaint with

your state or local bar association. In some

states, arbitration is available to mediate such

disputes. Remember that if you are satisfied with

the work your lawyer has done for you, communicate that message, too.

The FTC works for the consumer to prevent

fraudulent, deceptive and unfair business

practices in the marketplace and to provide

information to help consumers spot, stop and

avoid them. To file a complaint or to get free

information on consumer issues, visit

www.ftc.gov or call toll-free, 1-877-FTCHELP (1-877-382-4357). The FTC enters

Internet, telemarketing, identity theft and other

fraud-related complaints into Consumer Sentinel, a secure, online database available to

hundreds of civil and criminal law enforcement

agencies in the U.S. and abroad.