Factors Impacting an Attorney’s Hourly Cost
There are several factors to consider when breaking down the contract attorney hourly rate. Depending on the location and what needs to be done, the rates will vary. The most expensive cities for contract attorneys are typically New York City, Washington DC, and Atlanta. In these metropolitan areas, rates can start as high as $50 per hour and reach close to $100 per hour.
In addition to your geographic location, what type of contract work you need performed will impact the rates that you pay. A court reporter will usually be a bit more than an immigration attorney. A litigator costs more than a real estate attorney, and so on . Certain legal specialties will cost more because of demand, and the researchers at LawCrossing are always sure to let you know when a new, affordable contract position opens up.
Contract attorneys are also charged a premium during peak times. For example, litigation is typically busiest during summer and holidays, meaning even higher fees for contract attorneys.
It is sometimes possible to negotiate rates immediately if you ever receive what you might consider to be an unreasonably high rate. You can also sometimes offer a bit less for reduced pay. There are several options that can be talked over directly with the attorney or agency.
Average Cost of a Contract Attorney Per Hour
According to the Bureau of Labor Statistics, which is probably a pretty good source, contract attorney hourly rates are as follows:
General $60.73
Criminal $55.87
Bankruptcy $55.04
Immigration $53.71
Real Estate $51.25
Intellectual Property $50.47
Labor $50.36
Tax $49.93
Personal Injury $48.89
Constitutional $47.78
International $45.72
Wills-Probate $43.09
Labor and Employment $41.07
Accepting that contract attorneys do not perform equally, nor are their practices areas as full (or as active) as their staffs, their practice rates appear to be just above $50 an hour with the exception of generalists.
To get an idea of how contract attorneys are paid across the country, here are some aggregations by region:
New York $69.82
California $60.17
Washington, D.C. $58.99
Connecticut $54.66
Florida $54.06
Illinois $53.72
Massachusetts $52.05
Texas $46.79
Pennsylvania $43.12
Michigan $41.78
Arizona $39.41
North Carolina $36.83
Georgia $35.50
Tennessee $34.50
Warranty paid: 0
Half agreed. This is a good source for hourly rates.
How Contract Attorneys Determine Their Hourly Rate
Our major focus at BCG is on contract attorney placements. We have an extensive network of contract attorneys that work with us from coast to coast, and we are constantly talking to them about various issues of interest to our clients and the legal community in general. One question that has been coming up quite often recently is what factors affect the hourly rate charged by contract attorneys. This is an important issue for working with contract attorneys, as these rates can vary widely from coast to coast, as well as with each individual contract attorney.
32% of recent surveys returned by contract attorneys indicated that the most important factor in determining their hourly rate was the research and writing burdens of the project. With most contract attorney projects involving some form of research and writing, this is not surprising. Virtually all contract attorneys enjoy research and writing, however; the more compelling question is how to set their price. Contract attorneys make the following considerations when determining their hourly rate.
First, contract attorneys have to consider their overhead expenses. The overhead expenses of a hiring contract attorney can vary widely. Overhead is made up of many different factors, including office space, equipment, utility costs, phone systems, interpreters, and parking. As these factors are very different in each city or region, the type of rate that can be supported by overhead would also vary.
Second, contract attorneys calculate the amount of fees generated for any particular contract attorney project, and how their fee stacks up against the fees generated using alternatives such as hiring additional associates or outsourcing. Most contract attorneys find that while contracting is cheaper than hiring an additional associate or outsourcing, the discrepancy in fees is not enough to justify moving in a new direction since few contract attorneys will be able to generate additional work to make up for the difference in hourly rate.
Third, contract attorneys compare their rate to that of competitors, as well as to the amounts that they’ve charged in the past for similar projects. Contract attorneys are generally reluctant to raise their rates, particularly where clients had an excellent experience on past projects.
What to Expect During Negotiation
One helpful strategy for both clients and attorneys is to ask about the projected scope of work at the outset of the engagement. This information may lend perspective to the amount that is being charged and the particular skill sets that are needed. If the estimated scope of work is high, there could be an underlying need for another type of legal resource. For instance, an attorney may find that a client needs more paralegal support in organizing documents, or that a lead attorney should be focusing on more substantive legal issues rather than gathering information or meeting with the client. In these instances, the attorney’s hourly rate may not be a point of contention.
Clients can also negotiate with their attorneys to create an agreement that establishes a cap on rates and/or hours. Some attorneys will decrease their hourly rate as they become more familiar with the case. Others modify their rate based on the complexity of the project. In addition, certain attorneys charge different rates based on the type of work being performed . Many firms have a universal policy for reviewing the rates of contract attorneys on a periodic basis. Some attorneys will be willing to negotiate a reduced rate for repeat engagements or if they seat several associates.
Voluntary resources, such as the Association of Corporate Counsel and the International Practitioners of Law & Managerial (IPLM) have devoted lengthy treatises towards understanding the contract attorney hourly rate. Resources are often organized according to whether the attorney is employed on a temporary, part-time, full-time basis or if their work is on a per-project basis. These valuable insights aim to coordinate the mutual objectives of both client and attorney. For example, one of the goals of the contract attorney hourly rate is to provide the attorney with the financial security they need to be successful. In some instances, contract attorneys are viewed as experts in a particular field, or as transition attorneys who are given the time to document tedious processes. The bottom line is that the contract attorney hourly rate must make sense from a business perspective for both the client and the attorney.
Contract Attorney Rate Trends
Flat Fees and the Move Away From Billable Hours
The growth of the flat fee market over recent years has been well publicized, as have the many benefits that these arrangements can deliver to both attorneys and their clients. Even the largest firms, offering "traditional" services and focusing on hourly fee billing, have been looking at all the ways to use flat fee structures as a part of what they offer to their clients. In a recent report released by Thomson Reuters’ Peer Monitor, 45% of law firms were reported to be using flat fees for certain types of work in 2017. This is up from less than 30% in 2013. This trend will only increase over time, especially as more clients demand it. The most common types of work billed on flat fee arrangements involve commercial transactions and M&A work.
Retention and Premium Offers
In order to retain counsel, many companies will pay "retainer" fees to cover a particular amount of hours or one-off projects, or to exclusively work on their matters in a given window of time. Retainer fees guarantee that an attorney will be "always-on" for the client’s projects, and that the client does not need to go through the trouble of finding and onboarding a new firm or attorney each time it needs some specialized legal services. These retainer fees are usually fairly low, but they guarantee total commitment from the attorney, while simultaneously offering the attorney a consistent amount of revenue during the course of the contract. This is why increasingly law firms are now offering services to clients or individuals on a subscription basis, allowing them to sign up for bespoke services on a month-to-month basis. With plenty of flexibility built in, clients have an additional incentive to go with these services over the traditional hourly options.
Alternative Fee Structures
Alternative fee arrangement (AFAs) is an umbrella term referring to any of the various forms of fixed or contingent fee structures beyond the traditional hourly billing rate structure, with the goal of bringing predictability to client spending. Some of the more common AFAs include: The percentage-based contingency fee is generally used in personal injury ("PI"), medical malpractice, class action, and civil rights cases. Contingent fee agreements have long been common in PI work because many individuals cannot pay multi-thousand dollar retainers out of pocket to a PI attorney for something that has not yet occurred. The smart PI attorneys charge on a contingent fee basis, which allows them to take the case without any upfront costs to the client. It also allows them to take cases that may be challenging and lengthy litigations because while the PI attorney is working on the case, he or she is also losing time and profit from not being able to take other cases or work another job. The benefit to the client is that the case costs them nothing unless the attorney wins their case, so they are willing to engage attorneys in risky litigation that could have a big financial upside. Contingency fee arrangements are becoming more and more popular in non-Personal Injury areas of law, such as employment, civil rights, and consumer class action claims. For the client, the risk is the same as traditionally considered risky as with a PI case, but the upside for the attorney is that they may be able to get a much larger contingent fee. If the client wins a large class action lawsuit, the attorney’s contingent fee can be quite significant. Many start-ups and other companies will pay much more in stock than cash to lawyers and are gaining traction in the overall market as the number of employees using alternative payment methods over traditional hourly rates is expected to grow from 12% to 48% between 2018 and 2022, according to Thomson Reuters.
How to Learn More About the Cost of Legal Services
To help you better understand the components of the cost of legal services, there are a number of resources available. First, there are law firm billing rate calculators, like this one from Zola Media. The Shilling Law Firm also has this table that breaks down billing rates by region and area of law. Finally , Lex Machina, which tracks the litigation attorneys, has provided a Contracts Litigation Attorney Rate Rankings 2014 that lists the average hourly rate in various courts.