Month: March 2015

“How Much is This Going to Cost Me?” – Understanding How Attorney’s Fees Work

Posted on by Louis Fine

Either you or someone you know has likely found themselves in one of these situations at some point: you’re facing a health problem and want to see a doctor, or you know it’s been way too long since you’ve been to the dentist, or that leaky roof, broken air conditioner, or sputtering car is in desperate need of repair – but you put it off or never take care of one of these vital needs because you are worried about how much it’s going to cost.

The same thing happens when people are facing a problem or issue that requires the assistance of an attorney, often for the first time in their lives. But just like the foregoing problems won’t go away on their own, and likely will only get worse, ignoring a legal problem or failing to get help because you are worried about how much a lawyer will cost you may only end up costing you more in the long run. The reality is that a lot of folks don’t understand how attorneys charge for their work; sometimes, speaking with or even retaining an attorney to handle your matter won’t cost you anything at all.

Before you make a decision as to whether or not to reach out to a lawyer for help, it is important to understand the different kinds of attorney’s fee arrangements and which one may apply to your case. Here are the most common fee arrangements:

  • Initial Consultation. The first step in your relationship with a lawyer is usually your first meeting, or initial consultation, in which you discuss your specific problems, concerns, and questions with the lawyer and explore whether or not to retain the attorney to handle your matter. While some attorneys may charge you for that first meeting at a flat rate or an hourly rate (as discussed below), many attorneys, including myself, provide for free initial consultations regardless of whether or not you choose to hire the lawyer after your meeting.
  • Contingency Fee. When you see a lawyer in a TV commercial exclaim something like “You pay nothing unless we recover damages for you,” they are speaking about a contingency fee arrangement. Primarily used in personal injury, medical malpractice, Social Security Disability, and workers’ compensation matters, this arrangement means that if the attorney fails to recover any compensation for you either through trial or settlement, you are not obligated to pay any attorney’s fees (though you may be on the hook for out of pocket costs). If you do obtain a recovery, the attorney will take a percentage of that amount (most often 33⅓%, but sometimes higher or lower depending on the law or the agreement) as their fee and also reimburse themselves for any costs incurred during the case.
  • Flat Fee. For simpler matters like preparing a basic will, a standard bankruptcy matter, or uncontested divorces, an attorney may charge a flat fee, that is, a set amount up front for completing the requested work or for particular aspects of the matter.
  • Hourly Rate. This is perhaps the most common fee arrangement, and the one used most often in litigation matters. The attorney will charge you a dollar amount for every hour of time they work on your matter. How many hours your matter will require and how much per hour the attorney may charge for their work will depend on a number of factors, such as the complexity of the matter, the attorney’s experience, and the average rate in the community in which the attorney practices.
  • Retainer Fees. A “retainer” is essentially a deposit a client gives to an attorney at the beginning of the attorney-client relationship, with the funds being drawn upon to pay the attorney’s fees as the matter proceeds. These funds are usually deposited into a client trust account only to be applied to fees incurred for that specific client’s matter. At the conclusion of the case or relationship, any unused portion of the retainer will be returned to the client.

For those who are involved in a lawsuit, it is important to understand that most of the time (unless a contract, court order, or specific statute says otherwise), the prevailing party will not recover or recoup their attorney’s fees and costs from the losing party at the conclusion of the case.

Whatever the fee arrangement, it is important that you discuss and fully understand how the attorney will bill you for their time and their work, and that a written agreement be executed clearly explaining how the fee arrangement will work. Don’t simply ignore or put off any pressing legal matters; contact an attorney to see what arrangements can be made that will allow you to address your needs.

Consistency, Clarity, and Calculators: New Formula for Spousal Maintenance in Illinois

Posted on by Louis Fine

A new Illinois law effective on January 1st of this year establishes for the first time specific formulas for calculating the amount and duration of spousal maintenance payments after a divorce.

While child support payments in Illinois have long been determined by statutory factors and formulas, spousal maintenance awards have been subject to wild inconsistency, leading to similarly situated couples receiving vastly different outcomes and making it difficult for the individuals and their attorneys to predict and plan for the ultimate order that will govern their obligations.

The amendments to Sections 504 and 505 of the Illinois Marriage and Dissolution of Marriage Act provide guidelines for judges in the event that they determine that a maintenance award is appropriate (based on the factors listed in Section 504(a)).

Calculating the Maintenance Amount

Notably, the new guidelines only apply where the combined gross income of the parties is less than $250,000 and no multiple family situation exists. For couples within that threshold, the new law provides that a maintenance award should equal 30 percent of the payor’s gross income, minus 20 percent of the payee’s gross income.

Example:

  • Husband’s annual gross income = $100,000 (30% = $30,000)
  • Wife’s annual gross income = $45,000 (20% = $9,000)
  • $30,000 – $9,000 = $21,000 in annual spousal maintenance to wife.

One nuance is that the new law provides that regardless of the result of the foregoing calculation, the resulting award cannot be greater than 40 percent of the parties’ combined gross income when added to the payee’s gross income. The higher the payor’s income is in relation to the payee’s, the less likely the 40-percent rule is to limit the payee’s award.

Duration of Maintenance

How long a spouse will be required to pay maintenance is based on the duration of the marriage.  A judge is to use the following formula in determining how long payments must continue:

  • Married 0 – 5 years = 20% of the duration of the marriage
  • Married 5 – 10 years = 40% of the duration of the marriage
  • Married 10 – 15 years = 60% of the duration of the marriage
  • Married 15 – 20 years = 80% of the duration of the marriage
  • 20 or more years = court has discretion to order either permanent maintenance or maintenance equal to the length of the marriage.

Under this formula, for example, a 5-year marriage would result in a 1-year maintenance obligation, while a 10-year marriage would result in 4 years of maintenance payments.

Judge May Deviate From Guidelines But Must Explain Why

While a judge is not required to follow the new guidelines, if they deviate from them they must specifically state in their findings the amount of maintenance or duration that would have been required under the guidelines and the reasoning for any variance from the guidelines.

In addition to the new formulas, the amendment to the law also:

  • Prevents a judge from ordering unallocated maintenance unless the parties agree to it;
  • Authorizes a judge to permanently bar maintenance for marriages of 10 years or fewer;
  • Specifies that judges must subtract maintenance payments from the payor’s income for purposes of calculating child support.

The hope is that the new law will make it easier to predict and determine spousal maintenance amounts and thus reduce the amount of both acrimony and uncertainty involved in finalizing such amounts during divorce proceedings.

If you have questions or concerns regarding the new law or spousal maintenance generally, please give me a call at (312) 236-2433 or fill out my online form to arrange for a consultation.

This article has been prepared by the Law Offices of Louis R. Fine for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.