Evolution of Attorney Fees in the United States

In the 17th Century, most states capped legal fees based on the attorney’s area of practice. For example, there would be a cap for divorce, a cap for real estate transactions and a cap for criminal representation. Attorneys would therefore have to compete heavily for clients based on their skills because it wasn’t easy for an attorney that charged less than the cap to make a living. That’s why attorneys lobbied heavily for additional fee options and developed innovative ways to make more money. Most Queens accident attorneys use a contingency retainer, so you don’t have to pay anything until you collect money making it possible for even the poorest injury victim to obtain representation.

The Rise of the Contingency Fee

A Queens catastrophic injury attorney may need to spend hundreds of hours on a case, making the cost of representation unaffordable by most injury victims without a contingency fee arrangement. That’s why the legal profession developed what they called a “success fee” during the 19th Century. The fee caps were still in place, but it became accessible and legal to charge a success fee in addition to the capped amount. By the early 20th Century, the American Bar Association codified the “success fee” as what we call the contingency fee, based on the notion that this is the most ethical way to bill clients for legal services. For riskier cases or cases where the goal was not to collect money, such as criminal matters, attorneys would skirt the rules and demand a retainer before they began work. Most Queens accident attorneys handle cases on a pure contingency retainer without requiring a retainer.

The Backlash

In the 1930’s a powerful backlash turned attorney billing on its head. The contingency fee fell out of favor and the “capped” fee structure became the “base” fee structure. This meant that instead of protecting clients from being overcharged, the laws required that lawyers must be charged a minimum amount for each type of case. Lawyers that accepted less money were subject to a fine and the ABA’s model code considered it unethical to charge clients too little money. The rationale was that charging clients too little led to a reduction in the prestige of the profession due to low quality work. Thankfully, this lopsided system was short-lived because it was extremely unfair to injury victims that were unable to work and had expensive medical bills to pay. That’s why Queens catastrophic injury attorneys were sometimes willing to use contingency retainers even though they were considered unethical at that time.

The Rise of the Billable Hour

In the 1950’s, the ABA built on the concept of base fees to consider how keeping track of hours could justify higher fees for attorneys. The Supreme Court backed this up by holding that setting “base” or “capped” fees for legal services violated antitrust laws because it was a form of price fixing. This led attorneys to beginning to charge for their time in the form of the billable hour. In addition to billable hours, attorneys were allowed to charge contingency fees for certain types of personal injury matters, including medical malpractice.

Modern Attorney Billing

The laws governing attorney fees are more flexible now, allowing attorneys to create fee arrangements that best serve their niche of clients. For example, business lawyers that cater to startups are starting to offer flat rates for certain types of services such as setting up a business entity. Divorce attorneys are notorious for running up huge bills for single mothers and other poor souls that can’t afford it, charging for hours spent fruitlessly negotiating with a stubborn spouse. That’s why the trend is now towards flat rate billing for some types of matrimonial matters to keep costs down. Contingency fees are still alive and well with most Queens accident attorneys willing to take on strong cases without charging clients a dime until they collect money.