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Employee Rights and Hourly Fees Do Not Mix

By James Peters

This past Friday I spoke with a potential client who was recently terminated by his employer.  I concluded that he did not have a case worth pursuing and any claims he did have were likely not worth pursuing if it meant giving up the severance his employer had already offered to him.

At the end of the consultation he said he was surprised at my response because he had spoken to another employee-rights firm in Southern California where they told him that he had a “great” case and wanted to pursue it for him.  While I know I may not always be right about the merits of a case, in this situation I was very confident in telling him that based on what he was telling me his case was definitely not “great” and likely non-existent.

I was suspicious about the situation, so I asked him about the other attorney he had seen and what sort of fee arrangement he was offered.  The firm had actually offered to represent him in exchange for (1) a large retainer fee (likely around $1-2,000) AND (2) an hourly fee agreement.  Of all the employee-rights attorneys I know in the California, this is the first firm I have seen that charges hourly fees.  Most other firms work on a contingency fee where the client pays nothing unless they recover damages on the client’s behalf.

This area of the law is unique in that almost all of our clients are people who recently became unemployed and wonder if they will be able to pay their mortgage and keep their house, much less substantial attorney’s fees.  We work almost entirely on contingency, although we do represent a few hourly clients, but usually just to review employment, severance and non-compete agreements.

Because attorneys in California generally charge $350-500 per hour, contingency fees are usually the only way a client can pursue these types of claims.  Fees add up very quickly and in an hourly billing arrangement clients can end up owing their attorney tens-of-thousands of dollars even if they lose.  This also creates a conflict of interest where it is actually in the attorney’s best interest financially to drag a case out, perform unnecessary work and bill more hours.  Debates over these issues are raging in the legal community, such as in the article The Billable Hour Must Die published last year in the American Bar Association Journal.

The bottom line is that if you speak to an employee-rights attorney and they offer to take your case either (1) on an hourly basis or (2) on a contingency fee but also with a large up-front retainer fee, you should be wary.  At the very least you should get a second opinion from another firm and ask how they would charge to represent you.  Our firm, as well as others in California offer free consultations that can be done over the phone.

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Tags

Attorney's Fees | Attorney-Client Issues

Related Posts

• Contingency Fee Employment Law Cases
• The Perils of Trying to Win at “All Costs”

Full post as published by California Employee Rights Blog on August 03, 2008 (boomark / email).