What is an “offer” of settlement?   - Arnold Law in Eugene, Oregon – Powerful Advocacy. Proven Results.

What is an “offer” of settlement?  

In most cases, the definition of an “offer” is a proposal to end the case or otherwise resolve the case. The case is ended by an agreement. You agree to plead guilty to something, for instance, and the prosecutor agrees to only ask for certain punishment. Or you agree to less parenting time in exchange for more money in a divorce case.

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Criminal case offers don’t always have to be an offer of a guilty plea.  In rare circumstances, we’ve had clients agree to pay damages in exchange for a dismissal or other alternative remedies.  For example, diversion agreements are where adjudication is deferred during the pendency of the case for several months while the client is required to do something or simply just to stay out of trouble.  Thereafter, the case is dismissed.?
Basically, offers could be a lot of things.  At the heart of it, an offer is a communication from one side or the other — because either side could make an offer to resolve the case.

The defense attorney and his client could make an offer to the prosecutor to resolve the case. If your case is really good for the defense and you think that nine times out of ten you are going to win this case in front of a jury, the offer may be, “Hey, Mr. Prosecutor, our offer is you dismiss this case, apologize, shout from the roof tops, `I made a mistake,’ and we’ll call it even.”

You know that never happens in reality because as Sun Tzu would say you need to build a golden bridge for your opponent to retreat upon. You need to create some sort of resolution that allows them to save face and move on. And that doesn’t necessarily mean excluding the opportunity for an outright dismissal. You just need to be able to finesse it in a way that allows the other side to walk away feeling good about it or better that he would if he had gone to trial and got destroyed by your attorney.

Attorney Fees: You Get What You Pay For

It is mind boggling how many potential clients walk into an attorney’s office without any knowledge as to how attorneys get paid. We think it is imperative for clients to know this information before they meet with an attorney. Usually, we’ll spend time in a consult explaining this to clients. While useful to the client, the client would probably be better served spending that face-to-face time with the lawyer talking about his particular case needs. Therefore, it is better for you to learn about this on your own in advance of the consultation.

How do attorneys get paid?

Generally, there are 3 ways in which attorneys get paid: retainer/hourly basis, flat-fee, and contingent fee.

The Retainer Deposit

The most common way for paying an attorney is with a retainer deposit and an agreement to pay an hourly fee, typically $X per hour for the attorney, less per hour for staff, such as paralegal time and investigator time, plus the payment of costs by the client. How much should a retainer be? There is no one right or wrong amount. How much an attorney charges depends on the local market. This is hard to figure out because many attorneys do not advertise rates and retainer amounts on their websites.  One good way to figure this out is by calling multiple law firms and asking for their fee rates and typical retainer amounts before you commit to an attorney.  You could even cold call attorneys you are not interested in just to figure out what the market will bear.

Knowing the market makes a big difference because you may find in a certain state or a certain community the hourly rate for an attorney or maybe a flat fee for an attorney is much, much less than it would be if you were to go to the big city lawyer that is two hours away from you.

However, remember the old mantra: “You get what you pay for.”  We have seen examples of attorneys that charge way less per hour than us and that ends up costing a client way more money. The cynic would say that they are overbilling the client on an hourly rate for work they didn’t do or they are just very inefficient and are doing a poor job which ends up costing them more. Efficiency and honesty are what matter, hence the other points above (organization of the office and the handshake).

The Flat Fee

Overbilling is a concern for any service professional. Avoiding this worry is why many clients and attorneys like to do the second type of attorney-fee arrangement which is called the flat fee. This is where the attorney and client agree to a set amount of money for particular stages of the case or maybe for the entire case to be earned upon receipt.  Regardless of how much actual time is put into the case, it will cost no more and no less for the client.

It could be a $5,000 flat fee for pre-trial preparation for a DUI and then another $2,500 for the trial fee, just as an example. Many clients like this approach because it allows them to easily budget for the case. Many attorneys like the approach because they are poor business people and have trouble keeping track of their time.  They also selfishly like the lump sums they receive relatively quickly to pay their overhead.

This influx of instant cash flow is appealing to many poor businessmen.  The experience that we have observed with many attorneys doing this sort of practice model is they love a case when it comes in the door until that next big flat fee comes in. Then they ignore the old flat fee cases and work on the new ones because there’s no financial incentive to work on the old ones. The invisible hand of the free market incentivizes work where the money is.  However, many, if not most, high-quality lawyers are incentivized by a job well done or by their egos of looking good in court and will work the heck out of a case regardless of the payment.

The thing about flat fees is that each individual, the client and the attorney?bear some risk in the hopes of gaining a benefit. The client gets the benefit of having a confirmed limited amount of money that they will have to pay, but the client runs the risk that the attorney will resolve the case in a way that doesn’t maximize the value of that flat fee. In other words, the attorney might hurry up and try to end the case really quickly to get a windfall on your flat fee. This could be great for?the client?because the case got done quickly, which might make them really happy.

But it could also mean that the attorney tries to strong-arm you into accepting an offer simply to end the case quickly so that they can make more money by going on to the next flat fee. What you don’t want to do is hire an attorney who is not going to work on your case — an attorney that is only ferrying offers back and forth between the prosecutor and you. You want them to be earning you a good offer because no offers are free.
On the other hand, what the client is potentially gaining is that the attorney has not accurately estimated in his head what it would actually cost in terms of time.  By negotiating a flat fee, the client is purchasing an agreement that he will pay no more for the case than what he agreed to. If the attorney is a?bad?estimator of time or just?because?something happens in the case that requires the attorney to do much more work than he was expecting, then the client gets that benefit.

As a result, the attorney is?going?to try to get the case done to stay within the realm of?that flat fee but then the attorney is also risking that the case is just?going?to cost more than he or she has estimated.  Consequently, everybody with a flat fee is?bearing some risk and also looking?potentially?to gain something as well.  So long as everyone has equal information in the bargaining process, the system works.  However, this is not the case because how in the world would a client know how much is too much in each situation?  The answer is found above: you see what the market is commanding by calling around.

If you trust the attorney, then a flat fee or hourly fee is going to likely work out for both you and the attorney.  This is true because you have followed our advice above and found a great fit for you because you are only hiring an attorney you trust.  Therefore, the attorney is not going to be taking advantage of you.

We personally do not like flat fees, because they spread the risks over multiple clients. In?essence,?if your case is not very difficult, you are subsidizing the more difficult cases and that just doesn’t seem fair to us. We think every client should have to bear the brunt of the work done on their case. Nonetheless, even though we dislike them, we still occasionally agree to flat fees when it works out best for the client and our law firm.?
Contingent Fees

The third type of attorney fee is called a contingent fee. That is when an?attorney?doesn’t get paid unless they settle or win your case.?This?is most common in personal injury cases for?plaintiffs that are victims?of?negligence. Since these folks are not working because?they?are injured and don’t have money set aside for the time when they get into a car accident, a contingent fee allows them to hire an attorney without paying any money out of their pocket. Then, the attorney only gets paid if the client recovers his or her damages. No recovery, no fees paid to the lawyer. In most personal injury cases, clients agree to pay costs regardless of whether recovery is achieved or not, so an attorney may have to be reimbursed something. This should be set out specifically in the attorney fee contract.

Contingent fee agreements put you in a business relationship between you and your attorney. The attorney wants you to do well and recover as much as possible because they like you and you are their client.  But, they also want you to do as well as possible, because the better you do and the more you recover, the more the attorney makes in attorney’s fees. Everyone’s interests are aligned in that scenario.

A?contingent?fee won’t apply in criminal defense or family law cases. Contingent fees are not ethically allowed in these cases because the bar associations have contemplated the worst-case scenario where the?attorney?is going to do whatever they can to win in order to get paid. This creates a conflict of interest in that it may actually be in the?client’s?best?interest?to settle and?plead?guilty in a criminal case or give up custody in a divorce. Further, they don’t make a lot of sense in a criminal case. There aren’t many defense cases where the end of the case results in a defendant receiving a big pot of money from anyone.

If It Isn’t in Writing, It Didn’t Happen: The Fee Agreement

The next thing to consider is the attorney fee agreement. This is?really an interesting?concept.  You are entering into a business relationship by signing a contract. The contract is one that the lawyer created. It is?essentially?there to protect your lawyer and you don’t have a?separate lawyer?on your side to negotiate the fee agreement. It will inherently be one-sided in favor of the attorney. Also, you will be asking for advice from the person who is adverse to you in the contract.  It’s really a crazy situation if you think about it.

However, don’t be intimidated. To boil it all down, you are essentially agreeing to pay them for their time, which you should do anyway because you are hiring them to do something for you and nothing is free in this world. Some law don’t complete fee agreements: don’t ever hire them. They are?sloppy,?unorganized and very poor businessmen. Every bar association recommends you do it and all law practice insurance carriers?recommended?you to do a written fee agreement.  Someone who doesn’t do a written agreement is flying by the seat of their pants and are to be looked at with extreme caution. Do not pay money unless you sign a fee agreement. Fee agreements can take other forms such as an engagement letter where the attorney sends you a letter confirming what you are?agreeing?to and ask that you sign the bottom of the letter and return it.

It’s really important for you to read every paragraph of the fee agreement?before?you sign it. If the attorney just hands it to you, tells you to sign here and doesn’t give you an opportunity to read it, you should request an opportunity review it. If the attorney says there isn’t enough time left in your consult for that, then ask to go sit in the lobby to review the document before you sign it. If the attorney?doesn’t?want?you to read it and if he doesn’t encourage you to read it, that should leave you with questions about whether or not you should engage the attorney.

Attorney Fee Agreement Components

A standard attorney fee agreement may have the following components. It should include a statement of who the parties are, referring to you as their client and them as the attorney.
The components of the fee?agreement?should include the retention for a specific purpose. This is?important?because?you may be going through a divorce along with your domestic violence criminal case and everybody wants to be on the same page about the scope of representation. If you think you are hiring a lawyer to help you with an upcoming restraining order hearing and the attorney thinks he is just representing you only in the criminal case or just the divorce case, then you need to look to the fee agreement for guidance on that and for clarity so that everyone is not confused by the circumstances.

Another component of the fee agreement should be the minimum hourly rates for an hourly fee or the flat fee in a flat fee case. The attorney’s fee schedule, often times will be present in the agreement. If it’s not, you should ask for a current copy of the fee schedule or ask for it to be reduced to writing.

The agreement should state how often the attorney can increase their hourly rate. You don’t want to be retaining an attorney and then find out he increases his hourly rate every July and today is June 30th.

You should also see the range of rates for legal staff. As you go through the fee agreement, if you haven’t already discussed this with your potential attorney, this is a good time to have a conversation with him about how he uses support staff. Most good lawyers with a good business practice model will try to save you money by using staff to assist. If the work doesn’t require the attorney’s big brain, they should have an associate attorney to work that particular task. If the work doesn’t require an associate attorney’s big brain, the paralegal and legal assistant should work on it. If the task doesn’t require the paralegal or legal assistant’s expertise, they may have a law clerk do the work. This model works to both the attorney and client’s advantage.

The fee agreement should also state the minimum billing increments. Do they bill in real time? You should ask the attorney at this point of the conversation about their billing software and how they keep track of time if they haven’t volunteered that information already. Any competent attorney with a good practice model will have proprietary billing software sold by a third-party vendor that allows them to keep track of their time electronically, such as Time Matters/Billing Matters, Timeslips, Clio, or Amicus, among others. If they are still doing billing by hand on a piece of paper, you should really worry about how they are going to deal with electronic discovery and other modern requirements of a 21st century law firm.

It is very common to bill in 0.1 hour or 6 minute increments as a minimum billing entry. Why do law firms do this? The proverbial “point one” takes into account the amount of time required not only to send that two-line email, but also to change focus from one task to the next, find the file, open it up, decide what to do, then do it, and then move one. So, while it may only take two minutes to write a few lines in an email, the actual total time to draft and send that email is longer. For larger tasks that exceed “point one,” hopefully they are billing actual time.  You can inquire into whether or not they do that.

Also, ask about how the law firm handles having multiple lawyers working on your case. Are there ever discounts available and how is that done? For example, you meet with two attorneys to talk about your case. Are they both billing for the meeting? All good lawyers will have no problem telling you how that will be dealt with up front. There are times when it makes sense for all the lawyers in the room to bill for the time, but not always. You can inquire at the beginning of any meeting how the billings are going to be done. Don’t be shy.  For instance, they may not charge you for the more junior attorney in the room.  Or they might charge you for everyone.  Either is okay so long as everyone is upfront about it and it doesn’t come as a surprise later.

We’ve said this already, and we’ll keep saying it. If you ever have a question, ask it. This is your life. You need to understand.

Another component of the fee agreement?you may see is a paragraph that tells you that results in your case cannot be guaranteed. This is because results cannot be guaranteed. Ever. Often, and even likely, a given result cannot even be accurately estimated because your case may take a long time to resolve.?You?know the attorney will work hard on your behalf to represent you competently and that you must pay for that attorney’s services no matter how the case turns out.?If that attorney is giving you promises or guarantees about the outcome on the matter, then you should view that attorney with caution and skepticism. He may be over-selling you himself to you.  Keep in mind that if something is too good to be true, it probably is.

Another component in many fee?agreements?and over-the-desk conversations while reviewing the fee agreement is an estimate on the cost of the case. If the attorney provides an estimate, then this may be in the fee agreement. If an attorney provides an estimate of the?client’s?fees or expenses for handling? the matter, you need to?understand?that it is only an estimate and not a promise or a cap on your fees, unless he says so in writing, as in a flat fee?agreement (see above). The final expenses of any?attorney-client?engagement?are dependent on?many?factors?and?issues, not all of which can be foreseen or quickly estimated.?Therefore, although a law firm may provide you an estimate to help you?understand the probable (or possible) expenses and fees of?representation,?no estimate provided can be regarded as?binding?because?litigating a case involves people primarily. It isn’t like bidding a house remodel.  People’s?whims?can greatly affect the outcome of the case and the cost of that case. For instance, an unethical or incompetent adverse counsel can greatly increase the cost.

Another component of the fee agreement you may see will be a statement of who will pay case costs. In most fee agreements, it will be stated that in addition to any fee charged, the client is always?going?to be responsible for paying all costs connected with a?client’s case. A “cost” is a case expense that could include copy costs, expert witnesses, filing fees, trial fees, service of?subpoena fees, investigator fees, deposition fees, and physician fees if there is an issue?regarding?medical condition, etc. If your case is a high-profile case, you may need to inquire about public relations and media handling because you?probably?don’t want to be paying an attorney $400 to $500 an hour to be handling the PR part of your case if they have an outside vendor they use at $200 an hour.

Another component of the fee?agreement?is the stated amount of the retainer fee deposit. Clients are?typically?asked to deposit a sum of money in advance to take into account a month or two of litigation or potentially, if?your?case is complex, the entire cost of litigation. The client will agree to make additional retainer deposits that are requested by the attorney,?including, for example,?advance payment of attorney fees and cost for a trial or expert witnesses. But always remember, a retainer amount is not a cap on fees. It’s only security that the attorney will get paid for their time.

This?is one area where it is really?important?to confirm that attorney’s specific practices about how they want the retainer replenishment done. Many attorneys will simply have you post your initial deposit.  Then, once that deposit is complete or run through, they will just send you bills and ask you to pay off the bill every month or request another specific deposit amount. Other attorneys will ask for a complete?replenishment?so that there is always money available to be billed against. Consequently, you want to make sure that both you and the attorney are talking.  Money is often an awkward conversation but it must be done frequently, lest complications arise at uncomfortable times.

No matter how?aggressive?attorneys are in?trial, they often will appear timid when asking for fees and talking about money. That’s not?necessarily?a fatal flaw for an attorney. We get into this business because we like to help people, we like trials or all of the above, and the talk of money is sometimes distasteful and uncomfortable.?But for any new relationship, it’s important to tackle these things head on and be upfront and have everybody with the same expectations.

Another?important part of the fee agreement is the discussion of?the?billing statement and how the attorney is going to be billing you for the work done.?You?should be receiving at least a monthly billing statement. Ask them the process for generating that billing statement, i.e. what software they use.?Typically,?the entire balance is going to be owed and due each month unless you have worked out some sort of payment plan with the attorney. You should ask the attorney about what will happen if you fall behind in?making?payments. For instance, will the attorney?immediately?redraw from your case??Also, consider asking for a draft billing statement to be drafted after major, time-consuming case events, like a trial or depositions.

This is one of the reasons why it is very important at this initial meeting to talk with your potential lawyer about how and when bills will get paid. If you get into a situation where you owe your attorney money, it can put you in a position where it can make him or her really struggle to advance your case. For example, you know from receiving your billing statement that you owe your attorney money. Then, you get a phone call from your attorney and you see her calling on your caller ID. Your attorney is calling you and you don’t?want to?answer that?call?because?you are worried that your attorney is going to be calling you to talk about the money you owe. You may want to avoid that conversation because you don’t like to talk about money, or perhaps because you don’t have the money to pay. Well, your attorney?might?be calling about the money, or the attorney may be calling you about the offer that she?received?and she really needs to talk to you.

It’s really important to make sure that money issues won’t prevent you from actually advancing your case. This is an example of?why it is important to make sure that when you are talking with an?attorney?in that first meeting you feel comfortable talking with that individual about money. Money is an issue that is going to come up in every case. It cannot be avoided.

Further, attorneys may get into a?conflict?of interest if they are resentful of you for not paying their bill. They may be unable to fire you or withdraw from your case because it’s too close?to?trial. Attorneys have mortgages, student loans, spousal support, and medical bills to pay too! An attorney’s resentment against you for your non-payment may be a conflict of interest that is not easily identified?because?it’s the sort of?resentment?that’s deep down inside. Look at it this way–if you are going to have delicate brain surgery done, you don’t want the?surgeon?thinking about how she is going to make her next house payment because you haven’t paid her bill while your brain is literally in her hands.

Let’s say that you do owe your attorney money. The fee agreement should state how this is to be handled. There should be a stated interest rate on unpaid balances.  Expect to see a large percentage of compounding interest. No attorney is going to charge interest that is less than a credit card. Attorneys aren’t banks. Most don’t have a collections department that can handle overdue balances. Usually it is the attorney or her staff who are tasked with managing overdue accounts. Therefore, they want to incentivize you to pay your credit card monthly payments rather than them monthly.  They want you to use your credit card to pay off their entire balance.

What about bill complaints? There’s probably going to be a section in the fee agreement that sets forth the process and timeline for you to make your complaint. The reason that attorneys typically put that in the fee agreement is because they don’t want to be recreating in their mind what caused your billing question months later when they no longer have an independent recollection of the transaction. So, if you see a problem, contact them immediately. As attorneys, we all strive to do everything perfectly. But we are human too, and mistakes happen, such as a client getting billed for another client’s work due to an improper keystroke on the computer. We want you to only pay what you owe and not a dollar more. Also, we want to send you out into the world satisfied with our services. All attorneys are going to be motivated to try and resolve your billing question as soon as possible.

What happens if I don’t like the attorney I have chosen? What if I want to fire him? The fee agreement should have a provision about that, and you and your potential attorney should talk about it. No one likes to start a business just to be talking about what happens if the business fails. The same thing is true with starting the attorney-client relationship: you don’t want to be talking about what happens if the relationship needs to be terminated.?Still, you should be pondering this up-font.

Clients always retain their right at any time to terminate?an attorney’s services.  But that right goes both ways. An attorney will always reserve the right to withdraw from representation at?any time, for any reason, including for non-payment of the attorney fees. They may also want to terminate the relationship because they may just not like working with you. If they do, you shouldn’t?resist that.?The last?thing you want to be doing is going to trial with?someone?who doesn’t like you or want to go to trial with you.?These are vital, important relationships that require you to be comfortable with that person and vise-versa.?

Another thing you may see in your fee agreement is a paragraph?about?case information and correspondence. If it is not in the written agreement, you should talk to your attorney about how it is that they will keep you informed. You?are entitled to?essentially?all the material that the attorney has in her file. You should have access and copies of all the correspondence, all the pleadings, all the evidence, and all the discovery. You and the attorney need to be on the same page about how and where and when that’s going to be?delivered?to you.

Say an attorney gets a letter from the prosecutor. How is that going to be forwarded to?you??Is the attorney going to hold it in a file that you come and pick up? Do you have a mailing address or a P.O. Box that is safe for you to receive information that is confidential that you don’t want others to see? Do you want that information delivered to you via email and do we have your email address? Do you want to use an online file?sharing?system like Dropbox or?OneDrive? Attorneys have lots of tools at their disposal to keep you informed but you want to make sure that it’s clear?when?you instruct the attorney how that information will be delivered to you. And if you have special needs, like keeping this information from your roommate, follow up with the legal assistant, who is actually responsible for sending most correspondence to the client.

Another thing that you should always do with that information?is keep?it organized. We always recommend that clients put together a file separating the correspondence, evidence and pleadings. In many cases, you can identify the pleading because it’s a document that has numbers running down the side, or it has the name of the court at the top of the document.?Unless the amount of the paper that you have is a?truckload,?you should bring that file with you when you meet with your attorney any time in the future.
In almost every meeting that we have with a client, the client asks?questions. The client often says: Hey, attorney, you sent me this one paper that I really?wanted?to ask you about.” When the client’s file is 1000 pages large, it is necessary to identify that one individual piece of paper with some precision.  Bring it with you and point it out. Failing to bring the file along can make it really difficult and will create an inefficient meeting, because the attorney can’t?help the client by providing the help he needs. Having that file and bringing it with you to the attorney meetings will build your relationship and make those meetings work out a lot better for?you.

Another thing that an attorney may ask for is a personal guarantee. A personal guarantee is when another person called the guarantor guarantees that the client will make all payments and perform all obligations under the fee agreement. That person, the guarantor, will step into the client’s shoes on the clients’ behalf if the client fails to meet the clients’ responsibility to pay. This means that if the client doesn’t pay, the guarantor will pay. This often happens when the client is in jail and his/her family members are paying for the attorney. The guarantor is not the client and will not be privy to any information about the case unless the client agrees to allow that and instructs the attorney to disclose information.?

When?you’ve gone?through the fee?agreement?and you’ve read it, again, remember that you should have an opportunity to ask questions. Fee agreements shouldn’t be written in a way that only an attorney can understand them. It should be written in a way that you can understand. If you don’t understand it all, that’s okay. All you have to do is ask and you shouldn’t feel uncomfortable about asking. You are signing a contract. It is imperative that you understand all the terms in it. Do not worry about appearing uneducated or being embarrassed about not understanding what a term is. This is your life.

Conclusion

In the end, trust your instincts about the attorney.  Remember, only you have to live with the consequences of the case outcome.  There’s the old story about the attorney who represented a client of murder.  Everyone thought that the verdict would be “not guilty.” However, the jury came back guilty and the judge sentenced the man to life in prison.  Stunned, the client turned to his attorney and asked, “What now?”

“What now?” the attorney replied.  “Right now you are going to go with the deputies to jail and I’m going to meet my wife for a steak dinner.”

QUICK LIST OF QUESTIONS YOU SHOULD ASK TO GET THE INFORMATION YOU NEED IN YOUR INITIAL CONSULT

1. How long have you been practicing law?
2. How many trials have you had?
3. How many of the trials you’ve had were jury trials?
4. How many trials have you been in over the past year? The past two years?
5. Can you give me examples of cases you’ve handled that are similar to mine?
6. Do you have any specialized training or expertise that would assist my case?
7. How large is your firm? Are you a sole practitioner, or is this a traditional firm?
8. In what form do you accept payments? Do you accept checks, debit cards, and credit cards?
9. How much do attorneys and staff charge per hour?
10. How much is a typical retainer for a case like mine?
11. What happens if I can longer afford to pay for your services?

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