How Do Lawyers Make Money? 5 Different Ways

When we hear about people studying to become lawyers or are practicing law, most of us just stare at them with awe and admiration. The sheer dedication required to not only study law, but to pass the bar exam, and to constantly refresh your knowledge on the concept is no easy feat and deserves to be compensated as such. We’ve all been told that lawyers get the higher end of the paycheck, but how do lawyers make money?

Although the way lawyers make money varies depending on their practice, it usually boils down to these five types of payment methods; retainers, hourly fees, flat fees, contingency fees, and consultation fees. To really understand how lawyers receive money from these payment options, we need to know what these fee types really mean and how they are executed to generate income.

A combination of retainers and hourly fees are the most common way lawyers from all different practices and firms utilize to make income. Although the term hourly fees are pretty explanatory, the term retainers may not be all too familiar.

1) Retainers

Retainer fees are when lawyers are paid a set fee, which is upon agreement between the lawyer and the client prior to working the case. I know, this is a bit of a confusing topic, so let’s break it down here.

A retainer fee closely resembles a down payment. Like a down payment, the client “prepays” a certain amount of money as their initial payment. The lawyer then stores that payment in their work account. They do not necessarily take the payment towards their income just yet. Every time the client requests the lawyer’s services, the lawyer will deduct or take away a portion of the initial payment for the client to “pay” for their services for their own income.

Sometimes, clients who are in positions where a lawyer on hand may be necessary will pay a large amount of money to ensure that the lawyer will be able to handle their case every time the client may need one. Makes a lot more sense now, right?

Retainers often depend on the lawyers themselves, as different lawyers may have different rules and regulations regarding them. On average, retainers can cost anywhere between $2,000-$100,000. As mentioned, these average costs really depend on the type of lawyer and who they are able to represent.

2) Hourly Fees

Hourly Fees - How Do Lawyers Make Money?

The amount an attorney requires for the retainer fee varies based on the attorney’s experience, the services to be provided, and market rates. Experienced attorneys can estimate approximately how much time your legal issue will take to resolve. The attorney also has a standard hourly billing rate for your legal needs. The retainer would ideally cover the expected time multiplied by the hourly billing rate.

Usually, lawyers operate on a monthly basis. So the retainer fee would need to cover at least a month of hours the lawyer expects to work on the case. If the work takes longer than a month, you may be asked to add more funds to the account. For particularly complex cases that are most likely to last many months, the lawyer may expect the retainer fee to cover several months of work.

There are dozens of different categories that may be used to classify the time needed to complete your task and the hourly billing rate. As a result, actual dollar values are hard to provide. Retainer fees may be as little as $500 to draft a demand letter or in excess of $10,000 for complex litigation.

3) Flat Fees

Flat fees are a set price for the entire case or service. This is saved for anything that does not require extensive hours such as prepping for a case. This is more focused on things such as constructing a will or filing a consensual divorce (where both sides willingly decide to divorce). As these services often come with a set template that may need some minor tweaks to adjust clients’ needs, these are arguably the cheapest ways to utilize lawyers.

Lawyers who specialize in family law, and in some cases criminal law (in terms of routine charges such as DUIs) are most likely to use this type of payment method for their clients. As for starting pay for these services, will always vary based on the lawyer. But, it seems like on average, things such as an uncontested divorce can range from $700 and increase up to $1000 for writing a prenup. For wills, that cost can range from $300 and increase up to $1,200 based on the complexity of the will.

These prices are just an average estimate. These fees are often calculated based on the hours needed to complete these tasks. The lawyer may have a standard or an average amount of hours that they usually spend prepping for a will or a divorce, and then have separate flat fees based on the complexity of these tasks.

Like consultation fees, flat fees are one of the easiest ways for lawyers to make money. They are set rates for common things that people seek lawyers for, which racks up easy income.

4) Contingency Fees

As the name states, contingency fees are just fees that are contingent or dependent on the success of the case itself. Once a lawyer decides to take the case (after the first consultation), they may come to an agreement that, once they have won their case, the lawyer will get a certain percentage of the money for their fees. This type of payment is more common in lawsuit cases, such as worker’s compensation and personal injury as these are the cases that have the highest chance of success and the highest amounts of potential lawsuits. For these types of fees, the amount of payment a lawyer can receive will vary on the percentage of the money that the lawyer requests to take. Most lawyers, on average, take about a third of the total settlement fees.

Although this may seem like a really nice opportunity for lawyers to receive the most bang for their buck, it is also one of the riskiest choices to make. For instance, if the case ends up not winning, the lawyer has now spent many laborious hours prepping without getting paid. On average, lawyers spend more than the typical full-time (40 hours) a week to ensure their case has everything in order to be successful. To have spent all that time with the risk of not receiving payment is what causes most lawyers to avoid this type of payment plan.

5) Consultation Fees

Consultation fees are the initial charges made at the very first appointment a client makes with a lawyer. This is where the client states their case, and the lawyer discusses with them, eventually deciding on whether or not this case fits their expertise. As this is the very first appointment you can make with a lawyer, it is one of the easiest and potentially quickest ways to receive and make money.

Consultation fees are typically set by the lawyers themselves; however, some lawyers provide a free consultation. On average, a consultation fee with a lawyer can range anywhere from $50-$100 to as high as $500. I know, what you’re thinking, and I thought the same way… $500? Oftentimes the reasoning behind such high consultation fees is that the lawyer behind the charge is experienced or in demand.

Regardless of the type of lawyer, consultation fees are utilized in almost every firm.

Quick Review – How Do Lawyers Make Money?

A lot of the fees and rates vary based on the type of lawyer, the practice, as well as their demand in the field. However, these fee terms are where lawyers generate income. As a recap, they are:

  • Retainer Fees – a prepayment for lawyer services
  • Hourly Fees – a fixed hourly rate for the number of hours worked on a client’s case
  • Flat Fees – A fixed charge for services that do not require case-like services
  • Contingency Fees – An agreement of a percentage earning should the case be successful
  • Consultation Fees – A fee set for initial consultation or interaction between a potential client and lawyer.


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