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Attorney’s Fees Exceeding Damages? What You Can Do About It


Hearing that the cost of attorney’s fees exceeds damages can be incredibly frustrating. This is a challenging problem to remedy once you realize it exists. Most clients do not contemplate the possibility of attorney’s fees exceeding damages when signing a retainer agreement, but it is important to consider at the beginning of representation.


Ideally, this problem would be addressed on the front end. When retaining a law firm and pursuing litigation, clients should inquire about the possibility of recovering attorney’s fees. The winning party may be able to get the other side to pay their attorney fees, but this depends on state statutes or contracts. If it is possible, your attorney should be sure to include attorney’s fees in the request for damages. This way, even if attorney’s fees do exceed damages, you will not be paying them if you win.

If this was not discussed and fees end up being higher than the damages, clients can dispute the reasonableness of the fees. It is possible that your attorney is overbilling you. Model Rule 1.5 of the American Bar Association states that “a lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.” Factors that should be considered in determining the reasonableness of fees include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.

If it appears that you have been overbilled by your attorney, a firm that specializes in legal malpractice can represent you in contesting the fees. Incurring additional legal expenses and entering litigation against your attorney may seem daunting. Arbitration is a cost-effective alternative to resolving such a dispute in court. Many state bar associations now provide fee arbitration which streamlines the process so that the parties can obtain a judgment without the high cost and expenditure of time normally associated with litigation.