In our last article, we discussed the minimum legal fees recommended by some chapters of the Integrated Bar of the Philippines.
It is useful for clients to understand the various types of legal fee arrangements commonly employed by lawyers, as the discussion of legal fees typically arises early in their interactions with legal counsel.
Before discussing compensation for lawyers, however, it is crucial to recognize that the Supreme Court has emphasized that the legal practice is different from a mere business. The practice of law is inherently meant to serve a higher purpose beyond profit-making as they have a duty to public service where they are expected to subordinate their personal interests to what they owe to themselves.
Thus, it has been said that the practice of law is a noble calling in which emolument is a byproduct, and the highest eminence may be attained without making much money. (Burbe vs. Atty. Magulta, AC No. 99-634, June 10, 2002)
Accordingly, many lawyers admirably provide pro-bono legal services to deserving clients. The term pro bono publico is a Latin phrase for professional work undertaken voluntarily and without payment that is usually afforded to those who cannot otherwise afford to pay for legal services.
Notably, though, there is also a saying that “lawyering is a jealous profession” such that most lawyers practice their profession on a full-time basis as a means of livelihood, making it necessary to charge fees for services.
Accordingly, the following are the usual legal fee arrangements between lawyers and their clients:
1. Per consultation fee
A common question of clients to lawyers is “how much is your consultation fee?”.
This fee is an amount to be paid to the lawyer for a “consultation” where the lawyer provides an evaluation and possible remedies to the legal problem of the client.
The fee does not usually include drafting or preparation of legal documents. For example, when a client consults with a lawyer about a property that they wish to purchase, but where the original title is lost, the lawyer may advise the client that a reconstitution of the lost title should be commenced in court, and in the meantime, that the client-buyer may enter into either a contract to sell or earnest money agreement with the owner-seller.
The fee does not include the preparation of the legal documents and are subject to a separate fee agreement.
Consultation fees range from P5,000 to P15,000 per consultation.
2. Monthly retainer
A retainer is a predetermined fee agreed upon by both lawyer and client, which is paid in advance for legal work to be performed within a period of time, usually on a monthly basis. It is usually availed of by businesses that wish to have a lawyer on-hand for queries on various matters such as contracts, business, corporate, and labor law issues. Retainers usually cover the preparation of legal opinions, meetings, drafting and sending of demand letters for contracts and receivables.
The scope of such retainer agreement is usually well defined and specified at the beginning of the engagement, and matters falling outside their scope will be covered by a separate fee agreement.
Retainer fees usually range from P7,000 to P15,000 per month.
3. Corporate secretarial services
Section 24 of the Revised Corporation Code provides that immediately after the election of directors of the corporation, it must organize and elect the following corporate officers (a) president, (b) treasurer, (c) corporate secretary, and (d) compliance officer, if the corporation is vested with public interest. These are the minimum and mandatory corporate officers that a corporation must have.
The corporate officers shall manage the corporation and perform such duties as may be provided in the bylaws and/or as resolved by the board of directors.
Among the duties and responsibilities of a corporate secretary are attesting to and issuing certifications on official transactions and actions of the corporation and its board of directors, preparation and submission of the general information sheet, scheduling and handling meetings of the stockholder and directors, as well as preparing the minutes and resolutions, maintaining the corporate books, recording changes in shareholdings and directors and officers, and ensuring compliance by the corporation to laws, rules and regulations.
Given the specific duties and responsibilities of a corporate secretary, lawyers usually charge a separate fee for their appointment to this position, which range from P3,000 to P10,000 per month, depending on the size and which industry activity the company is operating in.
4. Package/fixed fee
For the handling of specific matters or projects, lawyers may charge a package rate or a fixed fee for the entire engagement. This arrangement is usually for the handling of annulment or declaration of nullity of marriage cases, issuance of duplicate owner’s certificate of title over property, settlement of estates, and labor cases.
These types of engagements may also include a success fee at the end of the engagement ranging from 5 percent to 20 percent of the value of the assets involved in the case.
5. Per work done with acceptance fee, hearing fee, pleading/ document drafting fee
In the handling of litigation matters, i.e. cases before the various administrative agencies and courts, a common fee arrangement would be the per work done fee structure consisting of an acceptance fee, meeting, conference or hearing fee, and document drafting fee.
Some fee arrangements also involve “stage billing” where the client pays the lawyer a lump-sum at certain stages of the legal proceeding such as after pre-trial, after presentation of the evidence for the client, and when the case is submitted for decision.
6. Hourly fees
Many lawyers also charge based on time worked on a matter, which is commonly based on their hourly rates. Time is gold to lawyers, as there are only 24 hours in a day, such that time-based charging would seem the most fair compensation to lawyers. However, there are many clients are hesitant to agree to such a fee arrangement as they are concerned that the legal fees will accumulate to a substantial amount.
Hourly rates of lawyers usually range from P3,000 to P6,000 per hour. Though there are some established and veteran lawyers who are known to charge as much as P25,000 per hour for their services.
To address the concern that hourly-based time billing may result in exorbitant fees, lawyers usually provide an estimate of the time to be spent or a “fee cap” for the work.
7. Success/contingent fee
In contingent or success fee arrangements for legal fees, the lawyer only receives their fees if and if they are able to obtain a favorable outcome in the legal matter referred. The fee is paid either upon the favorable decision or upon actual collection of the amounts in favor of the client.
This type of arrangement is usually found in collection cases, disputes involving property, and tax cases.
Since the lawyer has delayed the collection of their fees and invested their time and effort without the assurance of a favorable result, this type of fee usually range from a low of 10 percent to a high of 50 percent of the monetary award in favor of the client.
It is standard that whatever the fee arrangement is agreed upon between the lawyer and the client, clients shoulder the filing fees and assessments as well as out-of-pocket expenses.
Note that the abovementioned types of legal fees are just some of the usual fee arrangements and clients and lawyers are free to agree to specific arrangements which best suit their needs for as long as the agreement is not contrary to law, morals, good customs, against public policy or order.
On a final note, it is important to keep in mind that legal fees may vary significantly, depending on the experience and expertise of the lawyers, the complexity of the case, the risk involved, and other factors of the matter handled.
(The author, Atty. John Philip C. Siao, is a practicing lawyer and founding Partner of Tiongco Siao Bello & Associates Law Offices, an Arbitrator of the Construction Industry Arbitration Commission of the Philippines, and teaches law at the De La Salle University Tañada-Diokno School of Law. He may be contacted at jcs@tiongcosiaobellolaw.com. The views expressed in this article belong to the author alone.)