Differences between Attorney Fees and Case Costs

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Attorney Fees vs. Case Costs

In legal proceedings, attorney fees and case costs are two distinct types of expenses. Attorney fees are the compensation paid to a lawyer or law firm for their professional services, such as time, labor, and expertise.[1] Case costs, sometimes called litigation costs, are the out-of-pocket expenses paid to third parties to advance the case through the legal system.[2][3] While both are part of the total expense of litigation, they cover different items and are usually itemized separately in billing.[4]

Comparison Table

Category Attorney Fees Case Costs
Purpose Compensation for the lawyer's work, time, and expertise.[1] Reimbursement for expenses paid to third parties to litigate the case.[2]
Recipient The attorney and their law firm. Third-party entities such as courts, government agencies, expert witnesses, court reporters, and process servers.[4]
Common Examples Hourly rates, flat fees, contingency fees, retainer fees.[5] Court filing fees, deposition and transcript costs, expert witness fees, postage, and fees for serving subpoenas.[6][7][8][9][10]
Billing Structure Based on a pre-arranged structure, such as hours worked or a percentage of the recovery. Billed as the actual amount of the expense incurred.[4]
Contingency Cases Payment is contingent on winning the case; no fees are owed if the case is lost.[11] The client may still be responsible for paying case costs even if the case is lost, depending on the fee agreement.[12]
Venn diagram for Differences between Attorney Fees and Case Costs
Venn diagram comparing Differences between Attorney Fees and Case Costs


Responsibility for Payment

Typically, the client is responsible for paying both attorney fees and case costs as specified in their fee agreement.[4] Even when a law firm advances money to cover costs, this is often treated as a loan that the client must repay.[4]

In the United States legal system, the "American Rule" generally requires that each party pays its own attorney fees, regardless of the outcome of the lawsuit.[13] However, there are exceptions. A court may order the losing party to pay the winning party's attorney fees if a specific statute allows for it, such as in certain civil rights or consumer protection cases, or if a contract between the parties contains a "fee-shifting" provision.[14] The prevailing party in a lawsuit is often able to recover some case costs from the losing party, though the recoverable amount may be limited by statute and might not cover all actual expenses.[2]

References

  1. ↑ 1.0 1.1 Time and Money: The Difference Between Attorney's Fees and Costs. (2018-12-13). Retrieved 2024-03-08, from https://www.aldavlaw.com/blog/time-and-money-the-difference-between-attorneys-fees-and-costs/
  2. ↑ 2.0 2.1 2.2 The difference between attorney fees and litigation costs. (2017-07-23). Retrieved 2024-03-08, from https://www.smithdietrich.com/blog/2017/july/the-difference-between-attorney-fees-and-litig/
  3. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named ref1
  4. ↑ 4.0 4.1 4.2 4.3 4.4 Fees vs. Costs - Attorneys. Retrieved 2024-03-08, from https://www.attorneys.com/personal-injury/fees-vs-costs
  5. ↑ Attorney Fees + Case Costs: Expense Management Impact. (2023-08-14). Retrieved 2024-03-08, from https://www.mycase.com/blog/attorney-fees-and-costs/
  6. ↑ Hidden Costs of Lawsuits: Attorney's Fees vs. Court Costs. (2023-08-04). Retrieved 2024-03-08, from https://www.youtube.com/watch?v=sMtb0-s6W5s
  7. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named ref2
  8. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named ref3
  9. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named ref4
  10. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named ref5
  11. ↑ Do Lawyers Get Paid If They Lose a Case?. Wyatt Injury Law. Retrieved 2024-03-08, from https://wyattlaw.com/do-lawyers-get-paid-if-they-lose-a-case/
  12. ↑ Who Pays for the Costs in My Case? Are They Included in the Percentage Fee?. Retrieved 2024-03-08, from https://lambergoodnow.com/personal-injury/legal-fees-and-costs
  13. ↑ Can Parties Recover Their Attorneys' Fees in Litigation?. (2017-08-01). Retrieved 2024-03-08, from https://www.sheehan.com/news-blog/can-parties-recover-their-attorneys-fees-in-litigation/
  14. ↑ Recovery of Attorneys' Fees in Litigation – Who Pays?. (2016-08-11). Retrieved 2024-03-08, from https://www.eddb-law.com/recovery-of-attorneys-fees-in-litigation-who-pays/
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