What MCA Attorneys Charge
4 Fee Structures Compared

A fee quote becomes useful only after the attorney identifies the work it purchases.

Two proposals can carry the same billing label and cover different services, since one may address negotiation before litigation while another includes an answer to a complaint but excludes discovery, motion practice, and any appeal. The amount beside the word retainer resolves none of those differences. The cheapest quote was the most expensive document in the file. It was also the shortest.

The four structures below are ways to examine proposed billing arrangements. They are not a price survey, they are not ranked, and no statement here claims every model is offered, customary, or permitted for every matter.

The Engagement Letter Controls the Quote

Before any structure is compared, the engagement letter defines the assignment, the professionals bound by it, and the events that trigger each charge. Labels such as phase two mean little without the accompanying description, and an estimate is not necessarily a cap unless the agreement makes it one.

Ask what event triggers each payment.

The letter should distinguish legal fees from expenses, identify billing increments with the rates for each professional whose time may appear, and explain how the engagement ends if the owner declines a later stage. In our experience, though no survey supports the impression, the transitions between stages generate more disputes than the rates themselves. That is where fee disputes begin. Keep every receipt the engagement produces.

Hourly Billing Prices Time

With hourly billing, the central calculation combines the time charged with the applicable rate, so the practical question is which activities will consume that time and who will perform them. Reading the agreements, assessing a complaint, and communicating with the funder are distinct tasks, and a budget for initial assessment should not be mistaken for an estimate covering the entire dispute.

The meter runs on every task the engagement includes, including correspondence the owner never sees, and the invoice arrived with the regularity of a tide table and the warmth of one. A reporting arrangement that shows what was completed beside what remains uncertain allows the business to decide whether to authorize further work before the next increment accrues.

Litigation can create assignments absent from the opening discussion, and the point of defining the assignment at the outset is to expose those possibilities before they appear as line items.

A Flat Fee Needs Boundaries

A fixed amount can provide certainty about a defined service, and the uncertainty moves to the boundaries of that service: what qualifies as completion, which events fall outside the assignment, and what follows if the dispute changes shape. A proposal covering a specified negotiation phase should state whether preparing the settlement agreement is included, whether counsel will review the funder's draft, and who handles any filing required after signatures.

A lawsuit raises the harder version of the same question. Representation through a stated event differs entirely from representation through judgment, and the owner needs an extremely direct answer before treating the quoted figure as the cost of defending the case. Ask counsel to ensure the letter names the event through which representation runs. Seldom does a fee letter volunteer the distinction without being asked.

You hire the lawyer and then you learn what the hiring covered.

A Percentage of the Enrolled Debt

Some engagements price the work as a percentage of the debt placed with the firm, a structure that ties the fee to the size of the problem rather than to the hours required. The owner should identify the baseline with precision: the balance on which date, inclusive of which charges, and adjusted for which payments already made.

The trigger matters as much as the rate. A fee earned upon enrollment differs from a fee earned upon settlement, and a sullen line item for the full percentage beside partial performance has ended more relationships than any hourly rate. Whether any particular fee is reasonable is a question for the engagement and the forum, not this article.

But the label on the invoice decides nothing about the obligation behind it.

A Percentage of the Savings

A savings based fee measures the outcome rather than the effort, typically as a share of the difference between the amount claimed and the amount finally paid. The arithmetic depends entirely on the starting figure the parties agree to treat as the baseline, and baselines are negotiable instruments in their own right, since a creditor's inflated demand (which the creditor's advocates will describe as standard arithmetic) can manufacture savings no negotiation produced.

The agreement should therefore define the baseline date, the treatment of fees and interest accrued during negotiation, and the point at which savings are measured and deemed earned. I have seen owners sign fee agreements without reading them. I understand the fatigue.

The retainer is, in plainer terms than most invoices offer, a word with several meanings, and only the engagement letter decides which one the parties chose.

Fee Review With Delancey Street

In October 2010, a federal ban on advance fees for certain debt relief services took effect, and the federal guidance surrounding it has carried a durable warning: hiring attorneys does not exempt a seller, and calling a charge a retainer does not change its character. That guidance addresses consumer debt relief sold by telephone, a posture distinct from a commercial MCA engagement or an in person attorney retention. The principle travels even where the rule itself may not apply.

Federal guidance on debt relief fees and the retainer label states the agency examines practices rather than the terms companies use to describe themselves. Ask what triggers each payment and what work product each payment covers, and treat any reluctance to answer, even casually expressed, as information about the engagement being offered.

Delancey Street offers a free confidential initial review of MCA debt concerns, including the structure of a proposed resolution engagement. It is a settlement company rather than a law firm, and legal matters are handled by independently licensed counsel, whether counsel the owner retains or counsel the company coordinates.

Steps the owner takes, or does not take, before signing will decide whether the fee dispute or the funder dispute consumes the year, so resist the urge to authorize the engagement during the first meeting. The adviser should ensure the scope is defined before anything is signed, with counsel confirming that no statement made against the funder enlarges the case.

Simply request that every promise be placed in the letter. The file should close with a receipt for every promise kept, and the fee that survives that standard is usually the fee worth paying, since extremely vague letters rarely survive it.