There are three basic kinds of legal fees, and before any work begins on a legal matter, the attorney and client should agree how to handle fees and costs.  Some attorneys require all fee and cost arrangements between attorney and client to be in writing.  Each type of fee agreement has its own advantages and disadvantages.

CONTINGENT FEES
Contingency fees are conditional: meaning you only pay them when a legal matter has been successfully resolved.  With contingent fees, you pay your attorney a certain percentage of the settlement or judgment amount.  You and the attorney should agree on the percentage is before the attorney takes the case.  The percentage will depend on a number of factors, including difficulty of the case; prospects of recovery; the likely time and expense required in bringing the case to a close; and the attorney's skill and/or reputation.  The advantage of a contingent fee is that you don't owe the attorney anything for his time unless the attorney gets you something, and even then your fee will be no more than the attorney got you, and the amount you owe will not increase simply because it takes the attorney more time than expected.  Some view it as a disadvantage when a case settles quickly and the attorney gets paid the same percentage for what might be very little time.  Contingent fees are most often used in personal injury cases; they are prohibited in criminal cases.

FLAT FEES
Flat fees, sometimes called fixed fees, are usually associated with standard services allowing an attorney to fairly accurately predict the amount of time needed to handle the matter.  These may include an uncontested divorce, routine adoption or preparing a simple will.  The advantage of a flat fee is knowing how much your bill will be; the disadvantage is that for anything other than simple matters, an attorney is likely to set a fairly high flat fee to assure the fee will be reasonable for whatever time that ends up being involved.

HOURLY FEES
An attorney's hourly rate is determined by many factors, including education, experience, and office location... and how much of a demand there is for his services.  The advantage of an hourly fee is that for matters resolved quickly, the fee is small; but for many matters it is impossible to ever know for sure how much work will be involved in a case, and the hourly fee grows until the case is over, regardless how high the fee runs.  At this time, depending on the nature of the case, my hourly rate will normally vary between $125 and $175 an hour.

COSTS AND EXPENSES
All legal actions involve some costs, such as the court filing fee, and process server's fees.  Other cases involve fees for expert witnesses, medical records, court reporter's transcripts of testimony, outside research, paralegals, travel expenses, private investigators, or preparation of exhibits.  If your case involves an injury, your doctor will generally charge at least $500 for his time to give a statement (called a deposition) that can be used in court, and the fee for the court reporter to take it all down will cost at least $300 more.  If several depositions are required, including three or four doctors and an expert witness, the cost in simply preparing the case for trial can easily exceed $10,000.  Costs and expenses do not go to the attorney for time or effort, but instead go entirely to reimbursing the attorney for his out of pocket expenses associated with the case.  Costs are paid by the client to the attorney or law firm and are in addition to other legal fees.  While an attorney might want to take responsibility for all costs and expenses himself or herself, the Rules of Professional Responsibility prohibit this.  (An attorney could actually lose his license for a violation.)

RETAINER FEES
A retainer fee binds the law attorney or law firm to the client and prohibits them from representing a competitor of the client.  This kind of agreement guarantees that the attorney will be there to represent the client whenever the client needs an attorney, but additional fees beyond the retainer are often required when a matter must go to court.  True retainer fees are seldom used on an individual case, although the payment an attorney requires before taking an individual case is often referred to as a retainer.  My minimum retainer is generally $500, though I have begun some cases without any retainer, and on some matters the flat fee is only a small fraction of that.

COMBINATION FEES
Fee agreements often involve elements of more than one of the general types of fee.  For example an attorney may require an initial fee, frequently called a retainer or flat fee, to take a case, and then an additional hourly or contingent fee to handle it to conclusion.  When combination fees are used attorneys may agree to reduce one kind of fee if another kind is raised at the same time, such as agreeing to lowering the contingent fee that would otherwise be charged if an hourly fee is also included.

VALUE BILLING
In non-criminal matters attorneys and clients also sometimes agree on what you might call value billing, in other words agreeing to the value of the attorney reaching certain goals or specific outcomes, perhaps with several different payment points in the work.  Once those things are attempted, or completed, the agreed value of that representation is added to the bill, without regard to the number of hours required to complete it, though the billing may be tied to the success of the efforts.

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