Occasionally I am asked by clients and prospective clients about the costs and expenses of hiring a lawyer to handle their cases for injuries. It seems like this question is coming up more often now than it ever used to. It's a good question and a timely one too. Clients have a right to know in advance what it might cost them, especially in today's troubled economy. Also, clients are scared of frivolous cases and do not want to be accused of a frivolous lawsuit. No one likes sticker shock, and personal injury clients are no exception. Florida Supreme court rules control Florida lawyer's contingency fee contracts. Unlike a straight hourly rate fee contract, or a lump sum contract where fees are paid on a negotiated hourly rate or flat rate basis, clients who hire lawyers on a contingency fee only pay FEES if the contingency (winning the case) occurs.
So let me discuss fees and costs this way:
- Before suit: there is no significant Adverse Consequence to the client financially. The client is not in any jeopardy of having to pay court costs, a final judgment, go to court, give a deposition, submit to a medical exam, produce confidential records, or in any other way submit to an unwanted intrusion or expense. A claim is not frivolous until a jury decides against it. So there is no specter of criticism for such claims. If you don't make a claim you don't get any money and there is no risk.
- After suit: Our work is usually divided into two stages: presuit and suit. During the presuit stage (out of court) we investigate each case, and then often try with the client’s permission to settle the case before filing suit. The second stage (in court) is the part which has “adverse consequences” if a suit is lost. To avoid any risk clients often decide to settle without filing a suit. Under our documents, the client has the last say about whether to accept or decline any settlement offers by the at fault party, and the client controls the decision to sue or not sue. Our fees go up after suit is filed, and although some of the court costs are recoverable, not all expenses we incur must be reimbursed by the defense. For example, our travel expenses are not subject to reimbursement.
The “adverse consequences” of losing a suit are as follows:
1. The verdict may be lower than the defendant’s highest offer. At trial there may be no recovery, or the net recovery after fees and court costs and other expenses may be less than any highest final presuit offer.
For example if the highest presuit offer to you by the insurance company is $100,000 and you rejected it, the final verdict after trial might only be $80,000.
2. There may be a cost judgment against the client, including substantial defense attorney’s fees. Florida has adopted a law that mandates assessment of attorney’s fees against a losing party if the verdict is substantially (more than 25%) different than the last offer before trial.
For example, if you were offered a settlement of $100,000 and decided to reject the offer, and a verdict for $75,000 or less was returned, then the Court would assess the defense fees against you. Those would come out of the $75,000 so your net before paying your own attorney's fees would be a lot less than if you accepted $100,000. Defense costs may run into thousands of dollars or more. If the verdict was $0, then the Court would assess defendant’s attorney’s fees against you and the result would be a cost judgment (debt) owed by you to the opposing party. If not paid then the opposing party could take legal steps to collect the debt by garnishment or levy and sale of assets. Note: both you and your own attorney suffer the loss if you decline a good offer and get a low verdict.
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Now, generally what are the fees and costs when you hire a lawyer? For a PI lawyer like me, none until the case is won. No fees and no costs until the case is won.
Here is what ALL contingency fee contracts must do:
- They must be written: no handshake deals allowed.
- The contract must state the percentages due depending on whether there was a trial, settlment or an appeal.
- The contract must state whether costs will be deducted and if so, whether before or after the fee is calculated. In some cases the costs can run into thousands of dollars so this is a big deal.
- Upon completion of the case, the client gets a detailed breakdown of all costs and fees with an explanation how they were determined.
- The client and lawyer must both sign the Fee contract.
- A fee cannot be shared between lawyers without the consent of the Client in writing.
- A boilerplate disclosure must be signed by the client in which he agrees he read a "Statement of Client's Rights" and received a copy and understands those rights.
Some key provisions in the Statement of Clients Rights say:
You, the client, have the right to know in advance how you will need to pay the expenses and legal fees at the end of the case...you have the right to know periodically how much money your lawyer has spent on your behalf. You also have the right to decide how much is to be spent to prepare a case.
- How much can a lawyer charge without the court's permission? After suit but before an answer is filed as follows:
- 1/3rd up to $1 Million
- 30% of any recovery betrween $1 million and $2 million
- 20% of any recovery over $2 million
After the case becomes contested fees at different amounts can be charged. The fee structure has been approved by the Courts for years, and almost every PI lawyer charges fees as allowed.
Fees in excess of these structures are potentially illegal.
Rule 4-1.5 prohibits illegal fees. Fees which are too high, or which were generated by illegal advertising are illegal. Contingent fee contracts are not allowed in any domestic relations matter or criminal cases. The vast majority of cases involving contingency fees are cases involving some type of bodily injury, death, medical malpractice or the like.
