How to formalize an agreement with a lawyer?

January 7, 2009 6:45 AM

My cousin needs some legal advice about how to formalize an agreement with a lawyer, also this lawyer has agreed to work for free in exchange for 1/3 of any winnings. Is this fair? If so, is there a specific contract he should request?

Briefly (please excuse the vague explanation) he found out recently that a hospital lost some of his medical records years ago – he requested the records and they could not be found. A mutual friend has an uncle who is a lawyer and said that this may be a lawsuit. The lawyer asked for 1/3 of any win and, if nothing ever comes of the suit, than he won't charge anything. This informal agreement leaves me with a bad taste in my mouth, though maybe I'm too concerned.

Maybe some of you guys can recommend some sort of document to request from the lawyer that can protect my cousin. For example, it’d be good to be sure that this 1/3 includes legal expenses or other hidden costs. I just want to know the best way to protect everyone and keep this as streamlined as possible. Incidentally, is 1/3 fair?
Thanks!

posted by mateuslee to law & government (8 comments total)

This is called a contingency agreement and is very common in this kind of suit, and 1/3 is a a typical take, and probably not unfair--unless there's some important information left out of the post it doesn't sound like this is some kind of slam-dunk malpractice case for which your cousin is likely to win oodles of millions of dollars. You can Google "contingency fee" or "contingency agreement" to get a start for some things you might look at.
posted by phoenixy at 6:54 AM on January 7 [1 favorite]

Let me be the first to point out that straight up asking for legal advice (even for somebody else) on askme is a good way to get no useful information. It's a good way to get this: I'm not giving you legal advice, and am in no way wanting, being, or pretending to be a lawyer for you, your cousin, or anybody I'm not already a lawyer for.

To generally explain that billing practice, though, it's called a contingent fee, and it is pretty usual. I can't speak to how fair 1/3 is in this particular case, but again, it is fairly standard. Keep in mind that lawyers in contingent fee representations are typically footing the bill for court fees and all that sort of thing, and are potentially deferring payment for a long long time, which is why the fee is so high. So, basically, what phoenixy said.

It's smart for anybody to get a scope of representation letter when hiring a lawyer. They may call this an engagement letter or a retainer letter. It should lay out the terms of the agreement and the scope of the representation (duh). This is so your cousin doesn't think his hospital suit lawyer is going to represent him during a custody dispute or something.

If a family member wanted to hire an attorney that didn't have a standard scope of representation letter, I would throw a hissy fit until they found another attorney. He can get another attorney to review the first attorney's scope of representation letter, if he wants.
posted by averyoldworld at 7:02 AM on January 7 [1 favorite]

Yes, 1/3 is standard, though your cousin should inquire as to whether expenses/fees come out of the attorney's 1/3 or your cousin's 2/3 if he's unsure. The attorney preparing some type of fee agreement document for you both to sign is an option many take, so your cousin could request something like that. It's likely to be less formal-looking than the usual contract, though, because attorneys are actually held to relatively high standards on client relations. They're not likely to get away with fine print or disclaimers when it comes to dealing with their own clients, so they usually don't bother with that stuff. So don't be freaked out by the lack of formality.

That doesn't mean your cousin shouldn't be vigilant, though. If he's at all concerned, he should ask for something (anything...even a short letter on firm letterhead would be adequate) stating what expenses are coming out of who's share. The attorney's assistant can handle that in a few minutes, and if they're not willing to give your cousin something as easy as that they're probably not the guys you want representing you. This also might be a good measure of how much time they're willing to devote to the case, which is the biggest issue with contingency litigation.
posted by aswego at 7:07 AM on January 7

Working on contingency is pretty common in cases like that. I pursued a personal injury case with the same agreement. 1/3 + expenses is about the going rate. Expenses are going to include copies, courier services and a bunch of other nickel and dimey type things. If you're concerned, ask your lawyer for a written description of what expenses entails or ask for a written estimate of what those expenses might be.
posted by electroboy at 7:10 AM on January 7

The lawyer will probably have some kind of formal document for retention of services which will detail all of this. Contingency fees are utterly commonplace, and this sounds completely above-board.

Lawyers, particularly in personal injury practice, take almost all of their cases this way. Personal injury liability is pretty hefty. Settling for $500,000 to $1 million is pretty common. If the lawyer takes half of that, hey, that's $175,000-333,000 in one suit. Do that once a year and you're fine. You probably file a hundred such suits for every one major award, plus a few minor ones (tens of thousands), but that's how this kind of practice works. It's the shotgun approach to litigation: file enough lawsuits and you're bound to nail someone.

So yeah, it's kind of sketchy, but not at all for the clients. Society as a whole suffers because there are way more cases filed than have merit, but individual clients tend to do just fine.

Stop worrying.
posted by valkyryn at 7:49 AM on January 7

The lawyer will likely have your friend sign a contingency fee agreement. One thing your friend needs to look out for is whether he has to pay expenses or if the lawyer will cover those. I worked for an employment attorney right out of law school, and he always had contingency + expenses agreements. In that case, the client paid filing fees, copying costs, etc. The only thing they were not paying for was the legal fees.
posted by reenum at 7:53 AM on January 7

Sounds pretty fair to me, and to my knowledge, is common. Repeating others, just make sure the lawyer and the client understand and agree on how the accounting will work out should the suit be successful. It can be negotiated, too. The lawyer wants to be compensated for his work, and the client wants his settlement.

Just for example, suppose a suit is filed for $100,000 plus the cost of legal fees. What's the split then? What if the $100,00 is awarded, but not the legal fees? What if the other guy doesn't pay or pays slowly- who gets what, when? Work all that out.
posted by gjc at 7:55 AM on January 7

Have your cousin look up the attorney in Martindale Hubble or elsewhere. If the attorney or the firm has any degree of experience, presence, or size, then they will have a standard contract which will probably be just fine.

Not to comment on his case, but I think such is especially important to do in this scenario because I seriously question the quality of an attorney who advises that lost medical records is a good case to pursue... I would like it would be worth, at best, whatever the nuisance value is.
posted by dios at 2:50 PM on January 7