Is it unreasonable to put a contingency lawyer on a budget?

January 11, 2007 12:37 PM

Is it unreasonable to put a lawyer on a budget?

I got injured pretty badly. The insurance company accepted full liability, then went all Linda Blair on me. So this thing is going to have to be handled by a lawyer. The lawyer's contract calls for a percentage cut of the settlement on contingency (this part seems standards and is fine), plus 100% reimbusement of all case expenses regardless of outcomes. That's the snag. The lawyer is firm that it must be a blank check on expenses. When I asked about the possibility of winding up with nothing left after his fee and expenses, or even owing him more than the settlement can cover, he pooh-poohed the question but admitted it's possible. Yikes.

He says most cases like this total less than X dollars in expenses, and that even after his fee that should leave me with some money for the doctors. I'm willing to pre-approve an expense budget of 120% that, but want to be consulted before goes it goes beyond so there's no unpleasant surprises. The lawyer says no way, non-negotiable. Either commit upfront to paying unlimited expenses, or else hire someone else.

The 2nd choice guy has the same requirement, plus credit card-sized interest fees accruing on the balance. Neither sends out monthly invoices so I can see how high the balance is running to pay it down to avoid the interest.

I'm a novice at this, so need a hive-mind reality check. How hard would it be to find a personal injury lawyer willing to accept some (even minor) degree of expense oversight or budget? It took a while to find a lawyer who otherwise seemed like a good choice, so if my expectations are completely unreasonable, it'd be good to know now. Thanks.

(California, by the way, in case it matters. If you can recommend someone, I'm all ears.)

posted by nakedcodemonkey to Law & Government (20 answers total)

Well, there's always the personal injury lawyers who advertise that "you pay nothing unless we win." The wisdom of hiring one of those guys is left as an exercise to the reader.
posted by Faint of Butt at 12:41 PM on January 11, 2007

I worked for a personal injury lawyer in NYC, and our standard agreement never charged the client expenses if we didn't win. It might be a situation where you need to shop around more.
posted by dcjd at 1:00 PM on January 11, 2007

Best answer: FoB, that's what a contingency fee is. Because most cases settle, you'll never "pay nothing." Those ads just restate the status quo in a much slimier way.

Rule 1.4(a) of the Model Rules of Professional Conduct provides that a lawyer must keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information. So, yes, you have a right to accounting of expenses. I'm confused as to why they won't issue you monthly statements.
posted by Saucy Intruder at 1:03 PM on January 11, 2007

Best answer: IME, personal injury lawyers serve a segment of the litigant population that generally can't afford anything but a contingency-basis fee arrangement. There's plenty of that work, so there's little incentive to offer other arrangements. PI lawyers take the juciest cases they can get, since the work is not that much harder whether you're going after $50K or $500K. (I actually worked for a firm that did PI, and the break-even point was around $30K -- if the whole case wasn't worth at least that much, then the contingency and fees weren't likely to pay operating costs over the time it took to do the case.)

PI cases usually involve two areas of recovery: verifiable damages like your medical bills and lost wages, and "pain & suffering." Again, IME, insurance companies will pay for meds pretty easily (unless they think you're faking), and will pay lost wages if you've got good evidence (e.g. a long salary history and statements from your employer that you weren't being paid because you couldn't work after your accident).

OTOH, they often balk at paying big (or even small) pain & suffering damages, because they know that if they go to trial, they can often convince a jury that you should just suck it up, because shit happens.

So...you might propose a two-part deal to the lawyer: a lower percentage cut of medical and lost-wages recovery, plus an expenses limit; plus a higher percentage of P&S. That way, you may get more money to pay medical bills (which the lawyer should help negotiate anyway) and the lawyer has an incentive to string the insurance company up for big P&S damages, plus bad faith for jacking you around.

IAAL, but IANYL.
posted by spacewrench at 1:11 PM on January 11, 2007

Response by poster: Saucy Intruder, I was told that they don't tally/report the info for clients as a manner of course so it's an inconvenience to remember to do it for one case. Ditto with running unusual expenses by a client -- not typical, so hassle to remember and a risk if they forget. Lawyer #1 said that he'd rather not accept the case than risk of being on the hook for expenses he forgot to tell me about.

Also, it'd be better if I could hear about significant overruns before they happen. "Jet to Tahiti for a month? Gonna need to know what that's about before writing the check ..."
posted by nakedcodemonkey at 1:15 PM on January 11, 2007

Either commit upfront to paying unlimited expenses, or else hire someone else.

Hire someone else. He's being unreasonable. If you have trouble before the case even starts you can imagine how much trouble you might get from him later.
posted by caddis at 1:44 PM on January 11, 2007

Further, of course they tally the expenses, how do you think they bill you for them? It is most likely all computerized so that giving you a record is as simple as puching a button. He's not just unreasonable, he's likely a liar too. You can do better.
posted by caddis at 1:47 PM on January 11, 2007

I've been thru the injury lawsuit thing twice and neither time was I responsible for anything but a percentage if I won. Why the heck would anyone give a lawyer a percentage if he's gaurantee time and materials?
posted by Mitheral at 1:54 PM on January 11, 2007

It should be straight %, usually 1/3. Ask your friends if they know any good attorneys.
posted by lee at 2:10 PM on January 11, 2007

I have heard about lawyers that attempt to make expenses an income source by overcharging their clients for them. Some also try to cover regular overhead through overcharging for expenses. They are allowed to charge you for the cost of making copies involved with your case, but if the copier breaks they can't tack the repair bill onto your expenses. Some try to do this though. I think that agreeing to regularly invoice you for expenses and clear anything over x amount with you in advance is completely reasonable, but lots of guys have a fee agreement, and you either sign it or take your business elsewhere. You would probably be fine agreeing to cover expenses (it is standard for low dollar amount cases) but if it makes you uncomfortable, I would keep looking until you find someone who is willing to agree to your terms. However, having a lawyer that you trust and who will return your phone calls should probably be your main priority. If you find someone who you think qualifies there then you may not want to let invoicing and clearing expenses be a deal-breaker.

IAAL but IANYL and I ain't never been to California. Who knows how it works out there. Good luck. Be prepared for this not to be resolved for a long time. Just the nature of the beast unfortunately.
posted by ND¢ at 2:16 PM on January 11, 2007

Even in contingent fee cases it is typical for clients to pick up the tab for expenses. In some states it is actually required for the clients to be responsible for these expenses as a lawyer is forbidden to provide financial assitance to the client.
posted by caddis at 2:27 PM on January 11, 2007

It seems that California is not one of those states where it is required.
posted by caddis at 2:30 PM on January 11, 2007

In my experience, the standard fee is 33.3 percent of the recovery, plus expenses--if the case does not go to trial. If a case goes to trial, most contingency fees go up to 40 percent. Regarding your contract, be aware that attorneys can take their percentage out before, or after, expenses.

For example, if you get a $100,000 recovery and there are $15,000 in expenses (usually for court filing fees, depositions, expert witness fees, medical records, etc.), the attorney's fee would be $33,333 if he takes fees out before expenses, or $28,333 if he takes them out after expenses. This is always negotiable. Realistically, however, your expected recovery/damages will dictate how willing an attorney will be to negotiate.

Personal injury firms have a built-in pressure to effectively and efficiently handle your claim because their recovery is the same whether it takes 100 hours or 200 hours to resolve your case (which is one of the reasons he is likely resisting your request to provide monthly invoices). Accordingly, if this is a straight-up insurance dispute, the attorney should have the processes, experts, experience, etc. to get this resolved quickly (relatively speaking, as all legal disputes crawl relative to the real world). This is generally not the case with most other attorneys because they make more money the more they work on your case (e.g., billable hours). Also, please recognize that this is a gross generalization.

It does seem a little odd that the attorney is not willing to send you a monthly bill regarding expenses. I would expect that most attorneys track expenses pretty carefully. If your claim is significant (e.g., > $50,000), I would look around a little more. At the end of the day, however, I don't know if it should be a deal breaker if you are otherwise satisfied with the attorney and their references.

IAAL but I am not your lawyer.
posted by ajr at 3:02 PM on January 11, 2007

Best answer: Unless you ask them, most lawyers will not detail expenses but just send a bill that says "$500, fax charges," or whatever. Whoever you go with, and I agree with shopping around for somebody more reasonable, insist on monthly recaps that have detail showing exactly what you are paying for. A reputable lawyer will have no problem with this, any more than your plumber does.
posted by beagle at 4:15 PM on January 11, 2007

I was told that they don't tally/report the info for clients as a manner of course so it's an inconvenience to remember to do it for one case

You owe me a new bullshit detector.
posted by Saucy Intruder at 4:40 PM on January 11, 2007

Best answer: Find another lawyer. Many firms (including my own) will agree to seek your approval for all but insignificant expenses.
posted by kellygreen at 5:51 PM on January 11, 2007

Response by poster: Thanks, everyone! You've made a tough decision much easier. I'm not looking forward to starting the search process over, but it's good to know that this isn't the norm after all. Whew.
posted by nakedcodemonkey at 6:51 PM on January 11, 2007

Best answer: For informational purposes: You are not likely to see $500 for fax charges and the like. The biggest expenses for a plaintiff's practitioner, in descending order, are expert fees charged by physicians (independent or treating physicians) and transcript charges by court reporters. The expert fees will likely be several hundred to a couple thousand dollars, and transcripts are usually a couple hundred per deposition or more, depending on the number of pages.

You did not mention what kind of issue is involved. The above assumes the run of the mill auto accident. If there are complex engineering issues, such as with a product liability case, then expert fees (running to several thousand dollars) will also be involved.
posted by yclipse at 8:06 PM on January 11, 2007

Beware of law offices. Don't drink their 'koolaid', you'll be charged for it. (seriously)

I worked for awhile at one of the giant law firms, in the accounting office. The detail they tracked for billing seemed insane to me! In the case of fax, we were spending more man-hours money to track single-page faxs than the amount we could bill (at least, I guessed it was that bad).

So, at least the big firms do in fact track expenses that closely. IANAL, but I worked for a bunch, once (and never again).
posted by Goofyy at 7:04 AM on January 12, 2007

I work for a small firm. IANAL, I'm a paralegal, and I handle the billing and I draft the fee agreements. We're not in personal injury, but I can tell you that we promise to notify/seek permission from clients for any expense that's reasonably anticipated to be above $300, like hiring an expert or taking a deposition or whatever.

I agree with the others who have said that lawyers tend to track their expenses closely, and I doubt they can't send you a monthly bill or statement. However, in my opinion, "faxing" and other administrative tasks would not be considered expenses, they would be considered time charges (0.1 hours to fax document, etc.), and therefore included in your contingency amount. If they ARE considered expenses, ask the lawyer for a menu of their "In-House Expenses", the flat rates they charge for these services.
posted by Sprout the Vulgarian at 11:11 AM on January 12, 2007