June 23, 2012 (Original publish date) • By Dennis Beaver
It is impossible to turn on TV, open the phone book to the attorneys section or surf the Web and not find ads for personal injury lawyers, which generally all sound pretty much the same and stress, “No recovery, no fee.”
Sounds like a great way of hiring a lawyer, doesn’t it? The ads want you to think, “The lawyer who takes my case puts in all the time and gets paid only if we get paid. For me, it’s a no-brainer, a free ride, I can’t lose. Sure, I’ll sign!”
So you phone the “800” number flashed on your screen and wind up hiring the “No recovery, no fee” lawyer, who then loses your case after years of litigation. Are you on the hook for anything?
Well, you could easily get a letter from the attorney which reads, “I am sorry that we lost your case. Now we need to talk about how you are going to pay us for …”
“Pay us? What part of the no-fee stuff means that I have to pay anything at all?” you might be thinking. And, in fact, one of the most frequent complaints to state bar associations from unhappy clients deals precisely with the meaning of the words “no fee” and the resulting confusion. So, what does “no fee” really mean?
No fee does not mean free
Ron Jones specializes in business and real estate law in Hanford and sees the public confusion as a result of two factors.
“When most people think of hiring a lawyer — let’s say, in a divorce or contract dispute — they usually are concerned with the amount that lawyer will bill for time spent on the case. If it is a personal injury matter, fees are often on a percentage basis — for example, one-fourth to sometimes half of the amounts recovered, plus costs.
“There is generally more to most cases than just the lawyer’s time,” Jones points out. “The written retainer agreement lawyer and client sign must set out clearly what out-of-pocket expenses incurred the client will be expected to pay. There is a difference between attorney fees — what a lawyer charges for time, document preparation and advice — and costs, which are other expenses incurred for the client’s benefit.”
Some example of costs
Costs can include any and all of the following, and again, we are not talking attorney time, rather, the out-of-pocket expenses which clients can be responsible for:
• Postage and shipping costs
• Photocopy and binding expense
• Travel expense, including mileage, train and airplane
• Lodging and meal expense
• Deposition and court reporter charges
• Video conferencing/long-distance telephone charges
• Expert witness fees, such as forensic accountants in divorce cases
• Private investigators
• Computerized research if the law firm is charged by the provider
• Possibly secretarial and paralegal time
• Court filing fees.
“Who pays what, under what circumstances and when, should be clearly set out in writing,” Jones observes. He describes three basic types of retainer agreements:
1) The client pays attorney fees and all related costs and expenses, such as hiring a private investigator, an accident reconstruction expert, accountant, etc.
2) The law firm covers everything and the client reimburses the law firm out of the recovery, only if there is one.
3) The client pays no attorney fees unless the case is successful, but does pay the out-of-pocket costs.
“Fee agreements where the lawyer covers all expenses related to the case are typical in personal injury cases where it is likely there is going to be a recovery. You will not normally find this in cases which have a limited chance of success or which have a low dollar value,” he notes.
“It is important for the public to understand that law is a business with a bottom line. Reasonable lawyers try to not accept cases which appear as doubtful or which have a minimal chance for success. With most personal injury cases — where the lawyer is paid a contingent fee — an experienced attorney who is good at selecting cases will only take those which will likely provide a desirable result.”
How not to be surprised
“Always read the retainer (fee agreement) very carefully,” Jones stresses. “If you do not understand the fee agreement, but are inclined to hire the lawyer, it is a good idea to take that retainer to another attorney and pay for a consultation in which it can be clearly explained to you. Also, it’s a good idea to set out in writing, that before your lawyer incurs any costs which might exceed, say, $1,000, that your approval is required.”
“Finally,” the Hanford lawyer underscores, “when you do not have a working history with that attorney and fees are expected to exceed $1,000, California law requires a written, signed agreement.”
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.