Gross recovery - how is my contingent fee determined?

[Trystero99]

What is the name of your state (only U.S. law)? TX

My suit is against a company for deceptive trade practices. I'm represented by counsel, but now do not trust them and wish I had not hired them. So I'm asking the internet instead of the attorney.

Say I paid $50,000 for collectible merchandise as an investment, and it was only worth $20,000. I was a fool, but was also deceived. Assume the defendant will offer to buy it back for $25,000, a little extra to make the suit go away. My contract with the attorney is to sue for "all damages incurred as a result of the sale," and says the contingent fee is a percentage of "the gross amount of the recovery." "Recovery" is not defined in the contract, nor is "damages."

If I accept an offer to buy the merchandise back for $25,000, is the "gross amount of the recovery" for fee purposes the full cash proceeds of $25,000, or the $5,000 by which it exceeds the market value of the merchandise returned in exchange? Seems like he $5,000 iis the damages recovered, but did I commit to paying the higher amount? I know gross recovery means not reduced by expenses, but does it not need to be reduced by the market value of merchandise returned as a condition of the settlement?

Is there any authoritative reference that addresses this question?

 

[adjusterjack]

If I accept an offer to buy the merchandise back for $25,000, is the "gross amount of the recovery" for fee purposes the full cash proceeds of $25,000,

Yes.

Just like a personal injury claim.

If you had $20,000 in medical bills and settled for $25,000 the lawyer would get a third of the $25,000, leaving you in the hole for some of the bills.

That's a bad example because personal injury claims are often settled for enough to pay the attorney one third, pay the medical bills and still leave something for the claimant.

In your case the lawyer will get his percentage of the $25,000, not of the $5000.

If you want that to be any different I suggest you hash it out with the lawyer before you agree on any settlement.

By the way, I don't see you having a winnable case here. If you bought a widget from me for $50,000 when you could by it elsewhere for $25,000 there was nothing deceptive on my part, just stupidity on yours and I wouldn't offer any kind of settlement since I know you won't win.

 

[latigo]

What is the name of your state (only U.S. law)? TX

Is there any authoritative reference that addresses this question?

Yes! Two in fact. An English dictionary and "The Complete Idiot's Guide to Investments".

Both available at Barnes & Noble.

 

[Trystero99]

Yes! Two in fact. An English dictionary and "The Complete Idiot's Guide to Investments".

Both available at Barnes & Noble.

Yes, I’m guilty of “stupidity” and being an “idiot.” (Thanks for the warm welcomes.) But the defendant’s trade practices were most definitely deceptive.

I don’t agree that this is “just like a personal injury claim.” The personal injury plaintiff uses part of the recovery to satisfy medical bills. Of course they owe a contingent fee on the entire amount recovered. But in personal injury settlements, the medical bill payment does not go directly back to the defendant. In my example, I’d be returning the merchandise to the defendant for a greater settlement.

I would like to understand how the objective value of the merchandise returned to the defendant would not reduce the amount I’m considered to have recovered from the settlement.

 

[Paul84]

Yes.

By the way, I don't see you having a winnable case here. If you bought a widget from me for $50,000 when you could by it elsewhere for $25,000 there was nothing deceptive on my part, just stupidity on yours and I wouldn't offer any kind of settlement since I know you won't win.

Seems to me that Trystero99 would have a case with sufficient evidence to prove the elements of fraud in the state where the sale occurred (but please correct me if I'm wrong):

http://www.texas-opinions.com/law-fraud.html

 

[adjusterjack]

Yes, I’m guilty of “stupidity” and being an “idiot.” (Thanks for the warm welcomes.) But the defendant’s trade practices were most definitely deceptive.

Deceptive? How? You haven't explained that.

I don’t agree that this is “just like a personal injury claim.”

I used that as an "example" of how contingency fees are calculated. If you didn't get that, ask your lawyer how he plans to calculate his contingency fee.

I would like to understand how the objective value of the merchandise returned to the defendant would not reduce the amount I’m considered to have recovered from the settlement.

That's easy. You needed the lawyer to get you that settlement.

Again. No reason to argue the point here. Ask your lawyer how his fee will work and if you don't like it, attempt to renegotiate the fee agreement before you agree to a settlement.

 

[adjusterjack]

Seems to me that Trystero99 would have a case with sufficient evidence to prove the elements of fraud in the state where the sale occurred (but please correct me if I'm wrong):

How do you even come close to that conclusion if the OP hasn't explained how he spent $50,000 on items worth $25,000?

So far I can't imagine any wrongdoing on the part of the seller, especially since the OP has already admitted to stupidity.

 

[quincy]

Seems to me that Trystero99 would have a case with sufficient evidence to prove the elements of fraud in the state where the sale occurred (but please correct me if I'm wrong):

http://www.texas-opinions.com/law-fraud.html

I can see from what has been posted that there could be the possibility of fraud on the part of the seller. But far more would need to be known about the original transaction to determine this better (how the collectible was marketed for sale, what sort of collectible was purchased ...).

I don't think that Trystero99 is going to be able to rely on a forum, however, to get the answers he needs. If he does not trust the attorney he has, he should seek out help from another in his area for a personal review - preferably an attorney who knows something about the type of collectible Trystero99 purchased.