Right way to structure contract with a lawyer without "open check"

[mvoltin]

Georgia - Had an accident where things are generally straightforward but still need a lawyer to help with the process. I was proposed a contract that seems essentially unbalanced and unfair. Please advise if there is a better way to structure this type contract. Two parts of the contract are listed below (abridged). One is for fees and owe is for costs.

Let's for the sake of this question, the Fees section is acceptable. I am struggling with the costs section. The lawyer told me "we may have to pay several hundred to transcriber, $500-$700 to a videographer, etc.". This seems like a blank check where nobody has a duty to use funds in judicious manner. Here is an example of scenario I am afraid of:

Law firm figures there is $300,000 recovery virtually guaranteed. They get $100,000 but there is $200,000 they can spend on costs. They hire their cousin Vinny as a videographer (as opposed to putting iphone on tripod) at a high (but arguably reasonable) cost. Even if no additional witnesses are needed, they may take more depositions that would drive the cost up, etc. At the end, most of the remaining $200,000 can be expensed but it would be difficult to argue/prove what was really necessary, etc. They may have a friend who is an expert in accident reconstruction and they may hire them even though an accident reconstructions wasn't really needed and changed the outcome of the settlement. There is nobody in charge of spending money who has duty to minimize unnecessary costs and protect the remaining recovery amount.

I understand many victims may sign this contract because there is an imbalance of power (attorneys can paint grim picture and have more info) but no business would enter in this type of "open ended" contract, ever. Is there a better way to do this? The lawyer asked me to propose an alternative.

Fees: "As compensation for their services, I agree to pay the Firm (33%) of the gross recovery on behalf of the undersigned. Recovery is defined as an offer of settlement, verdict, or judgment. lf it is necessary to file suit, compensation for the Firm shall be 40% of the gross recovery. lf post- trial motions are filed, or if the case proceeds to appeal, compensation for the Firm shall increase to (45%) of the gross recovery.

Costs: "I understand that the firm may advance case expense costs, which will be reimbursed from any recovery' case expense costs may include, but are not limited to, obtaining medical records and bills, investigative fees, service of process fees, witness fees, deposition costs, transcript costs, medical narratives, and expert may witness fees' Please note that certain case expense costs for copying, printing, postage, and file supplies be charged at the conclusion of the case at a reasonable estimated amount. Upon request, the firm will provide an itemized list of expenses to the undersigned. The parties agree that the firm will be fully reimbursed for all case expense costs at the time of recovery, in addition to the attorney fee. NO RECOVERY, NO FEE".

 

[quincy]

Georgia - Had an accident where things are generally straightforward but still need a lawyer to help with the process. I was proposed a contract that seems essentially unbalanced and unfair. Please advise if there is a better way to structure this type contract. Two parts of the contract are listed below (abridged). One is for fees and owe is for costs.

Let's for the sake of this question, the Fees section is acceptable. I am struggling with the costs section. The lawyer told me "we may have to pay several hundred to transcriber, $500-$700 to a videographer, etc.". This seems like a blank check where nobody has a duty to use funds in judicious manner. Here is an example of scenario I am afraid of:

Law firm figures there is $300,000 recovery virtually guaranteed. They get $100,000 but there is $200,000 they can spend on costs. They hire their cousin Vinny as a videographer (as opposed to putting iphone on tripod) at a high (but arguably reasonable) cost. Even if no additional witnesses are needed, they may take more depositions that would drive the cost up, etc. At the end, most of the remaining $200,000 can be expensed but it would be difficult to argue/prove what was really necessary, etc. They may have a friend who is an expert in accident reconstruction and they may hire them even though an accident reconstructions wasn't really needed and changed the outcome of the settlement. There is nobody in charge of spending money who has duty to minimize unnecessary costs and protect the remaining recovery amount.

I understand many victims may sign this contract because there is an imbalance of power (attorneys can paint grim picture and have more info) but no business would enter in this type of "open ended" contract, ever. Is there a better way to do this? The lawyer asked me to propose an alternative.

Fees: "As compensation for their services, I agree to pay the Firm (33%) of the gross recovery on behalf of the undersigned. Recovery is defined as an offer of settlement, verdict, or judgment. lf it is necessary to file suit, compensation for the Firm shall be 40% of the gross recovery. lf post- trial motions are filed, or if the case proceeds to appeal, compensation for the Firm shall increase to (45%) of the gross recovery.

Costs: "I understand that the firm may advance case expense costs, which will be reimbursed from any recovery' case expense costs may include, but are not limited to, obtaining medical records and bills, investigative fees, service of process fees, witness fees, deposition costs, transcript costs, medical narratives, and expert may witness fees' Please note that certain case expense costs for copying, printing, postage, and file supplies be charged at the conclusion of the case at a reasonable estimated amount. Upon request, the firm will provide an itemized list of expenses to the undersigned. The parties agree that the firm will be fully reimbursed for all case expense costs at the time of recovery, in addition to the attorney fee. NO RECOVERY, NO FEE".

No one on this forum can analyze contracts or help you draft a contract. That gets into the practice of law and requires an attorney licensed to practice in your own jurisdiction. In other words, it exceeds the scope of this forum.

Here, however, is a link to Georgia’s Rules of Professional Conduct, Rule 1.5, Lawyer Fees, that can help you determine the reasonableness of fees:

https://casetext.com/rule/georgia-court-rules/georgia-rules-of-professional-conduct/chapter-1-georgia-rules-of-professional-conduct-and-enforcement-thereof/part-one-client-lawyer-relationship/rule-15-fees

I suggest three things. One, go over the lawyer contract point by point with the attorney you are looking to hire, until you understand exactly where the money is going and what it means for your potential bottom-line recovery. Two, see more than one lawyer and do the same with each. Three, contrast and compare.

Good luck.

 

[mvoltin]

No one on this forum can analyze contracts or help you draft a contract. That gets into the practice of law and requires an attorney licensed to practice in your own jurisdiction. In other words, it exceeds the scope of this forum.

Here, however, is a link to Georgia’s Rules of Professional Conduct, Rule 1.5, Lawyer Fees, that can help you determine the reasonableness of fees:

https://casetext.com/rule/georgia-court-rules/georgia-rules-of-professional-conduct/chapter-1-georgia-rules-of-professional-conduct-and-enforcement-thereof/part-one-client-lawyer-relationship/rule-15-fees

I suggest three things. One, go over the lawyer contract point by point with the attorney you are looking to hire, until you understand exactly where the money is going and what it means for your potential bottom-line recovery. Two, see more than one lawyer and do the same with each. Three, contrast and compare.

Good luck.

I understand nobody can draft a specific contract but this was more general question about best ways to frame the cost provision - this is something fairly generalizable and folks working in this space probably have encountered similar dilemma and possibly found a solution. So, perhaps someone who has experience with this can answer.

in regard to the three things - yes, agree... they are self-evident. Because of having done #1 I am posting this question here.

 

[quincy]

I understand nobody can draft a specific contract but this was more general question about best ways to frame the cost provision - this is something fairly generalizable and folks working in this space probably have encountered similar dilemma and possibly found a solution. So, perhaps someone who has experience with this can answer.

in regard to the three things - yes, agree... they are self-evident. Because of having done #1 I am posting this question here.

The attorney you see will be drafting the contract. If you object to the terms, you tell the attorney what you object to and why.

 

[mvoltin]

Again, thank you but that's not the question (again). Yes, attorneys will be drafting the contract but I have input and have a question about best practices. Hopefully someone who has experience in this can answer. Respectfully.

 

[quincy]

Again, thank you but that's not the question (again). Yes, attorneys will be drafting the contract but I have input and have a question about best practices. Hopefully someone who has experience in this can answer. Respectfully.

Respectfully, read (again) what Rule 1.5 says about fees.

An attorney should charge only what is necessary and reasonable. IF you question the need or reasonableness of any fee, you should discuss that with your attorney. IF you think the attorney is going to rip you off, find a different attorney you trust. IF you feel an attorney HAS ripped you off (unlikely because most attorneys value their licenses), you can file a fee dispute and a complaint.

You can let the attorney know what you expect from him/her and what you are able to or willing to spend but the best practice is to let the professional practice his profession.

 

[mvoltin]

Respectfully, read (again) what Rule 1.5 says about fees.

An attorney should charge only what is necessary and reasonable. IF you question the need or reasonableness of any fee, you should discuss that with your attorney. IF you think the attorney is going to rip you off, find a different attorney you trust. IF you feel an attorney HAS ripped you off (unlikely because most attorneys value their licenses), you can file a fee dispute and a complaint.

You can let the attorney know what you expect from him/her and what you are able to or willing to spend but the best practice is to let the professional practice his profession.

Again, I really appreciate but I think you are totally missing the point of this question (from the begining). Please let others answer.

P.S. Just as further explanation - this is not about what reasonable. It's about what's necessary and in the best interest of the client. For example, another cost may increase a chance of winning a case by 0.1% but may cost 80% of settlement amount. It could be considered necessary (chances of case being won increases) and reasonable (whatever it is) but not in the best interest of the client. It's a simple business contracting question and best practices of how it's done in the legal domain.

Unfortunately, having too many non-answers (and just pointing to generic resources that have nothing to do with the question) will discourage someone knowledgeable in this area to respond. So, respectfully, again, please leave it and let others answer.

 

[quincy]

Again, I really appreciate but I think you are totally missing the point of this question (from the begining). Please let others answer.

P.S. Just as further explanation - this is not about what reasonable. It's about what's necessary and in the best interest of the client. For example, another cost may increase a chance of winning a case by 0.1% but may cost 80% of settlement amount. It could be considered necessary (chances of case being won increases) and reasonable (whatever it is) but not in the best interest of the client. It's a simple business contracting question and best practices of how it's done in the legal domain.

Unfortunately, having too many non-answers (and just pointing to generic resources that have nothing to do with the question) will discourage someone knowledgeable in this area to respond. So, respectfully, again, please leave it and let others answer.

Well, I am knowledgeable and I know what you are asking and I can tell you that the majority of attorneys are always working in the best interests of their clients.

If you want someone to tell you what costs are absolutely necessary and what can be eliminated as not absolutely necessary, no one is better able to tell you that than your own attorney.

The majority of attorneys are not out to rob their clients by inflating costs or handing jobs off to incompetent cousin Vinny the videographer. They instead are performing a job for their clients in the way that gets their clients the best possible outcome. They are professionals who know what is necessary and what is reasonable to reach that goal.

By the way, forum members will respond if/when they are available and if they have an interest in responding. I imagine most of them are wisely sleeping right now.

 

[LdiJ]

Georgia - Had an accident where things are generally straightforward but still need a lawyer to help with the process. I was proposed a contract that seems essentially unbalanced and unfair. Please advise if there is a better way to structure this type contract. Two parts of the contract are listed below (abridged). One is for fees and owe is for costs.

Let's for the sake of this question, the Fees section is acceptable. I am struggling with the costs section. The lawyer told me "we may have to pay several hundred to transcriber, $500-$700 to a videographer, etc.". This seems like a blank check where nobody has a duty to use funds in judicious manner. Here is an example of scenario I am afraid of:

Law firm figures there is $300,000 recovery virtually guaranteed. They get $100,000 but there is $200,000 they can spend on costs. They hire their cousin Vinny as a videographer (as opposed to putting iphone on tripod) at a high (but arguably reasonable) cost. Even if no additional witnesses are needed, they may take more depositions that would drive the cost up, etc. At the end, most of the remaining $200,000 can be expensed but it would be difficult to argue/prove what was really necessary, etc. They may have a friend who is an expert in accident reconstruction and they may hire them even though an accident reconstructions wasn't really needed and changed the outcome of the settlement. There is nobody in charge of spending money who has duty to minimize unnecessary costs and protect the remaining recovery amount.

I understand many victims may sign this contract because there is an imbalance of power (attorneys can paint grim picture and have more info) but no business would enter in this type of "open ended" contract, ever. Is there a better way to do this? The lawyer asked me to propose an alternative.

Fees: "As compensation for their services, I agree to pay the Firm (33%) of the gross recovery on behalf of the undersigned. Recovery is defined as an offer of settlement, verdict, or judgment. lf it is necessary to file suit, compensation for the Firm shall be 40% of the gross recovery. lf post- trial motions are filed, or if the case proceeds to appeal, compensation for the Firm shall increase to (45%) of the gross recovery.

Costs: "I understand that the firm may advance case expense costs, which will be reimbursed from any recovery' case expense costs may include, but are not limited to, obtaining medical records and bills, investigative fees, service of process fees, witness fees, deposition costs, transcript costs, medical narratives, and expert may witness fees' Please note that certain case expense costs for copying, printing, postage, and file supplies be charged at the conclusion of the case at a reasonable estimated amount. Upon request, the firm will provide an itemized list of expenses to the undersigned. The parties agree that the firm will be fully reimbursed for all case expense costs at the time of recovery, in addition to the attorney fee. NO RECOVERY, NO FEE".

I understand what you are getting at. Personally, I object to the bolded. I think that the bolded is part of the attorney's cost of doing business and should not be charged to the client as an expense, and certainly not on an estimated basis. The other expenses are necessary expenses in a lot of lawsuits. Can those expenses get out of hand? Yes, that can sometimes happen. The nature of the case and what the other side does sometimes controls what those expenses end up being. The attorney includes that in the contract, rather than getting your approval on a line item basis, simply because it is too impractical to deal with things on a line item basis.

The attorney knows how complex your case is or isn't. The attorney should be able to give you an average ballpark range of what those expenses could add up to in a case similar to yours. A possibility could be that you add verbiage to the contract limiting how much can be spent on expenses before it is necessary to get your approval on a line item basis.

However, I can pretty much guarantee that if you end up going to trial at least 50% of the award is going to end up being used for legal fees and expenses and maybe as much as 2/3rds. Remember however that if the attorney loses, the attorney ends up eating all of those costs. Therefore if you set your expectations at whatever the worst case scenario the attorney suggests, then you will be less disappointed if the expenses are on the higher end.

 

[adjusterjack]

Unfortunately, having too many non-answers (and just pointing to generic resources that have nothing to do with the question) will discourage someone knowledgeable in this area to respond. So, respectfully, again, please leave it and let others answer.

Typical. Don't like the answers, get snappy. Well, here's some more answers that you won't like.

1 - That's a pretty standard contingency agreement though I agree with LdiJ that the bolded part shouldn't be there. That's office expense. Otherwise, I doubt that any attorney is going to change much of the agreement.

2 - Your medical providers will get reimbursed out of your share before you get paid. So there goes a good portion of your 2/3.

3 - If you think the attorney is going to play fast and loose with your 2/3, then get another attorney.

4 - If you think that ANY attorney is going to play fast and loose with your 2/3, then represent yourself in the negotiations, especially since you think your settlement is guaranteed.

5 - Or, solve the problem by offering the attorney a larger percentage to include all costs and expenses in his share (not counting medical provider reimbursement).

 

[quincy]

It is important to remember that, when working on contingency, the attorney is using his own money to pursue the case on behalf of his/her client. The attorney is unlikely to spend more than is reasonable or necessary because, if the case is lost, the attorney collects nothing and is out his costs. A contingency case is often more of a financial gamble for the attorney than for the client.

If a client does not like the structure of an attorney’s contingency agreement, however, the client can always opt to pay a retainer fee and the attorney’s hourly rate. This means that the client must pay upfront and ongoing costs, whether the case is won or lost.

 

[LdiJ]

It is important to remember that, when working on contingency, the attorney is using his own money to pursue the case on behalf of his/her client. The attorney is unlikely to spend more than is reasonable or necessary because, if the case is lost, the attorney collects nothing and is out his costs. A contingency case is often more of a financial gamble for the attorney than for the client.

Very good point Q

 

[Litigator22]

Very good point Q

Good point? . . . More a conjecture based on the unlikely circumstance that the client is equally suited to predict the results of litigation and ignores the fact that in the event of failure the lawyer can write-off his out-of-pocket whereas the hapless client can't.

 

[quincy]

Good point?. . . More a conjecture based on the unlikely circumstance that the client is equally suited to predict the results of litigation and ignores the fact that in the event of failure the lawyer can write-off his out-of-pocket whereas the hapless client can't.

I certainly think so.

A lot of what we post on this forum is, out of necessity, conjecture. Our opinions are formed based on a few (generally short) paragraphs and a smattering of facts.

That is one reason why it is important for any visitor to this site to seek legal advice from an attorney licensed to practice in their own jurisdiction who can personally access and review all facts and advise accordingly.

 

[LdiJ]

Good point? . . . More a conjecture based on the unlikely circumstance that the client is equally suited to predict the results of litigation and ignores the fact that in the event of failure the lawyer can write-off his out-of-pocket whereas the hapless client can't.

Anyone who thinks that the ability to write off expenses means that a person suffers no economic harm from having unreimbursed expenses doesn't understand basic economics. If someone has to spend $20,000 which ends up as a loss, they can save potentially save between 30% to 50% by deducting it, depending on their state and their tax bracket, but they still lose the other 50% to 70%.

Certainly there are people out there who don't grasp that concept, but it is still true.