Attorney Fees Clause in Legal Retainer Contract

[WarrantSeeker]

What is the name of your state? Virginia

I have participated in a few class action type suits where firms represent a large number of people and seek relatively small settlements from major corporations for breaches of duty. A common theme in the retainer agreements is that the client is solely responsible for potential attorney fees that could be awarded to the defending party. An example clause states:

"If you are not the prevailing party in Your case, the court may award attorney fees and cost of the type enumerated in Paragraphs 3 and 6 to the prevailign party and payment of such attorney fees and costs will be Your sole responsibility."

This appears to be a major liability. While the retainer agreement (as most do) emphasizes that no payments are required unless the firm secures a settlement, this disclaimer leaves open the possibility of suffering a major cost. I asked an attorney about this one time, and his response was basically that yes it's possible but it's rare.

Given that the firm is trying to collect a small amount (under $1,000), is it reasonable to agree to such a retainer agreement and open yourself up to a major loss?

 

[adjusterjack]

I can't imagine any class action where the firm is trying to collect under $1000. Your piece of the pie may eventually be less than $1000 but it's not worth it to a lawyer to take on a class action unless there are hundreds or thousands of class members and millions at stake. While a settlement is distributed to the claimants after the lawyer get his share, an award of lawyer fees to a successful defendant will also be apportioned among the claimants and amounts from each likely minimal.

 

[WarrantSeeker]

I don't believe that it's a true "class action." There appears to be a new trend of firms suing for members of class-like group of people individually. I believe they file thousands of claims for individual members of a class. I believe this may be due to an increase of arbitration clauses and weakening class action law. I will look for more details.

 

[adjusterjack]

Something like this?

Multiple Claimant Litigation Act (virginia.gov)

 

[quincy]

What is the name of your state? Virginia

I have participated in a few class action type suits where firms represent a large number of people and seek relatively small settlements from major corporations for breaches of duty. A common theme in the retainer agreements is that the client is solely responsible for potential attorney fees that could be awarded to the defending party. An example clause states:

"If you are not the prevailing party in Your case, the court may award attorney fees and cost of the type enumerated in Paragraphs 3 and 6 to the prevailign party and payment of such attorney fees and costs will be Your sole responsibility."

This appears to be a major liability. While the retainer agreement (as most do) emphasizes that no payments are required unless the firm secures a settlement, this disclaimer leaves open the possibility of suffering a major cost. I asked an attorney about this one time, and his response was basically that yes it's possible but it's rare.

Given that the firm is trying to collect a small amount (under $1,000), is it reasonable to agree to such a retainer agreement and open yourself up to a major loss?

This is not a class action but rather a consolidation or joining of separate like-cases against the same defendant(s), with each plaintiff responsible for their own attorney fees as they would be if the cases had been filed separately.

In other words, if you hired an attorney to sue a party, you would pay that attorney for representing you in the case. This is no different.

If the amount you are seeking is only $1000, though, why the need for an attorney? It does not seem worth the expense.

 

[WarrantSeeker]

This is not a class action but rather a consolidation or joining of separate like-cases against the same defendant(s), with each plaintiff responsible for their own attorney fees as they would be if the cases had been filed separately.

In other words, if you hired an attorney to sue a party, you would pay that attorney for representing you in the case. This is no different.

If the amount you are seeking is only $1000, though, why the need for an attorney? It does not seem worth the expense.

To add clarity, I will paste the message they sent me. There is no "expense" on my part if everything goes smoothly. There is only presumably an expense if attorney's fees are awarded to the defendant. If you're worried this is a scam, I don't believe it is, as I have participated in other cases like this and received a recovery.

"Thank you for choosing the ***(omitted by me). Our continued commitment lies in the complete satisfaction of every client we serve. To better assist you with your legal issues, please follow the link below, which will allow you to sign a legal services agreement.

Once we receive the signed agreement, we will be able to complete our investigation and pursue your matter. We may need to schedule a time for a call if we have any questions.

We have been handling consumer privacy cases for many years now. We plan on filing individual cases, seeking monetary relief for our clients. It is unlikely that any of the millions of consumers affected have actual damages because of this conduct, but that does not mean ***(omitted by me) is not responsible. We are targeting up to $750 per client in damages. It may be more, it may be less.   Please remember we will review your matter free of charge. If we determine you have a potential case, our legal services agreement does not require you to pay anything upfront. Our offices will take this matter on contingency. That means if we do not recover for you, we will not charge you any attorney fees and we will not ask you to reimburse the costs we spend on your matter. We will only get paid if we are successful in your case and you obtain a recovery."

 

[quincy]

Sounds about right. If you win a civil action, the attorney can take his fees from the damages awarded. If you lose the civil action, you must pay the attorney from your own pocket.

Generally you must pay a retainer so the attorney is guaranteed pay for his work, but all contracts are mutual agreements. They can be negotiated to fit the needs of the parties.

It is a bit different in class action suits, where the attorney takes his fees from the damages awarded.

Contingency agreements are often worded so that the plaintiff will pay only if damages are awarded. Attorneys will generally only take cases on pure contingency if there is a better than even chance that the suit against the defendant will be successful. They will not invest their own money pursuing a suit that has no merit.

If you do not feel comfortable with the agreement presented to you, don’t sign. File your own small claims suit. For $1000, I am surprised you have an attorney anyway.

 

[adjusterjack]

I will paste the message they sent me.

1. There's nothing in that "message" about a plaintiff paying attorney fees. So, what makes you so concerned about it in this case?

2. You do realize, I hope, that the "message" is NOT the services agreement that you'll sign when you click on the link to the services agreement.

For $1000, I am surprised you have an attorney anyway.

Or are contemplating one. Enlighten us, please.

 

[quincy]

Key is reading carefully the entirety of any contract and fully understanding all terms of the contract and what obligations you will be bound to when signing it. If you object to any terms or do not understand any terms, don’t sign.

 

[zddoodah]

Given that the firm is trying to collect a small amount (under $1,000), is it reasonable to agree to such a retainer agreement and open yourself up to a major loss?

The possibility exists whether it's in the retainer agreement or not. The clause you described is more of a warning than anything else. The opinions of anonymous strangers about the reasonableness of this should not be of any import to you.

an award of lawyer fees to a successful defendant will also be apportioned among the claimants and amounts from each likely minimal.

That is not at all how it works. Of course, in virtually all class action suits, the possibility of a fee award to the defendant is virtually nil.

 

[quincy]

The time when a defendant could be awarded attorney fees and costs can be when the defendant has filed a successful counterclaim or when the plaintiff has filed a frivolous action against the defendant. Generally all parties are responsible for paying for their own attorneys, absent a contract that states otherwise or absent a court’s specific award to a party of attorney fees/costs.

 

[WarrantSeeker]

1. There's nothing in that "message" about a plaintiff paying attorney fees. So, what makes you so concerned about it in this case?

2. You do realize, I hope, that the "message" is NOT the services agreement that you'll sign when you click on the link to the services agreement.



Or are contemplating one. Enlighten us, please.

I understand that the message is not the services agreement. In my original post, I copied and pasted the clause in the services agreement that concerned me. I posted the recruitment email they sent me to provice context. Note another clause in the agreement says:

"You will not owe us anything for attorneys fees unless we recover some benefit for you."

At another point though it says:

""If you are not the prevailing party in Your case, the court may award attorney fees and cost of the type enumerated in Paragraphs 3 and 6 to the prevailign party and payment of such attorney fees and costs will be Your sole responsibility.""

They appear to say I will not owe them anything in any circumstance, but I could be responsible for the attorneys fees of the other party if awarded by the court.

There appears to be confusion regarding why I am hiring an attorney for a recovery amount of less than $1,000 and why I don't just file in small claims court. This is not a normal case of someone doing something to me and then me suing them. I am being "recruited" by this firm to sue the company (who is very rich and large). It is the goal of this firm to recruit thousands of people across the country to sue the company. Normally, this would be a class action, but the firm is not attempting to file a class action. Their strategy is to file thousands of individual suits. I don't know why they are using this strategy instead of a class action. Without joining with this firm, I would have no idea how to sue this company. Presumably, even if I filed the suit myself, the threat of paying attorneys fees still exists.

 

[quincy]

I understand that the message is not the services agreement. In my original post, I copied and pasted the clause in the services agreement that concerned me. I posted the recruitment email they sent me to provice context. Note another clause in the agreement says:

"You will not owe us anything for attorneys fees unless we recover some benefit for you."

At another point though it says:

""If you are not the prevailing party in Your case, the court may award attorney fees and cost of the type enumerated in Paragraphs 3 and 6 to the prevailign party and payment of such attorney fees and costs will be Your sole responsibility.""

They appear to say I will not owe them anything in any circumstance, but I could be responsible for the attorneys fees of the other party if awarded by the court.

There appears to be confusion regarding why I am hiring an attorney for a recovery amount of less than $1,000 and why I don't just file in small claims court. This is not a normal case of someone doing something to me and then me suing them. I am being "recruited" by this firm to sue the company (who is very rich and large). It is the goal of this firm to recruit thousands of people across the country to sue the company. Normally, this would be a class action, but the firm is not attempting to file a class action. Their strategy is to file thousands of individual suits. I don't know why they are using this strategy instead of a class action. Without joining with this firm, I would have no idea how to sue this company. Presumably, even if I filed the suit myself, the threat of paying attorneys fees still exists.

Right. Attorneys cost money. There are very few cases where an attorney will work for free.

Again, if you do not like the terms of any agreement, you can try to negotiate terms that are more to your liking or you can refuse to sign.

 

[adjusterjack]

There appears to be confusion regarding why I am hiring an attorney for a recovery amount of less than $1,000 and why I don't just file in small claims court. This is not a normal case of someone doing something to me and then me suing them. I am being "recruited" by this firm to sue the company (who is very rich and large). It is the goal of this firm to recruit thousands of people across the country to sue the company. Normally, this would be a class action, but the firm is not attempting to file a class action. Their strategy is to file thousands of individual suits. I don't know why they are using this strategy instead of a class action. Without joining with this firm, I would have no idea how to sue this company. Presumably, even if I filed the suit myself, the threat of paying attorney's fees still exists.

I understand it now and maybe this will help you understand what's happening. Several years ago, around 2014 or 2015 DuPont faced 3500 individual lawsuits regarding the dumping of C8 (a carcinogen) into the Ohio River resulting in cancer in many victims. Instead of a class action each lawsuit was handled separately. The first two went to trial and the awards were $1.6 million and $5.1 million to the plaintiffs. In 2017 a $671 million settlement was reached that resolved most of the 3500 lawsuits. DuPont continued to review additional claims for compensation.

I think something similar is happening with you for whatever wrong was done to you and others. The lawyer is betting on early awards to plaintiffs that will bring the defendant to settlement negotiations and avoid thousands of individual trials, the cost of which is likely to be prohibitive.

What I don't get is why this would be lucrative to a lawyer if each plaintiff's loss is less than $1000. It would cost a lawyer more than that even to pursue a single case.

It only makes sense if a large number of plaintiffs on the list have much greater potential damages than $1000.

Would you care to share more details as to what wrong was committed against you and all the other plaintiffs?

 

[quincy]

With the mention of “privacy,” it sounds like there was a data breach.