Legal Fees

This page is here to introduce you to the subject of legal fees and to explain how we charge.

(There's a lot of information here. If you're interested in all of it, then, by all means, read it all. On the other hand, you may only be interested in some of it. In that case, I recommend that you skim the headlines and read only what interests you. Even though there is a lot of information here, this material does not cover everything. Entire books have been written on the subject of legal fees. So, if your question is not answered by this information, contact us to discuss your particular question or situation.)

Generally, lawyers charge fees one of these 3 ways . . .

hourly rate

fixed fee

contingent, or percentage, fee.

Traditionally, in accident, injury and malpractice cases -- the types of cases that we concentrate on -- legal fees have been handled on a contingent basis.

A contingent fee means that there is no legal fee unless a condition -- a contingency -- is met. In this case, the condition is a successful result to the case, a recovery of money damages for your injuries and losses.

If there is no success -- no recovery -- there are no legal fees. If there is a recovery, the legal fees are an agreed percentage of the amount that is recovered, payable at the end, when the case is resolved.

The effect of contingent legal fees is that any client with a strong case can afford to hire a lawyer. In fact, the client can afford to hire the best lawyer that s/he can find since the percentages charged tend to be similar.

In other words, you can hire a lawyer with barely any experience and training wheels still on his briefcase . . . or you can hire a lawyer with over 25 years of experience, many past successes and standard-setting client relations . . . all for the same fee, or at least a similar one.

Here's what one judge said about contingent fees . . .

The contingent fee, though much maligned and misunderstood, has been termed "the poor man's key to the courthouse." An automobile company may decide that it values profits over people and manufacture a car with an inexpensive but hazardous design. That car then blows up, leaving the driver nothing more than charred flesh and his grieving family numb with shock and facing possible financial ruin. Could that poor family afford the per hour rate of the high-priced, Wall Street legal talent which the automobile company will employ to defend any suit they might bring? The answer is searingly obvious. A contingent fee agreement will enable that family to file suit and receive the compensation which they deserve.

Any person whose heart stirs with the barest twinge of compassion must praise such a just result.

Surely, large corporations and insurance companies will always be able to afford teams of high priced attorneys. Pity the poor injured plaintiff who must finance such a contest from his own resources. Judge Cirillo, Romano v. Lubin, 530 A.2d. 487 (Pa. Super. 1987).

This quote explains why large corporations and insurance companies are working to eliminate or limit contingent legal fees.

The Santa Maria Law Center Legal Services Agreement

Our contingent fee Legal Services Agreement answers these questions . . .

• What exactly is the case in which we represent you?
• What are our duties to you?
• Do we offer any guarantees?
• What are your obligations to us?
• What percentage of the recovery will the contingent legal fee be?
• Who pays the out-of-pocket expenses incurred in the case?
• Can we associate with other lawyers on your case?
• What happens if we have a conflict of interest?
• Can you terminate the Agreement?

Scope of Our Representation

The Agreement states the case that we are handling for you.

For example, it might say that we represent you "in connection with claims for injuries and damages arising out of a motor vehicle collision which occurred on or about January 1, 2006, in Montgomery County, Maryland."

This clearly defines the legal matter for which we are assuming responsibility.

If we are helping you with more than one legal matter -- you'd be surprised how often people with a pending accident claim are involved in another accident while the first one is pending . . . and sometimes another . . . and sometimes another . . . -- we will have separate Legal Services Agreements for each case.

Our Duties To You

We will consult with you, investigate your case, analyze and evaluate your case, advise you fully about your case including alternatives and the pros and cons of each, conduct settlement negotiations (if appropriate), file a lawsuit (if appropriate and with your approval), conduct all pre-trial procedures, prepare for trial and conduct the trial of your case (if necessary).

We'll even handle any necessary and meritorious appeal . . . but we are not required to file an appeal that we don't think has merit.

In other words, we will handle your case from soup to nuts.

We cannot guarantee the result of your case. No honest and ethical lawyer can.

However, unlike most other lawyers, we include in our fee agreement a number of service guarantees. We plan to treat you and your case the right way and we are willing to put these plans into writing as promises to you.

In the Legal Services Agreement that we propose, we include these service guarantees . . .

• 1. We guarantee the quality of our legal services. You can be sure that all legal work that comes from our office will be of the highest caliber. If you ever find anything that does not meet your needs or expectations, please bring it to our attention. We will correct the situation immediately.
• 2. We guarantee to communicate with You frequently. You deserve to be kept current on the progress of your case. So we will frequently call or write to you to tell you what has happened regarding your case since our last report. And if nothing has happened, we tell you that, too. Good communication is the key to a good working relationship with your lawyer. And we intend to make sure that your relationship with our firm is the best you have ever had...or ever will have.
• 3. We guarantee to return phone calls promptly. For a positive, productive lawyer-client relationship, we must communicate openly and freely with each other. If we are not available when you call, we promise to return your phone calls promptly.
• 4. We guarantee to meet all deadlines. Few things are as frustrating as deadlines that are not met. A missed deadline can do a lot to undermine a good lawyer-client relationship. What's more, we want you to know that you can trust what we tell you. So we guarantee to complete all promised work on time.
• 5. We guarantee the legal fees we quoted You. No one likes financial surprises. No matter how long your case takes us, it will never cost you one penny more. Once we quote legal fees, we stick to it, no matter what. You can depend on it.
• 6. We guarantee you'll always receive the highest level of care and attention. No one likes to be thought of as a case number. Every person in our office is here for one purpose: To serve you. If you don't receive the close personal attention you want, nothing else matters. When you are our client, you become part of our family. And we guarantee you will receive the best we offer

Your Duties To Us

You promise to . . .

• Comply with our Agreement, and not terminate it without good cause.
• Not abandon the case against our advice.
• Cooperate with us in preparing and presenting your case.

We think these are common sense requirements.

If you don't do these things, we can withdraw as your lawyers and receive legal fees for our services which will be determined in one (1)of the following two (2) ways:

• (1) If no settlement offer has been received, we are entitled to legal fees based on our time spent on your case, charged at our normal hourly rates; or
• (2) If a settlement offer has been made, we are entitled to legal fees equal to the percentage of the settlement offer that we would have earned if that offer had been accepted.

Here's what this last part means.

All that lawyers have to sell is their time, advice and skill. If a lawyer uses these things for you, at your request, it is unfair for you to fire the lawyer without cause or abandon the case so that the lawyer is not compensated for his or her time, advice and skill.

Would it be fair, for example, for a client to accept the benefit of a lawyer's services for, say, a year, and then fire the lawyer and accept the settlement offer that the lawyer had negotiated before s/he was fired -- but not have to pay legal fees for the lawyer's help? Of course not, and that is why this provision exists.

Actually, Maryland law gives lawyers working under a contingent fee agreement who are fired without cause a right to be paid legal fees for their efforts. Since that is the law, the best thing to do is put it in the agreement so you know of this rule.

The Contingent Fee

If we are allowed to represent you until the end of your case, and there is no recovery, you will not owe us any legal fees.

Contingent fee agreements usually involve fees of 1/3 to 40%, although they can be for any percentage. The percentage that we normally propose is 1/3, or 33 1/3% of the gross amount recovered for your personal injuries. And if there is an appeal -- which does not happen often -- we propose a small increase in the percentage, to 40%.

"Gross amount" means that the fee is calculated based on the full amount of your injury settlement. This is sometimes called a "gross fee agreement." Other lawyers may propose a "net fee agreement" which means that costs are paid out of the gross recovery before the legal fee is calculated. Some others may propose different percentages depending on when and how your case is resolved. For example, they may propose a certain percentage if the case is settled before suit is filed but a higher percentage after a lawsuit is filed.

Although, as part of our service, we will help you submit your PIP claim, there are no additional legal fees for this service. It is included. We do not charge a percentage of the amount that we help you recover from PIP.

And, although we will help if necessary with issues such as property damage claims, we take no percentage of those recoveries either. Those services are included unless something unusual happens such as having to file a separate lawsuit to recover these things for you.

Contingent legal fees are paid at the end of the case, and only if the case is successful. If the case is lost, you owe us no legal fees.

However, under our Legal Services Agreement, you are responsible for paying out-of-pocket costs, win or lose.

Costs

In addition to legal fees, under our agreement, you must pay the out-of-pocket expenses incurred in your case.

Generally, these are the main "costs" of an accident or injury case . . .

Charges for obtaining medical records. Health care providers can charge to produce copies of their records and bills and almost all of them do. In a routine case (I hate that term because all cases are unique), these charges total less than $100. We pay these costs for you and you pay us back when the case is resolved. In essence, we give you an interest-free loan. Many cases are resolved with only these costs being incurred.

If you decide, with our advice, to have us file your case in court, there are 3 main types of costs that could be incurred during the court case.

First, there are filing fees and the charges for having the court papers served on the person or company we are suing, such as by the Sheriff. These costs are normally $150 or so.

Second, there are "pre-trial discovery" costs, mainly the charges for deposition transcripts. These vary from case to case, depending on the type and complexity of the case. In routine accident and injury litigation, these charges range from $250 to $1,000.

Third, there are expert witness fees. These also vary depending on the case. In a routine case, the only expert witness fee is the charge of a medical expert for testifying about your injuries. In a typical accident and injury case, these charges range from less than $1,000 to $5,000, depending on the doctor(s) involved.

In complicated cases which require multiple experts, such as a medical malpractice case, expert fees can be tens of thousands of dollars. This is one reason why only the strongest malpractice cases, involving very serious injuries, are "practical."

Some lawyers will propose to pay the costs of the case if you lose. Some others will propose to pay the costs win or lose. Obviously, this is better for you than an agreement which requires you to pay the costs but there may be other terms in the proposed agreement which outweigh this advantage. My advice: Consider the agreement as a whole and decide what is best for you.

What Other Things Could You Have To Pay

Although this is not covered by our Legal Services Agreement, you need to know about this. When your case is resolved, you may also have to pay some of these things out of your recovery. . .

• Workers Compensation lien. If you received workers compensation benefits for the injuries that were the basis of our case, out of the amount that you receive, you have to repay what workers compensation paid on your claim. The workers compensation insurance carrier must reduce its claim by 1/3, effectively contributing to your legal fees. (In addition, the amount that you recover, after repayment of the workers compensation lien, is a credit against future workers compensation benefits. That is, the workers compensation insurance carrier does not have to pay you any more benefits until you have exhausted the full amount of your recovery.)
• Medicare lien. If you received Medicare benefits for the injuries that were the basis of your claim, you have to repay the amount that Medicare paid on your claim. Medicare must reduce its claim by a percentage equal to your "costs of acquisition," including legal fees. Therefore, if you paid a 1/3 fee and paid another 3% of the amount that you recovered as costs, Medicare would reduce its claim by 36 1/3%.
• Medicaid lien. If you received Medicaid benefits for the injuries that were the basis of your claim, you have to repay the amount that Medicaid paid on your claim. Medicaid must reduce its claim by a percentage equal to your "costs of acquisition," including legal fees. Therefore, if you paid a 1/3 fee and paid another 3% of the amount that you recovered as costs, Medicaid would reduce its claim by 36 1/3%.
• Hospital lien. Any unpaid hospital bills must be paid.
• Subrogation claim by your health insurer. If your health insurance company paid medical bills, under laws that some call "tort reform," the insurance company is entitled to be repaid. This is called a "subrogation claim." Here, also, in most but not all cases, the insurance company must reduce its claim by 1/3, effectively contributing to your legal fees.

• And, no, even though you have to pay your health insurance company back for paying your medical bills -- exactly why you have the insurance -- they don't have to refund any of your premiums. It's a one-way street moving in the direction of the health insurance company.

• Unpaid medical bills. You are responsible for paying unpaid medical bills.

In each of these cases, if there is a good reason, we may be able to negotiate an additional reduction in the amounts that you have to repay. No, we don't receive any portion of the amount that you save. It's included in our service to you.

When considering a settlement offer, be sure to do careful calculations that consider anything that you will have to pay. You want to know "the bottom line." That is, the amount that you will recover after all legal fees, costs and repayments are made.

Association With Other Lawyers

We may occasionally work with other lawyers on your case if we think that is in your best interests.

If we think that is best, we will notify you and you can ask any questions or make any objections to the association that you wish. If you approve the association, we and the other lawyer(s) with whom we associate will share joint responsibility for your case and will divide any legal fees that are earned.

The involvement of other lawyer(s) will not increase the legal fees that you pay by even one penny. You end up with two (or more) advocates for the price of one.

Conflict Of Interest

You are entitled to have a lawyer who is devoted to your best interests -- and only your best interests.

A conflict of interest occurs when a lawyer cannot give focused representation because of conflicting interests of another client or former client.

We will never accept a case which would create a conflict of interest.

Occasionally, however, a conflict of interest will develop during a representation.

The most common instance of this is a representation of more than one person injured in an accident. For example, we might be asked to represent a driver and a passenger injured in a motor vehicle crash. Normally, there is no conflict of interest in this situation. However, sometimes a conflict between the interests of the 2 clients will occur when it becomes know that the defendant does not have sufficient assets or insurance to fully compensate both clients. Say, for example, that there are 2 clients who are each fairly entitled to $25,000 in compensation but the defendant has no assets and only has $20,000 of insurance (the minimum requirement in Maryland). In that case, each client is entitled to have a lawyer who is fighting for his or her interests in dividing up a pie which is too small to fully compensate both injured persons.

Other situations that can create a conflict of interest during the representation of multiple clients are when a material inconsistency between the testimony of the claimants develops or when multiple clients adopt inconsistent legal positions.

When a conflict occurs, you can transfer your case to another lawyer or you can, only after consultation and independent legal advice, waive the conflict and ask that we continue to represent multiple claimants.

If you ever believe that there is a conflict of interest in the case on which we are working together, immediately bring the conflict to our attention.

Firing Us

If we give you good cause, you can fire us and owe us nothing for legal fees.

This has never happened, and we work hard every day to make sure that it never does.

On the other hand, as I discussed earlier, even if we are performing competently, you can fire us -- but you will owe us legal fees.

Some More Details

If you don't feel that you can trust a lawyer that you are considering hiring, keep shopping.

In my view, because you should not hire someone you don't think you can trust, lack of trust is not the reason why you should have a written agreement. Instead, the purpose of the written agreement is clarity. You want to be sure that you and your lawyer understand your obligations to each other. You want to make sure that you are "on the same page."

You should never sign a proposed Legal Services Agreement without reading it carefully and having your questions answered clearly and satisfactorily. Don't sign any fee agreement (or any other contract, for that matter) until you understand its meaning and effect.

The fee agreement should be signed when you hire the lawyer and you and your lawyer should both get a signed copy of the agreement.

In fact, Maryland ethics rules require that a contingent legal fees agreement be in writing.

You Make all Important Decisions

Although some lawyers act as if they are in charge of your case, the fact is that it is YOUR case and you are the boss. After all, you have to live with the results.

Your lawyer owes you his or her best advice, recommendations and skill, and you should consider your lawyer's expert advice in making decisions, but you make all important decisions. This certainly includes the power to settle your case. Only you can settle your case.

Nothing in our proposed agreement takes these rights from you, and we never forget that we work for you, not the other way around.

Overview

Almost all lawyers will propose a contingent legal fees agreement to represent you in an accident, injury or malpractice case.

The percentage of the legal fees proposed will vary, but will usually be in the range of 33 1/3% to 40%.

Some will propose that the percentage be calculated based on the gross amount recovered (a "gross fee" contract) and others will propose that costs be repaid first and then the percentage fee taken from the net amount left (a "net fee" contract). A net fee agreement is better for you, but the advantage of that type of agreement may be outweighed by the lawyer proposing a higher percentage, not including as many services or by being less experienced or capable and, therefore, unable to help you recover as much.

You must decide in your case which proposed fee agreement is in your best interests, all things considered.

Some lawyers will agree to pay the out-of-pocket costs of your case, but more often costs will be your responsibility.

Remember finally that a lawyer's fee agreement is not carved in stone. You can propose different terms and see if the lawyer will agree to them.

To talk about any of this further, contact us.

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