For those “have you been injured in an accident?”-type cases where the attorney accepts the case on a contingency basis (they do, don’t they?), what expenses do they typically incur as a percentage of their fee?
Thanks,
Rob
Depends very heavily on the kind of case - whether expert witnesses are required and what their fees are, for example. Expenses would generally be over and above the actual contingency fee, though. In other words, if the fee is 30%, and there’s $10,000 in costs for litigating the case, the $10,000 doesn’t come out of the 30%. It’s 30% and also $10,000, so that they don’t spend $10,000 to win you $20,000 and then get $7,000 for their trouble.
Filing fees, expert fees, deposition costs, are routine. There can be a wide variety of other costs. Typically the lawyer takes a fee (1/3 is typical) from the gross recovery, and plaintiff pays costs from his share.
How many cases do they typically handle in a year? Anybody know what their win rate is?
(Thinking I may be in the wrong business)
Thanks,
Rob
Florida is fairly typical in this regard, I think, and allows attorneys to recover the following costs:
[QUOTE=Statewide Uniform Guidelines for Taxation of Costs In Civil Cases]
**
I. Litigation Costs That Should Be Taxed.**
A. Depositions
- The original and one copy of the deposition and court reporter’s per diem for all depositions.
- The original and/or one copy of the electronic deposition and the cost of the services of a technician for electronic depositions used at trial.
- Telephone toll and electronic conferencing charges for the conduct of telephone and electronic depositions.
B. Documents and Exhibits - The costs of copies of documents filed (in lieu of “actually cited”) with the court, which are reasonably necessary to assist the court in reaching a conclusion.
- The costs of copies obtained in discovery, even if the copies were not used at trial.
C. Expert Witnesses - A reasonable fee for deposition and/or trial testimony, and the costs of preparation of any court ordered report.
D. Witnesses - Costs of subpoena, witness fee, and service of witnesses for deposition and/or trial.
E. Court Reporting Costs Other than for Depositions - Reasonable court reporter’s per diem for the reporting of evidentiary hearings, trial and post-trial hearings.
F. Reasonable Charges Incurred for Requiring Special Magistrates, Guardians Ad Litem, and Attorneys Ad Litem
II. Litigation Costs That May Be Taxed as Costs.
A. Mediation Fees and Expenses
- Costs and fees of mediator.
B. Reasonable Travel Expenses - Reasonable travel expenses of expert when traveling in excess of 100 miles from the expert’s principal place of business (not to include the expert’s time).
- Reasonable travel expenses of witnesses.
C. Electronic Discovery Expenses - The cost of producing copies of relevant electronic media in response to a discovery request.
- The cost of converting electronically stored information to a reasonably usable format in response to a discovery request that seeks production in such format.
[/QUOTE]
On the other hand, you don’t get to recover:
These are considered overhead expenses and built in to the attorney’s fee.
ETA: Most plaintiffs’ attorneys I know handle a hundred or more cases at a time, but their “win rate” is essentially irrelevant because 1% or fewer go to trial.
So what’s is the risk? That the defendant will refuse to settle and the plaintiff will loose?
Thanks,
Rob
Or that the plaintiff will refuse to settle. Or disappear. Or that the defendant will be (or become) insolvent, or that no insurance coverage will be available.
All of these. Plus, you’ve got your fixed costs (staff, rent, telephone, etc.) which are due regardless of whether you’ve settled any cases this month, and on top of that you’ve actually got to get clients in the door to sign up with you rather than one of those other bozos. It can be a tough business.
If the point of the question is whether representing plaintiffs in civil actions is a gravy train, the answer is no. As Ambrosio points out, costs are fixed but revenue is not. Sure, you may win or settle one case that sets you up for years, or even for life. But you probably won’t, at least not in the early years of your practice.
That’s why I work on the other side: I’m risk averse. The upside is drastically reduced, but the earnings floor is much higher (especially short term). I only get a fixed hourly fee, which means I can never earn more than I work (at least not without bringing in my own clients and my own staff to work on their cases), but I’ll also never earn less than I work.*
A plaintiff’s lawyer does that every time he takes a case and fails to recover money for the client. He also may find himself with $5,000 in costs tied up in a case where the policy limit is 10 grand. After he takes his 1/3 fee and $5,000 costs, the client ends up with less than $2,000, most of which is probably going straight off to pay medical bills. That means he is either going to have a hugely unhappy client, or he is going to have to reduce his fee and eat some costs.
*It’s always possible that one of the large institutional clients I represent will go bankrupt, but since they are mostly insurance companies and subject to heavy state regulation as to their liquidity, it’s unlikely. My bills do get “written down” by clients, but they’re never written off.
Of these hundred cases, on how many would they expect to collect their whole fee + expenses? How hard is it to come by 100 cases?
I expect that lawyers tend to do reasonably well commensurate with their education and experience. I was curious to know if their large fees were due to the high risk nature of their business.
Thanks,
Rob
Well, their “whole fee” is variable, so I’m not sure that’s a helpful piece of data. In their shoes, I would much rather have half of the fee on a $100K recovery than the whole fee on a $20K recovery. Probably less than half, though.
Signing up 100 cases is not easy. You can either sign up for one of the lawyer referral services, which may have ethical implications or do your own advertising (or both). Or you can bring in work the old fashioned way, by talking to churches and community groups and what not and hoping your name gets around.
Typical arrangement I see is they sign up a client and the deal skims them 30% off any settlement. Most cases are just the “picks and shovels” of the mining operation that keep the office lights on, and give the lawyer some take-home pay while they wait for the occasional home run. There is rarely a good reason to litigate a case that should settle for under $15,000–just squeeze as hard as you can, take your cut, and move on to the next case.
From my perspective (insurance claims), I see about 10% of my cases turn into lawsuits. Of those, maybe 10% actually go to trial–so like RNATB says, only about 1% overall. Of my 14 cases that went to trial since 2011, the jury beat my best offer only twice (once by a mile!). So it’s kind of an informed numbers game where the plaintiff attorney takes into consideration who the defense attorney is, the merits of the case, and especially the venue where the jury will be coming from.
I’ve gotten to know a lot of plaintiff lawyers. What really sets apart the successful ones is the respect they show to other people, including their clients. They play the long game and build candid relationships with claims folks and defense attorneys, they are up front with their clients regarding the odds of their case being a dog or a home run, and they don’t send a case to trial just to see what will happen.