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  1. #1
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    Default Contingency Fees for Personal Injury

    My question involves an injury that occurred in the state of: CT
    I met a lawyer first time to discuss my injury and filing a claim to the insurance company.
    He told me that it won't cost anything until we receive a compensation from the insurance company but he wants 36% of "Gloss" on the recovery.
    That means that regardless of how much the incurred expenses are, he'll get 36% of the entire recovery. It will result in less for my portion, because I'll be responsible for all the expenses in the end.
    Also, the contract does not mention who is responsible for all the expenses, in the event that we cannot get any compensation.
    I would like him to agree on "Net" instead of "Gloss", otherwise I am really reluctant to sign the contract. As this case may go to a court and the expenses may accumulate to substantial amount in the future, I am afraid to sign the contract under this condition.
    My questions are:
    1. If the contract does not mention which party will be responsible for the incurred expenses in the event that we fail to recover, who is responsible for the expenses? Will it be I or him?
    2. Which is more common on the contingency fees based on "Gloss" or "Net"? Could I negotiate with him to agree on "Net"?(It is a reasonable request?) If so, what reasons shall I use to argue with him?
    Thank you in advance for all of your help you could give on this matter!!

  2. #2
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    Default Re: Contingency Fees for Personal Injury

    Quote Quoting seavsohana
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    My question involves an injury that occurred in the state of: CT
    I met a lawyer first time to discuss my injury and filing a claim to the insurance company.
    He told me that it won't cost anything until we receive a compensation from the insurance company but he wants 36% of "Gloss" on the recovery.
    I believe you mean "gross" as opposed to "net."

    He said "it won't cost anything unless we receive a compensation from the insurance company." Does that mean he intends to pay all expenses including filing fees, depositions, expert witnesses, etc. etc.? If that's the case you must have a very, very good case with a high likelihood of a very substantial recovery, and you must be broke.

    It is more common for you to pay all of those expenses, and for the attorney to risk only his fees on a contingency basis. Then if you receive money, you subtract all that you've paid before dividing up the rest of the money with the attorney. That's a "net" agreement.

    If the attorney is offering to pay all fees, then his expected payment will be larger. That does happen when an attorney sees a very good claim with big dollars involved and the client is broke.

    That means that regardless of how much the incurred expenses are, he'll get 36% of the entire recovery. It will result in less for my portion, because I'll be responsible for all the expenses in the end.
    It is common for the client to pay the expenses. Right now, based on what you said, I don't know what's being asked of you.

    Also, the contract does not mention who is responsible for all the expenses, in the event that we cannot get any compensation.
    Just ask for that to be spelled out more clearly.

    I would like him to agree on "Net" instead of "Gloss", otherwise I am really reluctant to sign the contract. As this case may go to a court and the expenses may accumulate to substantial amount in the future, I am afraid to sign the contract under this condition.
    My questions are:
    1. If the contract does not mention which party will be responsible for the incurred expenses in the event that we fail to recover, who is responsible for the expenses? Will it be I or him?
    2. Which is more common on the contingency fees based on "Gloss" or "Net"? Could I negotiate with him to agree on "Net"?(It is a reasonable request?) If so, what reasons shall I use to argue with him?
    Thank you in advance for all of your help you could give on this matter!!
    Discuss these concerns with the attorney. What is probably happening is that you just don't understand the proposed agreement. A good attorney will not object to explaining it and even adding wording to make you comfortable.

    Just remember that if he's willing to not only work on a "gamble," but to pay all of his office overhead during that time, he's entitled to a nice payday if he wins. If he's also willing to pay the expenses, he's entitled to be reimbursed for all of that before you split the balance of an award.

    These agreements are negotiable. Gain a full understanding of what the agreement says and how it would work in the end, and then tell the attorney what you want. He's telling you what he wants, and it's not unusual for you to negotiate with that.

    Right now you don't fully understand what he's asking for. Job one is to remedy that. Then you can negotiate.

  3. #3
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    Default Re: Contingency Fees for Personal Injury

    Hi cmre3456,
    Thank you for your prompt response.
    And I am sorry for my confusing post previously. As English is not my native language, I sometimes have a difficulty on expressing myself accurately. I'm sorry!
    If you don't mind, I would like to try the questions again, by excerpting verbatim from the contract.
    Could you kindly review the following, please?

    a) "The contingency upon which compensation is to be paid is recovery of damages, whether by settlement, judgement or otherwise."

    My Question: Does this mean the lawyer will be paid only if the insurance company agrees to pay the compensation, either a settlement in or out of court?

    b) "The lawyer agrees to advance, on behalf of the client, all out-of-pocket costs and expenses. The client is not to be liable to pay court costs and expenses of litigation, other than from amounts collected for the client by the lawyer."

    My Questions: (1) Does "The client is not to be liable..." mean that if we fail to recover for damages, I do not have to repay the lawyer for the court costs, if we ended up suing?

    (2) What about non-litigation expenses, such as obtaining medical report, police report, etc?

    (3) What are the differences between out-of-pocket cost and expenses vs. expenses of litigation?

    (4) I don't understand the meaning of "...other than from amounts collected for the client by the lawyer." Could you please explain to me?

    c) "Compensation (including that of any associated counsel) to be paid to the lawyer by the client on the foregoing contingency shall be the following percentage of the gross amount collected. Thirty six (36%) percent. The percentage shall be applied to the amount of the recovery not including any attorney's fees awarded by a court or included in a settlement. The lawyer's compensation shall be such attorney's fees or the amount determined by the percentage calculation described above, whichever is greater."

    My Question: I wish to amend this to say that the expenses that lawyer advanced will first be subtracted from the gross awarded amount and repaid to the lawyer, and then the 36% contingency fee will be applied to the remainder(net amount). Is this reasonable to ask?
    Thank you very much!!

  4. #4
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    Default Re: Contingency Fees for Personal Injury

    Quote Quoting seavsohana
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    1. If the contract does not mention which party will be responsible for the incurred expenses in the event that we fail to recover, who is responsible for the expenses? Will it be I or him?
    If you are not certain that your lawyer has made repayment of costs contingent on the outcome, re-check the retainer agreement.
    Quote Quoting Connecticut Rules of Professional Conduct, Rule 1.8 Conflict of Interest: Prohibited Transactions, Subsection (e)
    (e) A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:
    (1) A lawyer may pay court costs and expenses of litigation on behalf of a client, the repayment of which may be contingent on the outcome of the matter;


    (2) A lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.
    Quote Quoting Connecticut Rules of Professional Conduct, Rule 1.5 Fees, Subsection (c)
    (c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by subsection (d) or other law. A contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages of the recovery that shall accrue to the lawyer as a fee in the event of settlement, trial or appeal, whether and to what extent the client will be responsible for any court costs and expenses of litigation, and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.
    Quote Quoting seavsohana
    2. Which is more common on the contingency fees based on "Gloss" or "Net"? Could I negotiate with him to agree on "Net"?(It is a reasonable request?) If so, what reasons shall I use to argue with him?
    You need to read your contract to determine how you agreed the fee would be determined. There are circumstances under which a contingency fee calculated as a percentage of the gross recovery might be deemed by a court to be excessive, but it looks like the courts of your state will generally uphold such provisions.
    Quote Quoting seavsohana
    View Post
    a) "The contingency upon which compensation is to be paid is recovery of damages, whether by settlement, judgement or otherwise."

    My Question: Does this mean the lawyer will be paid only if the insurance company agrees to pay the compensation, either a settlement in or out of court?
    It means that the lawyer is paid based upon the recovery of damages, whatever the source of recovery.
    Quote Quoting seavsohana
    b) "The lawyer agrees to advance, on behalf of the client, all out-of-pocket costs and expenses. The client is not to be liable to pay court costs and expenses of litigation, other than from amounts collected for the client by the lawyer."

    My Questions: (1) Does "The client is not to be liable..." mean that if we fail to recover for damages, I do not have to repay the lawyer for the court costs, if we ended up suing?
    It looks like the attorney is making reimbursement contingent on recovery.
    Quote Quoting seavsohana
    (2) What about non-litigation expenses, such as obtaining medical report, police report, etc?
    Generally speaking, those will be "out-of-pocket costs and expenses".
    Quote Quoting seavsohana
    (3) What are the differences between out-of-pocket cost and expenses vs. expenses of litigation?
    You can read your contract, and search Google for dissertations on the subject, or ask your lawyer. I expect that the attorney is distinguishing potentially taxable costs and expenditures directly related to the litigation (expert witness fees, transcript costs and the like) from other expenses (experts' travel expenses, exhibit and demonstrative aid preparation costs, and the like).
    Quote Quoting seavsohana
    (4) I don't understand the meaning of "...other than from amounts collected for the client by the lawyer." Could you please explain to me?
    It seems self-explanatory - what part is giving you trouble?
    Quote Quoting seavsohana
    (c) "Compensation (including that of any associated counsel) to be paid to the lawyer by the client on the foregoing contingency shall be the following percentage of the gross amount collected. Thirty six (36%) percent. The percentage shall be applied to the amount of the recovery not including any attorney's fees awarded by a court or included in a settlement. The lawyer's compensation shall be such attorney's fees or the amount determined by the percentage calculation described above, whichever is greater."

    My Question: I wish to amend this to say that the expenses that lawyer advanced will first be subtracted from the gross awarded amount and repaid to the lawyer, and then the 36% contingency fee will be applied to the remainder(net amount). Is this reasonable to ask?
    You can ask for whatever you want, but you are telling us that you agreed to base the attorney fee on the gross recovery.

  5. #5
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    Default Re: Contingency Fees for Personal Injury

    Quote Quoting seavsohana
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    Hi cmre3456,
    Thank you for your prompt response.
    And I am sorry for my confusing post previously. As English is not my native language, I sometimes have a difficulty on expressing myself accurately. I'm sorry!
    If you don't mind, I would like to try the questions again, by excerpting verbatim from the contract.
    Could you kindly review the following, please?

    a) "The contingency upon which compensation is to be paid is recovery of damages, whether by settlement, judgement or otherwise."

    Sounds fair to me. I read that as saying that if the attorney collects money for you by any means whether by settling out of court or as a result of winning at trial, the attorney gets paid.

    My Question: Does this mean the lawyer will be paid only if the insurance company agrees to pay the compensation, either a settlement in or out of court?

    b) "The lawyer agrees to advance, on behalf of the client, all out-of-pocket costs and expenses. The client is not to be liable to pay court costs and expenses of litigation, other than from amounts collected for the client by the lawyer."

    Sounds fair to me. I read it to say that you aren't responsible to pay anything at all unless the lawyer collects money for you. Even then it seems clear to me that you would never have to pay more than he collects for you.

    My Questions: (1) Does "The client is not to be liable..." mean that if we fail to recover for damages, I do not have to repay the lawyer for the court costs, if we ended up suing?

    (2) What about non-litigation expenses, such as obtaining medical report, police report, etc?

    (3) What are the differences between out-of-pocket cost and expenses vs. expenses of litigation?

    (4) I don't understand the meaning of "...other than from amounts collected for the client by the lawyer." Could you please explain to me?

    To me, he's saying that you aren't responsible to pay anything at all unless he collects money for you, and then not more than he collects for you.

    c) "Compensation (including that of any associated counsel) to be paid to the lawyer by the client on the foregoing contingency shall be the following percentage of the gross amount collected. Thirty six (36%) percent. The percentage shall be applied to the amount of the recovery not including any attorney's fees awarded by a court or included in a settlement. The lawyer's compensation shall be such attorney's fees or the amount determined by the percentage calculation described above, whichever is greater."

    Here, I read this to say that in addition to the 36%, if he is awarded attorney's fees, he alone gets to keep that. Be aware that being awarded attorney's fees isn't usual in most places. It takes something extraordinary such as violating a certain law, or something in the law that's called "malice" or some other circumstance to be awarded attorney's fees. Here the attorney appears to be saying that if he's successful in arguing for an award of attorney's fees, he gets to keep that.

    Where I am, this would be required by law. You aren't an attorney and can't be paid attorney's fees. I see nothing wrong with that provision.


    My Question: I wish to amend this to say that the expenses that lawyer advanced will first be subtracted from the gross awarded amount and repaid to the lawyer, and then the 36% contingency fee will be applied to the remainder(net amount). Is this reasonable to ask?
    Thank you very much!!
    The way I read it, that's what it says. There's the GROSS (total) recovery, less the costs the attorney paid and less any recovered attorney's fees, leaving a NET to split. That split appears to be 36% to the attorney and 64% to you.

    Frankly, it all looks pretty normal to me. Understand that the attorney is going to spend a lot of time and money on your behalf. He gets reimbursed for his out of pocket expenses first before there's a splitting of money he gets for you. That's only fair in my mind.

  6. #6
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    Default Re: Contingency Fees for Personal Injury

    The agreement is, "Compensation... to be paid to the lawyer by the client... shall be the following percentage of the gross amount collected". "Gross" does not mean "net".

    As quoted, the contract provides two alternative methods for determining attorney fees, with your attorney being entitled to the greater fee.

    A $100,000 award * 36% = $36,000.
    A $100,000 award + $10,000 in attorney fees: as $36K > $10K, the attorney fee is determined by the contingency agreement = $36K.
    A $100,000 award + $40K in attorney fees: as $36K < $40K, the attorney fee is determined by the $40K fee award = $40K.

    Most personal injury cases do not involve attorney fee awards, such that this type of alternate fee clause becomes moot.

  7. #7
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    Default Re: Contingency Fees for Personal Injury

    Seavsohana, I'm reading something into all of this. I'm believing that whatever you case is, your attorney thinks he has a high probability of winning, and that he thinks the award will be quite a lot of money.

    First, he's willing to pay all of the costs which will be substantial, and he's willing to do all of the work and pay all of his office overhead strictly on a gamble that he will win. He must believe he has a really good case, just as I see it.

    Second, he's willing to accept 36% of any winnings where many attorneys want as much as 40% if the matter goes to trial. Just to me, that's a hint that he thinks the opposition has a lot of money and will settle out of court without a trial.

    Be aware that I'm just guessing based on hints in there, but that's what it might be, as I see it right now.

    Good luck!


    - - - Updated - - -

    Quote Quoting Mr. Knowitall
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    The agreement is, "Compensation... to be paid to the lawyer by the client... shall be the following percentage of the gross amount collected". "Gross" does not mean "net".

    As quoted, the contract provides two alternative methods for determining attorney fees, with your attorney being entitled to the greater fee.

    A $100,000 award * 36% = $36,000.
    A $100,000 award + $10,000 in attorney fees: as $36K > $10K, the attorney fee is determined by the contingency agreement = $36K.
    A $100,000 award + $40K in attorney fees: as $36K < $40K, the attorney fee is determined by the $40K fee award = $40K.

    Most personal injury cases do not involve attorney fee awards, such that this type of alternate fee clause becomes moot.
    b) "The lawyer agrees to advance, on behalf of the client, all out-of-pocket costs and expenses. The client is not to be liable to pay court costs and expenses of litigation, other than from amounts collected for the client by the lawyer."
    I read this to say that costs will be deducted, but being out of context of the whole, I can't argue it.

    As for attorney's fees, it might be moot. I can't find anything definitive in Conn. This must not be med. malpractice because Conn. has a sliding scale for fees which is far below this. Here, you can ask for attorney's fees if you can prove that the OP acted with "malice," and for a couple of other things. I have no idea why this attorney seems to think he has some shot at it.

  8. #8
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    Default Re: Contingency Fees for Personal Injury

    When an attorney agrees to take a case on contingency, he expects to win and to recover his fees. If he did not expect to win and recover his fees he would insist upon being paid by the client. So that's pretty much a given.

    It looks like Connecticut has attempted to limit contingency fees by statute, General Statutes 52-251c. Assuming the fee limiting provisions of that statute have been upheld and no exception applies, the highest permissible contingency fee appears to be 33-1/3%.

  9. #9
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    Default Re: Contingency Fees for Personal Injury

    I just really don't know, and we don't have nearly enough in front of us. That statute goes on to delineate circumstances, exceptions and methods by which that 33/-1/3 % can be exceeded.

    I truly don't know enough of the facts.

  10. #10
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    Default Re: Contingency Fees for Personal Injury

    "Compensation (including that of any associated counsel) to be paid to the lawyer by the client on the foregoing contingency shall be the following percentage of the gross amount collected. Thirty six (36%) percent."
    I would like to limit my question to just the above portion of the lawyer's contract. For the sake of argument, let's say that there are $1,000 in out-of-pocket expenses (copying, medical reports, court costs, etc.), and the recovery (the gross amount collected) is $10,000. I interpret the contract above to say that the lawyer gets 36% of $10,000 (= $3,600) and I receive 64% (= $6,400). I would next have to deduct $1,000 from my share to reimburse the lawyer for the $1,000 advanced to me for the out-of-pocket expenses. This leaves me with $5,400.

    I would like to negotiate with the lawyer to amend the contract, so the 36/64 split is based on the net amount recovered. Using the situation above, the out-of-pocket $1,000 would first be deducted from the (gross) $10,000 recovery, leaving $9,000. The lawyer would apply his 36% share against this (= $3,240) and I would receive 64% (=5,760).

    Can you tell me which of these two situations is considered "common practice"? Is my wish to split the net amount 36/64 a reasonable thing to ask?

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