Billboards, TV, and radio are covered with lawyer ads offering services with payment arrangements such as, “You don’t pay unless we win” and “No win, no fee.” This is commonly referred to as contingency fee agreements, the payment is contingent on the outcome of the case. For example, if there is a 45% fee on any settlement or verdict in the case, then the attorneys fee on a settlement for $100,000 is $45,000 (leaving $55,000 for the client). If the same fee agreement has a verdict of $0, then the fee is $0.
Is this a typical arrangement?
Short answer, yes. In Georgia, the State Bar of Georgia, which governs all attorneys and their client relationships allows for this in the Rules for Professional Conduct Rule 1.5(c) Fees
“(1)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 paragraph (d) or other law. A contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated.”
The prohibited matters are, a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or a contingent fee for representing a defendant in a criminal case.
What are the rules that govern contingency agreements?
In addition to the Rules for Professional Conduct discussed above, the contingency agreement must be in writing, with a copy given to the client. Also, at the payment of the fee, the lawyer must provide the client with the method of determining the fees, the amount of the attorney fee, and any division of fees with another attorney not at the same firm who helped work on the case. And, of course, payment of that recovery to the client, less any fees. See, Rules for Professional Conduct Rule 1.5(c)(2).
What other amounts may have to be paid back out of the resolution amount?
Keep in mind that other amounts may have to be paid out of your case settlement or trial verdict. This includes payment for medical treatment that was done but not paid for at the time, and a lien exists forcing your attorney to pay it off. Your health insurance provider may be due repayment or “subrogation” for amounts the health insurance provider paid for your medical care that you later recovered through work with your attorney. Even things like unpaid, overdue child support can come out.
What work by the attorney is covered and what isn’t?
It is important to talk to your attorney about what other fees are not included in the contingency fee. The contingency fee should cover all time worked by the attorney, paralegal, and other staff. It should also include all travel by car. Out-of-pocket expenses for the attorney, including the cost of retrieving medical bills and records, filing a lawsuit (about $200 in Georgia), serving the defendant with a copy of the lawsuit and paying for a court reporter to type down all depositions, hearings and trials are not included in the contingency percentage fee. But some attorneys try to sneak other fees in for the client to pay, I have even seen “long distance phone calls” listed on fee sheets, as if it were 1985. At MG Law we never charge for extra fees such as long distance.