RES

I have certainly blogged about the contingent fee system, a uniquely American approach. It has been called the “poor man’s key to the courthouse.” Why is that? Because supposedly the poor man is not able to put up money for hourly fees or for a large retainer. Why is personal injury conducive to a contingent fee agreement?

It is because of the Latin term, “Res.” What does that mean? It means a thing or an object. In a personal injury lawsuit, obviously, at the end of the day, you hope to have a settlement, award or verdict. That would be the thing or the object from which this percentage fee will be taken. Because there is money at the end of the case, the theory is that that that sum of money lends itself to the sort of fee structure of a contingent fee. I am convinced that it is so much better than having a client pay upfront money. There are several reasons for that.

Most notably, the client may not have the money to finance his/her case. In fact many will not have the money to put into a case for its proper development. There is no shame in that, of course. I have blogged about experts and how expensive they can be. Yet, it is a fact of life that you need experts in the development of your case. It can be a very expensive proposition to retain the experts. They are even more pricey than in the old days. Thus, given the fact that many people do not have this available pile of money, it makes all the more sense to have a contingent fee. That requires an injury lawyer who is ready, willing and able to fund the not inconsiderable expenses associated with an aggressive pursuit of the injury case. Wouldn’t it be almost impossible for a client to finance his/her case and on top of that to pay a lawyer by the hour?

In selecting a lawyer, you should ask explicitly: Am I expected to come up with the out-of-pocket expenses as they are being incurred? If the answer is yes, that would, be a very disconcerting feature for the client, or potential client. In my firm, we do not do it that way. Rather, we pay for the costs and the litigation as all the expenses become due. We do not want the client to have sleepless nights. The client would struggle with, if not agonize over, putting in thousands of dollars all the while being uncertain if the case will result in a recovery.

That leads to my next point which is if the case is not successful – thankfully that has occurred very seldom in my 35 years- the lawyer is not obligated to get reimbursement from the client. I have always put that in the contingent fee agreement. Indeed, in the form contingent fee agreement adopted by the Supreme Judicial Court, there is now boilerplate language to that effect. Why do I structure my fee arrangement that way? I do it because for me it is a business and it is a business expense. If, unfortunately, very unfortunately, the case does not result in a successful recovery, I will just chalk it up as an event in the life of my business. It will not have the same catastrophic effect that it would have on somebody who did not recover money and who is then obligated above and beyond to pay for those out-of-pocket expenses.

To summarize, the res – the thing or object- lends itself to the contingent fee arrangement. But please go further and assure yourself that you will not have to pay for expenses as they become due. If you do have to pay for expenses as they are incurred, it will put a financial strain on you as well as an emotional strain. Go even further, assure yourself that your fee contract doesn’t oblige you to pay for the expenses in the event of an unsuccessful result. All scenarios need to be taken into account, even the unpleasant ones.