Mar 26, 2009

Hiring an attorney for an injury requires you to learn a number of words that are not in regular daily conversations.

For example, we all know that lawyers, like most professions, get paid for their services. A lawyer's compensation is called a "fee." You may have heard the word "contingent" or "contingency" from time to time. These words mean "conditioned" or "conditional."

If you are involved in an injury accident that is the fault of someone else, you will hear and see the words "contingency fees" being used over and over again. The good news is that this means the lawyer gets paid a percentage of the recovery he obtains for you. And if the lawyer gets you nothing, you pay nothing for his time spent on your case. "Contingency" also suggests that the lawyer is not going to charge you anything up front. The more concerning news is that often the "devil is in the details." You can learn a lot about your attorney just simply based on how his contingency fee is worded. This blog will review contingency fees.

The fact is that legal work is very expensive, and the average person does not have a spare $12,000 or $15,000 to hire an hourly attorney. So many years ago, it occurred to some smart lawyers that regular people needed access to legal representation as well. Injury cases generally involve battles with insurance companies who are armed to the teeth with lawyers, and many times people do not stand a chance of getting a fair outcome without the help of a sharp attorney. The idea of contingency fees was revolutionary, because this granted regular folks access to skilled representation and put regular people on par with the skillful and cunning insurance industry. Contingency fees allowed for an "even playing field."

Contingency fee agreements between lawyers and clients are highly regulated by the Colorado Supreme Court. Certain information must be detailed and explained in the contingency fee agreement. The lawyer must give the client the option to hire the attorney on an hourly rate, and the contingency percentage must be fair and rationally related to the complexities of the case. For example, attorneys have been disbarred for taking cases where they did effectively no legal work and then took an offer of settlement that had been the intended offer of the insurance company BEFORE the lawyer took the case, but the lawyer still took his one-third percentage for the settlement.

A good attorney realizes that any fee agreement that a client signs must be balanced against an appreciation that every fee an attorney receives should be both earned and reasonable. A good attorney has a solid moral compass, and it should be second nature for her to be fair with her fees.

At Anderson Hemmat, our contingency fee for regular injury cases is one-third of the gross recovery. If a case goes into litigation, because there is more work involved, the percentage increases to 40% of the gross recovery. These fees are fairly typical and consistent with most attorneys representing injury victims in Colorado.

For Workers' Compensation cases, our fee is the state-mandated 20% of benefits received. This is the fee that every Colorado law firm should be charging for any work- related injury claim.

What might look like a good deal is often, after closer examination, not a deal at all. For example, there are attorneys who will sign clients to a one-third fee regardless of whether they settle the case within months or the case takes years and they have to go to trial and even withstand appeals by the insurance company.

Think about any job. Assume an employee has easy tasks, as well as more complex tasks, and the employee gets paid the same regardless of which type of task he chooses to complete. Do you think the employee will choose to do the complex task when he could make the same amount of money by performing the easy task? My point is that any lawyer who tells you that she will charge only a one-third fee regardless of whether she settles your case or has to go through trial and appeals is telegraphing that she will take the path of least resistance.

A good attorney realizes that often to get the best result for her client, she may very well have to work harder, file a lawsuit, take depositions and even make arguments in a trial. None of the slick firms who offer "one price does it all" fee agreements has a reputation in the legal community for being anything other than settlement mills where you would be lucky to have a lawyer overseeing any part of your case. And these firms will never take your case to trial.

Some law firms use a complex formula generally geared towards looking like they are going to provide you with a low contingency fee rate but over time the fee gets higher and higher. A competitor law firm to ours starts with a one-third fee. But months later, it goes up to 38%. Then, if they file a lawsuit, the fee goes up to 40%. If the litigation process takes longer than six months, the fee moves up to a 45% rate. If, after a trial, there is the need for an appeal, the fee moves up to 50%.

This type of fee agreement encourages the worst in our human nature. Imagine being able to be paid more the longer you drag your feet. Let's say that you agree to pay a painter $100 if he paints your garage in one week, but you agree to pay him $300 if it takes him two weeks to complete the job. How likely will it be that your garage will be done in one week?

The same is true in the law. Frankly, there is motivation at certain types of firms to drag your case out as long as possible. After all, the client will pay more money if they can make it take longer than a year to resolve your case.

At Anderson Hemmat, our fee agreement encourages a prompt and fair resolution of your claim. Feel free to meet with us. Review our fee agreement. Then compare it to other law firms. We bet you make the same decision as thousands of other people by hiring us to represent you.


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