CONTINGENT ATTORNEY FEES/CASE EXPENSES/TAXES
On this page, we provide a detailed explanation of how contingency fees, those are fees calculated on a percentage of the amount recovered, are calculated and how they work in different types of cases. We also discuss cases expenses and taxes on any recovery.
We at the Ziff Law Firm have had very few fee issues over the 60+ years we have been in business and we are firmly convinced that this good track record has been due to our willingness to discuss fee issues early so there are no problems down the road.…
Although we provide this explanation as a general overview, it is critical to make sure that you discuss with YOUR LAWYER exactly how the fees and expenses are going to be calculated in YOUR case because there are times when a case departs from these normal arrangements.
Good lawyers do NOT mind your asking about any fee questions so PLEASE ask your lawyer if you have any questions about the fees. This stuff is complicated so please make sure you understand exactly how fees and expenses will be deducted in your case.
CONTINGENT FEES IN MOST PERSONAL INJURY CASES
Up until 2007, the N.Y. law in a standard negligence action provided that the attorney’s fee was 1/3 (33%) of the remaining amount after expenses (called “disbursements”) were deducted off the top. As discussed below, the law was changed in 2007 so there are now two options for the calculation of fees and expenses.
AM I RESPONSIBLE FOR THE EXPENSES EVEN IF MY CASE IS LOST?
Until 2007, the answer to this question was “Yes”. In 2007, the law was changed so that attorneys now have the option of offering a client protection from the expenses of a case should the case be lost. The new law provides two different contingency fee options:
- CLIENT IS RESPONSIBLE FOR THE EXPENSES EVEN IF THERE IS A LOSS
This is the way it was under the old law. Under this option, the attorneys fee in the event of a win/recovery was calculated by first deducting the disbursements off the top and then the remaining amount was split 1/3rd to the attorney and 2/3rds to the client. Under this system, both the attorney and the client shared in the expenses in the event of a win but the client was responsible for all of the expenses in the event of a loss.
- CLIENT IS NOT RESPONSIBLE FOR EXPENSES IN THE EVENT OF A LOSSUnder this option, a client is not responsible for the expenses in the event of a loss BUT the fees in the event of win are calculated differently. Under this option, the attorneys fee is 1/3rd of the total recovery (before expenses are deducted) and all of the expenses are deducted from the client’s 2/3rds share before the remaining amount is paid to the client. This means that the client pays all of the expenses in the event of a win/recovery but none in the event of a loss.
Because this law is brand new, most attorneys are approaching this issue cautiously until the courts interpret the application of the new law. At the Ziff Law Firm we will be discussing this in detail with our clients in great detail so as to avoid any issues. If you choose to retain us as your attorneys, rest assured that we will be exploring both options with you so that you can make an informed choice.
WILL THERE BE A WRITTEN AGREEMENT REGARDING THE ATTORNEYS FEES AND EXPENSES?
Yes, N.Y. law requires that there be a written retainer agreement in all contingency fee cases. This agreement is the “contract” between you and your attorney so make sure you read it and understand it!
CONTINGENT FEES IN MEDICAL MALPRACTICE CASES
In New York, by a special law pushed through by the very powerful medical lobbyists that applies only to medical malpractice actions, the attorney’s fee is less than in a standard ‘negligence’ action. In other words, if a lawyer, or an accountant, or an architect, or any other professional screws up and causes damage to a person, an attorney representing that person gets paid a higher fee than if a Dr screwed up.
Why is that? Simple. The medical lobby wanted to discourage lawsuits against Dr’s so they pushed through a special law that protects Dr’s by cutting attorneys fees. The thinking was that if attorneys got paid less, many attorneys would stop handling these cases. And it worked. Many attorneys have abandoned this area of practice. Even worse, many times those attorneys who continue to handle these cases have to decline cases where there is clear negligence but the recovery will just not be sufficient to justify all of the work involved and the very high costs of pursuing the case.
So what are the fees?
In a standard negligence action, the attorney’s fee is 1/3 (33%) of the remaining amount after expenses (called “disbursements”) are deducted off the top. However, in a medical malpractice matter, the lawyers fee is set by law in the form of a sliding scale. It starts out at 30% on the first $250,000, then 25% on the next $250,000, then 20%, and it keeps going down until it is only 10% on any recovery over $1,250,000.