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An attorney contingency fee agreement is a contract where the attorney receives as payment a percentage of your settlement.  The attorney does not get paid if he/she loses your case.  Some agreements can be very confusing.  Read the fee agreement carefully as it may have hidden costs.  Be careful.

CAUTION IF the attorney fees are based on GROSS instead of NET of your settlement money.

  • Fees based on GROSS will always cost you more in attorney fees.
  • GROSS means you are also paying attorney fees on the costs the attorney decides to incur on your case. (Beside filing, expert and witness fees, and photocopying, this could include travel and lodging costs.)
  • GROSS means the attorney has no incentive to keep costs down. The attorney gets a percentage on every dollar spent. The more he/she spends, the more you pay in actual attorney fees.
  • You want an attorney fee agreement based on the NET settlement!
  • Fees on NET mean YOU GET MORE money! See EXAMPLE below.
  • Under GROSS, every dollar of costs, your attorney pockets 25 to 40 cents in addition. You pay more!
  • Under GROSS, an attorney makes more for him/herself by running up costs. You pay more!

CAUTION IF the attorney asks you for “up front” money in exchange for a fee percentage reduction.

  • Asking you for money to litigate your claim could mean the attorney is underfunded or does not have enough confidence in winning your case to use his/her money for your costs.
  • Be sure the law firm has the money and qualified staff to finance and withstand multi-million dollar complex litigation.
  • An underfunded attorney can give up a lot of your money to get a quick settlement.
  • Expert costs can be very high in complex “valuation” cases like this case against Sempra and SDG&E if it goes almost to or to trial. Even extensive mediation can require experts and be costly.

CAUTION IF the attorney says he will reduce his percentage but then gives you a long attorney fee agreement with confusing clauses that could actually inflate your final legal expenses.  Attorney fee agreements should be concise and easy to understand.

Be sure to:

  1. Review and understand any attorney fee agreement before signing it.
  2. Check that fees are based on NET not GROSS fees on your award money.
  3. Check online:
  • Does your attorney and law firm have lots of their own money to fund these complex costly cases?
  • Does your attorney have the necessary successful background and experience to go against SDG&E and its gigantic Los Angeles firm, Quinn Emanuel?
  • Have you checked www.quinnemanuel.com to see why you need the biggest and best law firm?
  • What experience did the law firm have BEFORE the fires?

TIP: Fees are negotiable even after an attorney fee agreement has been signed.

EXAMPLE:  You win $500,000, the GROSS award.  COSTS of litigation are $100,000. 

Fees based on GROSS                            Gross award $500,000
 You pay 40% attorney fee before paying COSTS  - 200,000
 You pay COSTS                                               - 100,000
 YOU end up with                                                             $200,000

Fees based on NET                                    Gross award $500,000
 You pay COSTS first                                         - 100,000
                                                         Net award $400,000
 You pay 40% attorney fee after paying COSTS    - 160,000
 YOU end up with $40,000 MORE                                  $240,000


 

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