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Tuesday, July 21, 2015

“We Don’t Get Paid Unless We Win” – What does it REALLY mean?

You've been injured or wrongfully terminated, or the victim of a scam or a breach of contract, and you want to sue. All of your friends tell you that you have a strong case and that any attorney worth his (or her) salt will take your case on a contingency basis - the "we don't get paid unless we win" representation. So you go on the internet, pick up the newspaper or search in the telephone directory (how quaint) to find a lawyer to represent you.

Each day, thousands of advertisements for lawyers can be found in local newspapers, on television stations and even on social networks like Facebook and LinkedIn. Most of these ads explain that the firm doesn’t collect any fees unless they win. Of course, there’s usually a catch with this statement and it centers around what the advertising firm means by “fees” and what other costs you might be expected to pay regardless of whether or not you win your case.

Attorney fees usually involve the time and labor of the attorneys and their staff. These fees do not include the out-of-pocket case costs that are inevitable in any court proceeding. So while you may not be required to pay any attorney fees upfront or at all (unless you win), you usually will be required to pay all related case costs. Case costs are usually expenses charged by third parties for work on your case. These may include court filing fees, expert witness fees, cost of obtaining medical records, court reporter fees, etc. Depending on the scope of your case and the duration of these proceedings, these fees can easily be thousands of dollars.

While some firms will require you to pay case costs as they are incurred, others won’t require upfront payment (especially, if you have a very strong case) and will instead deduct these expenses from the final settlement. Combined with legal fees, these costs may add up to 50% or even more of the settlement. Frequently, attorneys who specialize in litigation, such as personal injury or workers compensation lawyers, have arrangements established with lenders who in return for a promissory note signed by you, will advance the expenses to the attorney.

In selecting an attorney for your litigation matter, it’s important that you take time to understand what expenses, in addition to attorney fees, you will incur. You also need to know if you will be responsible for these costs even if you don't win (generally, you will be responsible) or if the amount won at trial or agreed to in settlement is less than the actual costs of the litigation. Your attorney should be candid with you and if she or he says "don't worry, I always recover expenses for my clients", you should run, not walk, away.

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