With our contingent fee clients, we often encounter misunderstandings about the distinction between the attorneys’ fee and the “litigation costs.” Those are two separate matters.
The fee is simple. If we recover money for the client, we get a percentage of the total recovery. In Federal Tort Claims Act cases that is either 20% (pre-suit) or 25%. For state law matters it’s higher.
Costs, however, are in addition to the fee. Here’s an example: An FTCA case is settled pre-suit for $100,000. The 20% fee is $20,000. We have spent $10,000 in costs, mostly for an expert review and retrieving records. The client will net $70,000.
Obviously, costs can be a big issue in the client’s net recovery. Using the same example, if the costs were $30,000 – and if you had three or four experts you could easily spend that much – the net to the client is only $50,000.
Please understand, costs are expenses we actually incur on behalf of a client. There must be a direct connection to the case. This is money we spent, meaning we can – and we will – provide the client with an itemized listing.
Even if an interest charge is listed as a cost, that reflects the actual amount we paid to our finance company.
There are never any “up charges” on costs we pass on to a client.
The above is easy enough to understand. It’s basic arithmetic. Clearly, it’s in everyone’s interests to keep the costs as low as you reasonably can, but that must be balanced with getting the evidence and other material you need to support a case.
To try a medical malpractice case successfully, you must have expert witnesses to support your case. Those experts are doctors and other professionals. Their time is expensive. Charges of $500 an hour or more are commonplace. Even a relatively simple medical malpractice case can end up with an expense bill of $100,000. Complex ones can cost a lot more than that. For cases that go to trial or get close to trial, expert expenses are usually 75% or more of the total litigation costs
If we think a situation is clear cut and an early settlement is a reasonable possibility, we will often hold off hiring experts. This is especially true in our FTCA cases. This often works to our client’s benefit. Using the example above about a $100,000 FTCA settlement, if we didn’t have to get an expert review and the total costs were only $2500, the net to the client would be $77,500.
When to get an expert review and what kinds of experts to use is a judgment call. It’s often not an easy one. We want to do what is best for the client, but the reality is that our firm does not have unlimited resources.
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