Public Health Law Map - Beta 5 - Medical and Public Health Law Site

$150,000 to fight a case that could be settled for $25,000, if the defendant was
negligent.
The most disturbing consequence of trial costs is that they allow a very well- funded
party to punish an opponent, irrespective of the merits of the case. A wealthy surgeon
can use litigation to force colleagues on a peer review panel to back down from
limiting his or her privileges. A tobacco company can devote unlimited resources to
fighting persons who sue for injuries caused by smoking.
1. Contingent Fees
Except for large businesses and wealthy individuals, most potential plaintiffs do not
have the money to pay the costs associated with litigation. There are third- party
payers in law, but they are insurance companies, which usually limit their payments
to defense lawyers. Since few people have the resources to hire an attorney on an
hourly basis, persons with valid personal injury claims would be denied their day in
court if this were the only payment system. This would be an injustice. The solution
adopted in the United States is the contingent fee contract. In this arrangement,
attorneys take a percentage of the winnings as their fee. The clients make their
claims, the attorneys have a chance to earn a fee, and the contingency aspect gives
attorneys added incentive to work hard for their clients.
If the lawyer works for a contingent fee, the fee must cover three costs of litigation.
The first is the out-of-pocket costs and the salaries for the support personnel in the
lawyer’s office. Out-of-pocket costs include filing fees, court reporters, expert
witness fees, copying charges, and payments for other goods and services necessary
to prosecute a case. The second is the value of the attorney’s time. In a contested
malpractice case, the attorney may invest hundreds of hours of work that will never
be paid for if the suit is unsuccessful. The third component is economic value of
accepting the uncertainty and delay in litigation.
The contingent fee contract provides that the fees will be paid out of the money
received from the defendant when a case is won or settled. Most contracts also
provide that the attorney will loan the client the money to pay the out-of- pocket
expenses of the case. Although the money for these expenses is styled as a loan, few
attorneys attempt to collect it from the client if the recovery is less than the expenses
in the case. The attorney’s fee is based on a percentage of the gross recovery, without
regard to the number of hours actually worked on the case. The fees are typically
staged—perhaps 33% if the case is settled without filing a lawsuit, 40% after a
lawsuit is filed, and 45% if the case must be defended on appeal. Most cases are
settled after the filing of a lawsuit but before the rendering of a judgment by a court.
Under this schedule, the attorney would receive 40% of the settlement and would be
reimbursed for expenses out of the client’s share.
2. Problems with Contingent Fees
Contingent fees are unfair because plaintiffs are not allowed to recover the cost of
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