Evaluation factors, common pitfalls, and pattern contingency agreement

By Larry and Roger Booth

Excerpted from Personal Injury Handbook


§1:01       Be Selective

The hardest thing for any lawyer, especially a young lawyer, to do is reject a case that appears as though it might bring good money into the firm. Caught up in the hustle and bustle of practice, lawyers often are so happy to land what appears to be a good case that they do not take sufficient time to understand the facts, get to know the client, and, most importantly, fully explore the reasons to reject the case. Accepting a bad case causes several problems. The case ties up the attorneys’ money, gives them headaches, and eventually produces little, if any, income. It also ties up the attorneys’ time preventing them from concentrating on other business. A few good cases are much better than a cabinet full of problems.

Sometimes, attorneys take a bad case because they have the deluded belief that somehow they can help everyone. There are certain people you cannot help or who have problems that cannot be economically solved.

An attorney we have known for years works seven days a week, makes little money and looks 20 years older than he should. His office looks like a hurricane just hit the building with the windows open. He takes every case that somehow finds its way into his office, works like mad and produces little results. The clients do not appreciate all the effort because the final settlement, if any, is disappointing in the extreme. On the other side of the spectrum is a famous attorney we know who brags that his case load at any given time is no more than eight or 10 cases, and this is with a staff of several attorneys and a lot of clerical help. Nonetheless, his results are spectacular and he consistently makes a huge income. There is a happy medium somewhere in-between.

§1:02       Checklists: Cases to Avoid; Cases to Accept

When a client calls who has been rejected by another attorney, watch out! Don’t take some other lawyer’s rejects.

Cases to Avoid

  • Is the client overly anxious, excited and wanting to sue everyone?
  • Is the rejecting lawyer well respected in the community?
  • Has the rejection occurred after a long period of litigation?
  • Is it late in the game in terms of discovery, trial dates, deadlines, etc.?
  • Has the client rejected a settlement offer that seems in the ballpark, especially in an automobile accident case where there may be small policy limits?
  • Does the client have a history of numerous lawsuits and claims?
  • Does he “smell” like trouble? (The smell test.)

If any of these indications of a potential bad client apply, you probably should reject the case. If they all apply, run as quickly as you can from ever representing this client. Nonetheless, a certain amount of discretion must be exercised depending on the strength of liability and especially the seriousness of the injuries. Sometimes we have taken over cases late in the game if we feel the current lawyer is just over his head, and the same thing applies to low offers. We once had a settlement judge recommend our firm (along with two others) to a lawyer who was just not experienced enough to realize the offer was way too low, was anxious about actually going to trial and had a client who rejected the offer.

Cases to Accept

  • Big injuries can usually make up for tough liability in the hands of a good lawyer, with a good trial record. These cases settle all the time.
  • Most good clients, especially the ones with serious injuries, almost never ask what the case is worth.
  • The case may fit into a particular area in which the lawyer is comfortable from prior cases.
  • After some investigation, you may decide that your immediate reaction to the client was not warranted.

§1:03       Withdraw Early if the Case Goes Sour

Just as important as not taking questionable cases or cases rejected by other lawyers is the maxim to “get off the horse early.” If a case appears to be going sour either in the preliminary investigation phase or during discovery, the best course of action is to bow out. Most contingency-fee contracts allow the attorney to withdraw at his own discretion. The key is to do it early. It is possible malpractice to do it late in the game with a trial looming.

Some years ago, we helped defend a referring attorney of ours against an old claim for which his legal malpractice coverage was inadequate. The plaintiff was a minor and therefore the applicable statute of limitations allowed for a fairly ancient claim. However, the malpractice coverage was based on the economy then, not now. The underlying case was not winnable for a variety of reasons and our attorney friend should have rejected it out of hand. During jury selection, the prospective jurors had great difficulty dealing with the concept that the attorney defendant accepted a terrible case. There is, of course, no liability for somehow mishandling a bad case because the plaintiff is not damaged. Frankly, they thought that our efforts to demonstrate that the underlying case was without merit was an excuse. The lay public, including clients, does not understand that a lawsuit is like a baseball game: it may change radically at any time, even in the bottom of the ninth inning.

Fee Agreements

§1:10           Form: Contingency Agreement

CONTINGENCY AGREEMENT

THIS AGREEMENT, made this __day of __, at ________, ________, between the ___________, a professional association, hereinafter referred to as “Attorney,” and __________, hereinafter called “Client,” for injuries and/or damages sustained on or about ________, in the County of _______, State of ________.

1. IT IS AGREED that Attorney is to receive 33-1/3 percent of the gross amount of the recovery as his fee if the case settled before the suit is filed, and 40 percent of the gross amount of the recovery thereafter, against all defendants. Client agrees to the above fee after having been advised by Attorney that the above fee is not set by law and is negotiable between Attorney and Client.

2. Actions against insurance companies and others for BAD FAITH require a higher fee because of the extreme amount of time involved for the Attorney and therefore the fees on such cases will be 40 percent of the gross amount of the recovery if the case is settled before suit is filed, and 50 percent of the gross amount of the recovery thereafter.

3. Attorney fees in actions that involve a person who is a minor at the time of the settlement or judgment may be subject to court approval.

4. IT IS FURTHER AGREED that Attorney may advance all legal costs in connection with this action. Examples include, among other things, investigators, experts, court reporter fees, medical record expenses, outside legal research, process servers and many other costs. In the event of recovery, either by way of suit, compromise or otherwise, Attorney is to be reimbursed from the recovery of the costs so advanced in addition to attorneys’ fees. Attorney will also be reimbursed for any interest owing to costs funding organizations for any advanced costs that are financed by attorney. Costs involving postage, Xerox copies, telephone calls, facsimiles and similar items are not itemized, but a uniform charge of __ percent of the gross recovery will be charged as an additional cost to cover all such items.

5. In the event of recovery, Client agrees to pay any and all medical costs that are unpaid from Client’s share of recovery. Should Client recover nothing, it is understood that Attorney is not bound to pay any of these medical bills.

6. Client agrees to keep Attorney advised of his whereabouts at all times, to cooperate in the preparation and trial of the case, to appear upon reasonable notice for depositions and court appearances, and to comply with all reasonable requests made by Attorney in connection with the preparation and prosecution of this case.

7. The above fees do not include fees and expenses in the event of an Appeal.

8. Attorney is hereby given a lien of any sum recovered by way of settlement or judgment of the amount of the advanced costs and his agreed fee. It is agreed that Attorney may retain the advanced costs and the agreed amount of his fee out of the settlement collected by way of settlement or judgment.

9. Attorney and Client both agree that neither shall make any settlement of this action without the knowledge and consent of the other. Whenever a verdict, judgment, award or settlement is obtained in this matter, the undersigned client(s) hereby authorizes, directs, and orders the attorneys(s) to sign the client(s) name to any and all releases, dismissals, forms, checks, drafts and other papers and to deposit the proceeds in the attorney(s) trust account, and to distribute the funds therefrom in accordance with this retainer agreement.

10. Attorney, in his absolute discretion, may withdraw at any time from the case if the investigation discloses no insurance coverage of the responsible parties liable to Client, or if in his or her opinion, the case cannot be economically pursued. Associate counsel may be employed at the discretion and at the expense of Attorney.

11. In the event of a settlement or judgment involving periodic payments or an annuity, the attorneys’ fees shall be based on the total value of the verdict or settlement and shall be paid out of the cash portion thereof and not over the life of the periodic payments.

12. Attorney may elect to defer his or her compensation and receive his or her attorneys’ fees through a structured settlement or annuity. The terms of such structured settlement or annuity shall be determined by Attorney in his or her sole discretion and shall not be affected in any way by the terms of any structured settlement or annuity obtained by client.

13. Client’s spouse, if any, is not a party to this agreement and Attorney has not been engaged to file a claim for loss of consortium or any other claim on behalf of client’s spouse.

14. IT IS FURTHER AGREED that Attorney has made no guarantees regarding the successful termination of the action, and that all expressions relative thereto are matters of his or her opinion only. This law firm maintains Professional Errors and Omissions insurance coverage within the statutory requirements for the services to be rendered on your behalf. The parties agree that any dispute whatsoever between the client and the attorneys whether relating to the attorneys’ performance, fees, expenses or any other subject will be resolved by binding arbitration before a single arbitrator and may not be submitted to a court for resolution by a judge or jury. IF NO RECOVERY IS OBTAINED, NO ATTORNEYS’ FEES SHALL BE PAYABLE.

15.      A copy of this contract has been provided to Client.

[Client’s initials]

Dated: _______                    Dated: _______

[Client’s signature]                    [Firm name]

[Address]                         By: ____________________________

[Telephone number]                            Attorney’s Signature


Larry Booth concentrates on high-profile personal injury and death cases in a wide variety of areas including auto defects, construction accidents, products liability, drugs, malpractice, and governmental liability. His firm has produced over 75 verdicts and settlements exceeding $1,000,000.  In 1974, Larry Booth was elected to the Inner Circle of Advocates, which is a national organization limited to the top 100 trial lawyers in the United States. In 1978, he was the President of the Los Angeles Trial Lawyers Association.

Roger Booth. In a legal career that began in 1991, Roger Booth has handled many large, complex cases, representing both plaintiffs and defendants.  Since 1997, he has focused on representing people who have suffered catastrophic injuries or the loss of a loved one.  Roger Booth has handled more than 20 cases that have resulted in verdicts or settlement in excess of $1,000,000.  In 2009 and 2010, he was named a “Super Lawyer,” an honor limited to the top 5 percent of attorneys in Southern California.

Larry and Roger Booth are the authors of Personal Injury Handbook, from which this article is excerpted.