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richanne96, Attorney
Category: Personal Injury Law
Satisfied Customers: 343
Experience:  Attorney in private practice in Phoenix, AZ
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My elderly mother is considering entering into an agreement

Customer Question

Hello. My elderly mother is considering entering into an agreement with a PI attorney who is interested in helping her gain restitution for her family property which was taken by the Nazis during WWII. While my family has had several experiences with restitution cases involving attorneys, the arrangement this attorney suggests concerns me. He is asking for a 60/40 split of any proceeds, with no monies due him if no recovery is made, but IF a recovery is made, all of his expenses, major and minor, come from my mother's 60%. If any recovery is made in this case, which based on our experiences, is unlikely, they could be nominal. Therefore, she could get a $5000 award, he gets $2000 of that, and then submits a bill to her for $6000 in expenses, wiping out her gains and having her owe him money. I've never heard of this and have already expressed my concerns. It seems very unusual and I feel like he is taking advantage of my elderly mother, and I have said I will not be signing this document unless that paragraph is removed. Appreciate your opinion.
Submitted: 2 years ago.
Category: Personal Injury Law
Expert:  richanne96 replied 2 years ago.

It is very common in contingency fee arrangements for the plaintiff to have to pay for costs. Sometimes the attorney will choose to advance costs, such as paying for a deposition, but the attorney keeps track and those costs are almost always recovered from the plaintiff's share. What is unusual is for an attorney to want to take on a case, or suggest pursuing a case, where the costs are likely to exceed the recovery. If that really is likely here, then what the attorney is suggesting is unethical. Most attorneys would not take a case where the likely recovery was only $5,000 unless the costs were projected to be minimal if anything. Perhaps you could add in a caveat that costs can not exceed recovery. The problem I see is that with personal injury cases, there is always a clause that says that the case can not be settled by the attorney unless the client agrees. I am not sure how that work with restitution, but perhaps a similar clause could be inserted? In any event, make sure the attorney supplies her with monthly statements showing all the costs as they are being accrued.

Customer: replied 2 years ago.
Thank you. I've emailed him about this and his response was: "The fees are capped at 40% of the recovery, if any. The expenses are unknown, but with the long odds this claim faces, I do not anticipate incurring significant expenses." I don't see that clause anywhere in the POA and Employment Agreement. I've asked him to point out where it is. He also writes, "Clients hereby transfer, assign and convey to Attorney a contingent fee interest in the Claims in the amount of 40% of any recovery. Clients fully understand they are forever giving, assigning over, transferring, and conveying a contingency fee (ugh, there's a typo), to Attorney at this time. Clients agree to pay Attorney an amount equal to said percentage of any recovery. If the Claims are settled by a structured settlement or periodic payments, it is agreed that the present value of such a settlement or payments based upon its actual cost, shall be employed as the basis for the computation of attorney's fees and, to the extent possible, all attorney's fees shall be paid at the time such settlement is first funded. It is further agreed that all reasonable and necessary expenses and costs of litigation and other proceedings, including...(long list) may be advanced by Attorny, and Attorney shall be reinsured for said charges by Clients out of the client's net proceeds of any recovery after deduction of Attorney's fees. If no recovery is made Attorney shall be solely responsible for payment of Attorney's expenses and costs. .....decisions on the amount of time and resources to be committed to the Claims is left to sole discretion of Attorney."I'd like to trust but I need to look out for my mom. Too many people take advantage of the elderly.Thank you.
Expert:  richanne96 replied 2 years ago.

When he says the fees are capped at 40%, he is talking about his contingency fees, not costs. You would not put something in the actual contract saying that the claim faces long odds or that the attorney does not anticipate incurring significant expenses. He is just saying that he is not going to put himself out on a financial limb by incurring a boatload of costs in a case when he likely will recover nothing, because then he will be on the hook for all those costs. I see his point there. I think this guy is OK. If you are happy with my answer, please give me a positive rating so I can be paid.

Customer: replied 2 years ago.
I'm sorry, I don't mean to be dense, but he is saying that his expense $$ comes out of whatever proceeds my mother gets, right? So if she gets 60% of a token, say $5000 - and his expenses are more than $3000, doesn't that mean she gets nothing...or could wind up owing him $$. I will def submit for paying you but I still don't feel like I get it! And I'm a communications director so I should! Thank you~
Expert:  richanne96 replied 2 years ago.
I will try this one more time. He is saying there is a very good chance that he will not recover anything when he says "with the long odds this claim faces." Therefore, he is saying that he is not going to advance a bunch of expenses because if he recovers nothing for your mother, he is personally out all the money he spent. Further, the way I read this contract, if he recovers less than he spends, the most he can recover is 100% of the recovery. That is because your mother's reimbursement of expenses is supposed to come out of her share. It could not go beyond it. So if he spends $6,000 and recovers $5000, he would be out $1000.