Contractual disputes or allegations of a breach of a contract are common in business transactions. A breach of contract occurs when one side to a contract only partially performs a contract, fails to perform a contract in the time required by the agreement, or when one side fails to perform at all. When one side fails in its obligations, the remedies (solutions) usually fall into one of three categories: specific performance (performing the terms of the contract, such as delivering a promised item), monetary damages (the payment of money to compensate the other side, including restitution and/or future damages). and rescission (the cancellation of a contract). Specific performance is just that; forcing one party to actually follow through on the contract (an example would be the forcing one party to deliver title to a piece of real estate or real property once the purchase price has been paid). Damages are also broken down into two categories: compensatory and punitive. Compensatory damages also come in different forms: special damages and general damages.
Special damages are generally designed to place a party in the situation he, she or it would have been had the wrong not occurred. Special damages are the most quantifiable type of damages that exist in the American justice system because the can be easily calculated and added up. Examples of special damages would include opportunity costs (commonly referred to as consequential damages). and out of pocket losses such as repair costs (when personal property or real property is damaged) or lost wages or earnings. The latter are referred to as incidental damages. Special damages that are classified as consequential damages for lost wages or opportunity costs must not be too speculative and must be reasonable. On the other hand, incidental costs are generally not speculative in nature. General damages are non-quantifiable damages but must be rationally based in reality. Good examples of general damages are “non-economic” losses such as emotional damages, damages for loss of enjoyment or pleasure, or damages for physical pain and suffering.
Punitive damages are famously known as damages that are awarded in order to punish a party for outrageous behavior, and their purpose is to discourage that party or other parties from acting in a similar way. Because they are the hardest of any type of damages to quantify, many jurisdictions place a cap on punitive damages so they do not exceed a certain multiple of compensatory damages. Punitive damages are also generally not awarded in claims for breach of contract, although it is possible. More often, punitive damages are awarded when a defendant in a tort claim or negligence claim is unusually abhorrent. A breach of contract can be material or immaterial. A material breach involves a significant or actual problem with the performance, not a non-important and inconsequential failure. Other types of damages do exist. Sometimes when a monetary or real property reward cannot be established, an award of nominal damages may be given. Statutory damages are also common.
It may be the intent of a legislature to award higher (or lower) damages for a specific wrong than would otherwise be set by “common law.” A good example of statutory damages is the case of non-return of a renter’s security deposit. Some legislatures see a public policy goal in forcing landlords (often in a position of power or strength) to timely return tenants’ security deposits and set statutory penalties beyond what would normally be awarded as special damages for a failure to do so. Legal Costs and Attorneys’ Fees In California, the party that is victorious in a lawsuit may recover costs of the suit after the matter is disposed of. Examples would include filing fees, jury fees, and other out of pocket expenses. However, in California, as in the rest of the United States, unless a contract specifically provided for the payment of attorneys’ fees, even the victorious party may not recover such fees (many contracts do have clauses that state that attorneys’ fees will be paid by the losing party in the event that one side seeks them after litigation).
Always be sure to contact an experienced litigation attorney before making any substantive decisions about a lawsuit or prospective lawsuit. Real Estate and Construction Disputes Almost every single major commercial construction project results in at least minimal litigation. Because there are so many contractual obligations inherently involved in a major commercial construction undertaking, a litigation-free project is rare. Our attorneys have over 70 representing Clients and have extensive experience litigating commercial construction projects. Past construction-industry Clients include Familian Pipe and Supply, T.M. Cobb, Wells Fargo Alarm & Guard, and many others. Litigation regarding construction projects can take many forms and have many different parties such as general contractors, sub-contractors, real estate agents, real estate brokers, material suppliers, laborers, developers, buyers, and owners.
Typical subjects that surround construction litigation include failure to complete work in a timely manner, the use of materials accepted in the industry, engineering defects, structural defects (roofing leaks, piping insufficiencies, foundation problems, and drywall issues), and many more. More than any other issues, the problems of delays in completion and structural defects come up often. However, to prevail in a civil action in connection with a construction defect, it must be shown that the defect was material and resulted in monetary damages. Construction delays often have defenses as well, as excusable work stoppages or unanticipated problems may alleviate liability for some parties.
At Lieber Galperin, our attorneys have extensive experience representing clients in all types of contractual disputes. Call (213) 973-0051 for a Free Consultation.
Construction Contracts Prior to Litigation
Despite the high number of lawsuits that arise out of major construction projects, the best defense to litigation is often preventative – having contracts that clearly define the duties and responsibilities of each party so that no ambiguity regarding the terms arises later. While unexpected circumstances regularly exist, the fewer there are the less complicated (and therefore less expensive) the inevitable litigation becomes. Each additional issue that is conclusively resolved in the contract-formation stage is one less potential issue that must be decided during litigation. The goal of contract formation prior to a construction process should be two-fold. First, the agreements between all parties should be thorough and cover all foreseeable contingencies. Second, the contracts must be clearly written with key provisions unambiguously articulated.
A qualified and experienced civil litigation attorney can also always assist with the review of agreements related to a prospective project. Insurance Litigation Insurance claims litigation arises in a variety of dispute contexts including property, commercial, and professional liability. It covers first-party coverage suits, complex litigation, routine coverage, arbitration, and appeals. An insurance policy is essentially a promise from an insurance company to protect you, the insured. Insurance companies owe a duty of good faith and fair dealing to every person or company they insure which means you can bring a claim against your insurance company if they act in bad faith—when an insurance company fails to treat one of its insured fairly under the law. Common acts of bad faith include failing to quickly process a legitimate insurance claim, demanding unreasonable documentation from a policyholder to back up their claim, and claiming to have lost or never received important documentation from the policyholder. If your insurance claim is being delayed or denied, you may need an experienced insurance litigation attorney to handle your case.
Collection litigation encompasses the process by which debt collection agencies or corporations collect accrued debt from various individuals or corporate entities. This includes enforcing obligations that arise from ongoing business relationships in a creditor-debtor context as well as the purchase and sale of goods or services under the Uniform Commercial Code. The most common actions in collection litigation are breach of contract and common counts (usually an account stated in writing or goods sold and delivered). Experienced collection litigators use a wide variety of strategies and tools including foreclosure, suit against guarantors, garnishing wages, seizing bank accounts, freezing assets, and filing liens on individual or corporate property. Additionally, collection litigators often use private investigators, conduct online asset searches, and search client files to determine if a collection judgment will be enforceable. Collection judgments are most commonly executed against the following:
- Personal property
- Real property
- Stock shares
- Money orders
- Debts due to the debtor
- Interests in property from the estate of a decedent
One of the most important concerns when dealing with a collection dispute is determining why the non-paying party failed to meet its financial obligations. If the non-paying party (commonly called the debtor) simply lacks the ability to pay, a collection judgment may not even be enforceable. To properly asses the enforceability of a collection judgment, you should consult an experienced collection litigator who will know and understand the appropriate state laws, like Chapter 9 of the California Commercial Code which determines the enforceability against collateral other than personal property in a retail installment sale or conditional sales contract. Judgment debtor exams are legal proceedings that one side may conduct after a monetary judgment by a court has been entered. Once a judgment instructing a party to a dispute to pay money has been entered, the party whom the judgment was entered in favor of has the right to collect money owed and has the right to schedule a judgment debtor exam if all funds are not paid. Appearance by the debtor, (also known as the individual who owes the money) is mandatory.
Failure to appear at a judgment debtor exam can result in a contempt charge. Often, judgment debtor exams can and are cancelled after a payment arrangement is worked out between the parties. Judgment debtor exams can occur after many types of civil judgments are entered (they are not held in criminal matters). They can occur as a result of judgments stemming from breach of contract cases, negligence cases, and any other type of judgment for tortious conduct (all civil wrongs other than a breach of contract). At a judgment debtor exam, the party to who the money is owed may ask the debtor, under oath, detailed questions about his or her income and finances. Such questions may concern employment salary, proceeds from investments, gains from inheritance or gifts, and personal and seemingly invasive questions. It therefore follows that anyone seeking to collect a judgment (or anyone against whom collection of a judgment is sought) should have the expertise of a qualified attorney with experience in judgment debtor exams by his or her side.
Unlike Britain, the United States judicial system has never maintained or allowed debtor’s prison. Individuals who are insolvent and cannot pay their debts are not at risk of being placed into custody (one exception exists in California: parents or guardians delinquent in child support payments may be sentenced to custody). Even if money (excluding child support) was obtained via fraud (and criminal charges have not been filed), no jail time may be imposed for a failure to pay. However, wages, other income, personal property, and real property may be attached and seized as a result of a monetary judgement. A final exception to the “no custody for a failure to pay debts” rule exists in Nevada, where the failure to pay a casino on money loaned, also known as a “marker,” can result in criminal charges and custody. In criminal cases in California involving theft or misappropriation of funds, sometimes the return of stolen money can result in a reduction or elimination of custody. Sometimes, the debtor can threaten or actually file for protection under the United States Bankruptcy Code.
Most debts, after bankruptcy protection is granted, are not recoverable. However, there are times when certain debts are not “dischargeable,” such as judgments resulting from monetary gain through fraud. Fiduciary Duties A fiduciary duty is a legal or ethical relationship of trust between two or more parties. Under CA law, a party can sue for breach of fiduciary duties if four requirements are proven: (1) a fiduciary duty did indeed exist, (2) that fiduciary duty was breached, (3) proximate cause (which means you have to show that the breach was sufficiently related to the fiduciary duty), and (4) injury or damages. Fiduciary duties arising in business require that the fiduciary (the person who owes a duty) execute due care when dealing with the money and funds entrusted to it on behalf of the principal (the person to whom a duty is owed). For example, directors and officers of businesses owe fiduciary duties such as a duty of care and a duty of loyalty to the business and its constituents. A duty of care requires that the fiduciary be adequately informed when making a decision on behalf of the interests of the principal. The duty of loyalty requires that the fiduciary act in the best interests of the business entity. Most business directors and partners, mortgage brokers, financial planners, shareholders, real estate agents, as well as escrow agents (and the list could go one) have fiduciary duties.
Civil appeals arise when one party of the dispute appeals the judgment of the court to the next level of the courts. No matter who wins at trial, one party walks away unhappy who may appeal the case. Appeals are handled very differently from a regular trial proceeding because only issues of law are brought before the court. The appellate process is a very narrow and specialized field requiring years of expertise and practice. If you plan to appeal a judgment, seek the counsel of an experienced appellate attorney right away.
The Civil Litigation Process
Not every dispute results in litigation, and not all litigation results in the all cases passing through all of the possible parts or stages. In fact, most cases never reach the trial or appellate stage – many cases settle during the discovery process or prior to the discovery process. Below is a description of the litigation process.
Pre-Litigation: Attempt to Resolve the Case
Usually, there is no legal requirement that a person or business participate in the pre-litigation process. Individuals and businesses are generally allowed to skip this first step and immediately file a lawsuit in Superior Court or in the United States District Court. Even when the pre-litigation part of the civil litigation process is not required, people and businesses often participate in pre-litigation processes strategically and by choice. Even the filing of a lawsuit creates a hostile environment that many people and businesses try to avoid if possible. Lawsuits can also be costly to file and negotiation prior to filing can save costs. Demand letters are often an effective way to formally request another side pay money that is owed. The tone and level of detail within a demand letter will vary depending on the relationship between the parties and the amount and complexity of the dispute. Other types of cases do not allow the filing immediately after a dispute and instead require parties to engage in some type of pre-litigation activity. For example, before a person or business can make a claim against any state-operated agency in California, a claim form must be submitted and a period of time must pass prior to eligibility to file a lawsuit.
Complaint and Answer
A complaint is the initial document that begins a lawsuit and is served with along with a summons to appear in California Superior Courts. The complaint will contain allegations by the plaintiff describing what the defendant did to cause the plaintiff some type of harm. The complaint will also request some type of relief (in the form of money or the performance of some act). The answer is the defendant’s response to the complaint and must be filed within 30 days of personal service (40 days in cases of substituted service). The answer contains the defendant’s responses to the allegations. It usually contains specific and general denials of the allegations and lists any affirmative defenses that would apply. The defendant can also file a cross-complaint (a claim against the plaintiff) or a cross-claim (a claim against another defendant). The defendant’s other option is to file a demurrer, which is a response alleging the complaint’s claims, even if true, would not be provide a legal basis for the lawsuit to continue. The demurrer asks that the case be dismissed. A demurrer may also request a dismissal because of some procedural defect with the complaint. A complaint may be dismissed with or without prejudice (if a case is dismissed with prejudice, the complaint cannot be re-filed).
In most litigated cases, the discovery process takes the most amount of time. Discovery is a general term for many types of fact-finding and informational gathering methods. During the discovery process, the parties may ask each other questions in writing under oath, called interrogatories. Parties may also ask each other to admit or deny certain facts in writing under oath, called requests for admissions. Parties may also schedule the deposition of any other party or witness. A deposition is a verbal examination where an attorney asks a witness questions under oath and while the questions and answers are recorded by a stenographer or electronically or both. Deposition witnesses can be any type of witness, including expert witnesses and eyewitnesses.
Either side may bring different kinds of written motions during the course of the case. Motions are requests that the judge make a certain order, such as dismissing a case altogether or ordering certain pieces of evidence inadmissible. The most common type of motion in most civil litigation and business litigation matters is the motion for summary judgment, also know as a motion for a judgment based on the pleadings. In a motion for summary judgment, one side generally asks a judge to decide the entire case without a trial. However, a summary judgment is only allowed when the side requesting the motion successfully alleges that even if all of the factual (not legal) arguments made by the other party are true and uncontroverted, the case must still be decided in the requesting side’s favor.
Trials are where the factual questions (such as eyewitnesses testimony about what he or she saw) in a case are decided. Factual questions can be decided by a judge or a jury, whereas legal questions can only be decided by a judge. Either side may request a jury trial. If neither side requests a jury trial, the judge will decide all factual issues as well as legal issues. Regardless of whether or not the facts are decided by a jury, the trial process is the same. In a trial, each side presents an opening statement, an outline of what it believes the evidence will show. Next, the plaintiff is permitted to introduce evidence such as exhibits and witness testimony. The defendant is permitted to cross-examine all of the plaintiff’s witnesses. After the plaintiff rests, the defendant is also permitted to introduce evidence such as exhibits and witness testimony. The plaintiff is permitted to cross-examine all of the defendant’s witnesses. After the defendant rests, the plaintiff may be permitted to introduce additional evidence to rebut the defendant’s evidence. Each side may have multiple opportunities to introduce additional evidence if the evidence rebuts the evidence the other party most recently introduced. Once the evidence has been introduced, each side receives an opportunity to present its closing arguments. The plaintiff presents its closing argument first, followed by the defendant, and followed an additional time by the plaintiff (the plaintiff goes first and last because the plaintiff is the party with the burden of proving its allegations). After closing arguments, the judge reads the jury a set of instructions. Those instructions provide the law the jury must follow and then directs the jury on the manner in which it is required to apply the law to the facts and ultimately reach a verdict. Appeals The losing side in a trial may appeal. However, appeals only consider whether the judge made the correct legal decisions. Appeals do not consider whether the judge made incorrect decision about the facts and appeals do not consider the jury’s decision about the facts. An appellate court can deny an appeal, grant a new appeal reversing a part or all of a case, or can order a new trial.
Important Business Litigation Issues
Often, the best way to avoid many business-related disputes is to have a properly executed agreement. However, even a perfect contract that leaves no room for interpretation can be breached. When that occurs, a party will rarely be fully compensated without legal help. While the civil litigation process does not officially begin until a lawsuit is filed, that daunting step can sometimes be avoided if the parties are proactive and work to resolve their dispute. Often, involving attorneys can save money, especially if the attorneys place their Clients’ interests first. When a lawsuit is filed or is imminent, arbitration and mediation can be viable alternatives to the costly process of litigation and trial. Arbitration is more similar to the court process and involves a decision from an arbitrator. This decision can be binding or non-binding (the parties must agree if arbitration is to be binding). Mediation is simply a negotiation with an impartial referee or mediator who is hired by both parties to bring them closer to a resolution/settlement. Many businesses and individuals see the litigation process as intimidating because of the rising costs of hiring qualified attorneys by the hour. Some inexperienced attorneys will accept cases for much less money than experienced business litigation attorneys. However, these new lawyers can end up charging as much or more than an experienced civil litigator because they will be forced to charge their clients to learn new concepts. Despite the high cost of civil and litigation, there are many knowledgeable and highly experienced business litigation attorneys who do everything possible to provide excellent representation at a reasonable price. Their goal is not to charge fees, but instead is to keep costs down and assist clients. This policy can dramatically benefit their clients. Some civil litigation attorneys also accept fees on a contingency basis, meaning that the attorney only receives a fee if the client obtains money in a settlement. However, these types of fee agreements are generally only offered in personal injury cases (such as a car accident, etc.).
Our firm regularly handles all types of business and civil litigation, including contractual disputes, real estate matters, collection litigation, insurance disputes, shareholder and partner disputes, and civil appeals. Having an experienced and qualified civil litigation attorney advocating for you or your corporation can make a significant difference in the outcome of a case. Having an experienced attorney can also reduce the fees clients pay (less experienced litigators regularly bill clients for time spent researching an issue or procedure that is new to them, where an attorney in practice for many years has often handled similar matters in the past and does not need to spend time familiarizing himself or herself with every new issue).
Where to File a Lawsuit in Los Angeles
With so many courthouses, determining where to file a lawsuit in Los Angeles can be difficult. Once you have determined what type of case yours is and how much money is at stake (instructions below), you will be able to determine which courthouse your case will be properly heard at using the Los Angeles Superior Court Locator Tool: Click Here for Los Angeles Superior Court Locator Tool
Even with this tool, the filing party must know what his/her case is classified as in order to know which court location is proper. This tool allows you to enter the city, community, or zip code that is nearest or most accessible to you or where the dispute arose, and will give you a list of appropriate courthouses that you can file your case in. If you do not know this information, then the tool offers a second option that let’s you choose which courthouse is nearest to you (or recognizable) from a drop-down menu. The first step in determining where to file one’s lawsuit is knowing what kind of case you have, as each courthouse only handles certain types of cases. The next step is to determine how much money is involved, or at stake, in the case you wish to file. Under the “civil” umbrella, there are unlimited civil cases (that exclude or include personal injury cases), limited civil cases (that exclude collections or include collections), limited unlawful detainer cases, and small claims cases. Cases involving family matters (such as child custody, support, alimony, or divorce) or probate matters (administration of a deceased’s estate, wills, or trusts) are handled in an entirely separate courthouse from civil or criminal matters. Knowing precisely what type of case you are filing, as well as how much money is involved, is key to determining where to file your lawsuit. Descriptions of all types of matters are below so you can determine where to file.
Unlimited Civil Matters
An unlimited civil case is a general civil case that involves an amount of money over $25,000. While the majority of unlimited civil cases involve money, this term also includes a number of other types of cases as well. Cases that are filed for the purpose of determining or resolving questionable title to real property, also referred to as “quieting” title, are also considered unlimited civil cases. In addition, a case wherein an individual requests a civil restraining order or where someone wishes to change his/her or his/her child’s name is also considered an unlimited civil case. Essentially, an unlimited civil case is any case that does not fit within the definition of a limited civil case under the Code of Civil Procedure, Section 85-89 (discussed below).
Limited Civil Matters
Limited civil cases, on the other hand, are general civil cases that involving seeking monetary damages of up to $25,000 (so, any case that involves $25,000 or less). Many cases that fall under this category include things such as auto torts, personal injury, property damage, contracts, employment, unlawful detainers, or small claims appeals. According to the Code of Civil Procedure, Section 85-89, an action or special proceeding will be treated as a limited civil case if three conditions are met: (i) the amount in controversy (the amount of the demand or recovery sought) does not exceed $25,000, (ii) the relief sought is the type that could actually be granted in a limited civil case, and (iii) the relief sought is exclusively the type that is described in one or more statutes that classify an action as a limited civil case.
Unlawful Detainer Matters
Unlawful detainer cases fall under limited civil matters, and involve repossession of real property from someone who is wrongfully in possession. Unlawful detainer suits are most often filed by landlords (but not exclusively) who want to end a tenancy involuntarily after a tenant has taken possession of the rental premises, but must take certain legal steps before doing so. Essentially, an unlawful detainer case is an accelerated method to recover possession (meaning actually occupying the premises) of real property. These are limited proceedings specifically designed to allow landlords (or other similarly situated individuals) to repossess real property from a tenant who is wrongfully in possession. Although unlawful detainers fall within the definition of a limited civil case, they are typically filed in different courthouses than general limited civil cases, depending on where the real property or rental premises is located.
Small Claims Matters
Small claims cases are ones that do not fit within the definition of either unlimited civil cases or limited civil cases. Whether a case is classified as a small claims one depends on who is filing and the amount of money involved. Specifically, if you are an individual or sole proprietor, you can sue in small claims court for up to $7,500, or if you are a corporation or other legal entity, the limit is $5,000 (and parties cannot file more than two claims in any court in one calendar year). Cases involving amounts that exceed these limits will have to be classified as a general limited civil case, and as such, filed in the proper courthouse. In Los Angeles County, the courts that hear small claims matters are located in Downey, Alhambra, Stanley Mosk (downtown Los Angeles), Van Nuys East, and Inglewood. (Local Rule 2.3). A small claims case wherein a party seeks damages for injuries to a person or to the personal property of a person should be filed in the “nearest or most accessible” county to where the injury occurred or where the defendants (any of them) reside at the time the action commenced. Like ownership/possession of property disputes, this means that personal injury disputes can be filed in more than one court if there are multiple defendants that live in different counties. (CCP § 395).Contract Disputes In addition to who is filing, where a small claims case is filed also depends on the type of case. For example, with contract disputes, the case should be filed in the “nearest or most accessible” county where the buyer signed the contract/purchase order, where the buyer resided at the time the contract/purchase order was entered into or where the buyer resides at the commencement of the action. (CCP §§ 1984.4, 1812.10).
Restraining Order Matters
There are four general types of restraining orders in California: civil harassment restraining orders, elder abuse restraining orders, domestic violence restraining orders, and civil harassment restraining orders. The last type, civil harassment restraining orders are the most common type of protective relief requested in California because it is the “catch all” type of order – the type of restraining order that can and must be filed when the other three types are not available. Further, workplace violence restraining orders can only be filed by an employer on behalf of an employee. Employees who wish to seek protection should file civil harassment restraining orders.
Ownership/Possession of Real Property Disputes
For disputes over ownership or possession of real property, the case should be filed in the “nearest or most accessible” county to where the property is located or where the defendants (any of them) reside. In other words, this type of case can be filed in more than one location if there is more than one defendant each residing in a different county. (CCP §§ 392, 760.050, 872.110).
Fee Structures in Civil Litigation
Civil litigation attorneys can charge clients for their work, time, and expertise in various ways, the most common methods being by billable hours, a flat fee, or a contingency fee. The actual cost or amount that an attorney charges, however, will depend on a variety of factors. The most important factors are the amount of time spent towards each step of the client’s case, the attorney’s ability, experience, reputation, novelty, the difficulty of the case, the results obtained, and the costs involved. An attorney’s overhead costs are typically factored into a client’s overall bill. These include things such as the attorney’s office rental cost, staff salaries, legal research and books, utilities, office equipment, computers, etc. The fee structure that an attorney ultimately employs usually must align with the area of law that he/she practices. Most civil and business litigation law firms and solo attorneys use the billable hour fee structure, and flat fees are frequently used when the case is relatively simple or routine, such as a will or an uncontested divorce. However, auto accident cases are notorious for using a contingency fee structure, which is ideal for clients who may not have the necessary finances upfront, but have a strong argument to receive compensation from the defendant for his/her injury.
A billable hour fee structure tends to be the most accurate and simple to implement, and as such, is most commonly utilized in the majority of areas of law. In this structure, the attorney gets paid, and the client gets charged an agreed-upon hourly rate for the hours (or portion of an hour) he or she works on a client’s matter until it is resolved. For example, if the lawyer’s fee is $10 per hour and the lawyer works 5 hours, the fee will be $50. It is important for clients to know, that attorneys may only charge for tasks that are directly related to building a case. In other words, “billable hours” do not account for miscellaneous time that an attorney is at work, has lunch, or other unrelated matters. Again, most civil litigation attorneys use the billable hour model. Sometimes, attorneys may charge different fees for different types of work, such as charging a lesser amount for performing legal research than what the fee would be to make a court appearance. Each type of work is typically scaled so that it accurately reflects the experience required to perform the work and the amount of actual worked required to complete the task. In this billable hour fee structure, it is important to keep in mind that associate junior lawyers working in large firms typically have a different fee scale from the more senior attorneys or partners, who almost always charge much higher fees than the young associates and paralegals. Again, their experience and reputation reflect the hourly rate that they can charge clients.
A contingency fee, on the other hand, is an agreement between a client and his/her attorney that offers the client a chance to hire the attorney without having to pay any initial payment. Most common in personal injury (car accident, etc.) matters contingency fee arrangement also generally offers no monthly legal bills (as the case is ongoing) and offers the attorney the opportunity to be paid an agreed-upon percentage of the total amount recovered, once the trial or settlement are complete. Attorneys sometimes require clients to pay for certain expenses and expert fees in contingency cases – other times the attorney is responsible for all costs. A contingency fee is meant to help those who do not have money for attorneys or who do not have easy access to the courts by making allowing them to pay for legal services out of the prospective recovery. An to the contingency fee arrangement is that the attorney’s interests are aligned with the interests of the client, as the attorney only is paid upon money being paid to the client. Some civil litigation attorneys accept contingency fee agreements on many cases, while others accept them only on some cases or accept partial contingency cases (a hybrid of contingency and hourly fee). Other attorneys accept no contingency matters.
Flat fees are self-explanatory—the attorney charges the client a flat rate, regardless of the amount of work done or the type of work. Common in criminal law, immigration, bankruptcy (and less common in civil litigation and business litigation matters), this fee can be paid upfront or it can offer the client the opportunity to pay the fee in increments, notwithstanding the outcome of the matter. Flat fees are calculated based on the level of experience of the attorney, as well as any facts presented by the client and the type of case. Using a flat fee arrangement can be a gamble for both the attorney and the client. This is because once the attorney and client have agreed on a flat rate, reduced it to writing, and signed the writing, then the fee must be paid despite the amount of time spent on the case. Many clients prefer the predictability of flat fee, as the cost of hiring an attorney can at times prove volatile. This is countered with the advantages, above, of non-flat fee arrangements, such as having an attorney aligned more closely with the client.
Which Fee Structure to Choose
When researching which fee structure is best for you, it is important to consider large issues, such as: the type of case, how complicated the matter is, the experience needed to complete the task, and more. Without carefully considering the options, one runs the risk of paying more than he/she expected, or not getting the outcome he/she wanted because the fee structure did not properly fit the client’s case or budget.