myLawCoach

Cost of Witness Depositions in a Civil Lawsuit

Attorney:  Before we go to trial in your lawsuit, we’re going to need to collect enough evidence to be able to prove your case to a jury.  Let's talk about the best way to do that, and the cost of that. 

Client:  You're charging me on an hourly basis in this case, correct?

A:  Yes, my rate is $250 per hour.  You have a straightforward, non-complex case.  First, do you have any witnesses who will back up your version of events in the case?

C:  Yes, several witnesses. 

A:  That’s good.  Do you know if your opponent has any witnesses in his favor?

C:  Yes, I think so.  What do we do about that?

A:  We first have to find out who those opposing witnesses are.  We can do that by sending out a set of questions to the opposing side.  We call them written interrogatories.

C:  What do those questions do?

A: Some of the questions make the other side tell us who their witnesses will be at trial, or which persons have knowledge of your case.  I’m talking about third-party witnesses here, not your opponent. 

C:  What happens once we know who they are?

A:  We can serve subpoenas on those opposition witnesses to make them appear for deposition.  If they have some documents that relate to your case, we can make them bring those documents with them to their depositions, too.   

C:  I’ve heard the word “deposition” before, but I’m not sure what it means.  Is it something we do in court?

A:  No.  A deposition is a formal, pre-trial question-and-answer session between an attorney and a witness in a law firm conference room.  We don't do it in court. 

C:  Tell me more about that.

A:  The witnesses we want to depose are going to be the opposition's witnesses, meaning anybody who might testify against our side at trial.  Those witnesses can bring an attorney with them to their deposition if they want to pay for that.   

C:  Exactly what happens at a deposition?

A:  If I’m the one making the opposing witness show up for their deposition, I get to ask the witness a lot of questions about the case, to see what they know or don’t know.  That's called cross-examination.  Since I’m deposing them about their personal knowledge of the case, they’re called a fact witness. 

C:  Is there another kind of witness?

A:  Yes, if they have some specialized knowledge, like a college professor or a doctor, they’re called an expert witness.

C:  Like on “Law and Order” and other T.V. shows about lawyers?

A:  That’s right.  The witnesses who get called “Doctor So-and-So” on the witness stand are usually expert witnesses.  The rest of them are fact witnesses.

C:  What else happens at the depositions you take? Do I get to be there?

A:  Yes, since you’re a party to the lawsuit, you can attend every deposition, if you want to sit in and watch.  First, I put the witness under oath, just like in court, so they have to answer under penalty of perjury.  Then I can ask them as many questions as I want.

C:  Do you do anything besides ask them questions the entire time?

A:  I can also look at any documents they bring with them, make copies for our side, and ask them questions about those documents during the deposition. 

C:  What is the goal of all this?

A:  I’m trying to get an advance look, a preview, of what the opposing witnesses will say at trial and what documents the other side will try to use at trial.  That’s the purpose of a deposition, to make sure we’re not surprised later on at trial by a witness.

C:  What will the opposing attorney be doing at the deposition while you’re asking questions?

A:  They will get notice of each deposition that I take, so they can attend. They have to let me ask my questions, but they might object to my questions here or there.  If they become a real jerk about it and interfere too much, I can go complain to the judge.

C:  Do we get to take the deposition of my opponent in this case, too, or just third-party witnesses?

A:  Yes, we'll take your opponent’s deposition at some point.  They’ll want to take your deposition, too. 

C:  What happens when they take my deposition?

A:  When the time comes, I’ll prepare you to answer their questions at your deposition and review any documents you have that you’ll be required to bring with you.  I’ll also be there to defend your deposition, to keep them honest and object to any improper questions.

C:  How do you keep track of all the questions and answers at a deposition?

A:  Each deposition has a court reporter in the room who takes down everything that’s said.  It’s all put into a deposition transcript booklet.  That's a typed booklet full of all the questions and answers from the deposition.   

C:  Who has to pay for that?

A:  When I take someone’s deposition in the case, our side has to pay for the court reporter.  When the other side takes a deposition, they pay for the reporter. 

C:  Do you need someone to take notes for you at the deposition?

A:  No, I write down my questions beforehand. Then I’ll have my laptop computer with me, which I can hook up to the court reporter’s machine, and see the questions and answers on my computer screen in real time. 

C:  What if you catch a witness lying?  Can we use that against them at trial?

A:  Yes, that’s called impeachment. I’ll be trying to pin down their version of events in the case at their deposition to get them to commit to their story. 

C:  How do you impeach them at trial?

A:  If they try to change their story at trial, I can pull out their deposition transcript booklet in front of the jury and read out loud the different answer they gave at their deposition. It would make them look bad. Juries don’t like witnesses they think are lying.

C:  Can you impeach them at their deposition, too?

A:  In a deposition, the witness will be prepared to answer my questions by their own attorney beforehand.  So I don’t expect to “crack” a witness at deposition.  I just try to get them to commit to their version of events.  Then they can’t backtrack later at trial. 

C:  How many depositions do you think we’ll have to take? This is not a complicated lawsuit.  It's pretty straightforward.

A:   We’ll have to take your opponent’s deposition, plus all their fact witnesses who will testify at trial.  Plus, if they identify any expert witnesses for trial, we’ll have to take their depositions, too.  I’m thinking we’ll end up taking about 5 depositions by our side.  That's not unusual.

C:  Will all 5 of those depositions work the same way?

A:  Yes, I’ll have to prepare for each of them. They’ll be held at my office here, since our side is noticing and taking them.  We get home court advantage for those, which means I won’t have to travel to some other location. 

C:  You’re still talking about the depositions that our side will take, right? What will the other side do?

A:  The same thing.  Let’s assume 5 more depositions by their side.  They will take your deposition, plus our side’s fact witnesses and any experts we decide to identify for trial. 

C:  When will we decide if we need any expert witnesses?

A:  If they disclose an expert in a particular field to testify for them at trial, we’ll probably want our own expert in that same field, too, to offset theirs.   

C:  What will you be doing at the depositions the other side takes?  Not asking questions, right?

A:  Right. The opposing attorney will be asking all the questions.  I’ll just be listening to the witness's answers.  I’ll also be objecting to the opposing attorney’s questions if I think they’re improper.  That's called defending the deposition.

C:  This is starting to sound expensive.  How much do you think all these depositions will cost?

A:  Depositions are expensive.  In fact, the part of the case called pre-trial discovery, which is when each side tries to collect all their witnesses, documents, and other evidence to prove their case at trial, is the most expensive part of any civil lawsuit. 

C:  How expensive?

A:  The discovery phase of a typical lawsuit like yours can cost up to 70% of the total legal fees in the case.  Depositions are just one aspect of pre-trial discovery, but an expensive aspect.

C:  Then do we really need to have so many depositions?

A:  We can decide how many depositions we want to take, but we have no control over the number of depositions the other side decides to take.  If your opponent has lots of money, they could try to bury you in depositions and all the legal fees.  That happens in litigation.

C:  Can we do anything about that? 

A:  Unfortunately, no.  I have to attend each time they take a deposition of some witness.  I need to get a preview of how each witness will look and sound under cross-examination in front of a jury at trial.

C:  Is it really necessary, from a cost standpoint?   

A:  I’ve seen many witnesses over the years who wanted to be helpful, but who ended up looking and sounding so bad at their depositions that they would've hurt more than helped at trial.  They either came across as too nervous on cross-examination, like they might be lying or hiding something, or they couldn’t remember enough of the facts. 

C:  So the deposition process is as much about weeding out potentially bad witnesses as finding good witnesses?

A:  Exactly.  The jury won’t be impressed with bad witnesses, so we want to weed them out beforehand.   Basically, we use pre-trial discovery and depositions to learn both the strengths and weaknesses of our own case, so we don’t get unpleasantly surprised at trial. 

C:  Let's talk about the actual cost of the depositions.  First, what about the depositions that the other side will take of our witnesses? 

A:  There will be the cost of my time for preparing you and our other witnesses to testify.  I’ll meet with each of you beforehand to rehearse the types of questions you’ll be asked, discuss possible answers with you, and look at any documents that the opposing attorney has asked you to bring with you to your deposition. 

C:  So that's the cost for preparation.  What else?

A:  For our side's witnesses, I’ll have travel time to the opposing attorney’s law office, where the depositions will take place.  Then there will be the cost of my attending and defending those depositions. 

C: So how do we add up the cost of all those steps?

A:  First, let’s assume your deposition will last one full day.  Because you’re a party to the lawsuit, not just a third-party witness, that’s a fair time estimate.  I’ll probably spend 4 hours meeting with you beforehand.  Assume 1 hour round-trip travel time, plus 8 hours with you at your deposition.  That adds up to 13 hours of my time, multiplied by my hourly rate of $250 per hour.

C:  So that’s about $3,250 in your fees just for my deposition?

A:  That’s right.  Remember, whenever I quote you the cost of a deposition, it's only a rough estimate.  It could be more if the opposing attorney decides to go into a second day of questioning the witness.  I’ve seen that happen before, even in a straightforward lawsuit like yours.

C:  What will the rest of our fact witness depositions cost?  You thought the other side would take 4 of them, besides me.

A:  Let’s assume I spend only half of your preparation time with the other fact witnesses, say 2 hours, and their depositions only take half as long as yours, or 4 hours each. To keep it simple, I estimate each of their depositions should cost roughly half of your $3,250.  Let's say $1,600 each in legal fees.  Again, that’s a rough estimate.

C:  So if my deposition costs $3,250, plus 4 other fact witnesses at $1,600 each, all 5 of them will add up to $9,650.  That's almost $10,000 in legal fees to me, just for the depositions that the other side takes of our witnesses, right?

A:  Unfortunately, yes.  Then assume we will have to spend roughly the same amount of money yet again to take about 5 depositions of their fact witnesses, including your opponent.  It's not exactly the same cost, but close enough. But there won’t be any travel time for me, because I’ll be taking those depositions at my office here.

C:  Are there any other deposition costs I should know about?

A:  Yes, our side has to pay for the court reporter each time we notice and take a deposition ourselves.  That can cost up to $1,000 per deposition.  When the other side is taking the deposition, they pay for the court reporter, not us.

C:  Let me see if I’m keeping all this straight.  I should expect to pay about $10,000 in legal fees for the other side’s depositions of our witnesses, plus another $10,000 for our side’s depositions of their witnesses, plus up to $5,000 more for a court reporter to handle the 5 depositions we take.  Bottom line, that’s roughly $25,000 minimum just to complete all the depositions in the case?

A:  Yes, just for the fact witness depositions.  We'll have to talk later about a separate budget for written discovery requests by both sides, such as interrogatories, and for reviewing and handling your documents and the other side's documents in the case.  That's part of pre-trial discovery, too.

C:  Besides what you've already told me, is there anything else I should know about the cost of depositions in my case? 

A:  Yes, we’ve only talked about depositions of fact witnesses so far.  If we or the other side decide to use expert witnesses at trial, too, that would add to the deposition budget.

C:  We better go over that together.

A:  Each expert witness deposition always costs much more than a fact witness.  Expert witnesses usually charge a few thousand dollars per day, or more, for their time.  They are professional witnesses who are very distinguished individuals in their chosen fields. 

C:  What should the expert budget be?

A:  I would estimate that, if we hire an expert and they get deposed for a half-day by the other side, it will cost about the same amount in legal fees for me to prepare for and attend their deposition as for one of our fact witnesses. Remember I estimated that would be about $1,600 in legal fees.   

C:  But there’s more, right?

A:  Yes, because you have to include the expert’s own hourly fees for studying your case, forming their expert opinions, and then sitting for their deposition.  In a straightforward case like yours, an expert might charge a total of $5,000 - $20,000 to do all that.  I’ve seen some expert witnesses in really big lawsuits charge into the six figures for their services.

C:  So in addition to the $25,000 for fact witness depositions by both sides in the case, I should also plan on spending up to $20,000 more for a single expert witness for trial?

A:  That’s about right.  To be safe, at the end of the day, you should be prepared to spend $25,000 - $50,000 for all the depositions in this case, depending upon whether we need an expert or not.  It’ll be the lower dollar amount if we don’t, the higher amount if we do.  Hopefully we wouldn't need more than one expert.

C:  Are those conservative estimates?

A:  Well, anything can happen in a lawsuit.  As a client, you always need to remember that.  One of the reasons that clients sometimes end up paying far more than they first planned in legal fees in a lawsuit is because certain factors end up being beyond their control, or their attorney’s control.

C:  Give me some examples of that.

A:  For instance, we can’t know right now, in advance, how many depositions the other side will take.  The other side might try to bury us in depositions.  We also don’t know what our judge in this case will make us do as we head toward trial. 

C:  So, as a client, I should always be prepared for contingencies in the case, which could cost extra?

A:  Absolutely.  Clients sometimes get mad at their attorneys for big legal bills, when it’s not really their attorney’s fault.  As your attorney, half the time I may simply be reacting to what the opposing side or the judge is making us do.  But that still takes my time, and costs you legal fees.  I can't do anything about that.

C:  Is there anything you can do to keep the legal fees down for the depositions?

A:    Yes.  I will be handling the more important depositions myself at my $250 per hour rate.  But there may be other, more minor depositions that I can delegate to the younger associate attorneys in my office who will be helping me on your case.  My associates only charge $150 per hour, so that would save money on deposition costs.

C:  Just talking about the cost of depositions, it sounds to me like I really need to decide if I have the willingness, as the client, to spend a lot of money to take this case all the way to trial.

A:  Yes, if that’s what you really want, you have to be prepared to make a big investment in legal fees and maybe expert fees, particularly for pre-trial discovery and depositions.

C:  I've heard about mediation, which is supposed to be a way of settling cases before trial.  Is that option available?

A:  Yes, we can talk about pre-trial mediation afterward.  Just remember one thing.  If you really don’t think you want to pursue this lawsuit for whatever reason, consider settling with our opponent before you sink too much money into pre-trial discovery and depositions.  They will cost the majority of the legal fees in the case. 

C:  You've probably had clients who wished they'd settled instead of spending so much money on legal fees by the time of trial.

A:   Unfortunately, yes.  But I’d rather forgo the legal fees and avoid an unhappy client who gets buyer’s remorse later on and then blames me for the amount of the legal fees.  That’s when clients stop paying their attorneys, when they get buyer’s remorse, even if it’s not their attorney’s fault.

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

Cost of Written Interrogatories in a Civil Lawsuit

Attorney:   We’re about to begin the pre-trial discovery phase of this lawsuit against your opponent.  Since it’s a straightforward, non-complex case, I think it makes sense to start by sending your opponent a set of written interrogatories.

Client:  What are those?

A:  Written interrogatories are questions we can ask your opponent to find out different things.  First, what his factual or legal claims against you will be at trial.  We can get a preview of that, so your opponent won’t surprise us later.  Second, what evidence they have, or know of, to prove their claims, such as witnesses, documents, things like that.   

C:  Can they do the same thing to us?

A:  Yes, each side can send, or “propound,” as many sets of written interrogatories to the other side as they want, so long as they don’t become so excessive that the judge would put a stop to it.

C:  What do we do when we get interrogatories from them?

A:  We’re allowed a set amount of time, like 30 days, to send back our written responses, meaning “reply” to their questions.  Since you’re a party to the lawsuit, you’ll have to answer their questions under penalty of perjury, just as if you were on the witness stand in a courtroom.

C:  Will I have to do that on my own, or will help me?

A:  I can help you in a few ways.  First, I’ll review the written interrogatories myself when they arrive.  If any of their questions look objectionable or improper, I’ll flag them so you don’t have to answer them.  I’ll state my objections in writing when we send back our complete responses. 

C:  What kinds of questions could be objectionable?

A:  For example, any question that asks you to reveal what you and I talk about between ourselves, which is privileged attorney-client information.  Or any question that asks about something totally private or totally unrelated to your lawsuit, such as what your tax returns look like.

C:  What do we do about those questions that are not objectionable?

A:  First, you need to review your records, files, and documents that relate to this lawsuit.  Some of their questions will ask for that information.  You’ll need to refresh your memory to answer their questions, or search for the requested information in your documents.  Next, write out the best, most complete answers you can and show them to me.  Remember, they’ll be under penalty of perjury.

C:  Do you look at my proposed answers first to make sure they’re okay, before we sent them out?

A:  Yes.  We won’t send any written responses back to your opponent until I’ve double-checked your answers myself.  My secretary will type them up in the proper format.

C:  Do all interrogatories look the same?

A:  No.  Some of them I prepare myself, in my own words, as your attorney.  Those are usually called “special interrogatories.”  Then there are standard, pre-printed questions that are created by the court system for everyone to use.  Those are called “form interrogatories.”  Sometimes they’re nicknamed “canned” interrogatories.

C:  How do you decide which to use?

A:  It’s always less expensive to start with the pre-printed form interrogatories.  There are different sets of form interrogatories, too.  There are sets designed specifically for contract disputes, personal injury cases, family law, and the like. If there is a set designed for your case, we’ll use those.

C:  When do you use special interrogatories?

A:  When we have to zero in more closely on specific factual and legal issues in this particular case that the “canned” interrogatories don’t reach.

C:  You must have sets of special interrogatories on your computer system that you’ve used in other lawsuits you’ve handled.  Could you adapt them to my case to save money?

A:  Yes, I may be able to re-use past special interrogatories for your case.  Maybe not an entire set, but at least some of the questions. 

C:  How much will it cost for us to propound interrogatories, then?

A:  Very little, if we’re just sending out form interrogatories.  About a ½-hour of my time to get them ready to go.  Then 1 - 2 hours after we get their written responses back for me to review their responses and discuss them with you.

C:  How much will the legal fees be, then?

A:  My rate is $250 per hour.  If it takes about 1½ - 2½ total hours to send out a set of form interrogatories and then later review their answers, that would be $375 - $625 in legal fees.

C:  And for special interrogatories?

A:  Assuming that I draft about 30 - 40 questions per set, and assuming that I can re-use some of my special interrogatories from other past cases, then maybe 2 - 3 hours of my time to prepare a set of special interrogatories.  Then another 1 - 2 hours afterward to review and discuss their responses with you.

C:  How much does that add up to in legal fees? 

A:  Assuming it will take 3 - 5 total hours to send them out and then review the answers later, that would be $750 - $1,250 in legal fees.  However, I might be able to have one of my less-expensive associate attorneys in the office prepare the special interrogatories instead of me.  At their lower rate of $150 per hour, the legal fees would be less for the 2 - 3 hours of attorney time it will take to prepare them.  However, I’ll still be the one reviewing and discussing the responses with you afterwards.

C:  What happens if they don’t respond, or if we don’t like their answers?

A:  Two options.  First, if they respond, but we want more information from them, we can keep propounding more sets of interrogatories to follow up.  Either form or special, or both.  Second, if they fail to adequately respond, we can bring a motion with the court to compel them to respond. 

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

Contingency Fees in Plaintiff's Cases

Client:  Since I’m the plaintiff in this case, you're handling the lawsuit for me on a 100% contingency basis, right? 

Attorney:  Yes.  You won’t have to pay any of my legal fees for handling the case unless and until we recover either settlement money or money damages at trial from your opponent.  You will have to pay all costs and expenses in the case, however, because those are different than legal fees.

C:  What do you mean by “recover” settlement money?

A:  Your opponent, the defendant, has an insurance company standing behind her in this lawsuit that will pay for any settlement with us.  If we “recover” settlement money, it means her insurance company will give us a check in a negotiated amount in return for us signing a settlement agreement with your opponent dismissing our lawsuit against her.

C:  Who gets the check?

A:  The insurance company’s check will be made jointly payable to both you and my law firm.  We will both endorse the check.  I will then deposit it into my law firm’s client trust bank account, and then we’ll divide up the money according to what my attorney retainer agreement says each of us gets. 

C:  What if we go to trial against my opponent and win?  How would we “recover” in that situation?

A:  We would have to wait longer to see any money.  If we win at trial, the court will issue a money judgment in our favor.  But even if we win, some defendants keep fighting by filing what are called “post-trial” motions.  For example, the defendant might ask the court to grant them a new trial, or to change the jury’s verdict, or to reduce the amount of money awarded to us.  If they lose all their post-trial motions, they’d still have the right to file an appeal of the money judgment.  Usually nothing gets paid to us until all the legal maneuverings are over, once and for all.  Honestly, it could take an extra year or two.

C: But all of those post-trial motions and appeals could be totally frivolous.  Do I get compensated for having to wait so long for my money?

A: Yes, in the end the defendant has to pay us “post-judgment interest,” starting from the date that the judgment is issued, for as long as they make us wait.  That can add up to a lot of extra money in interest if we get a big money judgment at trial.  So the meter is running against the defendant who tries to delay final payment.

C:  Let’s go back to what your retainer agreement says about dividing up the money between us.  Where do we start?

A:  There are several steps involved.  As step one, the retainer agreement says that all of the costs and expenses in the case first have to be paid off the top of the settlement money.  Costs and expenses include items like photocopying, messenger services, court filing fees, expert witness fees, court reporter fees, to name just a few.  My office manager is preparing an itemized report of all the costs and expenses in this case.

C:  Do you calculate your percentage contingency fee on the amount of money in the pot before or after all costs and expenses have been deducted?

A:  After.  It’s a smaller pot of money that way, but my approach ends up being a better deal for you, the client.

C:  Do all contingency attorneys take their costs and expenses off the top before they calculate their percentage fee?

A:  No, and it was smart of you to ask me about that up front, before you signed my retainer agreement.  Some attorneys do just the opposite of me.  For example, let’s say the plaintiff’s total recovery in the case is $1 million, and the attorney gets a 40% contingency fee.  Some attorneys will first multiply that 40% by the total amount recovered of $1 million, and come up with a $400,000 fee for themselves.  Assume the costs and expenses are $50,000.  They would take all $50,00 in costs and expenses off the top, then another $400,000 for their fee, and leave $550,000 for the client.

C:  But the way you’re calculating your contingency fee here is a better deal for me, right?

A:  Yes.  In my example, let’s say the attorney took their $50,000 in costs and expenses off the top. That would leave a net amount of $950,000.  If they then multiplied their 40% fee by $950,000, instead of by $1 million, their fee would only be $380,000, instead of $400,000.  That would put another $20,000 in the client’s pocket.  Enough to buy a new car, for instance.

C:  You could have sent me a legal bill each month showing the costs and expenses, and made me pay them myself on an ongoing basis, couldn’t you?  You didn’t need to wait until the end.

A:  That’s right.  Some attorneys bill their clients for the costs and expenses in the case as they go along.  The client gets a legal bill each month.  There are no legal fees in the legal bill, because the attorney is working on a contingency basis.  But the costs and expenses are listed in the bill.  The client has to send a check for them to their attorney each month.  If that happens, they don’t get deducted from the recovery at the end of the case.  They’ve already been paid by then.

C:  Why didn’t you do that with me?

A: Because you told me in the beginning that it would be hard for you to pay costs and expenses each month.  The total costs and expenses in this case are going to add up to many thousands of dollars.  So I decided instead to “advance” the costs and expenses myself, then get reimbursed for them out of the settlement money.

C:  Once the costs and expenses are reimbursed to you, what’s the next step?

A:  We refer back to the contingency fee amount shown in the retainer agreement.  You’ll recall back when we first talked about the retainer agreement together, that I planned to charge you the usual 40% share of any recovery as my contingency fee, as most other plaintiff’s contingency attorneys do today. 

C:  Yes, and I pointed out to you that I had interviewed several other plaintiff’s attorneys besides you, and every one of them told me I had a very strong case, with clear liability on the part of the defendant, a lot of potential damages, and an insurance company standing behind the defendant to pay those damages.

A:  That’s right.  So I proposed a better contingency fee structure for your case than those other attorneys.  Instead of automatically taking 40% as my fee, I proposed an “escalating” scale of percentages.  In other words, I would get a higher percentage depending upon how much harder I had to work and how much longer it took to settle the case or win at trial. 

C:  I have a copy of the signed retainer agreement right in front of me.  There are 5 different escalating percentages.  It says that you would get only 15% of the recovery, net of all costs and expenses, if you settled my case before we even had to file a lawsuit.  You would get 20% if you settled the case before any pre-trial discovery began.  You would get 33-1/3% if the case settled before trial started.  You would get 40% if we won at trial and got a court judgment.  Finally, you’d get 50% if we ended up successfully defending the judgment against an appeal by the losing side.

A:  That’s right.  Normally I don’t do “escalating percentage” fee structures with my contingency clients, but that’s because most of them don’t have as strong a case as you do.  This way, I really earn my higher fee percentages.

C:  Yes, because to be perfectly honest with you, I’d be unhappy if you were able to settle the case before even having to file a lawsuit, without having to do any real work, and you automatically got 40% of the settlement money.

A:  That’s true, but I need to explain something about the reality of being a plaintiff’s contingency attorney.  Too many clients are under the impression that every case we attorneys take ends up being a legal fee “jackpot” for us, that we make money hand over fist without having to do much work or take much risk.  The reality is just the opposite.  I know plaintiff’s contingency attorneys who make little or no money on up to half their cases.

C:  I’m guilty of that kind of thinking sometimes.

A:  I’m not trying to sing the blues here, because my good cases outnumber my bad ones.  But it’s easy for clients to forget that, unlike hourly attorneys who get paid whether they win or lose a case, contingency fee attorneys only “eat what they kill,” so to speak.  And lots of clients wouldn’t be able to afford attorneys at all if every attorney wanted to be paid hourly.  If the contingency fee percentages seem high, it’s because contingency attorneys really do take risks.  Just like venture capitalists who make risky investments in start-up companies, contingency attorneys are trying to offset their losing cases with their winners.

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

Overview of Different Attorney Fee Structures

Client:  You're charging me on an hourly basis in this case, right?

Attorney:  Yes, $250 per hour for my time, which is my standard fee arrangement  when I’m representing a defendant in a civil lawsuit, like you are here.  My associate attorneys in the office charge $150 per hour.  However, if you were a plaintiff suing someone else, there would be other fee options.

C:  You mean, other than straight hourly rates?

A:  Yes.  Attorneys can handle lawsuits for plaintiffs in several different ways besides straight hourly.

C:  Such as what?

A:  Sometimes I can take a case on a fixed fee basis.  That means a set, flat price for the entire case, either until it settles or all the way through trial.  I would put that fixed fee in the attorney retainer agreement that the client signs at the beginning of the case. 

C:  When would you be willing to do something like that?

A:  If it was a type of lawsuit that I was already familiar with, and had some prior experience handling, then I would have a rough idea of how much a case like that should cost, from start to finish.  That would allow me to feel more comfortable quoting a fixed fee for the entire case.  Otherwise I wouldn’t do it.

C:  I’m the defendant in this case.  Why can’t you charge me a fixed fee in this case, instead of straight hourly?

A:  Some attorneys might do that, but I’m just not as comfortable doing it on the defense side.  When I’m acting as the plaintiff’s attorney, I have a little more control over what happens in the case.  The plaintiff is the one on the offensive in any lawsuit, because they have the burden of proof at trial.  That sense of control means I can decide what amount of work I need to do to get the case ready for trial, which affects the ultimate amount of the legal fees.

C:  So the amount of control you have affects whether or not you’ll work on a non-hourly basis?

A:  It has to, because control relates to the level of risk I face in handling the case on a non-hourly basis. 

C:  Isn’t a fixed fee, or any non-hourly fee arrangement for that matter, always riskier for an attorney than straight hourly?

A:  You bet.  That’s why attorneys call non-hourly fees “risk-sharing with the client.”  When I set a fixed fee, I’m trying to predict the future.  There are a lot of variables, a lot of unexpected twists and turns, in a civil lawsuit that can cost extra in legal fees.  If I guess wrong with the fixed fee at the beginning of the case, I’m stuck.  The client only pays the fixed fee, nothing more.  If I end up setting the fixed fee for the entire case too low, I might end up working for free for part of the case.   

C:  So how do you compensate for that?

A:  Sometimes clients agree to periodically review, or perhaps even re-negotiate, the fixed fee with their attorney to make sure it stays fair to the attorney as well as to the client as the case progresses.  It isn’t good for the attorney-client relationship if either side feels like they’re getting a lousy deal, no matter what the reason.

C:  But what about the situation where the client agrees in the beginning to pay the fixed fee, but the case ends up being over much sooner than they expected.  They still owe the fixed fee.  Couldn’t the client be overpaying in that situation?

A:  Yes, they could, which is why both the attorney and the client need to be willing to review, and possibly even re-negotiate, the fixed fee to keep it fair to both sides.

C:  Can you do anything else to balance the risk between attorney and client, so that it’s fair to both sides?

A:  Sometimes I handle part of a case for a fixed fee, the rest of the case on a straight hourly basis.  There’s less risk for the attorney that way.  For example, I might handle the initial pleading stage of the lawsuit on a fixed fee basis, because it’s more predictable and manageable.  Then I’ll switch to straight hourly for the pre-trial discovery part of the case, because it’s more unpredictable.  Then maybe back to a fixed fee for the trial phase itself, which is a finite period of time.

C:  What if you didn’t want to work on a fixed fee basis at all?  What else could you do?

A:  A second approach might be “blended” hourly rates.  Here’s basically how that works, although there are variations.  My normal rate is $250 per hour.  My associates’ rates are $150 per hour.  If I add the two rates together, which equals $400, then divide by 2, it leaves $200.  $200 per hour becomes the “blended” rate for myself and my associates.  It’s an average.  I would charge $200 per hour for all my time and my associates’ time on the case, regardless of which of us did the work.

C:  That sounds good to me as a client on the surface, but does it really end up being fair to both sides?

A:  It depends on how much work I personally would have to do on the case compared to my associates.  If I had to do most of the work myself at $200 per hour, when I normally charge $250, it’s not going to be a good deal for me.  On the other hand, if I delegated nearly all the work on the case to my associates at $200 per hour, when they normally charge only $150, it’s not a good deal for the client.

C:  So how do you strike a balance with blended rates?

A:  Usually if my associates bill more than 50% of the total hours on the case themselves, but I still devote a significant amount of my own time to the case, albeit less than half, it works out well enough.

C:  I’ve heard that every plaintiff wants their attorney to work on a contingency fee basis, where the attorney gets paid their legal fees only if they win the case, but nothing if they lose.  Is that true?

A:  To a point.  Let me explain how contingency fee cases work.  First, if the plaintiff’s contingency attorney collects any money at all for their client, either at trial or by settling the case pre-trial, they get paid a percentage of the recovery as their legal fees.  These days, it’s around 40% of the amount recovered.

C:  But there’s more than just legal fees, right?  What about all the costs and expenses in the lawsuit?  Who pays for those?

A:  The client does.  Sometimes the client pays all the costs and expenses themselves each month as the case progresses.  The attorney sends their client a legal bill each month just for costs and expenses.  The attorney doesn’t want to get stuck with the costs and expenses if the case turns out to be a loser.  Other times, if the client doesn’t have enough money, the attorney will pay the monthly costs and expenses out of his or her own pocket.  That’s called “advancing” the costs and expenses for the client.

C:  Does the attorney have to wait to get repaid for those?

A:  Yes.  If the attorney collects a settlement for their client, or wins at trial, then when the money is paid by the defendant, the attorney takes the costs and expenses right off the top as reimbursement, before any legal fees are paid.

C:  That raises an interesting question.  How is that 40% contingency fee actually calculated?

A:  I’ve seen it done two ways.  It’s either 40% of the grand total amount collected from settlement or trial, which includes the costs and expenses.  Or it’s 40% of the net amount, after costs and expenses have been deducted off the top.  For obvious reasons, the first way produces a bigger dollar amount of legal fees for the attorney. The client gets less.

C:  What determines which approach to use?

A:  Basically, the stronger and better the client’s case is, the more attractive it will be to contingency fee attorneys.  Hence, the client will probably have a wider choice of contingency attorneys to hire, which means the client can negotiate a better deal for themselves on how the contingency percentage is calculated.  That’s an entire separate discussion for another day.

C: What kinds of cases are contingency fee cases?

A:  Usually personal injury cases.  Sometimes employment or workplace lawsuits, like for discrimination, harassment, or retaliation.  Virtually always on the plaintiff’s side.

C:  Can a case ever be handled on less than a 100% contingency basis?

A:  Actually, yes.  Sometimes plaintiffs’ attorneys will handle a lawsuit for a reduced hourly rate, maybe half of what they would normally charge.  They also get a half-portion of the typical contingency rate.  That’s called a “partial hourly/partial contingency” hybrid fee arrangement. 

C:  How would you charge for a case like that?

A:  I might charge only half of my standard $250 per hour rate, or $125.  But I would also get half of the typical 40% share, or a 20% contingency fee along with my reduced hourly rate.  There’s less risk for the attorney that way, and the client keeps a bigger share of any recovery in the case.  It’s a midway deal, a middle ground, between straight hourly and 100% contingency.

C:  When would you use a partial hourly/partial contingency fee arrangement?

A:  One example is if I was the plaintiff’s attorney in a business or contractual lawsuit of some kind.  Regardless of the type of case, what’s most important is that my client, the plaintiff, has to have a strong chance of recovering a sizeable amount of money damages from the defendant in the case, at least in the six-figures.  Otherwise, it would make no sense for me to work on a partial contingency basis.  I might as well charge straight hourly for my time.

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© 2008 Ken Moscaret.  All rights reserved.

Preparing a Discovery Plan for a Civil Lawsuit

Attorney:  Now that we’re through the initial pleading stage of your lawsuit, we need to create a pre-trial discovery plan going forward.

Client:  What’s that?

A:  A discovery plan is basically a “roadmap” for how we’re going to collect the evidence we need to prove your case at trial.  I’ve already been giving you litigation case budgets every quarter.  A discovery plan goes hand in hand with a case budget.

C:  Why do we need a roadmap?

A:  Because, without one, it would be like driving all over the road, so to speak, as we move forward toward trial.  A discovery plan keeps us focused on the road ahead, avoiding wasteful detours.

C:  I’ve heard that discovery can cost up to 70% of the total legal fees in a lawsuit.  Is that why we need a discovery plan?

A:  One of the reasons, yes.  We need to prioritize how and where to spend legal fees getting ready for trial.  A discovery plan helps set those spending priorities.  Without a discovery plan, the amount of legal fees we end up spending might be more than that 70% figure.

C:  Have you done discovery plans before in other lawsuits?

A:  Yes, in every case.  Just like litigation case budgets.  I’ve gotten into the habit of doing both of them, and clients like that.

C:  Tell me how we’re going to prioritize.  What are our options on discovery?

A:  First, let’s discuss the “menu” of discovery requests available to us in this case.  Some discovery requests are written, such as interrogatories.  Others, like witness depositions, are live and oral in nature.

C:  I’m assuming that written discovery is less expensive than live, oral discovery?

A:  Generally speaking, yes, which is why we’ll want to utilize written discovery as much as possible in the case, and only take oral witness depositions that are really necessary for trial.  When we send out our “outgoing” written discovery requests to your opponent in this lawsuit, that’s called “propounding discovery” on them.  They have to respond in writing to our requests, under penalty of perjury.

C:  Will the other side be doing the same thing to us?

A:  You bet.  Your opponent will also be propounding their own written discovery requests to us.  We’ll have to respond to that “incoming” written discovery.  Written discovery becomes a back-and-forth, two-way “paper” battle in a civil lawsuit.  If you’ve ever heard the term “paper wars,” that’s what it means.

C:  How do we decide when to use written discovery versus oral discovery?

A:  That’s part of the discovery plan.  I’ll get into the details in a moment.  To answer you question, though, generally we’ll use less-expensive written discovery requests to set up the more expensive oral discovery, like witness depositions.  We’ll start off by propounding some written discovery requests to your opponent.

C:  Which ones?  Can you explain each of the different written discovery requests to me?

A:  Sure.  The first, and simplest, written discovery requests in a lawsuit are “written interrogatories.”  Those are questions that I draft, which are designed to get information from your opponent that we can use in our case, or to find out what they intend to use in their case.  Information such as the names of witnesses, the identity and whereabouts of evidence documents in the case, or the arguments that the opposing side will make at trial.  All of that information, and much more, can be learned by propounding written interrogatories.

C:  How do we know that the other side will answer them truthfully?

A:  Your opponent has to send their written responses back to us under penalty of perjury, just like in court.  If they lie, and we catch them, we can “impeach” them at trial.  That means showing the jury that they’re lying.  That’s the quickest way to lose a case at trial, to have the jury believe your side is lying.  Juries hate that.  So if your opponent wants to lie in their responses to our interrogatories, under oath, they take a big risk.

C:  Let’s assume they answer them truthfully?  What happens next?

A:  When witnesses are identified in their interrogatory responses, we can consider whether to take oral depositions of those witnesses, or maybe just interview them informally.  If evidence documents are identified, we can decide whether to try to obtain those documents somehow.  There are a few ways to do that.

C:  Do we have to ask all our questions at one time?  What if we forget to ask something?

A:  We can propound more than one set of written interrogatories to your opponent before trial.  In fact, the way they end up answering our first set of questions may prompt us to propound additional sets of questions to them to follow up on their earlier answers.  We want to get as much information as we can through the interrogatories.

C:  And they’ll be doing the same thing to us?

A:  That’s right, like a mirror image.  Which is why I’ll need your helping in answer their incoming interrogatories when they arrive.  You know who our witnesses will be at trial, and which evidence documents we have in our possession.  The other side will want that information.  We’ll have to provide it to them.  Discovery is intended to keep either side from unfairly surprising the other side with undisclosed evidence at trial. 

C:  What are some other types of written discovery?

A:  The next is the “request to produce documents.”  We can propound that request on your opponent, asking them to deliver to us any documents, records, writings, paper files, audio/video materials, computer files, and the like that might relate to the lawsuit.  That means they have to search for and find everything they have in those document categories, review everything, and tell us what’s relevant to this lawsuit.  Then they have to give it to us for our inspection and copying.

C:  That sounds like a giant pain.

A:  It is.  In really big lawsuits, each side may have millions of pages of documents, in both paper and electronic format, that need to be located, reviewed, and turned over to the other side.  Fortunately, you have a straightforward, non-complex lawsuit, so the amount of paper that each side has to produce should be manageable. 

C:  Do they have to respond and produce documents under penalty of perjury, too?

A:  Yes.  If they try to hide relevant documents, and we catch them, the judge could punish them at trial with some tough penalties.  I’ve seen that happen before.  Plus, it would make them look like they have something to hide.  And if they get caught actually destroying documents to keep them from us, that’s even worse.  They could forfeit the case to us if they did that.

C:  How do we find out if the other side is hiding or destroying documents?

A:  Because there is often more than one witness in a case who knows which documents exist in your opponent’s files.  Several people could have knowledge of that.  Maybe they know your opponent, or worked with your opponent.  We can find out who those people are, and interview or depose them.  All it takes is one witness to speak up and disclose the existence of a document.  Then your opponent is stuck.  That’s the big risk for them in hiding or destroying documents.

C:  Are there any ways they can legally withhold documents from us?

A:  Yes. They can list those documents in a “privilege log,” which tells us exactly which documents they’re withholding, and on what legal grounds.  That allows us to fight them over the documents in court.  If they give us a privilege log, then they’re not hiding anything, just making us go to court to get them.

C:  I’m going to have to produce my own documents to the other side, too, right?

A:  Yes.  When they send us their own request to produce documents, I’ll go over the document categories in it with you.  Then you’ll need to look through all your files for responsive documents.  Then you’ll give me what you have, and I’ll review them myself to see which documents we produce right away, and which ones we withhold in a privilege log.

C:  Can this happen more than once, like with interrogatories?

A:  Yes, each side can send more than one request to produce documents to the other side.  For that reason, responding to document production requests ends up being more time-consuming for clients than other written discovery requests.

C:  What if I don’t have the time to search through all my files myself to find responsive documents?  Can you do it for me?

A:  I could, or I’d probably have one of the associate attorneys in my office do it.  But if would be more expensive that way. If you and I divided the labor on the document production, we could save money on legal fees.  If you searched your own files, and I then reviewed what you found, that’s the most affordable approach.  There’s a term for when attorneys let clients perform some of the work themselves in a lawsuit that clients are capable of doing, to save on legal fees.  It’s called “unbundling legal services.”

C:  What if we need documents that third-parties have, instead of my opponent?

A:  We can subpoena the third-parties to produce those documents to us, too.

C:  What comes after requests to produce documents?

A:  One of the last types of written discovery we would use, usually closer to trial, are “requests for admission of facts.”  These are written requests that I would draft to your opponent to force them to either admit or deny certain statements of fact about the case.  Requests for admission would help us pin down the other side’s position in advance of trial.

C:  What happens if my opponent decides not to respond to our written discovery requests?  What’s our recourse?

A:  We can file a “motion to compel discovery.”  I can give you a cost estimate for that later on.  We would go to court and ask the judge to order the other side to respond.  If they didn’t comply with a court order, they’d get sanctioned by the judge.

C:  Then there would be the oral witness depositions, too?

A:  Yes.  We can talk about our strategy for taking witness depositions at our next meeting.

C:  So would our discovery plan put together all these different methods of discovery into one big package?

A:  Exactly.  We would coordinate each method of discovery, written and oral, with one another.  We would create a timetable for accomplishing everything in different phases.  Just remember that a discovery plan would relate only to our side of the case.  We can’t predict everything your opponent will do in discovery, and how we’ll have to respond.  So our discovery plan has to remain flexible.

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.