In the February 2017 issue of Plaintiff, Thomas Zaret reviewed the rules on how a personal injury attorney should write a contingency-fee retainer agreement in California.
In California, retainer agreements in personal injury or wrongful-death matters must comply with Business and Professions Code section 6147. All Medical Injury Compensation Reform Act (“MICRA”) contingency-fee agreements must comply with Business and Professions Code section 6146. According to Mr. Zaret, a retainer agreement must explain a variety of elements, including how the compensation is calculated and what the costs are. When an attorney fails to follow a statute, the retainer agreement is voidable by the client. In these cases, the attorney only recovers the reasonable fee for the attorney’s services and costs incurred (Guiterrez v. Girardi (2011) 194 Cal.App.4th 925, 932-933).
Fees do not have the same meaning as costs. Fees are what the attorney gets paid for his/her services, whereas costs are the expenses for litigation such as court filings and medical expert witnesses.
Attorney fees can be based on contingency, hourly rate, or statutory fees. Typically, when an attorney charges a contingency fee, the attorney will not get paid unless the case settles or a jury gives a favorable verdict to the plaintiff. A court has discretion to approve a contingency fee that is higher than what a statute allows after evaluation of certain factors. A plaintiff needs to be careful that when an attorney takes a case on contingency, it is not necessarily a free lawsuit. Sometimes the attorney may require that the plaintiff to pay for litigation-related costs. The contingency agreement may only relate to the fees paid for the attorney services. The contingency-fee contract must set forth how costs will affect the calculation of the fee. For example, whether costs are taken from the client’s gross or net recovery.
The retainer agreement should disclose the services the attorney will provide. For example, the agreement needs to spell out whether the services include appeals, motions for new trial, and defense of cross-complaints.
The retainer agreement should additionally disclose the scope of each party’s responsibilities. The client is usually the decision maker so the attorney needs to communicate to the client what is happening at each stage in a case. The attorney is able to decide on the strategies in how to work a case, but not the results such as whether to settle and for how much.
A California attorney is subject to discipline if the fees are not conscionable. A retainer agreement needs to be in writing. The attorney needs to give the client a signed copy. When a dispute arises between an attorney and a client in California, the ambiguity in a fee contract will be interpreted in the client’s favor (Mayhem v. Beninghoff (1997) 53 Cal.App.4th 1365, 1370).
Read the article here.