Who Pays the Expenses in a NY Personal Injury Case?
As a practical matter, in most NY personal injury cases, the lawyers pay 100% their clients’ expenses related to a personal injury lawsuit from inception through the time the case is resolved, and are only repaid out of the proceeds of the case if their client receives compensation. This arrangement – in which the personal injury lawyer pays all of the case expenses – is part of the “contingency” fee retainer that most reputable personal injury lawyers use when representing injured people in New York. This arrangement is critical to providing personal injury accident victims access to the justice that they deserve, as the expenses associated with bringing a personal injury lawsuit are often far too high for an accident victim to pay on their own.
When selecting a New York personal injury lawyer, you should be aware that there are several ways in which case expenses can be handled. Under New York law – and, more specifically, pursuant to N.Y.C.R.R. § 806.27 – personal injury accident victims are entitled to two options with respect to case expenses. When discussing a retainer with a personal injury attorney, you should ask the lawyer to explain these options to you in detail and how they will impact the relationship between you and your personal injury lawyer.
The first option, which is recommended by most reputable New York personal injury lawyers, is as follows: The retainer agreement provides that the personal injury law firm will pay 100% of the case expenses, and will only be repaid out of the proceeds of the case if the client receives compensation. As the case proceeds, the personal injury lawyers pay expenses as they arise, and keep a ledger of all expenses charged to the case that the client can ask to review at any time. When the case resolves, the personal injury lawyer takes his or her fee – generally 33.33% - out of the gross recovery, the expenses are then deducted from the amount remaining after the legal fee is paid, and the client keeps the remaining portion of the funds recovered. Under this arrangement, if your case settles for $3,000,000.00 and $25,000.00 in expenses were incurred during the case, the personal injury lawyer will take a fee of $1,000,000.00, subtract the $25,000.00 from the remaining $2,000,000.00, and the client will receive $1,975,000.00. In the event that your case is not successful, reputable personal injury lawyers do not ask their clients to repay any of the expenses incurred during the prosecution of the case, though some retainer agreements do allow the personal injury lawyer to seek repayment of the expenses from the client (again, reputable personal injury lawyers do not normally do this).
The second option, which is available but not usually recommended by reputable New York personal injury lawyers, differs from the first option as follows: As the case proceeds, the client is responsible for paying the case expenses, however large or small they may be. When the case resolves, the personal injury attorney’s fee is calculated as 33.33% of the recovery net of expenses, which the client has paid out of his or her own pocket. Under this arrangement, if your case settles for $3,000,000.00, and $25,000.00 in expenses were incurred during the case, the personal injury lawyer will take a fee of $991,666.67 (equal to 33.33% of $2,975,000.00) and the client will keep $2,008,333.33. Minus the $25,000.00 already paid by the client in the form of case expenses, the net client recovery is $1,983,333.33. However, if the case is not successful, the client will not be repaid the $25,000.00 in expenses he or she incurred.
Finally, in New York medical malpractice cases, the arrangement is a hybrid of the two options available in non-medical malpractice cases. Under New York Judiciary Law § 474-a, New York medical malpractice attorneys must pay all of the case expenses as the case proceeds. If the case is successful, the expenses are subtracted from the gross recovery, and the attorneys’ fee is determined by applying the “sliding scale” contingency percentage to the recovery amount net of case expenses. If the case is not successful, reputable New York medical malpractice attorneys do not ask their clients to repay case expenses in most circumstances.
For a free consultation with a winning New York personal injury lawyer, all you have to do is call Jesse Minc at (718) 354-8000, or contact him by email through his website at personalinjurylawyersbronx.com. He has recovered millions for his clients, and will personally review your case to determine whether you may have a winning New York personal injury case.