Most lawsuits have costs within the following range:
- Contingency rate: 30% to 35%
- Initial Advanced Costs: $300 to $1,000
- Non-contingency fee: $0 in 2/3 of cases, $250 to $2,500 in 1/3 of cases
We give clients a ballpark estimate based on our knowledge of the particular venue when we believe litigation is the only remaining option. We provide a firm quote by contacting the specific attorney who would handle the case if our client is seriously interested in suing. Below is an overview of the various costs and general ranges.
The Contingency Rate is typically 30% to 35%
- Includes TKG and the independent attorney (is NOT in addition to our agency fee)
- Applies only to what is collected (no contingency fee is due if nothing is collected. It doesn’t matter what the judgment amount is, the contingency fee applies to what is actually collected.)
- In about 1/3 of our lawsuits, the attorney requests a non-contingent fee
- This fee for putting in the initial litigation effort is non-refundable
- Typically $250 to $500
- Can be up to 5% of claim or a maximum of $2,500
- Typical reasons for a non-contingent fee
- No evidence the company has the ability to pay judgment
- Debtor has tax liens or judgments or UCCs against assets
- High bankruptcy risk
- Known disputes
- When Debtor’s assets are out-of-state
- Complex or potentially difficult case
Out of pocket court and related costs – Clients pay this in advance
- Lawsuit Filing Fees
- Process server
- Hearing Fees
- Recording Fees
- Less common costs
- Court reporters for Depositions
- Substitute Service with Secretary of State
- Service Stakeouts
- Judgment Collection efforts
- Debtor Exam hearing fees
- Bank garnishments
- In-Store Keeper
Our clients have to pay up front before the attorney will incur the costs. We provide clients with an initial advanced costs quote. When clients send us this initial cost advance, it also represents acceptance of our litigation terms and conditions. Further, when the advanced costs have been depleted, our client will have to pay more before the attorney continues the litigation or judgment collection effort. Any unused cost advances are returned to our client at the end of the litigation process.
In 90% of cases, the initial cost advance will be enough to get a judgment.
- Additional costs usually are required for Judgment collection efforts if the debtor does not voluntarily pay
- Judgment collection efforts usually require additional $250 – $500
- Can be up to $2,000 or more on particularly obstinate debtors owing large sums
Can we put a cap on the out of pocket costs our clients might incur for litigation?
No. We cannot provide a cap on the cost of litigation. There is no way that we can know what out of pocket costs will be required as we do not know how the debtor is going to behave. All we can tell you is that historically, this is what our clients have had to pay for out of pocket court costs:
- 60% of cases: no more than the initial advance
- 20% of cases: up to an additional $250
- 15% of cases: an additional $250 to $500
- 5% of cases: more than $500
Can our client decide to drop a lawsuit once filed due to the additional costs?
In over 95% of the lawsuits we have filed, our clients are able to close the claim whenever they decide they do not want to advance more money during the litigation process prior to the judgment being ordered as well as during the judgment collection process. This usually happens when we are having trouble serving the debtor or the individual owner, with the implication that the company is now defunct or we won’t be able to collect after winning the judgment. As discussed in the judgment collection process, if we do not know where the company banks, we have to do a debtor exam to learn where the company’s assets (bank accounts) are located. To have a debtor exam, we need to serve an officer of the company to appear at the hearing. If we can’t serve an officer during the litigation stage, it is a strong signal we won’t be able to serve them during the judgment collection stage and therefore it may not make sense continue investing in litigation.
However, if the debtor files counterclaims or alleges damages were caused by our client, we may not be able to just dismiss the lawsuit whenever the client desires. Since the debtor is now seeking money from our client for counterclaims or damages. Unless the debtor agrees to mutually dismiss, our clients need to stay on the offense (e.g. continue the lawsuit) just as a defensive strategy against the debtor’s claims. While this is a very rare circumstance, we have to mention it. Please see the section below for more information on counterclaims.