LITIGATION TERMS AND CONDITIONS
Your payment of the Litigation invoice means you agree to these terms and conditions with The Kaplan Group.
The filing of a suit and the cost of litigation is not covered under our standard contingency-based services. We will not proceed to suit without the client’s written authorization (which includes email) and the client’s advancing of the initial court cost deposit.
About 1/3 of the claims that go to litigation are done on a pure contingency basis and for the other 2/3 the attorney requests a small non-contingency (e.g. non-refundable) fee (typically 5% of the claim amount or less). In most cases the contingency rate is approximately 35%, which includes a small % for our efforts during the process. There are exceptions (on both small and large claims) so we quote a specific rate on each claim in advance.
Attorneys do require that clients pay all out-of-pocket expenses associated with a lawsuit, and a deposit for these costs must be made in advance. The amount of the deposit is based on local filing fees, hearing costs, anticipated process server costs, etc. This may range from only $200 in some locales to as high as $750 in some situations. Our client’s deposit is used only for these types of out of pocket costs and not for compensating the attorneys. Judges typically add the amount of out-of-pocket court costs to the principal and interest that is included in a judgment. Thus, if the judgment is collected in full the client will get their costs returned. Any unused deposit with our attorney will be returned to the client. We find that the initial deposit is sufficient to cover costs in over 50% of the cases we litigate. However, frequently we do need to collect from clients additional amounts to cover additional out-of-pocket costs. This typically is associated with the debtor making it very difficult be served or constantly changing hearing dates or not appearing for hearings. Generally our attorneys will not proceed to incur additional costs unless a client deposit is on hand.
Judges typically add interest to the principal and allow interest to accrue on the judgment amount until it is paid in full. The rate of interest may be determined by the contract (must be signed by the debtor) between the debtor and client or by state law.
Judges may also add attorney fees to the principal amount. Typically an attorney fees provision must be in the signed contract between the debtor and client for this to occur. The amount awarded is typically between $400 and $700 rather than being based on the contingency fee rate. However, in general, the attorneys get to keep 100% of the attorney fees if they first collect 100% of the principal, interest and court costs. This gives the attorney an extra incentive to collect everything and is part of their contingency fee quote. Unless our quote specifically states that any attorney fees collected will be shared with the client, it should be assumed that they belong to the attorney if collected.
While interest, court costs, and attorney fees may be added to the amount of the judgment, this does not guaranty that they will be collected. There is no guarantee that litigation will result in a judgment. Nor is there any guarantee that a judgment will result in collecting funds. In most cases getting the judgment is only the first step to getting you money. Some of the anticipated out-of-pocket expenses will be incurred after getting the judgment.
If the debtor files a counter-suit, the cost to defend the client in a counter-suit is not included in the contingency rates discussed above. Attorneys typically require an hourly fee ($150-$400 per hour is most common) to defend a countersuit. Attorneys do require a retainer for defense of countersuits.
If the debtor defends the lawsuit you may need to have a witness appear in court or in a deposition.
October 15, 2009