It is common for attorneys to receive a contingency fee of around 33 percent of your recovery; a higher percentage may be suspect. Also, pay attention to how the contingency fee is calculated. Specifically, is it calculated based on your entire recovery, including money you received before you retained the attorney? Experts say this provision, which appears in a proposed agreement floating around town, is unjustifiable.
In addition to legal fees, homeowners often have to pay for an attorney’s “costs and expenses.” Costs and expenses are often taken off the top of the recovery amount, so you do not actually end up getting 66 percent of the insurance money. Thus, you need to know precisely what expenses will be incurred by the firm and taken out of your cut. This area, perhaps more than any other, requires you to scrutinize the contract language. Vague phrases such as “administrative expenses” should prompt you to ask detailed questions.
Additionally, make sure you understand how the costs and expenses will be billed. First, will you be required to pay costs and expenses even if you do not recover from the insurance company? (The answer is likely yes). Will you be expected to pay costs and expenses periodically, meaning before you recover any money from the insurance company? Or will you only be billed for costs and expenses after you recover? If you are not required to pay costs and expenses prior to recovery, reserve the right to demand periodic expense statements.
The bottom line is that every term in a retainer agreement should be clear and unambiguous. If you are presented with terms you find puzzling, it is advisable to consult with an attorney before signing. There are plenty of attorneys who will review the proposed agreement for free. My email is below and I would be happy to show your agreement to an expert. Turning to an attorney at this difficult time may be the right decision for you. Just make sure you know what you are getting into.
Todd Kaminsky is a federal prosecutor working in the Criminal Division of the United States Attorney’s Office for the Eastern District of New York and can be reached at firstname.lastname@example.org. This column is written in his personal capacity.