Before hiring a lawyer, the client should understand how attorney’s fees and costs will be handled. Attorney’s fees refers to compensation for the work of attorneys and their staff. Costs refers to out of pocket expenses such as filing fees, court reporter costs, expert fees, travel expenses, and mediation fees. 

Attorney’s Fees

We handle most cases on a contingency fee basis. A contingency fee is usually expressed as a percentage of the client’s recovery. California law requires (among other things) that a contingency fee agreement is in writing, states the contingency rate, and states how costs will affect the contingency fee and the client’s recovery.

Contingency fees are not set by law and are negotiable. Our standard contingency fee is the greater of: (1) 40% of the gross recovery, or (2) the amount paid or awarded on your claims for attorney’s fees. 

What does “your claims for attorney’s fees” mean?  In contrast to contingency fees, which are agreed between the lawyer and client, claims for attorney’s fees generally arise from a contract between the parties or a statute that provides for fee shifting. Statutory fees provide a mechanism to make it financially feasible for attorneys to take worthwhile public interest cases, regardless of the economic status of the client and the value of their economic loss.

Contractual and statutory fees are typically (but not always) based on the attorney’s reasonable market rate multiplied by their hours. They may be much higher or lower than the contingency fee. For example, where a worker has a lost wages claim of $50,000, their attorneys may spend time that has a market value that is several times the value of the claim (say, $500,000 worth of attorney time) prosecuting the case. Likewise, an attorney might earn a contingency fee that exceeds the market value of their time by efficiently negotiating a large settlement. 

Costs

In class action and representative action cases, we generally agree to advance all the costs and to forego reimbursement of costs if there is no recovery. In individual employment cases, our expectation is that clients cover some or all the out-of-pocket costs, depending on their financial resources. 

The out-of-pocket costs of the client are not to be confused with the litigation adversary’s costs. Subject to various exceptions, whoever wins is generally entitled to recover certain litigation costs. These costs commonly exceed $10,000 through trial in employment cases and may be much more. Even if an attorney agrees to cover the client’s costs, the client typically remains responsible for a cost award to a prevailing defendant. Likewise, in some circumstances, a client may be responsible for the other side’s attorney’s fees, which commonly exceed $100,000 in employment cases and may be much more. These are issues to be educated on before filing a lawsuit.