Dirk Derrick (00:00):
Welcome to The Legal Truth, the podcast created to provide you general legal information about South Carolina law, lawyers, and the legal process, and hopefully prevent you from being surprised by the unexpected. We will answer many of the questions I've been asked during the past 35 years about South Carolina personal injury claims and workers' compensation claims. We will also discuss existing laws and proposed changes in the law and how they affect you. My name is Dirk Derrick. I'm the founder of the Derrick Law Firm, and I'm your host.
Voiceover (00:35):
Please see required ethics disclaimers in show notes.
Dirk Derrick (00:41):
Welcome to The Legal Truth Podcast. The topic is the truth about attorney fees and personal injury claims. And we have with us, again, Pearl Carey from our marketing department. Welcome, Pearl.
Pearl Carey (00:54):
Thank you so much for that introduction. I'm a seasoned professional by now, so I'm really excited to be here.
Dirk Derrick (00:59):
Yeah, she's taken off on this thing.
Pearl Carey (01:01):
Absolutely. So first off, what is a contingency fee and how do those work in personal injury cases?
Dirk Derrick (01:10):
After the question about the value of cases, fees is probably the second question. I think the fee issue is what leads people to question whether or not they should hire an attorney.
Pearl Carey (01:22):
Really?
Dirk Derrick (01:23):
Whether they'll bring value, what's going to happen if they hire a lawyer and lose? Do they give the lawyer money that they owe on the case if their case is not successful? So it's an issue, and I can understand not being in this world where that would be... If you weren't in the legal work, you wouldn't understand that some of those worries are unnecessary. But in personal injury cases, most attorneys charge a contingency fee, which means they get paid if they win. I see a lot of ads on TV and on billboards and stuff talking about free unless we win, you don't have to pay us unless we win. And I look at it and say, "Well, that's the 99% of personal injuries." But I heard of a study that someone just did and said about 85% of the public still didn't know that. Still didn't know that attorney fees in personal injury cases and workers' comp cases were based upon the resolution of the claim.
Pearl Carey (02:23):
I'm sure like hiring a lawyer in the first place can seem a bit daunting.
Dirk Derrick (02:27):
Yeah. A contingency fee is a fee that is based upon the attorney obtaining recovery. Most contingency fees will say that they'll get a percentage based upon any money they obtain for the client. A contract will include two things. It will include the fee provision, it will include a cost provision. Those are two separate things, and before you sign one, you ought to have a clear understanding of both of them, so you won't be surprised by anything.
Pearl Carey (02:58):
So what is that cost provision?
Dirk Derrick (03:00):
The cost provision is provision which speaks about money spent to build a case. If you think about if an expert's hired, if a deposition is taken, a file and charge at the courthouse, those are cost that go to third parties. And you want to look at that well to see what costs are being charged to you and then what fees are being charged to you and whether or not that fee goes up during your representation.
Pearl Carey (03:30):
So how do those impact the contingency fees?
Dirk Derrick (03:33):
The costs do not impact the contingency fee.
Pearl Carey (03:36):
Okay. So those are separate.
Dirk Derrick (03:37):
They're separate.
Pearl Carey (03:37):
Got it.
Dirk Derrick (03:38):
So usually let's say case settles for $90,000, one third contingency and pay 30,000 in fees. You pay whatever costs out of your two thirds. So you want to have a grip on what the costs are and what costs are being charged.
Pearl Carey (03:52):
So are there some cases where the cost just kind of outweigh the benefit or?
Dirk Derrick (03:56):
Yes. When attorneys are looking at cases and whether they will take one on a contingency fee basis, they have to look at how much will it cost to build this case to a point to get it to a jury that a judge would say, "Yeah, you meet the requirements to go before a jury and to present the case before the jury." There are some types of cases that are very expensive and there are higher risk to bring. So as an attorney, you're looking at cases and you weigh in the ability to get the real value of the claim and how much is it going to cost you to get there?
Pearl Carey (04:29):
Right.
Dirk Derrick (04:30):
I think the fear from a client standpoint is, whoa, charge me a fee and then you charge me cost. Am I going to get any money?
Pearl Carey (04:41):
Right. Is this even worth it?
Dirk Derrick (04:42):
That's right.
Pearl Carey (04:42):
Yeah.
Dirk Derrick (04:43):
That's a legitimate question.
Pearl Carey (04:44):
Absolutely.
Dirk Derrick (04:45):
I can tell you fees can be pure contingency. I've seen some where people charge money upfront plus a contingency. It can be a contingency, but if it goes to litigation, that contingency fee goes up to a different level. And so you need to look at the contract and see what kind of contracts being offered to you. The cost, you look and see what kind of cost they're charging you. I've seen some costs where they charge for phone calls and postage and administrative costs of opening a file and stuff, and we don't do that.
Pearl Carey (05:19):
Yeah, you want to be transparent with your clients. Yeah.
Dirk Derrick (05:22):
You want to see if the fee goes up. Often the contingency fees would jump up if you have to file a lawsuit. We've chosen to stay at a third the entire time, whether we file a lawsuit, if we go to appellate court, whatever, we don't stay at a one third. I've always felt like there's some cases that require you to file a lawsuit in order to get the facts necessary to get the real value, and I never wanted my client to think I was filing a lawsuit to try to get an extra 7%.
Pearl Carey (05:53):
Right.
Dirk Derrick (05:53):
I want to be able, when I go to my client and say, "Hey, let us file a lawsuit. We need to find out this fact, this fact, and this fact because they can have a big impact on your value," that my client's not thinking I'm trying to make a higher fee.
Pearl Carey (06:06):
So if I have a case and my lawyer takes it on a contingency basis, what happens to all those fees if we lose?
Dirk Derrick (06:12):
The lawyer does not get paid. The contingency fee says you got to win or they get nothing. I think that's what the public doesn't know. The cost, the attorney can make a decision whether or not they ask you to pay the cost. I don't know who does what. I know as a firm, we don't do that. We got in our contract that if we lose the case, we eat the cost.
Pearl Carey (06:32):
That's it.
Dirk Derrick (06:33):
It won't cost our clients any money because that's a fear they have and a legitimate fear because the attorney's the one evaluating the case, the attorney's the one who's building the case and telling them what the case is worth, and so you go way down the road and build a whole bunch of costs in the case, you don't be stuck with it. So we just eat the cost.
Pearl Carey (06:53):
Absolutely. So those out-of-pocket costs, that's not going to come from the client. That would just be... We're not going to take this case or it didn't work out?
Dirk Derrick (07:00):
That's correct. Our rules of ethics say is that we cannot pay costs for our clients. We can advance it.
Pearl Carey (07:07):
Okay.
Dirk Derrick (07:08):
There's other things we can't pay. Lawyers can't loan money, lawyers can't pay for medical expenses. Those have to come from third parties or whatever. It can't come from lawyers, but they have said ethically we can agree just to waive the cost if we lose the case.
Pearl Carey (07:26):
So that one-third contingency fee, is that the same thing across the board or does that kind of differ?
Dirk Derrick (07:32):
Well, if you're talking about across the board the types of cases we take, we stay at one-third.
Pearl Carey (07:37):
Okay.
Dirk Derrick (07:37):
At the different stages of our cases, we stay at one-third. If you're talking about across the board as far as lawyers, people would have to talk to individual lawyers. I know there's lawyers who charge third that goes up to 40% if you file a lawsuit, go to 45% if you file a lawsuit. There's people who step it up based on the process, but they would have to... If somebody's going to hire a lawyer, that's something they should look at and see whether or not it's going to step up.
Pearl Carey (08:00):
So it could change depending on the type of contract or what law firm you go to.
Dirk Derrick (08:03):
That's right.
Pearl Carey (08:04):
Okay. Absolutely. And so what kind of steps can I take as a potential client to ensure transparency and a clear understanding of this agreement before I sign?
Dirk Derrick (08:14):
Well, you need to read it. You need to look at it, and then you need to contact the attorney and ask them questions so you have a clear understanding. You don't want to be surprised. The lawyers don't want you to surprise at the end of the case either, but you just need to read it, understand it, ask questions, find out things that will be included in the cost and things that will not be included in the cost.
Pearl Carey (08:33):
So if someone does borrow money during litigation, what would that be used for? Is that for medical expenses or how does that work?
Dirk Derrick (08:39):
Some people get in very bad situations during litigation. You imagine if you had a wreck or an incident or an injury that put you out of work. You're the provider for your family, you paying mortgage payments, all of that stuff continues. All your responsibilities continue, and now you're laid up in the hospital. So there's times when they need to borrow money just to get by. Unfortunately, the charges for that money are expensive. I mean, the interest rates...
Pearl Carey (09:07):
Adds up.
Dirk Derrick (09:08):
Yeah, it adds up, especially if it lasts a long time. But we try to discourage people from borrowing any money except for essentials to keep you house, food because you hate to see someone borrow a whole bunch of money, then have to pay back so much more than what they borrowed.
Pearl Carey (09:25):
Absolutely.
Dirk Derrick (09:26):
These companies who provide it, they're taking chances because if you lose your case, they not get paid back. So they're taking chances too. But those loans can be very costly.
Pearl Carey (09:36):
That doesn't affect the contingency fee or what is kind of the relation between maybe those loans that people take out during litigation and the contingency fee?
Dirk Derrick (09:44):
Does not affect contingency fee. If they're borrowing money that's going to come out of their portion when they settle the case or finalize the case.
Pearl Carey (09:51):
Gotcha. Are there any other areas of confusion or questions that you run into with clients when talking about contingency fees?
Dirk Derrick (09:59):
I think the biggest questions they have, is there any way I'm going to lose money? Is it going to benefit me or is attorney fees and cost, I eat up all the money in the case. They don't want to be left with any left with any expenses that they got to pay out of pocket. What if my medical bills are so big and then the insurance is so small that the attorney fee gets paid and then the rest goes to medical providers and I get no money? Is it even worth it? What I do not believe they fully understand is if our client has $300,000 worth of medical bills and only a $100,000 of insurance to cover the incident, if they give us permission, we will negotiate down the medical bills.
Pearl Carey (10:47):
Really?
Dirk Derrick (10:48):
And that's part of the job they don't think of. But part of our job is to get the highest value as possible, and then the other is to put as much money in their pocket as possible. So we negotiate down medical liens and medical bills with the providers, and it works with the medical providers too. They can't get blood out of a turnip if there's only a $100,000, and most of them will take their pro rata share of a third of the money, something to get that off of our client. So like I said, our client says, "I don't want those medical bills. I don't want them suing me for these medical bills. Go negotiate them down to whatever we have to." The biggest thing is to look and make sure you understand the percentage. Make sure you understand if it steps up, it keeps increasing and make sure you understand the cost, what's going to be charged as cost and whether or not the cost going to be eaten by the law firm if the case is unsuccessful.
Pearl Carey (11:47):
Right. So with those step-ups, do those usually happen after a year or two years? Or does it kind of depend on the type of case?
Dirk Derrick (11:55):
If you see them in contingency fee contracts, they'll step up. If a lawsuit is filed, then they'll step up, maybe again, if it's appealed or you have to try the case again.
Pearl Carey (12:04):
Gotcha. Absolutely. So why might a law firm charge a contingency fee as opposed to maybe retainer fees or hourly fees or something else like that?
Dirk Derrick (12:14):
Contingency fees give everybody a chance at their day in court. A lot of people that we represent who've been injured, who's now out of work or set back, lost the car, all this stuff going on-
Pearl Carey (12:27):
Horrible.
Dirk Derrick (12:27):
... they do not have money to come and pay you a retainer.
Pearl Carey (12:31):
On top of all of the other.
Dirk Derrick (12:32):
On top of that.
Pearl Carey (12:33):
Yeah.
Dirk Derrick (12:34):
It's a leveling of the playing field. The contingency fee gives everybody a chance to litigate cases.
Pearl Carey (12:41):
Right.
Dirk Derrick (12:41):
If it was only those who could pay hourly fees and retainers, you'd cut out a large portion of society as far as who could have their day in court.
Pearl Carey (12:51):
Or who needs help. Yeah, absolutely.
Dirk Derrick (12:53):
Approximately 85% of the public does not know that most personal injury law firms don't get paid unless they win. Before you hire an attorney, you should read the agreement, read the contract to see what the contingency fee is, does it go up and what costs are going to be charged to you, and finally determine whether or not those costs are going to be forgiven by the law firm if you're unsuccessful.
Pearl Carey (13:24):
So is there a legal requirement for personal injury law firms to do contingency fees, or is it kind of just relative?
Dirk Derrick (13:31):
No, it's just out of necessity to give people a chance to have their day in court and be able to take the claim. It surprises me that 85% of the population doesn't know that's how most lawyers, personal injury lawyers make the money on contingency fee contracts. But you think about it, I think on average people may have one, maybe two personal injuries during a lifetime. It's not something they think about or go through, and you're in a very stressful time in their life when this happens.
Pearl Carey (14:02):
Right. You don't want to get more money taken from you.
Dirk Derrick (14:05):
Yep. As an attorney who's done it for 35 years, you'd think everybody knows it, but they don't.
Pearl Carey (14:11):
So how much can contingency fees really vary from law firm to law firm?
Dirk Derrick (14:15):
I have not looked at other contracts, but I've heard of it going up to 45 and 50% depending on what state you're in and the complexity of the case. Cost, there's some attorneys in South Carolina do some more complex work that I know they charge 40 out the blocks and they're taking higher risk on cases, so they're charging more. So it has some of them who charge higher fees. There's some rationale behind it because they don't put a lot of money in it. There's a lot of need for expert testimony. If it deposes a lot of experts on other side, it can get very expensive to the point where unless there's devastating injuries or death, it's hard to bring a medical negligence case. Same thing, most workers' comp attorneys charge contingency. What's unique about workers' comp is that the Workers' Comp Commission has to approve the fee. There's a statute that sets what fees can be charged in workers' comp.
Pearl Carey (15:16):
Really?
Dirk Derrick (15:16):
It's usually a third, but if a client comes to a lawyer after they've received an offer, then it can only be a third of anything above that offer, and the Workers' Comp Commissioner has to approve any fees that's paid out of workers' comp.
Pearl Carey (15:32):
So what would be your closing remarks when it comes to attorney fees?
Dirk Derrick (15:36):
They would be number one, read before you sign.
Pearl Carey (15:38):
Absolutely.
Dirk Derrick (15:39):
Number two, know what contingency you're going to pay out of the recovery. And if there's step-ups in that, depending on what phase you go through or settle the case at. Number three, know what costs are going to be paid out of the recovery. Number four, know if the costs are going to be eaten by the law firm if your case is unsuccessful.
Pearl Carey (16:04):
So just to make sure I understand, here at Derrick Law Firm, we have a one-third contingency fee across the board, correct?
Dirk Derrick (16:10):
That's correct. We got a one-third contingency fee on all our cases. It doesn't jump up at any phase in the case. Our only cost paid to third parties, it's not stamps, phone calls, that kind of stuff.
Pearl Carey (16:23):
So today's podcast was named The Truth About Attorney Fees for Personal Injury Claims. Thank you so much for speaking to me. I learned so much and I really hope our audience did as well.
Dirk Derrick (16:33):
Sure they did.
Voiceover (16:34):
Thank you for joining us on The Legal Truth Podcast. If you have questions that you would like answered on a future episode, please send them to [email protected]. If you would like to speak to us directly, call us at (843) 248-7486. If you find the podcast valuable, please leave us a five-star review and share The Legal Truth with your neighbor, friend, or family member who is seeking reliable information about a South Carolina personal injury or worker's compensation claim. Dirk J. Derrick of the Derrick Law Firm Injury Lawyers is responsible for the production of this podcast, located at 901 North Main Street, South Carolina. Derrick Law firm Injury Lawyers has included the information on this podcast as a service to the general public. Use of this podcast and any related materials does not in any manner constitute an attorney-client relationship between Derrick Law Firm Injury Lawyers and the user.
(17:26):
While the information on this podcast is about legal issues, it is not intended as legal advice and should not be used as a substitute for competent legal advice from a licensed professional attorney in your particular state. Anyone seeking specific legal advice or assistance should retain an attorney. Any prior results mentioned, do not guarantee a similar outcome. The content reflects the personal views and opinions of the participants in the podcast and are not intended as endorsements of any views or products. This podcast could contain inaccuracies. The information contained in this podcast does not constitute legal advice and is not guaranteed to be correct, complete, or up-to-date as laws continue to change. In this podcast, you'll hear information about focus groups. Please note that not all of the firm's cases are presented to a focus group. Additionally, when speaking about juries or jurors in relation to a focus group, we're speaking of focus group participants and not actual trial juries or jurors.