SWITCHING ATTORNEYS CAN BE TRICKY BUSINESS
Things to Consider Before Changing Attorneys in Your Personal Injury Case
California law regarding changing attorneys allows any client to change attorneys at any time during the course of a client’s representation. However, there are serious and significant implications in making that choice. In most personal injury cases, the attorney agrees to represent the client on a contingency fee arrangement. This means that the attorney is working on the expectation of receiving his or her compensation from the recovery rather than getting paid by the hour as the work is being performed. So when a case is transferred from one attorney to another prior to its resolution, the issue which has to be addressed involves the compensation to be paid to the first attorney for the work performed and services rendered prior to the date of termination of those services.
The Basic Rules of Fee Sharing Between Terminated and New Attorneys in a Contingency Fee Case
The basic rule is that once a contingency fee attorney is terminated, he or she is entitled to recover the "reasonable value" for the services rendered up to the date of termination at the time the client ultimately collects money for the injury claim. The definition of reasonable value is a bit tricky. In some legal services agreements the attorney outlines a fee structure based upon an hourly rate and deems this the reasonable value of the services. For example, if the attorney spends 50 hours of time working on a particular case and the stated rate is $350 per hour. At the conclusion of the case, the terminated attorney will claim compensation of $17,500 as the reasonable value of the services rendered. That sum should then be paid from the settlement or judgment. In other retainer agreements, "reasonable value" is not defined by an hourly rate, but left to the determination of the outcome of the case and the services actually rendered between the two or more lawyers who represented the client. Take a look at how these two scenarios might affect the distribution of legal fees at the conclusion of the case.
Example 1: Ms. Gonzalez hires attorney Laurel Banks. Ms. Banks’ legal services agreement has a contingency fee arrangement for one third of the recovery to be paid to the attorney upon recovery of a settlement or judgment, but outlines that if her services are terminated prior to the conclusion of the representation, then she is to get paid $300 per hour for the time spent working on the case as her "reasonable value" of the services rendered. Ms. Gonzalez feels the case is not progressing as fast as she would like even though settlement offers have been exchanged between Ms. Banks and the insurance company. After 40 hours of work by Ms. Banks, a new attorney, Mr. Fred Flyer is hired by Ms. Gonzalez to take over the case. Within three weeks and only about 10 hours of actual work, Mr. Flyer gets a settlement of $100,000.00 for Ms. Gonzalez. In this situation, while Ms. Banks did most of the work, her legal services agreement limits her recovery to $12,000, at the same time, Mr. Flyer secures over $21,000 for his minimal services.
Alter this example a bit where Mr. Flyer spends 50 hours working on the case, but the jury only awards $50,000.00 to Ms. Gonzalez for her injuries. This means there is about $16,660 in legal fees to be paid, but Ms. Banks’ claim is for $12,000. Mr. Flyer, even though he spent more time on the case, would be limited to $4,660 in fees. That is obviously not a fair and just result, and if challenged, would probably be re-allocated by a judge or arbitrator to more accurately provide a "reasonable value" of the services between both attorneys despite the hourly rate claim by Ms Banks. Ultimately, Ms. Banks’ fees would have to be reduced while Mr. Flyer’s fees increased to properly compensate the competing attorneys. In either scenario, the client’s payment for the legal services would not change.
Example 2: If Ms. Banks’ legal services agreement only provides for the payment of reasonable fees for the services rendered and the case settles for $100,000 under the direction of Mr. Flyer, the new attorney, then an arbitrator or judge would allocate the $33,330 in legal fees in an equitable allocation, rather than based upon a predetermined formula. Depending on the amount of the services rendered and how much each attorney advanced the case towards the ultimate settlement, an arbitrator or judge will formulate an allocation that he/she believes will properly reward the attorney for the "reasonable value" of the work performed. In some instances, if the first attorney actually performed all the work necessary to secure an offer to settle for the maximum amount of the available insurance prior to the transfer of the case to a new attorney, the first attorney may still be entitled to the recovery of the full contract agreement, rather than an allocated portion of that settlement. This is a logical outcome since the attorney did all the work required under the legal services agreement, not just a portion thereof.
The Timing of When You Change Attorneys Can Make a Major Difference in Whether a New Attorney Will Want to Take Over an Ongoing Case
The timing of a change of attorneys is very important to consider before acting upon that desire. If a personal injury client decides to transfer his or her case to a new attorney after years of litigation and many hours of work by the first attorney, it may be much more difficult to find a new attorney who will take on the case because the amount of legal fees he or she would be sharing with the prior attorney may not make the case worth the financial risk to the new attorney. In other words, if the maximum amount of recoverable legal fees is too small for the hours of work required to be performed by the new attorney, then the new attorney may just opt out of taking over the case.
Another reason delays in changing attorneys adversely affect the outcome of the case, is that the longer a case remains with the old attorney, the more difficult it will be for the subsequent attorney to influence the case with his or her own ideas and methodology in handling the case. Much of the discovery, including depositions, will have been taken thereby limiting the influences of the new attorney on the outcome of the case.
Ultimately, if a client wants to make a change in lawyers, acting upon that desire earlier rather than on the eve of trial or late in the process will result in a much smoother transition and will allow the new attorney to best serve the client’s interests.
A Final Word About Changing Lawyers After the Start of Your Case
Are there good reasons to change lawyers? There certainly are a number of excellent reasons. Some of those reasons may include the following:
- Failure of reasonable communication between the attorney (or the attorney’s office) and client;
- Failure to actively prosecute the case;
- Problems with the attorney’s license;
- Lack of confidence due to the failure of preparation by the attorney during discovery;
- Lack of ability by the attorney to handle the type of case presented, and,
- Lack of professionalism on the part of the attorney or the attorney’s staff.
This is not an exhaustive list, but represents some reasons for making a change.
Finally, here are some things you should do before making a change in attorneys.
- Ask for a meeting with your attorney to review your file and see the work which has been performed;
- Ask for routine updates and monitor the progress of the case;
- Secure commitments on the way the case is to be handled; and/or
- Ask for another attorney to review the status of your file before making a change.
Once again, this is not an exhaustive list of things to do, merely a suggestion of some things to start with.
Moving a case from one attorney to another should not be made lightly and should be done after assuring yourself you have the facts supporting making that change. If there is a real need to terminate your lawyer because you have lost faith in the ability of the attorney to properly represent you in your matter, make that move early in the case if possible. If an early move is not available to you, assure yourself, after speaking with other attorneys, that the change is necessary and appropriate to protect your interest and to advance the outcome of your case.