ATTORNEY FEES & COSTS IN CONSUMER CASES
How the Average Joe Consumer Can Take on Goliath Corporations.
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Consumer lawyers are paid contingent to winning the case. That means you generally owe nothing to your lawyer upfront. Unique to lemon law and other consumer cases, if you win, as part of your damages, the manufacturer includes payment for your legal fees. In other words, you never pay attorney fees out-of-pocket. The following provides a more in-depth explanation of how it all works.
How Consumer Protection Laws Level The Playing Field
In the U.S., each side in a lawsuit is typically responsible to pay his or her own lawyer. But how is the Average Joe consumer supposed to afford litigation against a giant corporation? The great news for consumers is that lemon law and consumer protection laws in general work differently than other areas of law. It’s designed to level the playing field for regular folks against massive companies with seemingly endless resources. If you win your case against the manufacturer, the lemon law requires that they pay your lawyer’s bill. Consequently, lemon lawyers accept cases on a “contingency fee” basis meaning they require no payment upfront from clients. Lawyers then front the costs of litigation and only get reimbursed and paid in the end by winning the case. This arrangement makes it financially possible for Joe Consumer to fight his case.
Additionally, being on the hook for your attorney’s bill gives manufacturers a financial incentive to take your case more seriously. Without lawyers, manufacturers mostly ignore consumers demanding a refund—particularly when expensive goods like cars and trucks are involved. Instead, they kick the can down the road. But, when you hire a lemon lawyer, the meter essentially begins to run. The more Goliath Corporation litigates and extends your case, the more your attorney's fees and costs accrue. With increasing financial risk, manufacturers are far more motivated to agree to buy back your lemon when you hire a lemon lawyer.
But Note: There is Still SOME Risk.
Although consumer protection laws, such as the Song-Beverly Consumer Warranty Act (i.e., the lemon law statutes), make it financially feasible to hire a lawyer without going out-of-pocket, you need to know that pursuing a case is not entirely without risk. Lemon law lawyer advertisements, however, would make you think otherwise. They commonly assure prospective clients that there will be “no fees” and “no risk.” In truth, to be as accurate as possible, although you’d owe nothing to your lawyer if you lost your case in court, you may owe an amount to the manufacturer. That amount would be limited to their litigation costs, never their attorney’s fees. “Costs” as explained further below, are different than attorney “fees.” Nevertheless, consumers should be made aware of this risk. The bottom line: You deserve to know the full picture. That’s what I seek to accomplish here as I explain fees and costs below.
Assuming you win your case—by a settlement or a judgment after a prevailing jury verdict—the manufacturer will pay your damages in a “lump sum” amount. A portion of that amount is reserved to pay both your attorney’s fees and costs. In other words, you would never pay your lawyer out-of-pocket.
Because win or lose, you’d never pay your lawyer out-of-pocket, it may seem irrelevant what he or she charges hourly. After all, the manufacturer pays the bill at the end of the case if you win, not you. However, the rate your attorney charges factors into the damages you’re demanding from the manufacturer. So, if your attorney’s hourly rate is extraordinarily high (e.g., $900 per hour), the manufacturer will likely dispute that portion of your damages, which can delay or derail a settlement.
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The other part of your lump sum damages is attributed to your attorney’s out-of-pocket costs and expenses spent to litigate the case. If you win, the manufacturer must reimburse that as well. As mentioned, an attorney’s “costs” (and expenses) are different than attorney “fees.” Costs are the amounts paid to fight your case, not compensate your attorney for services. For example, to file a lawsuit in California generally costs $435 paid to the clerk of the court. That amount does not go into your attorney’s pocket; thus, it’s part of your attorney's costs, not fees. Other costs include amounts paid for expert witnesses, deposition transcripts, process servers, po jury fees, preparing trial binders, exhibits, and list goes on. The largest potential cost typically is the amount to pay for an expert witness. Not all cases require a retained expert. But there's no question that a good expert witness can be a real difference-maker in a case and thus a worthy investment.
In sum, I strive to keep my fees and costs at reasonable levels to achieve faster settlements for my clients. Additionally, I strive to be transparent regarding all fees and costs. After all, I am a consumer protection advocate.
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