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Hi, this is Stewart Albertson with Albertson & Davidson. I want to talk to you about contingency fees, and how they can give access to some beneficiaries who don’t have the ability to pay lawyers on an hourly basis. The traditional way that many people hire lawyers is they give that lawyer a retainer (for example, $10,000-$20,000 retainers are common), and then the lawyer bills against that retainer, according to their hourly rate. When that retainer runs out, the lawyer asks for more money.
However, beneficiaries are not in a position where they can pay lawyers to represent them in a trust contest or a will contest case. So, there is an option for contingency fee. Now, keep in mind, you generally do better overall to hire a layer on an hourly basis, if you can, because you’ll spend less overall on a case than you will if there’s a successful outcome in a contingency fee case, as far as attorney’s fees go.
Let’s give an example. You hire a lawyer to handle a case for you. You’ve got a million dollars at stake and you pay that lawyer $100,000 in hourly fees to get you your access to that million dollars. Well, that’s a pretty good result for you. You paid $100,000 in hourly fees to that lawyer and you end up getting the million dollars that was supposed to come to you.
If you didn’t have the money to pay the lawyer on an hourly basis, you could hire that same lawyer on a contingency fee basis, which is a percent of the recovery. Generally speaking, most cases are going to be 40% in California. So, using the same example, a lawyer works the case for a year and a half or two years, and just before trial, the case settles and it’s a million-dollar recovery to you. If you apply the math at 40%, that would be a $400,000 attorney’s fee and the balance would go to you. You can see the difference.
It generally makes sense to hire a lawyer on an hourly basis, versus a contingency fee basis, but if you don’t have the ability to hire a lawyer on an hourly basis, then the best option for you to do is to consider the contingency fee, which is a way to recover something for you that you normally couldn’t get access to if you didn’t have a lawyer willing to take your case on a contingency fee basis. So that’s just a little bit on how a contingency can work to return assets to you that are rightfully yours.