"Costs" in this context refers to the expenses necessary to pursue an asbestos case, from pre-lawsuit investigation all the way to trial (and in some cases, appeal). These costs can vary greatly, but typically they include court fees, investigation and deposition costs, expert fees, and administrative expenses such as postage, messenger services, copying, and travel. Handling of these costs should be spelled out clearly in the agreement between the plaintiff and the attorney. Let's take a closer look at how financial responsibility for costs might be handled in an asbestos-mesothelioma case. (For a breakdown of costs, check out our companion article What are 'Costs' in an Asbestos Case?)
Costs and Contingency Fee Agreements
Contingency fee agreements are common in asbestos lawsuits. Under a contingency fee agreement, the plaintiff does not have to pay attorney’s fees or costs until the attorney obtains a settlement or a verdict on behalf of the plaintiff. Simply put, the attorney advances the costs of the litigation. If the case is settled or won at trial, the attorney deducts the attorney’s fee and expenses from the recovery. If the case is lost, the attorney gets neither fees nor, generally, costs. Charges for any cost in case of a loss should be specified in the contingency fee agreement.
Learn more: How Will My Asbestos Lawyer Be Paid?
The Interplay of Fees and Costs
Whether the costs are deducted before or after the attorney’s fee is calculated impacts the total amount of costs and fees that the plaintiff pays from the recovery. In a contingency fee agreement, the attorney’s fee is set as a percentage of the recovery. If the costs are deducted before the fee percentage is calculated, the plaintiff pays less than if the costs are deducted after the fee percentage is taken out. For instance, let’s assume that the plaintiff and the attorney agree to a 40% contingency fee, the litigation costs total $10,000 and the case settles for $100,000.
- Costs before fees: If the attorney deducts the costs from the settlement amount before calculating the attorney’s fee, the attorney’s fees will be 40% of $90,000 ($100,000-$10,0000), i.e. $36,000. The plaintiff owes $36,000 in fees and $10,000 in costs, or a total of $46,000.
- Costs after fees: If the attorney deducts the costs after calculating the fee, the attorney’s fee will be 40% of $100,000 i.e. $40,000. The plaintiff owes $40,000 in fees and $10,000 in costs, or a total of $50,000.
Sometimes, attorneys who deduct costs before calculating their fees say that they "share" in the costs. Whether they actually share in the costs (or, in reality, take a smaller fee) the end result remains the same: the plaintiff pays less in the way of fees and costs if the fees are calculated from the net recovery after the costs are deducted, rather than from the gross recovery. Keep in mind that a plaintiff can negotiate these terms before signing a contingency fee agreement. (More: Will a Personal Injury Lawyer Negotiate Fees and Costs?)
Caps and Accounting
Plaintiffs can further protect themselves regarding costs in asbestos lawsuits by setting a limit on costs, and asking for regular cost accountings. A plaintiff can discuss expected costs with the attorney and request that the attorney seek approval before spending more than the agreed-upon amount. Also, a plaintiff can request quarterly accountings during the litigation to keep tabs on costs. These additional costs provisions should be negotiated at the onset, and spelled out in the contingency fee agreement.
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