myLawCoach

Cost of Injunctive Relief in a Civil Lawsuit

Client:  My opponent is this case is trying to injure me financially.  I don’t think my filing a lawsuit will be enough to deter him.  Is there anything extra we can do to protect my interests? 

Attorney:  Yes, we can ask the court to grant you injunctive relief against him.  That means a court order stopping him from doing what he’s doing.

C:  Shouldn’t I just wait for trial instead?

A:  The trial is still a long way off, maybe a few years.  You may get a judgment for money damages against your opponent at trial, but it might not be enough to compensate you by that time, if he keeps injuring you in the meantime.

C:  How does injunctive relief work?

A:  When we file our complaint, we can also file a separate court document either at the same time or soon after asking for an injunctive order.  There are two kinds of injunctive orders at the beginning of a lawsuit.  The first is a “temporary restraining order,” or TRO.  The other is a “preliminary injunction.”

C:  I’ve heard those terms, but what’s the difference between them?

A:  A TRO is basically a temporary “cooling-off” order that the court issues.  It comes before the preliminary injunction.  A TRO is a quicker form of relief that we can get right away, but it doesn’t last very long, maybe just a few weeks.  That’s why it’s called “temporary.”  A TRO gives the parties to the lawsuit and the court some additional time to consider whether a longer-term preliminary injunction is also warranted.

C:  Is a TRO easier to get than a preliminary injunction?

A:  Yes, which is the trade-off for the TRO being temporary.  We don’t have to give the court as much evidence and make as much of a showing to get a TRO, like we would for a preliminary injunction.

C:  Do I automatically have to get a TRO as the step before a preliminary injunction?

A:  No, you can choose which of them you want.  If your opponent is injuring you right now, and you can’t wait even a few extra weeks before a hearing on a preliminary injunction, you can apply for a TRO immediately, then seek the preliminary injunction soon after.  However, if waiting a few more weeks isn’t a problem for you, then skip the TRO, save the legal fees, and go straight for a preliminary injunction.

C:  Would it be more expensive in legal fees to apply for a TRO, too, along with a preliminary injunction?

A:  Yes, because a TRO is a separate, additional legal proceeding on top of a preliminary injunction.  The legal fees would obviously be more if you wanted both of them.

C:  What’s involved in getting a TRO?

A:  When we file the complaint, we also prepare a separate court document called an “ex parte application for temporary restraining order.”  It tells the court why you’re legally-entitled to a TRO.  We also give the court a sworn statement from you called a “fact declaration.”  It’s your own written testimony, under penalty of perjury, explaining the facts of why you need this immediate, short-term injunctive relief.  If we have other witnesses besides you, we can give the court their written fact declarations, too.  The court will weigh all of that written evidence, and decide if a TRO is merited.  There is usually no court hearing with live witnesses.

C:  How is my opponent going to react if I seek a TRO?

A:  Remember I said this was called an “ex parte” application for TRO. “Ex parte” is a Latin term we attorneys use to mean that we don’t have to give the opposing side a lot of advance notice of our intention to seek a TRO.  In an ex parte application, all I have to do is give the opposing attorney a quick telephone call before I go to court, telling opposing counsel that I’m going to be filing an ex parte application with the court on a certain day and time.  It could be the next day. 

C:  What happens on that day and time?

A:  I go to the judge’s courtroom and argue the merits of TRO to the judge. If opposing counsel wants to show up against me on that day and time, he or she can.  The legal arguments may take place behind the scenes in the judge’s chambers, not in an open courtroom.  If the judge agrees with us, he’ll issue the TRO and set a hearing on a preliminary injunction for a few weeks later.

C:  Does opposing counsel always show up on the appointed day and time to argue against the TRO?

A:  Sometimes, if your opponent wants to spend the legal fees to do that.  Other times, your opponent may not care.  He may be able to live with the TRO for a few weeks.  The opposing side will simply wait for a full hearing on the preliminary injunction, which is where they’ll make all their arguments against us.  They’ll save their “ammunition” for that.

C:  Do you just make a phone call to the other side when we go in for a preliminary injunction, too?

A:  No, that’s different.  It’s called a “noticed motion.”  It’s the opposite of an ex parte application.  A noticed motion means we have to give the opposing side a few weeks’ advance written notice that we’re going to be moving the court for a preliminary injunction.  There will be a full-blown court hearing on our motion for preliminary injunction, probably with live witnesses.  You’ll probably have to testify.  Both sides get lots of time to prepare for a noticed motion.

C:  What does each side do to prepare?

A:  Our side has to collect enough evidence to win the motion.  As the moving party, we have the burden of proof.  We don’t just get a preliminary injunction for the asking.  It could be an uphill battle for us.  We’ll have to get enough favorable witnesses, including you, to testify at the hearing to convince the judge that a preliminary injunction is merited.  If we can’t get live witnesses, we’ll need to collect as many written fact declarations from other witnesses as possible to give the court.  We’ll need a lot of evidence.

C:  What will my opponent be doing?

A:  Fighting hard to stop you.  A preliminary injunction lasts until the trial.  That could be a few years away.  A preliminary injunction against your opponent would prohibit your opponent’s current conduct until trial.

C:  What happens if I later win at trial, too? 

A:  Not only could you get money damages from your opponent, but we could also ask the court to convert the preliminary injunction into a “permanent injunction”  against him.  That would bar your opponent forever, theoretically.

C:  And if I lost at trial?

A:  Then the preliminary injunction against your opponent would dissolve.  He’d be free to resume his behavior from then on.

C:  You said the preliminary injunction could be an uphill battle for us?  Why is that?

A:  Because to get a preliminary injunction, we’ll have to carry our burden of proof to show that 3 factors exist.  First, we’ll have to show that waiting for trial to collect money damages from your opponent isn’t good enough.  You could be too damaged by that point by your opponent’s continued conduct for money damages to adequately compensate you, unless he’s stopped now.

C:  I think we could show that.  What’s the second factor?

A:  That the damage you are suffering is already happening, or is imminent.  In other words, the court can’t wait to act.  But if all we can do is show that your opponent might do something to you sometime in the future, but we’re not really sure when, then the court will deny the preliminary injunction until we have better, stronger evidence of real, imminent harm.

C: What’s the third factor?

A:  We have to show that, if the court issues a preliminary injunction against your opponent that prohibits his conduct for maybe the next few years, you’re likely to win when the case goes to trial, too.  The court doesn’t want to give you injunctive relief now unless you’re likely to win later on, too.  Otherwise, that’s unfair to your opponent.  So we have to make sure we have a strong enough case against your opponent both now and in the future.

C:  Somebody told me that if I get a preliminary injunction, I’ll have to post a bond.  What’s that?

A:  Yes, to guard against the possibility that a plaintiff may have wrongfully convinced the judge to issue a preliminary injunction against their opponent, thereby restricting their opponent’s conduct and perhaps damaging them instead, the court makes the winning party post an injunction bond with the court before the preliminary injunction takes effect.  The injunction bond will pay your opponent’s damages if he suffers any financial losses as a result of an unfair injunction you got against him.

C:  How much does the bond cost?

A:  Injunction bonds are not cheap.  I can put you in touch with an insurance agency that issues them to get a premium quote.  The price, or premium, for the bond will be based upon the dollar amount that the court requires from you to cover your opponent’s possible damages.

C:  So how much will it cost in legal fees to get a TRO and a preliminary injunction?

A:  Think of our application for TRO as being a slimmed-down prelude to the motion for preliminary injunction.  The work that I do in connection with the TRO application should be re-usable later when we seek a preliminary injunction.  However, I’ll have to do lots more work, too, to prepare our preliminary injunction motion.

C:  What will you do?

A:  For each proceeding, I’ll need to do legal research, draft a legal brief, and assemble written witness declarations to meet our burden of proof.  The legal research will allow us to cite some court case precedents to the judge to show that you meet the 3-pronged legal test I mentioned for being entitled to injunctive relief.  We’ll present a couple of witness declarations to the court, including yours, to get a TRO, but I’ll want us to have even more witnesses beyond that when we seek a preliminary injunction. 

C:  How long will the legal brief be?

A:  Probably about 10 - 20 pages.  Some courts have page limits on legal briefs.  But it’s not the legal briefs that will generate the most paperwork.  It will be the written witness declarations.  That’s our evidence.  Each one of them will probably be 5 - 10 pages long.  I’ll have to prepare those declarations in draft myself after interviewing each witness, and then show them to each witness to make sure they’re accurate and complete.  The witnesses will sign their declarations under penalty of perjury.

C:  What’s the cost of applying for a TRO by itself?

A:  I estimate roughly 20 - 30 hours of my time, at my $250 per hour rate, to prepare all the court papers for the ex parte application for TRO.  That would be about $5,000 - $7,500 in legal fees.  Add another 2 hours of my time for the court appearance, which would be $500 more.  Plus a small court filing fee of less than $50.
 
C:  The motion for preliminary injunction will be more expensive, right?

A:  Yes, although I’ll try to borrow as much of my previous work from the TRO application as I can.  Besides preparing a brand-new legal brief for the motion, supported by my legal research, the additional work I do will consist mainly of preparing and assembling even more witness declarations than we had before to carry our burden of proof on the motion.  Fortunately, you have a straightforward, non-complex case.  So I estimate another $7,500 - $10,000 in legal fees to prepare all the preliminary injunction court papers, plus the filing fee.  We would file our opening motion, and possibly a reply brief to the opposition.  Plus another $500 for attending the court hearing on our motion.

C:  Plus the cost of the injunction bond if I win.  That’s a pretty big investment in legal fees for what you say will be an uphill battle.

A:  That’s because injunctive relief is hard to get.  The vast majority of plaintiffs in civil lawsuits never seek injunctive relief when they file a complaint.  They just don’t meet that 3-pronged test.  It would be a waste of money for them to try.  But if you’re sure your opponent will keep trying to injure you, and that it’s too long to wait until trial to stop him, then we may have to take our chances now.  We just have to be aware of our burden of proof.

C:  What happens if the court denies our application for TRO?

A:  We might still get a preliminary injunction after that, but it means we’ll have to work harder to gather more evidence and witnesses to make a much stronger showing in our motion for preliminary injunction that we did for the TRO.

C:  And if we don’t get the preliminary injunction, either?

A:  Then your lawsuit proceeds just as it normally would have.  We’ll have our trial at some point, and we can present all the same evidence and witnesses against your opponent then.

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

What Attorneys Should and Shouldn’t Bill For in a Civil Lawsuit

Client:  Can we talk about how you’re going to bill me in this lawsuit?  I’m cost-conscious.  Plus, I’d like to avoid surprises in the legal bills.

Attorney:  Sure.  You have a straightforward, non-complex case, so that makes it easier for both of us.
   
C:  I’ve heard that big corporations give billing rules to their outside lawyers.  What are those?

A:  They’re called “outside counsel billing guidelines.”  They are basically a set of “do’s-and-don’ts” for what the outside attorneys can and cannot bill for when they handle a lawsuit for a big corporation.  However, since this is a small law firm, we don’t have anything that formal here.

C:  But you still have some rules-of-thumb, don’t you, for how you bill your clients?

A:  Absolutely.  There are a lot of court cases that say what’s reasonable and what’s not.  We try to adhere to that.

C:  Tell me what you mean.

A:  For example, the courts say that attorneys shouldn’t overstaff a lawsuit.  That means having more attorneys working on it than are really necessary.
 
C:  How do you avoid having too many attorneys on a case?

A:  By having only one of my law firm’s associate attorneys assist me on a lawsuit like yours.  Sometimes maybe a second associate.  But usually no more than that.  I try to concentrate most of the legal work in the hands of as few attorneys as possible.

C:  Do you take steps to make sure those other attorneys don’t step on each other’s toes in the case?

A:  Yes, by making sure there is a clear division of labor among all the attorneys on the case.  The courts say it’s okay for more than one attorney to work on a case, so long as they aren’t duplicating one another’s efforts by overlapping and re-doing each other’s work.

C:  What do you do about court hearings, witness depositions, and meetings where an attorney has to attend?

A:  To avoid unnecessary duplication of effort, I sent only one attorney to those, even if it’s only me.  Sometimes, though, I take a paralegal with me if there are a lot of case documents that I need to bring with me to the hearing, deposition, or meeting.  I can’t talk and search through a pile of documents at the same time.  The paralegal manages the documents for me.

C:  When you’re delegating work to your associates, do you think about which attorney would be most appropriate to do that work?

A:  Yes, that’s what the court cases say to do.  It’s called “delegating to the least-expensive, capable biller.”  The biller is supposed to fit the task.  If I think some task in a lawsuit doesn’t require my involvement at my $250 per rate, I delegate it to one of my associates at their lower $150 per hour rate.  I make that judgment call.
 
C:  Are there other times when you do the work yourself?

A:  Yes, for instance, when I have done that same task enough times before that I can get it done far more quickly than one of my associates, who are less experienced.  Even at my higher hourly rate, it still ends up costing less in legal fees if I do it.

C:  Do you use paralegals, too?  That saves money on legal fees, doesn’t it?

A:  Yes, if I think a paralegal can handle a task well enough, I’ll delegate it to them instead of an associate.  Paralegals have the lowest hourly rates in our law firm.

C:  What about secretaries?

A:  The courts say we can’t bill clients for secretarial work, so we don’t.  Same goes for menial office clerk work.  That’s part of our law firm’s overhead.  Law firm overhead is usually not billable.  It’s included in our attorney billing rates.

C:  What about attorney conferences that you have in the office?  How do those get billed?

A:  If an in-office attorney conference involves your case, you’ll get billed for it.  Sometimes I’ll only bill for my own time, not the time of the associates I’m meeting with.  Other times I’ll bill just for their time, not mine.  However, I do reserve the right to bill for both of us if it’s an important conference.
 
C:  What about legal research?  I’ve heard that can be really expensive in a lawsuit.

A:  I usually delegate legal research to my associates at their lower hourly rates, instead of doing it myself.  We may have to research everything we do in your case as we go along, because we need to make sure the law hasn’t changed.  However, we keep legal research to a minimum for really basic, routine legal issues in the case.

C:  Do you charge for preparing the legal bill you send me each month?

A:  No, although you’d be surprised how much time is involved in doing that.  First, all of the attorneys working on your case keep track of their hours either on written daily timesheets or by inputting their time directly into their computers each day.  Our accounting department collects all that time, and then prints out a preliminary, draft legal bill called a “pre-bill” or “work-in-process.”  I review that pre-bill to make sure there are no errors.  If I have questions about an attorney’s time charges on the pre-bill, I ask them to explain.  Then the finalized pre-bill gets turned into the legal bill that is sent to you.  I don’t bill for any of that time.

C:  Do you bill your time in fractions of an hour?

A:  Yes, in tenths-of-an-hour, or every 6 minutes.  If a task takes 6 minutes or less, we bill 1/10th of an hour for that.  If it takes 7 - 12 minutes, it’s 2/10th’s of an hour, and so forth.  We always round up.  We also describe the purpose or subject matter of each task in our billing entries, so you can see how and why the work related to your case.  We also bill in single-task format, so you can see the amount of time we actually spent on each task in the legal bill.  We give you that breakdown.

C:  What about charges other than for your legal fees?  Will those charges be on the legal bills, too?

A:  Yes, those are “costs and expenses.”  We include them on our legal bills.

C:  How do you charge for costs and expenses?

A:  For example, if we have to pay an outside vendor, like a messenger service, we charge you what they charge us, our actual cost.  We don’t mark up their invoice with a surcharge to try to make a profit on that.
 
C:  Will I have to pay for every cost and expense, or are there some you don’t charge for?

A:  We charge for all necessary costs and expenses, with a few exceptions.  For example, although we reserve the right to charge you for word processing in our written attorney retainer agreement, as a practical matter we don’t, except in unusual circumstances.  That’s secretarial work.  I even word-process many documents myself on my own computer, but I only charge you the legal fees for my time.  I don’t add a separate word processing charge on top of that.

C:  Photocopying and faxing?

A:  These days, attorneys are charging 10¢ - 15¢ per page for in-house photocopying.  We do that, too.  We try to use e-mail as much as possible so we don’t have to send faxes, but if we do, we charge the same rate per page as photocopying.  Just for outgoing faxes, though, not when we receive a fax.  Remember, a fax is just an outgoing telephone call.
 
C:  What about legal research charges?

A:  Like many attorneys today, we subscribe to online legal research services like Westlaw or Lexis.  They allow us to keep track of how many minutes of legal research time we spend on a particular client’s case.  We get an invoice for that amount, and bill you for it.  We don’t use the law books in the law library as much anymore.

C:  What if you need to hire outside consultants or experts on my case?

A:  We’ll get your approval first.  We’ll also get a budget estimate from them in advance, and show it to you.

C:  Travel?

A:  If we have to travel either locally or out-of-town on your case, we’ll put the name of the attorney who traveled, the destination, and the reason on the legal bill.  But you’ll always know if we’re going to be traveling somewhere, because we’ll be talking about the case with you regularly.

C:  Anything else?

A:  No charge for ordinary, routine office supplies that we use on your case.  Only if we have to pay an outside vendor for something unusual or specific only to your case. 
 
[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

Preparing a Litigation Case Budget for a Civil Lawsuit

Client:  Since I’m cost-conscious about my lawsuit, I need to have some way of tracking how much it’s costing me as we head toward trial.  I need to make sure that I have enough money set aside to cover your legal fees.

Attorney:  Then I should develop a forward-looking litigation budget for the case.  Let’s talk about what a litigation case budget can and can’t do, so you have the right expectations.  I’ve had clients misunderstand case budgets in the past.

C:  Do all attorneys prepare case budgets for their clients?

A:  No, but they should.  It’s not as difficult as some attorneys may think.  It’s a discipline that I’ve gotten into over the years with my clients.

C:  Is there a secret to doing it?

A:  Just experience and planning.  First, an attorney has to have enough prior experience litigating cases to know what happens in them.  Second, an attorney has to be willing to take the time to think through the case from start to finish in his or her mind, and try to plan ahead. 

C:  What will the case budget look like?

A:  There are different ways to prepare budgets.  The format I like is one that breaks down the lawsuit into several parts, or phases of the case.  Within each phase, I prepare a quarterly budget for the coming 3 months.  Within that quarterly budget, I break down all the different tasks and events that may occur, and give a projected dollar cost estimate for each.

C:  Why quarterly?

A:  Because if you try to budget too far ahead, you end up with “funny” numbers. I’ve found that quarterly budgets are manageable enough for me to be able to reliably estimate the legal fees.  I can usually anticipate 3 months ahead in a lawsuit.

C:  Why not monthly budgets?

A:  Because case budgets shouldn’t become a burden for attorneys, either.  Otherwise attorneys lose their motivation to do them.  In my view, monthly is too often, and unnecessary.  Quarterly ends up being a good balance between the client’s needs and the demands on the attorney.

C:  You used the word “estimate” a second ago.  Is that what you’ll be doing in the case budget?

A:  Yes.  It’s important to understand that a case budget is not the same thing as a fixed fee, a flat fee, a “cap” on the legal fees, or a guarantee that the legal fees won’t exceed a certain amount.  That may be another reason why some attorneys avoid doing case budgets, because they’re afraid their clients will misinterpret them, which can cause problems in the working relationship.

C:  So a case budget is not set in concrete.

A:  No.  It’s a series of “best estimates” on my part about what the lawsuit is likely to cost, looking ahead one quarter at a time.  An attorney like me can budget more easily for those parts of a lawsuit that I have control over, such as how many witness depositions our side wants to take.

C:  But what about the parts that you can’t control?

A:  That’s the real tricky part of case budgeting, the other half of the case that I can’t control.  Your opponent  and the opposing attorney always drive that other half.  I can’t read their minds about what they’re going to do, or not do, on the case from quarter to quarter.

C:  Any there any other factors that are out of your control?

A:  Yes, there’s the judge.  The overall legal fees will be affected by how much, or how little, work the judge requires the parties in a lawsuit to do in the case.  Each judge is different.  You can’t predict that in advance.  Also, by how busy the judge is with his or her other caseload.  For example, I’ve seen judges make the parties prepare legal briefs and oral argument for a court hearing, then the judge becomes unavailable on the appointed date.  The parties end up have to spend more time, and legal fees, re-preparing again for the new date.

C:  Anything else?

A:  Yes, unforeseen circumstances.  That can cover a lot of things.  You often have at least one thing happen in a lawsuit that you just couldn’t anticipate beforehand. 

C:  It sounds to me like the attorney is not always to blame for how high the client’s legal fees end up being in a lawsuit.

A:  That’s right, and I wish more clients understood that going in.  For example, in your lawsuit, I might estimate about $10,000 or so to take 5 witness depositions in the case that our side will need for trial.  I can put that in my case budget.  I then try to predict how many witness depositions the opposing side will take, because I know I’ll have to attend each one. 

C:  How can you predict that?

A:  It’s hard.  I’d like to think your opponent will take roughly the same number of depositions for their side as we do.  But maybe not.  Maybe your opponent is deep-pocketed, and wants to try to hammer you into settling before trial.  They might try to wear you down financially by taking many depositions.  Or maybe the opposing counsel is a real jerk who enjoys running up the legal fees on an opponent.  I’ve seen that happen before. 

C:  So how do you end up accounting for that in a case budget?

A:  By remaining very flexible about the budget, and making sure the client understands that.  That’s why I tell clients that a case budget is like a living, breathing document that is never static, always changing, even for a straightforward, non-complex lawsuit like yours.

C:  How do explain that to the client?

A:  By continually updating the case budget every quarter with the best available cost projections.  That’s why it’s unrealistic for an attorney to give the client a one-time budget for the entire lawsuit at the start.  You end up with “funny” numbers.  A “ballpark” initial fee estimate at the beginning is fine, but that’s not the same as a full-fledged case budget.

C:  I’m confused about something here.  You said a case budget is a planning device for both the client and the attorney in a lawsuit.  You’ll try to give me reliable numbers, because you know I’m depending on them from a financial standpoint.  Yet you say the budget has to remain flexible.  But what good is a case budget to a client if the attorney doesn’t stay within their budget numbers, and overruns the budget? Doesn’t that let the attorney off the hook?

A:  I agree, that can become a sore point for the client.  Let me explain my philosophy on case budget overruns.  First, it depends on the size of the overrun.  Second, it depends on whether it is fair to hold the attorney accountable for it.

C:  I assume some smaller budget overruns are going to be inevitable at some point in a lawsuit.

A:  That often happens.  I personally believe that the attorney should automatically be forgiven any quarterly budget overrun of less than 10% of the original estimate amount.  I’ve even heard of state laws that only require auto repair shops to estimate to within 10% of the final cost, so 10% is a reasonable “cushion” that consumers are used to.

C:  What about bigger budget overruns?

A:  If the attorney believes they’re going to exceed the quarterly budget by up to 50%, they should notify the client of the budget overrun when it occurs, preferably beforehand; and give the client the opportunity to discuss the overruns with them.  The attorney should not just overrun the budget without saying anything until the legal bill arrives in the client’s mailbox.  The attorney needs to speak up long before that point.

C:  That’s right, because I might decide I don’t want to keep spending legal fees on the case if the budget overrun is going to be too big.  I may decide to settle instead.

A:  Exactly, the client needs to have input at that point.

C:  And if the budget overrun is more than 50%?

A:  At that point, assuming notice and discussion with the client, the attorney has to be able to show that it wasn’t due to lack of planning or professionalism on his or her part.  For example, that the overrun was caused by the opposing party, the judge, or unforeseen circumstances.

C:  That sounds reasonable, but let’s be honest here.  If I’m the client, how will I know if the attorney is giving me a valid excuse or not for a budget overrun?  I’m not an attorney myself. How will I really know?

A:  To be perfectly blunt, you may not.  So you’re going to have to be on the lookout for a repeat pattern of your attorney overrunning the budget by large amounts each quarter.  If that keeps happening, you may have to vote with your feet, and be prepared to change attorneys.

C:  Which no client wants to do after having invested a lot of time and money in their current attorney.

A:  Unfortunately, you’re right.  I won’t deny that.  There’s no easy solution.  But if a client is looking for a little extra protection, it may be useful to read other clients’ critiques of a particular attorney on a website like Avvo beforehand, to see if other clients have had that same problem themselves.

C:  Okay, let’s go through the nuts-and-bolts of one of your quarterly case budgets.

A:  First, any civil lawsuit can be divided into 5 phases:  (i) the opening, or pleading, phase of the case; (ii) the middle phase, or pre-trial discovery; (iii) then pre-trial motions; (iv) trial preparation; and (v) trial itself.  Every 3 months, I’ll tell you what phase of the case we’re in, and itemize in writing the tasks and events that I expect to occur during the next 3 months.  I’ll list each of them as a separate line item in my quarterly budget, with an estimated high/low range of legal fees.  I’ll send you the completed budget at the start of each new quarter.  If I need to revise the budget mid-quarter, I’ll e-mail you the new amounts.

C:  Will you charge me for doing that?

A:  I think it’s fair that I be able to charge up to 2 hours of my time for each quarterly budget.  At my $250 per hour rate, that's up to $500 per quarter.  I’ll have to review the case file each time, think about where we’re going, and compose it into a useful budget.  That kind of planning has benefits to you, the client, so I should be able to charge something for doing it.

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

Cost of Preparing a Motion to Dismiss the Complaint in a Civil Lawsuit

Attorney:  I’ve reviewed this lawsuit that your opponent filed against you, and I’m not impressed.  Normally I’d recommend that we simply file an answer denying the complaint, to keep the legal fees down, but I think we have a good chance of getting some or all of plaintiff’s complaint thrown out of court right away.

Client:  How do we do that?

A:  By filing a “motion to dismiss,” sometimes known as a “demurrer,” in lieu of an answer at this point.  It’s a motion that basically challenges the plaintiff’s legal right to bring these claims against you at all, or tells the court that the claims pleaded against you are too defective in their wording.  It’s a hard “counterpunch” by us back against your opponent.

C:  Tell me how it works.

A:  We tell the court that the plaintiff has no right to be in court on some or all of her claims.  For example, your opponent has 4 claims in her complaint.  One of them says you owe her money.  She doesn’t say on what basis, such as because you signed a contract with her or orally promised to pay her.  Instead, she merely says you’re “morally obligated” to pay her.  Moral obligation is not a legally-valid claim in a civil lawsuit.  Our motion to dismiss would take aim at that claim to get it thrown out completely.

C:  So just because a plaintiff thinks somebody wronged them somehow, they can’t automatically turn that into a claim in a civil lawsuit?

A:  That’s right.  The law defines the available claims a plaintiff can and cannot bring in court.  Those claims are the specific, pre-existing frameworks that a plaintiff must work within when preparing their complaint.  If you can’t fit your facts and evidence into one or more of those frameworks, you can’t sue and win in court.  Those are the rules.

C:  So it’s basically that the law doesn’t allow you to try to fit a round peg into a square hole in suing someone.

A:  Essentially, yes.  Now I still need to know more about your case, but I suspect that your opponent has some weak claims in her complaint.  I can tell she’s stretching here and there.

C:  What about the other claims she has?

A:  They are all legally-allowable in theory, however we can try to challenge her a second way with our motion to dismiss.  Every claim requires the plaintiff to include certain minimum allegations in writing in the claim, which are called “prima facie allegations.”  Without those minimum allegations, she can’t proceed with that claim.  We can tell the court in our motion that she has failed to include all the required minimum allegations in her claims.

C:  Is there a third way to challenge her?

A:  Yes, it’s closely related to the second one about prima facie allegations.  Let’s say she does include all the minimum allegations in her claims.  However, the law says that certain more serious claims require a plaintiff to provide lots of supporting facts and details, over and above the prima facie allegations.

C:  I’m not sure I understand.  Give me an example of that.

A:  Take the claim of “fraud” that she has pleaded against you.  Fraud is a pretty serious accusation.  The available damages for fraud are greater.  So the law compensates for that by making the plaintiff plead the facts and details of the alleged fraud much more fully and completely.  If the plaintiff is too vague, or generalizes too much in their fraud claim, they may not be allowed to proceed with it.

C:  What happens if we do show that my opponent does not have the minimum prima facie allegations, or hasn’t included enough facts and details in her claims?  Is the case over?

A:  Not necessarily.  It’s one thing for us to show that your opponent is not legally allowed to bring a certain claim at all.  That’s fatal to her.  But it’s a different result when she does present a valid claim, but just pleads it poorly by not using the right words, or enough words.

C:  What does the court do to her then?

A:  The judge would probably give her a few more chances to “cure” the pleading defects by filing what are called “amended complaints.” 

C:  Do we know if she’ll be able to cure the problems?

A:  We can’t know at this point.  But the burden would shift back to her to re-plead correctly.  The ball would stay in her court.

C:  What if she does fix the problems?

A:  Then the court would allow her to continue with those claims, as re-pleaded.  We would have slowed your opponent down, but not stopped her.

C:  And if she doesn’t?

A:  After a few chances at re-pleading, the court would probably permanently dismiss those claims.  They’d be gone for good.

C:  So it’s a wait-and-see situation for us?

A:  That’s right.  We knock the ball back in her court with our motion to dismiss, and see how she reacts.

C:  How much does the motion to dismiss cost?

A:  Fortunately, I won’t have to spend much time reviewing the actual evidence in the case, because we’ll be attacking the complaint more on technical, legalistic grounds in our motion. The evidence will come later.

C:  What will you be doing?

A:  Mainly legal research and drafting the motion papers.  I’ll need to cite some case law precedents to the judge to show that your opponent’s claims either aren’t valid, or are too defective in wording.  I’ll also have to go through each of her claims, one by one, in the legal brief that I prepare as part of the motion, explaining the reasons the court should grant our motion.

C:  How long will the brief be?

A:  Probably about 10 - 20 pages.  Some courts have page limits on legal briefs.

C:  So what’s the cost of the motion?

A:  I estimate roughly 20 - 40 hours of my time, at my $250 per hour rate, to prepare all the court papers.  That would include our opening motion, and any reply brief to the opposition.  That's about $5,000 - $10,000 in legal fees.  Then up to 2 hours more of my time for the court hearing on our motion, which is another $500.  Plaintiff’s claims are not complex, but there are 4 of them.  It just takes time to address each one of them in the brief and try to knock them out, one by one.   
   
C:  Then you need to tell me what the benefit is to me, as the client, of spending that much extra money on a motion to dismiss, if we’re not sure we can knock my opponent out completely by doing it?   

A:  That’s a fair question.  Most clients never ask it.  A lot of attorneys never discuss the pros and cons of a motion to dismiss with their clients in advance.  I’d ask the same question if I were in your shoes.  The purpose of the motion to dismiss is to put your opponent to the test right away in the case, and to signal to the judge that she may have some weak claims.  It’s like a game of “chicken.”  It costs money to play chicken with your opponent in a lawsuit.

C:  So we’re trying to call her bluff, smoke her out, on some of her claims against me?

A:  That’s right.  You’re gambling extra money as a client on legal fees, but if we win, the case could either be over before it’s started, or at least we’ll make your opponent spend more time and legal fees getting her claims right. 

C:   I really do think her lawsuit against me is frivilous.

A:  Then she’ll see that we’re going to fight hard, instead of simply answering her complaint.  I’ve seen opponents quit at that point before.  Or she may re-plead some of her claims, and drop others voluntarily.  We’d narrow down the lawsuit against you that way, which is a good thing. 

C:  It sounds like there’s a psychological element here.

A:  There is.  We may get an early clue with our motion to dismiss about just how strong your opponent’s will, and checkbook, is to keep going.  So you have to decide if you want to call her bluff early on, to test her.

C:  To recap, it sounds like we could get a partial knockout on some claims, but probably not a complete knockout on everything.

A:  That’s a good way to look at it.

C:  Any other costs for the motion to dismiss?

A:  Less than $50 for the motion filing fee with the court.

C:  Because you’ve leveled with me about the upside and downside of the motion to dismiss, instead of painting too rosy a picture, I’ll take the risk of spending the extra legal fees on it.  I agree it’s a good tactic by us.   I just don’t want to let my expectations get too high.

A:  I’d rather level with you up-front about it, so you don’t get upset with me later for not telling you what to realistically expect.

C:  What happens if the court denies our motion, or if the plaintiff ends up re-pleading correctly?

A:  Then we have to answer the complaint, just as we would have done anyway.

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

Cost of Answering the Complaint in a Civil Lawsuit

Attorney:  Let’s talk about the lawsuit that your opponent just filed against you.  He’s the plaintiff, you’re the defendant.  It’s a straightforward, non-complex case.  We have 20 - 30 days to respond.

Client:  I’ve never been sued before.  I’m not sure how to respond.

A:  The simplest approach is to file a document with the court called an “answer” to the complaint, denying the plaintiff’s claims and allegations against you.  Once that happens, the case is considered “at issue.”  That basically means the battle has been joined.

C:  What happens if we don’t file an answer?

A:  There are other types of responses besides an answer.  I’ll explain them.  However, if we don’t respond somehow within the required time frame, then you are considered in “default.”

C:  What does that mean?  Is it anything like what happens when I fail to make my mortgage payments on time and default on the loan?  Then the bank forecloses on my house? 

A:  Same basic idea.  When you default in responding to a lawsuit, it means your opponent becomes the automatic “winner” of the case.  It’s like you’ve thrown in the towel from the beginning and are not contesting his claims of liability against you.

C:  What happens if I default?

A:  You opponent can then go into court and offer evidence to prove the amount of money damages that you owe him as the plaintiff.  Remember, he is now considered the automatic winner on the issue of liability, but he still has to prove those damages to a judge.  He’ll use witness testimony and documents to do that.

C:  Once he proves some amount of damages, do I have to pay him?

A:  Not right away, but soon.  The court will issue a “money judgment” in your opponent’s favor.  It will be a court order saying you owe him that amount of money.  If you don’t voluntarily pay it, which is called “satisfying the judgment,”  he can do a few things.

C:  What are they?

A:  He can tell all your creditors and the rest of the world about his money judgment against you by recording the judgment in the public records.  Everyone who looks will be able to find that judgment against you. 

C:  Can we do anything to stop that from happening?  Like how I get one last chance to stop a foreclosure on my house if I make up the past due payments before the bank sells the house?

A:  Yes, you can, but it’s more expensive.  After a notice of default is filed against you by the plaintiff, we would have to file a “motion to set aside default.”  A motion is a document that asks the court to give us relief and requests a court hearing on that. If we could show good cause, we could get the default against you set aside.

C:  Then what would happen?

A:  We would go back to square one and would still have to file a response to your opponent’s complaint.  You wouldn’t be able to avoid the lawsuit.  We would have just taken an expensive detour. But none of that is going to happen here.

C:  Okay, back to filing an answer.  What will it say?

A:  Sometimes a defendant’s answer can be what’s called a “general denial,” where we say in a single “blanket” paragraph that we deny all of the plaintiff’s claims and allegations.  Other times we have to rebut, point-by-point, item-by-item, each and every claim and allegation against you.  That’s a much longer document.  It’s called a “specific denial.”  Fortunately we can do a general denial here.

C:  The general denial will be less expensive?

A:  Yes.  It’s less work for both you and me.

C:  Is there anything else we put in the answer besides that one blanket paragraph?

A:  Possibly, yes.  The general denial basically says, “the plaintiff is wrong in what he’s saying about the defendant.”  It’s a defensive posture for us.  However, there are two opportunities to go on the offensive when we answer the complaint.

C:  What are they?

A:  First, we can include in our answer what are called “affirmative defenses.”  Let me explain how those differ from the general denial.  With the general denial, we force your opponent, the plaintiff, to meet his burden of proving the truth of everything he’s said about you in the complaint.  If he can do that, he wins the case.

C:  Then what does including affirmative defenses do for me?  I’ve never heard of them before.

A:  Even if the plaintiff can prove everything he says about you, affirmative defenses give us the chance to completely nullify his win.  It’s like he wins, then we take the win away from him.  However, we have to meet our burden of proving those affirmative defenses, or your opponent preserves his win.

C:  Give me an example.

A:  The statute of limitations is a classic affirmative defense.  That means you have to sue someone within a certain number of years, or you lose your right to sue them at all.  Let’s say your opponent waited too long to sue you here.  Depending on the facts of your case, we may be able to plead the statute of limitations as one of our affirmative defenses in our answer.  Then, even if your opponent happens to prove everything he said about you, if we can prove that he waited too long to sue, his win turns into a loss.  We nullify him.

C:  What is the second opportunity?

A:  They are called “counter-claims” or “cross-claims.”  We normally have to plead them at the same time as our answer.  It basically means you’re counter-suing your opponent as part of the same lawsuit.  Both of you then have lawsuits going against one another simultaneously.

C:  Give me an example of how that works.

A:  Let’s say your opponent sues you for money he says you owe him.  You deny that you owe him anything, and also plead affirmative defenses to try to nullify his entire case.  But say your opponent also kept property that belonged to you because you didn’t pay him, and you want him to return it.  You need to counter-sue to get it back.  You would file a counter-claim or cross-claim in the same lawsuit to get that relief.

C:  Why wouldn’t I start a brand-new separate lawsuit against him?

A:  Because if your claims against him arise out of the same facts and circumstances as his claims against you, you both have to sue one another at the same time.  That’s because all the claims are related to one another.

C:  Unfortunately, I can’t think of any grounds to counter-sue him, but I’ll let you be the judge of that.

A:  Yes, based on the facts and information you give me about the case, I’ll be able to determine which affirmative defenses we can plead, and whether we can counter-sue for anything.

C:  How much will this cost?

A:  I’ve prepared and filed answers for other clients in this type of  lawsuit before.  I'll need to review some of the evidence as I'm doing it.  Drafting the general denial and affirmative defenses should take up to 2 hours, at my $250 per hour rate. 

C:  So that’s about $500 in legal fees?

A:  Yes.  However, if you have valid counter-claims or cross-claims against your opponent, I’ll have to spend a lot more time analyzing, researching, and drafting them, just as if you asked me to file a lawsuit for you from scratch.  A rough estimate would be up to $5,000 in legal fees to do that. But it’s too early for me to know yet.  I need to learn more about your case first.

C:  Any other costs involved?

A:  A few hundred dollar filing fee to file the answer with the court.

C:  What happens after that?

A:  Normally, once the case becomes “at issue” with the filing of our answer, both sides then start pre-trial discovery proceedings in the lawsuit.  We can talk about that next time. 

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

Cost of Preparing and Filing a Civil Lawsuit

Attorney:  Now that you’ve signed my retainer agreement, let’s start talking in more detail about the lawsuit you want to file against your opponent.

Client:  I gave you the general outlines when we first talked on the phone about what my opponent did to me, and what I want to ask for in money damages.  Tell me what other information you need.

A:  First let me explain how the process of filing a civil lawsuit works.  Have you ever been involved in a lawsuit before?

C:  Fortunately, no.

A:  We start out by preparing a legal document called a “complaint.”  It may be called something different in other jurisdictions. The complaint explains how you have been wronged, or damaged, and what relief you are asking for from the court.

C:  So we tell my story in the complaint?

A:  Exactly.  However, we are legally required to tell your story within specific frameworks under the law, which are called “claims.”  Sometimes they’re also called “causes of action.” For example, “breach of contract” can be one type of claim in a complaint.  Another is “negligence.”  The law requires us to plead your grievances against your opponent within those specific formats.
 
C:  Will you be the one to write up those claims in the complaint?

A: Yes, I will draft them to conform to the legal requirements.  First, we need to decide which ones to plead.  Second, there are certain statements, called “prime facie allegations,” that we need to put in each claim, at minimum.  Finally, we need to include enough specific facts and details to support your claims.

C:  Why do we need to do that?

A:  Because the purpose of the complaint is to fully notify your opponent in writing of the nature of your claims against him, so he can respond in court.

C:  What happens if we don’t?

A:  If we don’t, then when your opponent does respond in court, he can ask the court to dismiss your complaint for defective pleading without even looking at the merits of your case. We could get thrown out of court.  It would be like writing a test, but the teacher deciding not to even grade it because you didn’t answer the questions in the proper format.  You get a zero.

C:  Tell me more about what we need to do to avoid being thrown out of court.

A:  First, once you give me all the details about your dealings with your opponent, I will be able to determine which claims are viable against him, and which are not, from a legal standpoint.  I will then be able to draft the allegations in the complaint to act like a “roadmap” for your case.

C:  Do we have to give my opponent all that information in the complaint?  Can’t we hold something back and surprise him later at trial?

A:  No, the law of pleading does not allow surprising your opponent that way.  If we don’t plead all of your available claims in the beginning, we may not be allowed to proceed to trial later on any claims that we omitted.
   
C:  As you are drafting the claims in the complaint, what else will you be doing?

A:  I’ll be thinking about if, and how, we will be able to prove each claim at trial.  You not only have to plead, but also prove, each claim in the complaint.  Otherwise you get thrown out of court.  You have the burden of proof as the plaintiff.  We have to both plead and prove

C:  It sounds like you have to do some advance planning in preparing the complaint.

A:  Correct.  You have a straightforward, non-complex case.  There are several ways that I try to think ahead on how we are going to prove our case at trial as I’m preparing the complaint.

C:  What are they?

A:  First, I need to get an idea from you in the beginning of who our witnesses will be at trial, besides yourself, and how strong each of them will be as a witness. Without some good favorable witnesses, we won’t get very far.

C:  I have several witnesses who are willing to help.  What next?

A:  I’ll need to review any documents you have that we can use as evidence to prove your case.  Sometimes documents are better than oral witnesses, because juries know that witness can lie, but documents generally don’t lie.

C:  I have lots of helpful documents in my files that I’ll bring into your office for you to review as you prepare the complaint.  What else?

A:  I will do some legal research into the claims that we plead.  It’s not that I haven’t prepared complaints such as yours before.  It’s just that some quick legal research will tell me if there have been any recent changes in the law in those areas.

C:  What do you look for?

A:  Any new court case precedents that have either expanded, or restricted, certain claims that we might bring.  That occasionally happens.

C:  Since I’m cost-conscious about this lawsuit, at what point do you know that you have enough information to draft the complaint?

A:  From a legal standpoint, we have to be able to establish two things at trial in order to win: liability and damages.  That means we have to be able to prove both that your opponent in fact wronged you, and exactly what your damages were, in dollar terms.  I need to make sure we can do both.

C:  It isn’t enough just to show that my opponent has some liability to me for what he did?

A:  No.  Most clients don’t realize that proving damages is just as crucial to winning their lawsuit as proving liability.  You’ve heard the term “no harm, no foul?”  That means that even if someone wrongs you, if you can’t show that you actually suffered any damages, you legally can’t win your case.  You need both halves to prevail.
 
C:  How long do you think the complaint will end up being?

A:  Since we will probably have several claims to plead, I’m estimating 10 - 20 total pages.

C:  Will I get to see it before it’s filed with the court?

A:  Yes, I’ll want you to review the draft complaint carefully to make sure I’ve gotten all the facts and details correct.

C:  Let’s talk about the cost of all this.  Can you give me a breakdown?

A:  I can only give you a high/low estimate of the legal fees at this point.  I won’t know how many documents or other evidence you will have for me to review until you bring them into the office, which will affect the amount of time I spend.

C:  A rough estimate is fine for now.

A:  I estimate that I’ll spend about 4 - 8 hours reviewing your documents and other evidence, plus a total of about 4 hours meeting or talking with you by phone to get the necessary facts and details. I’ll probably need to do about 2 hours of legal research, then about 10 - 15 hours drafting the complaint.  That will include any revisions and edits to get it ready for filing.  That adds up to roughly 20 - 30 hours at my $250 per hour rate.
 
C:  So the overall estimate is $5,000 - $7,500 in legal fees to file the lawsuit?

A:  Yes, roughly, but I won’t know for sure until I get into all of your documents and evidence.  If it turns out that my estimate is too low, I’ll let you know in advance and we can discuss it.

C:  Anything else besides your fees?

A:  Yes, there will be a standard court filing fee of a couple hundred dollars.

C:  Once the complaint is on file with the court, what happens then?

A:  We’ll have to personally serve it on your opponent, which means we’ll have to pay a modest amount for a process server to handle the “service of process.”   Once that’s done, your opponent will have about 20 - 30 days to respond to the complaint, either by answering your allegations, or asking the court to dismiss the complaint.

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

Amount of Money Damages Versus Amount of Legal Fees

Client:  If I’m going to continue prosecuting my lawsuit, I want to make sure that I don’t end up spending more in legal fees than I can collect in damages at trial.  You said you’d tell me how I should evaluate that as a client, so I make the right business decision.

Attorney:  I can start by telling you about an actual case that I heard about once.  A client had a property line dispute with her neighbor, who sued her.  The neighbor was seeking only about $20,000 in money damages from the client.  The client’s attorney ended up charging her about $350,000 in legal fees to litigate a $20,000 dispute. It became a publicized court decision.

C:  How did the client let that happen?

A:  I don’t know all the details.  But I have personally seen other cases myself where a client ended up paying far more in legal fees than her case was “worth” at trial.

C:  You use the word “worth.”  What do you mean by that?

A:  Every lawsuit has a price tag in terms of money damages.  For a plaintiff, the value, or “worth,” of their case is the maximum amount of money damages that they can realistically expect to recover if they win at trial.  Think of that like hitting a home run in court.  The plaintiff has to be able to prove those damages with sufficient evidence, however.

C:  How do you determine what the maximum potential damages might be?

A:  I use a mix of different factors.  First, I rely upon my past experience litigating cases like yours.  Second, I talk to other attorneys in town about their cases.  Third, sometimes local legal newspapers carry information about jury verdicts in other similar lawsuits.  Fourth, I evaluate the witnesses, documents, and other evidence that we have in hand on the damages issue to see if they will support the maximum potential recovery by us.  It’s not science, more like an art.

C:  What have you been able to determine about my case?

A:  Using all those factors I just mentioned, I feel we have a strong chance of proving money damages of between $500,000 - $1 million in your case. 

C:  How do you define “strong chance?”  Can you give me a percentage?

A:  Not until we complete some pre-trial discovery and depositions in the case, so I can see more of the ultimate evidence.  Right now, I’d say we have a “better than 50% chance” of proving those damages.  Remember, we’ll have to prove liability first, but I believe we have the evidence to do that.

C:  So you’re saying that, as of right now, you think I’m more likely than not to win that amount of damages?

A:  Yes, as of right now.  Keep in mind that as we take more witness depositions and obtain more documents from your opponent, that might strengthen or weaken our case.  The value, or “worth,” of a case is always in flux, never static.  That’s because it’s directly tied to the quality and quantity of the evidence in the case, which can always change from day to day.

C:  So there will always be some level of risk for me, as the client, that I might end up spending a lot of money on legal fees to go to trial and still come away with less money in damages?

A:  Yes, you can never eliminate that risk.  You never know what juries will do at trial.  That’s one reason why the vast majority of civil lawsuits settle before reaching trial.  Both parties decide they really don’t want to take that risk anymore.

C:  Is there anything I can do as a client to reduce or manage that risk?

A:  Yes.  First, I tried to give you the most realistic initial estimate that I could of the legal fees through trial, which can be difficult to project so far in advance.  You’ll recall that I said the total legal fees were likely to be roughly $50,000 - $100,000 the first time we talked on the phone.  I based that on my past experience with cases like yours, although it’s not a guarantee.

C:  So you didn’t “lowball” me on the initial fee estimate?

A:  No, I deliberately avoided doing that.  That’s why I put it in writing for you, with the usual caveats.  When attorneys lowball the initial estimate just to get the case in the door, and it turns out like that property line dispute that I told you about, clients end up suing their attorneys for overbilling.

C:  Can you give me any further fee estimates as we go along?

A:  Yes, I will give you forwarding-looking, periodic litigation budgets for the case in writing.  I’ll talk about those with you in more detail the next time.  Suffice to say, with a case budget, you’ll have some advance idea of how much each portion of the lawsuit is likely to cost as we head toward trial.  Remember, a case budget is a best estimate, not a cap on the legal fees.

C:  Do you revise the case budgets as we go along?

A:  Yes, you have to, otherwise the case budgets won’t be useful tools for anyone.  They will just be “funny” numbers.

C:  Does every attorney do what you do?

A:  No, some attorneys avoid giving initial fee estimates at all, and if they do, they won’t put them in writing.  Even more attorneys don’t give their clients periodic case budgets, because those attorneys are afraid of committing themselves to anything in writing.  They don’t want their clients to use the case budgets against them if the legal fees get too large later on for whatever reason.

C:  They why do you do it?

A:  Because I’m comfortable giving my clients periodic case budgets.  It’s a habit I’ve developed.  My law firm bills efficiently.  I like to plan ahead, too, which is necessary for case budgeting.  If my clients are going to assume significant financial risk by litigating a case toward trial, I’m willing to share some risk with them by committing to case budgets in writing, again, with some caveats.  Also, I’d want a case budget if I were the client.

C:  So between your initial fee estimate, plus case budgets, I’ll have some tools to project how much the case will cost in legal fees.  Once I know that, I can keep comparing the cost of litigating to the projected damages at trial at any point in time. 

A:  Yes.  Just keep in mind that both the cost of litigation and the projected damages at trial will keep changing.  It’s like having two moving parts side by side.  The goal is to manage the two numbers, so they don’t get too out of whack with one another.  If they do, it will be time to re-evaluate whether it makes sense to keep litigating.

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

Client’s Decision to Litigate or Settle

Attorney:  Now that we’ve filed our lawsuit against your opponent, we need to have a “reality check” about how much money you’re prepared to invest in this case.  You’re the client, so it’s your decision.  As your attorney, I need to know as we go along if you want to keep litigating toward trial, or try to settle. 

Client: Pardon me for sounding cynical, but you surprise me.  I thought every attorney wanted to go all the way to trial, because they make a lot more money in legal fees that way.

A:  Some attorneys do, but they often end up with unhappy clients.  Unhappy clients sometimes sue their attorneys.  I don’t want that aggravation.  I’d rather be candid with you up-front.

C:  As the client, what is the decision-making process that I should be going through?

A:  First, you need to look at your available time and energy, financial resources, and emotional “stomach” for continuing to litigate the case all the way to trial.  If you don’t have all of those ingredients in sufficient quantities, you may not want to go all the way.  The stress of the case could last a few years. 

C:  Let’s say I have all of them to some degree.

A:  Keep in mind that what you have now could be exhausted faster than you think in a year or two, even though you have a straightforward, non-complex case.  Based on my experience, I can almost guarantee that it will take more time, energy, money, and fortitude than you first think to win a lawsuit.

C:  Is that why I hear about so many lawsuits settling before trial?

A:  That’s right.  The commonly-quoted statistic is that anywhere from 90% - 97% of all civil lawsuits never reach trial.  That’s virtually all of them.  Some get dismissed, the rest settle.

C:  That reminds me of the old adage that “war represents the failure of diplomacy.”

A.  That’s right, going to trial represents the failure to settle.

C:  But lawyer T.V. shows always make trial look so exciting and dramatic.

A:  That’s because they’re just acting on T.V.  A real trial is like a dramatic stage play, only in a courtroom.  There are good guys and bad guys. The jury is trying to sort them out.  For a client, it can be very nerve-racking.

C:  I’ve never been a juror, so I don’t know firsthand how they operate.

A:  A jury’s job in a civil lawsuit is to assign blame, then punish someone for it.  Someone is always to blame in a lawsuit.  It isn’t always the defendant, either, the one getting sued.  Sometimes the jury blames the plaintiff for causing their own problems.  Then you get a defense verdict.    

C:  What comes next for me as the client?

A:  Second, you really have to take a cold, hard look at not just the strengths, but also the potential weaknesses, in your own case. Every lawsuit has both.  Too many clients aren’t realistic about their case.  They kid themselves.  My job as your attorney is to try to highlight the strengths while minimizing the weaknesses wherever I can.   

C:  How do I recognize the weaknesses in my case?

A:  By asking yourself each step of the way, what witnesses, documents, or other hard evidence do we really have in hand to put before a jury at trial to prove our case.  It’s not enough to believe you’ve been injured.  That’s an emotional response.  You have to prove it with evidence.  Those are two completely different things.

C:  Once I decide that I want to pursue the lawsuit, and I’ve realistically assessed my case, what should I do then?

A:  Third, you want to make sure that the amount of money damages you can actually prove at trial, using the available evidence, is not less than the amount of legal fees you will incur going to trial.  If the damages are lower, it makes no economic sense to go to trial.  You win the battle, but lose the war.  You should settle instead. 

C:  And what if I do decide to settle instead of litigate?  How do I know what amount of money to settle for?

A:  There are different rules of thumb that attorneys use for that, depending upon whether you are a plaintiff or defendant in the lawsuit.  First, under the plaintiff approach, you evaluate how much money you can realistically expect to recover at trial.  Let’s say hypothetically $1 million.  Next, you try to forecast the odds of success at trial. Say hypothetically that you believe you only have a 40% chance of winning $1 million in damages at trial.  You settle for 40% x $1 million, or $400,000.

C:  What is another settlement formula?

A:  When you are a defendant in a lawsuit instead of a plaintiff, there is the “cost-of-defense” settlement.  You determine how much more money in legal fees you’ll have to spend to defend the case all the way to trial, then offer that amount to the plaintiff to settle the case and stop the legal fees.

C:  So in the end, it’s really all about the money.

A:  Unless you have deep enough pockets to litigate a case just on principle alone, which most people don’t, civil litigation is all about dollars-and-cents at the end of the day.  It should be a business decision, not an emotional decision.  Part of my job will be to keep reminding you of that, one way or another.

[TO BE CONTINUED]

© 2008 Ken Moscaret.  All rights reserved.

Asking Questions About Your Attorney's Retainer Agreement

Attorney: I gave you a copy of my law firm's standard retainer agreement that I give to all my new clients.  Did you have a chance to read through it?

Client:  Yes, and I have some questions.  I’ve never read through an attorney’s retainer agreement before.

A:  Okay, let’s cover your questions together before you sign the agreement.   

C:  First, is anyone else besides you going to be working on my case?   

A:  Probably, although I will be doing much of the work myself.  The retainer agreement says I can staff your case with other attorneys from my law firm according to my judgment.  That’s pretty typical language in an attorney retainer agreement. 

C:  Who else might work on the case?

A:  I have some associates, meaning junior attorneys, in the office who work for me.  From time to time, I may need their help with specific projects on your case, like legal research or writing court papers, things like that, backroom projects.  I will delegate that work to them. 

C:  Who will be going to court?

A:  I will generally be the one going to court on your case.

C: Do you usually go to court by yourself, or do you take another attorney with you?  I’ve heard about law firms that always send two attorneys to court or meetings, when they really only need one attorney, and it doubles the cost.   

A:  I always go by myself, or send one other attorney if I can’t go.

C:  So you’ll decide when to bring these other attorneys onto my case?  Can I meet them, so I'll know who they are, and they'll know me?

A:  Sure, I’ll take you down the hall after we’re done talking and I’ll introduce you to them.  If I ask them to help me here and there, it’ll save you money on legal fees. That’s because they have lower hourly rates than me.  I charge $250 per hour.  Their rate is $150 per hour.

C:  Okay, but I’ve been told that hourly rates can be misleading.  If an inexperienced attorney takes a long time doing something, even at a lower hourly rate, it could end up costing more in legal fees than if a more experienced attorney did the same work faster, even at a higher rate.

A:  That's true.

C:  So I don’t mind paying a higher hourly rate for somebody who really knows what they’re doing, and has the experience. 

A:  I will review each attorney’s hours on your case every month.  If I think someone has taken way too long doing something, or if somebody is duplicating somebody else’s work on the case, things like that, I’ll make them explain.  I may decide to reduce their hours by writing down their time.  That's called exercising billing judgment.

C:  I just want the attorneys who work on my case to be efficient billers. 

A:  I agree, but I won’t know whether they were efficient or not until after they’ve done the work.  If I decide to write down their time, I will indicate that on the legal bill each month, so you know.

C:  How experienced are the other attorneys in your office who might work on my case?  Have they been practicing law for awhile, or are they right out of law school and don’t know anything yet?  I’ve heard about law firms that stick clients with beginner attorneys to train them.   

A:  Most of them have experience.  One is right out of law school.  Since we are a small law firm, we can’t afford to train too many people.  We let the big law firms in town do the training.

C:  Can we say in the retainer agreement that you won’t put any brand-new, first-year attorneys on my case without telling me? I don’t want to pay to train some beginner attorney. 

A:  If you want, we can do that.

C:  It's important to me that you stay involved in the case yourself from start to finish.  I’m hiring you because Avvo gave you a high rating personally.  I’ve heard about people hiring a particular attorney because of their reputation, then their case gets handed off to some other attorney in the office. 

A:  Since I'm going to be the trial attorney if the case goes that far, I intend to stay involved the entire way.

C:  Can we say in your retainer agreement that you will be primarily responsible for handling my case? 

A:  Sure.  And I will supervise any other attorneys who work on the case, too.  I just need the flexibility to be able to delegate work on your case to other people at times, because I may be out of town or have scheduling conflicts.

C:  I don't have a problem with you delegating.  I just don't want to end up with too many people working on my case.  I don’t want to have to pay to educate new people on the case again and again.

A:  My usual practice is to have one other associate, two at most, team up with me on a case as needed.  They will understand the issues in your case.  Maybe a paralegal, too, because there are things a paralegal can do cheaper than attorneys.  Paralegals have lower hourly rates than associate attorneys.

C:  Can we say in your retainer agreement that no more than three attorneys, including you, will bill on my case?  It's a pretty straightforward case.  I just don’t want to pay for a whole “platoon” of attorneys.  I’ve heard about that happening at other law firms.

A:  Yes, since that will still allow me to delegate to associates. 

C:  What if one of those associates leaves your law firm, and you have to assign another associate to my case?  You won’t charge me for their getting-up-to-speed time, will you?

A:  No, because that’s not your fault.  That's my responsibility.

C:  If I have questions or need information about my case, who do I call first? 

A:  I’ll be your first point of contact in the office.  If I’m not here, you should ask for my secretary.  She will route your call to the right person in the office.

C:  I’m a real stickler for having people return my phone calls.  I’ve heard about attorneys who never return their clients’ phone calls, or who always have their secretaries do it for them.  I want to be able to speak to my attorney, maybe not every single time, but at least when it’s important. 

A:  My policy is to return a client’s phone call myself within 24 hours, unless the call is so routine that I can have my secretary or another attorney in the office do it.  If I'm in trial or out of town, it may take a little longer. 

C:  How will you record your time on my case, since you’re going to be billing me hourly? 

A:  All attorneys and paralegals in my office bill in tenths-of-an-hour.  So if it takes 6 minutes or less to do something, you’ll get billed 1/10th of an hour at that person’s hourly rate.  It gets rounded.  Six minutes is 1/10th of an hour. 

C:  What if something takes more than 6 minutes? 

A:  If it takes 7 - 12 minutes, you’ll get billed 2/10th’s of an hour, and so forth.  Unlike some law firms, we don’t bill in quarter-of-an-hour increments.  Those law firms would charge you a minimum of 15 minutes for everything they do, including each short phone call.

C:  I've never seen a legal bill before.  Can you show me a sample of what your legal bill will look like each month?  I’ve heard about clients getting “sticker shock” when they receive their legal bill.

A:  I’ve attached a sample legal bill to my retainer agreement.  It shows you the name of the attorney who did the work each day, a description of their work, the date it was done, and how much it cost.  It also shows you the amount of time they spent on each piece of work.

C:  Do I need to add up everything myself to see how much time everyone spent on my case each month?

A:  No, because at the end of the legal bill, there’s a list of all the attorneys and paralegals who worked on your case that month, plus their hourly rates and the total hours they billed. 

C:  How do I read this sample legal bill?

A:  Each piece of work on your case is a separate line item listed in chronological order. That's called single-task billing.  Like you see on your credit card statement, telling you each place you spent money that month, and exactly how much you spent there.

C:  What else is there? 

A:  We always include a short description that explains the purpose or subject matter of each task, like a phone call, letter, meeting, etc. That way, you know why we did something, and how it relates to your case.

C:  I’ve heard of law firms that do just the opposite of what you do.  They don’t break out each task separately in their legal bills.  Instead, they lump together a lot of different tasks in a single line item, and don’t tell you how much time each task took. 

A:  Yes, that's called block billing.  It's allowed.  Those law firms presumably can explain their charges.  But we bill differently than that here.

C:  Your retainer agreement says that, after I get your legal bill, I have to notify you within 30 days if I have any questions or objections about your legal bill, otherwise I will be deemed to have accepted it.  What does that mean? 

A:  I call that a pay-or-object provision. I put that in my retainer agreement because I’ve had some clients in the past who never said a word to me for months or even years about anything being wrong with my legal bills.  Then they suddenly stopped paying me and began complaining that I had overbilled them 12 or 18 months before. 

C:  So it's like when my bank sends me my checking account statement each month, and says I’m supposed to look at it within 30 days to catch any problems.  I've never paid attention to those deadlines before, so I guess I’ll have to start doing it now with your legal bills.

A:  All you have to do is call or e-mail me within 30 days if you have any question or problem, anything you don't understand.  I’ll respond, and we’ll work it out somehow.  I just don’t want to find out many months later. 

[TO BE CONTINUED]

© 2008 Ken Moscaret. All rights reserved.