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Q. I settled a weak case for $30,000, and got my client's medical bills reduced to $15,000. But my client is angry that he's "netting a measly $5,000," won't let me pay his doctors, and objects to my one-third fee. What should I do?
A. If this is the first time he's learned of a $5,000 net recovery, I can understand why he's more than a bit "unsettled."
You may have earned your $10,000 fee. But from your client's perspective, you are making twice what he's taking home. Rather than getting kudos for turning a losing case into cash, you now have an angry client, a fee dispute, a likely grievance, and unpaid doctors.
This could have been prevented if you took the following steps:
➤ Explain, Explain, Explain the difference between the full settlement amount and the client's "net recovery." Even if your retainer agreement spells it out, never assume that the client knows the difference or remembers anything you said at the start of the case. He doesn't.
➤ Show the Math before settling any case. Even if you still have liens to negotiate, prepare a preliminary settlement sheet to show the client all of the anticipated deductions and to provide a conservative estimate of his net recovery. Once you get those liens reduced, his actual recovery will increase even more and further enhance the client's satisfaction.
➤ Be Flexible to ensure the client's satisfaction. Rather than insist on the full contingency fee to which the client agreed, experienced personal injury lawyers promote goodwill by discounting their fees in appropriate cases.
Lawyers who appear to "profit" more than their own clients are more prone to grievances. That's why many plaintiffs' counsel are leery of attorney's fees which exceed the net recovery of their clients.
To preempt these complaints, smart lawyers often adjust their fees to ensure that their clients come out ahead. There are certainly labor-intensive cases with massive medical liens that can't be resolved this way. But in smaller cases like yours, reducing your fee will reduce the likelihood of a grievance, will increase your client's satisfaction, and may even prompt future referrals.
If you cut your fee from $10,000 to $7,500, this modest discount would eliminate any disparity between your fees and your client's net recovery of $7,500. Better yet, if you reduced the fee to $7,000, your client would net a thousand dollars more than you would.
If that doesn't appease him, you must keep all disputed funds in escrow until his dispute is resolved. Beyond your client's $5,000 net recovery, his protest of legal fees and medical liens has placed the rest of the settlement proceeds in dispute. So after paying the client the sum of $5,000, you must retain the remaining $25,000 in trust until rival claims are sorted out.
If litigation is ultimately necessary, you will probably have to file an "action in the nature of interpleader" to sort out your claim for attorney's fees, the doctors' claim for payment of medical bills, and your client's claim for a greater net recovery. This will only prolong the agony and will likely place you at the receiving end of a bar complaint.