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Everything You Should Know About the Retainer Agreement

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The retainer agreement is the contract between you and your lawyer and to a large extent, it defines your rights and responsibilities. These are seven things that you should know before you sign the retainer agreement.

You are the Boss

The retainer agreement does not bind you to your lawyer. You can terminate the client-attorney relationship at any time. You are the principal and your lawyer is your agent–this means that you are the boss. When you want to terminate the relationship with your lawyer, all you have to do is tell them, “You’re fired.”

Some will assume that they are bound to their lawyer because they signed a retainer agreement. Not true!

Reimbursement of Case Expenses

If you lose your case and do not recover money, you must make sure that you will not be responsible for the expenses incurred by your lawyer. In a medical malpractice lawsuit, the expenses can range from $10,000 to as high as $200,000.

The retainer agreement should state that: “In the event there is no monetary recovery, the client will not be responsible to reimburse their lawyer for expenses incurred in the prosecution of the lawsuit.” If the retainer agreement does not contain language to this effect, you may be responsible for reimbursing your lawyer for case expenses if there is no monetary recovery. Don’t let that happen!

Additional Legal Fees

Some law firms charge additional legal fees for work that is outside of the scope of a lawsuit. For example, in a wrongful death lawsuit, some law firms charge an additional fee for legal services performed in probate court (in New York, this court is known as Surrogate’s Court). Some law firms charge additional fees for legal services when there is an appeal. Read the fine print!

You should ask your lawyer: “Will there be additional legal fees if there is an appeal?” In wrongful death cases, you should ask your lawyer, “Will there be additional legal fees for work in probate court?” Remember, the retainer agreement must specifically state that the lawyer can charge an additional fee.

Authority to Settle

The retainer agreement should contain words that the lawyer will not settle the lawsuit without your consent. Seems pretty basic, but it is very important. Your lawyer cannot settle your case without your permission–make sure this is clearly stated in the retainer agreement.

Lien Resolution

Medicare and Medicaid are the most common liens in personal injury litigation. Typically, the lien amounts do not affect the legal fee, but reduce the amount of your monetary recovery.

Ask your lawyer, “Who will investigate the liens and when will we know the final lien amount (if any)?” The retainer agreement may specify that you are responsible for the payment of liens, and that’s okay, but just make sure your law firm has a procedure for determining the lien amount and negotiating a reduction in the lien.

Legal Fee

Sometimes the legal fee is based upon the “gross” amount of the monetary recovery, but that is not always the case. The gross amount of the settlement means the total amount of the recovery; for example, if you settle your lawsuit for $1,000,000, the “gross” amount of the settlement is $1,000,000, and the legal fee will be based upon that amount.

In medical malpractice claims in New York, the legal fee is based upon the client’s “net” recovery. The legal fee is calculated on the client’s net recovery, rather than the “gross” amount of the monetary recovery. For example, if your claim settled for $1,000,000 and the case expenses (also known as “disbursements” in New York) were $25,000, the gross recovery is reduced by the case expenses to calculate the client’s “net recovery”. After deducting the case expenses, the client’s “net” recovery was $975,000.

Get a Second Opinion

Make sure you read the retainer agreement in advance of meeting with your lawyer to sign it. If you don’t understand the terms or conditions, get a second opinion from another lawyer, and they will explain it for you. There may be terms or conditions that you can negotiate with your lawyer.

Very few law firms will negotiate over the percentage of their legal fee in contingency fee personal injury claims, but you never know. If you’ve got a fantastic case with catastrophic injuries, lawyers might compete with each other to get your case and in some cases, your lawyer might be willing to reduce the percentage of his legal fee, e.g., one-third to 25%. It never hurts to ask!

Have questions? Contact The New York Injury & Malpractice Law Firm, P.C. and we will be happy to help you.