In case you missed it, last March all four Appellate Divisions of the Supreme Court of NY have adopted new rules governing the calculation of attorney fees in contingent fee personal injury and wrongful death cases.
The new rules allow the contingent fee client to choose one of two options within the contingent fee retainer agreement as to how attorney fees will be calculated in contingent fee personal injury and wrongful death cases:
(These new rules do NOT apply to Medical Malpractice cases):
Option 1 – Client remains liable for repayment of all costs and expenses, regardless of the outcome of their matter. The Fee Percentage is calculated on the net sum recovered after deducting costs and expenses from the total amount recovered.
Option 2 - The Firm agrees to pay and remain liable for all costs and expenses, regardless of the outcome of the matter. The Fee Percentage is calculated on the gross sum recovered before deducting costs and expenses. The Firm agrees to pay all costs and expenses of the action and the client will not remain responsible for all expenses and disbursements in the event the claim or action is dismissed or otherwise rejected by any court of competent jurisdiction.
The New York State Academy of Trial Lawyers’ suggested language for inserting into fee agreements including an example of how the two options will impact the amount due to the client at disbursement can be found here.
Historically, contingent fee law firms in NY sustained 100% of the financial risks in obtaining the best possible result for their clients and were then penalized financially with reduced fees based upon the calculation method of fees on the net amount recovered after costs.
Thanks to Advocate Capital, Inc. friend, and renowned NY Personal Injury Attorney, Dan Buttafuoco for sharing this important update.
Senior Vice President, Client Services
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