Question #3: “How Do Attorney’s Fees Work?”
(Transcribed from Audio Recording.)
Lemon law cases are different than personal injury cases when it comes to attorney’s fees. The reason is that the laws have an extra provision that you do not find in injury cases. That is the provision for attorney’s fees.
Many people get confused by the fact that the law says they can recover attorney’s fees. After all, “if the law says that then that should be the way it is damn it!,” they say. However, as I explained in my email on “Top Questions Asked By Lemon Vehicle Owners – Question #2” – which was: Don’t They Have to Take It Back? – there is a burden of proof to meet before you “win under the law.” Until that moment, it’s a matter of negotiation between you, your attorney and the defendant and their attorney.
So, the first thing to remember is that when settlement money is paid, it is actually split up based on what your agreement with your Attorney says, not what the law provides!
Why am I telling you that? I will answer that in a second, but first let me explain the most common way most law firms get paid attorneys fees in lemon law cases.
I will refer to it as the Fee Shifting Model. Here the attorney says they will get paid by the manufacturer, not you, for their attorney’s fees. The fees are calculated by figuring out what the attorney did on an hourly basis and multiplying that times an hourly fee. For example, if the attorney spent 20 hours at 100.00 per hour, his fee would be $2,000.00
Now, you may have seen advertising by some firms saying that they will represent you for “Free” in your lemon law case. I am sure you have heard the old saying that if it sounds too good to be true it probably is. Well here is the catch. Lots of cases are resolved for a lump sum of cash paid by the Defendant. When this happens the fees end up coming out of the total settlement dollars. Because it’s uncertain which portion is yours and which portion is just fees, it’s not necessarily free and this is misleading. For example, assume the car company offers $6,000 to resolve the case. When they make this offer its just $6,000 and they do not care how much the client or the attorney gets. All they care about is that they are paying 6k to get rid of your case.
So to answer that question above, this is why I am telling you that settlement money is split up based on what your agreement with your Attorney says, not what the law provides!.
Now, to be fair, if your vehicle is bought back and there is an extra amount included for attorneys fees and it’s clearly above and beyond the amount of your recovery, then this arrangement could be considered free “to you” in that instance. I mean the firm is not doing it for free, but it was free to you so to speak.
Please don’t be confused. You should not let this potential drawback discourage you. Remember, the attorney fee risk is on the law firm, not you, if they do not perform. This is a huge benefit to you because no fees are paid to the law firm unless and until something is recovered from the manufacturer. And when it is, the fees come from that money, not out of your pocket. This is the way we prefer to be paid. And it’s a damn good deal right? It’s just that many times its not really Free, that is just another example of misleading lawyer advertising I want you to be aware of.