Finance Litigation

why an attorney finances litigation proceedings in personal injury cases?

Public Comments

1. If you win, the attorney gets one third of your winnings. So if you win $100,000 in court, you actually only get $66,666, and then $33,333 goes to the attorney. Also, whether you win or lose, you do still have to pay for basic costs such as the costs of obtaining medical records, the cost of filing things at court, the cost of a deposition (if necessary), etc. So although you don't pay the attorney at an hourly rate like you would for many other cases, you still pay the basic costs involved with filing a law suit, and the attorney's pay is simply 1/3 of your monetary winnings. If you lose, then the attorney doesn't earn any money, but s/he doesn't lose money either, since you still have to pay for the costs associated w/ filing the law suit. (Although arguably, the attorney loses all the time spent on your case, and time = money.) Why? Perhaps to provide attorneys with more incentive to defend your case? And for fairness reasons, since presumably the injured person is a victim and should be properly defended.
2. Because they cost 1000s of dollars to finance, and most of us don't have that kind of money laying around. The justice system is for everybody and the poor should not be shut out or disenfranchised.
3. Because the attorney expects to reap a substantial profit from the investment.
4. As stated above, most plaintiff attorneys will cover the expenses associated with personal injury lawsuits to assist the client in pursuing their suit. Litigation has become incredibly expensive and most individuals could not afford to file a lawsuit on their own, especially when they have become seriously injured and must deal with large medical bills and the like. The idea was originally to provide all persons access to the courts. If the client is successful in their suit, the expenses are recouped by the law firm and then their fee is taken from the verdict. Most respectable firms charge between 25% and 40%, depending on the difficulty of the case. If the suit is unsuccessful, almost all firms will eat the expenses. Thus, plaintiff firms must carefully evaluate new cases before they file suit as it is very easy to spend thousands of dollars in expenses when preparing a case. It is not unheard of for law firms to go bankrupt from the expenses involved in one losing case.