Contingency Fee Agreements

When a family is looking for a lawyer to represent them, fees will always be a consideration. However, most families do not have the resources to hire an attorney on an hourly basis. This is especially true in a Michigan wrongful death case where the time required to maximize recovery could be astronomical. This does not even take into consideration that the case may go to a full blown jury trial and appeals process. In Michigan, lawyers are governed by the Michigan Rules of Professional Conduct. Rule 1.5 sets the fees that can be charged by attorneys. While many families may feel that one-third of any recovery may be high, the rules specifically allow for contingency fees as they recognize the risk taken by all parties involved that there will be a recovery in the matter. Typically an attorney will not receive any compensations unless they recover on your behalf.

Michigan Rules of Professional Conduct 1.5 – Fees

All Michigan lawyers are governed by the Michigan Rules of Professional Conduct (MRPC) and must follow all Michigan court rules and statutes. The two rules that you need to be familiar with when you are deciding who to hire as your family wrongful death attorney are MRPC Rule 1.5 and Michigan Court Rule 8.121. We are going to give you the actual wording of both rules, but we will also explain everything in plain English so that you can go armed with valuable information when discussing your family’s case with prospective attorneys.

Rule 1.5

(a) A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee. A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. The factors to be considered in determining the reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing
the services; and
(8) whether the fee is fixed or contingent.
(b) When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.
(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or by other law. A contingent-fee agreement shall be in writing and shall state the method by which the fee is to be determined. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement of the outcome of the matter and, if there is a recovery, show the remittance to the client and the method of its determination. See also MCR 8.121 for additional requirements applicable to some contingent-fee agreements.
(d) A lawyer shall not enter into an arrangement for, charge, or collect a contingent fee in a domestic relations matter or in a criminal matter.
(e) A division of a fee between lawyers who are not in the same firm may be made only if:
(1) the client is advised of and does not object to the participation of all the lawyers involved; and (2) the total fee is reasonable.

What MRPC Rule 1.5 means for your case:  

  • Lawyers are allowed to charge a contingent fee up to one-third of the recovery in your case and it is NOT considered excessive by the ethics and court rules.
  • All contingency fee agreement MUST be in writing and must spell out how the fee will be determined
  • After your case is completed, the lawyer MUST give you a written statement explaining the outcome of the case, if there was money recovered and how much is being paid to you. In a wrongful death case, this will also be disclosed to the probate court in order to get any settlement approved. Therefore, there are extra layers of protection for a family going through a wrongful death case.

Michigan Court Rule 8.121

(A) Allowable Contingent Fee Agreements. In any claim or action for personal injury or wrongful death based upon the alleged conduct of another or for no-fault benefits, in which an attorney enters into an agreement, expressed or implied, whereby the attorney’s compensation is dependent or contingent in whole or in part upon successful prosecution or settlement or upon the amount of recovery, the receipt, retention, or sharing by such attorney, pursuant to agreement or otherwise, of compensation which is equal to or less than the fee stated in subrule (B) is deemed to be fair and reasonable. The receipt, retention, or sharing of compensation which is in excess of such a fee shall be deemed to be the charging of a “clearly excessive fee” in violation of MRPC 1.5(a), unless such fee is received as a result of an award of attorney fees payable pursuant to MCL 500.3148, or other award or sanction made pursuant to statute, court rule, or the common law.

(B) Maximum Fee. The maximum allowable fee for the claims and actions referred to in subrule (A) is one-third of the amount recovered.

(C) Computation.

(1) The amount referred to in subrule (B) shall be computed on the net sum recovered after deducting from the amount recovered all disbursements properly chargeable to the enforcement of the claim or prosecution of the action. In computing the fee, the costs as taxed and any interest included in or upon the amount of a judgment shall be deemed part of the amount recovered.

(2) In the case of a settlement payable in installments, the amount referred to in subrule (B) shall be computed using the present value of the future payments.

(a) If an annuity contract will be used to fund the future payments, “present value” is the actual cost of purchasing the annuity contract. The attorney for the defendant must disclose to the court and the parties the amount paid for the annuity contract, after any rebates or other discounts.

(b) If the defendant will make the future payments directly, “present value” is the amount that an entity of the same financial standing as the defendant would pay for an annuity contract. The court may appoint an independent expert to certify the “present value” as defined in this paragraph. The court may base its findings on the expert’s testimony or affidavit.

(D) Agreements for Lower Fees. An attorney may enter into contingent fee arrangements calling for less compensation than that allowed by subrule (B).

(E) Advice to Client. An attorney must advise a client, before entering into a contingent fee arrangement, that attorneys may be employed under other fee arrangements in which the attorney is compensated for the reasonable value of the services performed, such as on an hourly or per diem basis. The method of compensation used by an individual attorney remains the attorney’s option, and this rule does not require an attorney to accept compensation in a manner other than that chosen by the attorney.

(F) Agreements to Be in Writing. Contingent fee arrangements made by an attorney with a client must be in writing and a copy provided to the client.

(G) Applicability. This rule does not apply to agreements reduced to writing before May 3, 1975. The one-third provision of subrule (B) applies to contingent fee agreements entered into after July 9, 1981. Earlier agreements are subject to the rule in effect at the time the agreement was made.

What Michigan Court Rule 8.121 means to your case:

  • Lawyers in Michigan are allowed to charge a contingency fee on wrongful death case and those involving no-fault benefits (this is important if the death occurred as the result of an automobile accident)
  • Lawyers cannot charge more than one-third of any recovery.
  • Wrongful death attorneys are allowed to charge less than one-third, but we caution against this practice unless there are extraordinary circumstances. Most skilled wrongful death attorneys will expend a great deal of time and energy on all their death cases that certainly warrant the payment of the full attorney fee.
  • Michigan lawyers MUST advise you, in writing, that you have the option to hire the attorney on an hourly basis. This is important, especially if the matter settles very quickly with the insurance company and the client questions the amount of attorney fee versus time spent on the case. Clients at the early stages of cases simply do not understand the amount of work that will go into submitting a settlement proposal to insurance companies. It can also be dependent upon the reputation of the attorney you hire. Insurance companies will certainly know the track record of your lawyer, many times before you do.
  • Remember that just because the wrongful death attorney has an obligation to explain your option to pay on an hourly basis, they do NOT have an obligation to accept your case if you have the resources to pursue your case on an hourly fee basis.

Contingency Fee Agreements Explained

Michigan wrongful death attorneys will certainly charge their clients on a contingency fee basis. While they must offer the opportunity to hire them on an hourly basis, they are under no obligation to take your case based on these terms. A contingency fee agreement simply means that the lawyer only receives a fee if the client receives a settlement or judgment.

A Michigan wrongful death lawyer will typically advance the costs and expenses of the case in return for a fee that is one-third of the total money actually recovered. This is a KEY thing to remember when considering the offer by an attorney. They must actually recover the money in order to get paid. They cannot simply get a judgement against an individual…they must actually collect the money for you as well!

In Michigan wrongful death cases, the ultimate fee charged is usually 33 1/3% after deducting the file costs. We have also written a blog post on a recent Michigan ethics opinion talking about the costs that lawyers are allowed to charge back to the client. You need to consider these costs very carefully as they not only reduce the amount the lawyer will ultimately receive, but it will also reduce the amount of money available to compensate the wrongful death family members. Therefore, you should be involved in all decisions to spend money on your case even though your lawyer may be advancing the costs.

Cut Rate Attorneys

In today’s world the amount of information that is available to the general public is dizzying. This is now being used by Michigan wrongful death attorneys as they scour accident reports and deaths that have been recorded. They will then send letters and attempt to contact surviving family members. Many of these lawyers will offer cut rate contingency fees in order to secure your case. You should take some time to really think about what this means. The best Michigan wrongful death attorneys are worth every penny of the contingency fee that is being charged. In fact, many times lawyers will work many more hours than what is recovered and in many case it may end up that there is no recovery at all.

Wrongful death cases are inherently serious and the time and labor needed to properly investigate and maximize recovery for family members make contingency fee cases a tool for giving everyone the access to justice that they deserve. Most families in Michigan cannot afford to pay the lawyer’s hourly rates of $300 to $500 an hour. Families going through the pain of a wrongful death case also need to remember that the other side will typically be represented by and insurance company or corporate client who will not care how much they spend on attorney fees. Their main objective is to win the case and pay nothing to a wrongful death plaintiff. This can also result in the other side intentionally creating work for the plaintiff’s attorney in order to discourage pursuing the case all the way to a jury trial.

The lawyers at Ford & Murphy PC prepare every case as if it is going to go to a full jury trial. We have the resources and talent to go up against any insurance defense attorney. Call us today for a FREE Michigan wrongful death consultation at (269) 342-9900.


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