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Archive for the ‘Contingency Fee’ Category

Within the same breath of learning that Copyright Enforcement Group’s (“CEG”) attorney Mike Meier will be taking over Terik Hashmi’s Northern District of Florida bittorrent cases, in a twist of comedic tragedy for plaintiff attorney Mike Meier, I learned that FIVE of his Southern District of New York cases have been joined together, and “additional cases [perhaps all of his other bittorrent cases] may also be “deemed related” and transferred [to this judge] in the near term.” (emphasis added).

In other words, riddle me this:

Question: “How do you kill many small bittorrent cases, when each case only has just a handful of defendants?”

Answer: You BUNCH THEM TOGETHER into one case and you kill them all at the same time.

The following cases (so far) have now been joined:

THIRD DEGREE FILMS, INC. v. DOES 1 – 217 (1:11-cv-07564-JGK, or “11 Civ. 7564”);
DIGITAL SIN, INC. v. DOES 1 – 179 (1:11-cv-08172, or “11 Civ. 8172”);
MEDIA PRODUCTIONS, INC. v. DOES 1-55 (1:11-cv-09550, or “11 Civ. 9550”);
THIRD DEGREE FILMS, INC. v. DOES 1 – 216 (1:11-cv-09618, or “11 Civ. 9618”);
ZERO TOLERANCE ENTERTAINMENT, INC. v. DOES 1 – 56 (1:11-cv-09703, or “11 Civ. 9703”)

In District Judge Katherine B. Forrest’s order, she states:

“it is hereby ORDERED that the parties shall cease all discovery-related activity in the above-captioned cases until otherwise ordered by this Court.”

In other words, if your ISP has not yet handed out your information, I strongly suggest that you send them a copy of this order and stop them from handing out your information.  If you are a defendant in this case, I would hold off until their next status conference before doing anything, which is scheduled for March 12th, 2012, 3pm.

Once again, other plaintiff attorneys should sit up and take notice.

As for Mike Meier, well, if his New York cases go bust, at least he now has Terik Hashmi’s cases to fight in Florida.  At least they are merged together under Case No. 4:11-cv-00570 (FLND) and are under an order to show cause by March 9, 2012 why they should not be dismissed.  With Mike Meier taking over Terik’s cases and a letter to the court throwing Terik under the bus, perhaps those Florida cases may survive.

In the meantime, it looks like Lady Justice has a sense of humor.  Perhaps Mike’s cases got “infected” as soon as he agreed to take over Terik’s FL cases.  At the very least, it’s poetic justice.

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PLEASE NOTE: OUR FIRM IS *NO LONGER* ACCEPTING NEW CLIENTS FOR THIS AREA OF LAW.  PLEASE CONTACT THE TEXAS BAR FOR AN ATTORNEY REFERRAL.  IF YOU ARE AN ATTORNEY LOOKING TO TAKE ON FORECLOSURE CLIENTS, PLEASE CONTACT US.

I’ve been reading about certain “contingency fee” mortgages that some attorneys are having their clients sign.  Specifically referring to a New York Times article written by David Streitfeld on November 6th, 2010 entitled, “Taking On a Second Mortgage to Pay the Lawyer,” Florida foreclosure attorneys have devised a new and creepy way to have clients pay inflated attorney fees.

In short, the scheme is that the attorney charges a contingency fee of 40% for whatever the attorney saves the client in terms of a mortgage loan modification and/or principal reduction.  However, instead of having the client pay the fee out of their pocket (which is impossible because all that is gained is equity and a lower monthly mortgage payment), the client agrees to take out a second mortgage in the law firm’s name to pay the contingency fee.

There are many issues here, and pardon me for sounding the “foreclosure scam” alarm with regard to what on paper appears to be an inventive way for the attorney to guarantee being paid.  In short, the client is essentially signing over to the attorney a security interest in their home in return for providing a service which is supposed to have the end goal of lowering the homeowner’s mortgage payments to a fair and affordable amount.  However, charging an unreasonable contingency fee which attaches to, encumbers, and uses the home itself as security for payment of that contingency fee inevitably defeats the purpose of the loan modification because it will unnecessarily increase the monthly cost of the mortgage payment.

Then, as soon as the homeowner falls short of paying the second mortgage to the attorneys, regardless of what they claim they will or will not do, the law firm immediately has the right to declare a default on the second mortgage, accelerate the entire debt as being immediately due, and can foreclose on the home judicially or non-judicially, depending on the state in which the property is in.

In other words, the homeowner who contacts the law firm for help to protect them from losing their home to the bank signs over a security interest in the home which in the end will cause them to lose that very home the lawyer was sought out and paid to protect… to that lawyer.

While this is not a classic foreclosure scam, it still smells like one.  The lawyer is taking advantage of the fact that the homeowner does not have any other choice than to pay their inflated contingency fees.  However, the contingency fee should be commensurate with A REASONABLE FEE, not how much the attorney can save the client.  This model of charging a percentage of what is saved works well when it is a few thousand dollars, as is often done with tax assessors.  However, with a home which is easily worth hundreds of thousands of dollars, taking a 40% cut of whatever is saved (which can often be hundreds of thousands of dollars) would constitute an excessive fee.

On top of that, there are a number of ethical and legal issues with making such a transaction which would place the financial interests of the attorney and the client to be adverse to one another.  This raises ethical issues which will not be covered in this issue.

In summary, before agreeing to such a “contingency fee” security interest deal, ask yourself whether the amount of money you will save (and that the attorney will consequently earn) would constitute a REASONABLE FEE for the services rendered.

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While Texas Personal Injury is certainly not our field of specialty, it is one of the straightforward areas of law which can be handled by us on a contingency basis. The purpose of writing this article is to share with potential personal injury clients EXACTLY HOW the Cashman Law Firm, PLLC would handle their personal injury case in Houston, TX. This article should also serve as a template for what you should expect from any competent law firm in Texas practicing personal injury law.

THREE ELEMENTS TO A PERSONAL INJURY CASE IN TEXAS

In general, there are THREE ELEMENTS to a personal injury case.

1) LIABILITY, namely asking whether there is someone (or multiple individuals or perhaps a corporation, etc.) who has caused you harm. It is the Texas attorney‘s job to determine in the first phone call who the parties are, whether you (the injured plaintiff) were also partially responsible for the harm that you have suffered, and how to best apportion who will be responsible to pay you damages for your injury.

2) DAMAGES, namely, the Texas attorney should try to estimate what kind of damages have you suffered, and an idea of what those damages will be. Even though an attorney should NEVER give his potential client an idea of what amount he might be awarded if he prevails (it is actually UNETHICAL and deceptive to do so, especially 1) in today’s climate of tort reform and a conservative shift of juries over the past ten years, and 2) since the attorney cannot possibly know what the damages might be until he has gathered all the evidence), he should determine what kind of damages have been suffered, and whether his client’s damages will be for solely for suffering that happened in the past, or whether his client should also collect future damages (e.g. for lost earnings, future lost earnings, future medical expenses, etc.).

3) CAN THE POTENTIAL DEFENDANT(S) PAY FOR IT? DO THEY HAVE ASSETS? Here, the attorney would ascertain who to sue, and from where can they afford to pay damages. The attorney, once retained, will do an asset check where he will determine what assets the defendant has, and what kind of liability coverage (insurance policies) the defendants carry.

YOUR FIRST MEETING WITH AN ATTORNEY

In the first meeting, the attorney will have you sign a contract outlining his fee (in most personal injury cases, the attorney will take a contingency fee percentage which means that the attorney would not bill for the time he spends on the case, although he may or may not have the client pay the court fees and out-of-pocket expenses; in some jurisdictions, it is a violation of the ethics rules for an attorney not to collect these from the client). Generally, the attorney will take 1/3 of the amount awarded (if he has paid out-of-pocket fees or court costs, this will be taken from the award prior to taking his 1/3 share). For more time consuming cases, or cases that require extra effort and costs to maintain, the attorney would likely take 40% rather than the traditional 1/3 share.
Here at the first meeting, the client will tell the entire story, and they will bring in all evidence they have of the event. This might include medical records, photographs, police reports, etc. If there are medical damages, the attorney will have the client fill out a “Medical Records Authorization” form which gives the attorney the power to acquire copies of the client’s medical records. [Sometimes the attorney will have the client acquire copies on their own, or if the case is a larger case, he may pay a service to acquire the evidence to make sure it is in a proper usable form for trial.]

AFTER THE FIRST MEETING WITH YOUR ATTORNEY

After the first meeting, the attorney will instruct the client not to speak to any insurance company agent, and not to give any statements or admissions to any parties. The attorney will contact each party (including the insurance companies and the government agencies, if necessary), and will instruct them not to contact the plaintiff. He will tell them to turn over all medical records and/or medical bills they’ve recovered. If they have taken any recorded statements from the client, he will demand that they turn those over to him immediately. The attorney will then start his own investigation as to the insurance policies and assets of each party (including the plaintiff, because the plaintiff’s own uninsured / underinsured motorist (UM / UIM) automobile insurance policy can often be an easy source of payment in case the defendant has no assets, no insurance of his own, or is otherwise judgment proof.

WHY MOST TEXAS PERSONAL INJURY CLAIMS NEVER SEE A COURTROOM

It should be noted that most personal injury and most medical malpractice lawsuits never see the inside of a courtroom. Most of the time, there is one party or another who has enough deep pockets where the defendant makes the calculation that it would be cheaper for them to settle the case rather than to go though an expensive trial. The amount of the settlement is usually substantial enough to have the client enthusiastically settle the case.

WHAT ELSE MIGHT A CLIENT NOT BE TOLD? WHAT IS SUBROGATION?

Since we’re giving the full story, the attorney-client relationship does not end here. Very often and without notice to the client, there are parties who must be paid first before the client receives his award (a competent attorney will take the following into consideration before advising the client to accept a settlement offer); some parties (e.g., hospitals, insurance companies, or government entities such as Medicare or Medicaid) hold liens on whatever judgment the plaintiff receives. It is the attorney’s responsibility to ascertain who is owed what, and to disburse the funds to these individuals before releasing the award to the client. The reason for this is that it looks unprofessional for an attorney to hand over money to a client, and then to have the insurance company sue the client based on their insurance policy’s “subrogation clause,” which gives the insurance policy the right to be reimbursed money they paid out to various parties prior to the lawsuit. This is fair because if an insurance policy pays out $10,000 in medical expenses, and then the client receives $100,000 in medical expenses, $10,000 of that amount fairly belongs to the insurance company. Hospitals often file liens on judgments to be paid in case their patent (the client) sues and prevails in an action, and they do this without giving the client notice that they have filed the lien. Government agencies hold what are called super liens, where if the attorney disburses funds to the client prior to paying them, the attorney can be held professionally and financially liable for the debt the client owes based on the lien. Thus, a responsible attorney will ascertain who is owed what, and will disburse these funds prior to giving the client his share of the award. —This part of the story is often left out, but it is responsible for an attorney to inform his client about subrogation and liens right at the outset of the attorney-client relationship.

IN SUM, EVERYBODY GETS PAID

Everything said, the client will receive a fair amount for the damages he has suffered, the hospital, insurance company, and government agencies will be paid for the services they rendered, the attorney will be reimbursed for his court fees and out-of-pocket expenses, and he will receive his commission. At this point, the attorney-client relationship will end, and everybody will part whole and compensated for their injuries.

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