Although something like 97% of all personal injury lawsuits eventually settle short of jury trial, they can nonetheless be very expensive because of the costs of litigation. Most reputable injury lawyers advance costs for the client, but these advanced costs must be re-paid to the lawyer when (and if) the case settles or goes to trial judgment. My typical client trusts me to ensure that costs do not get out of hand, or to tell the client if costs are becoming a problem that could hinder settlement of the case.
I mediate a lot of cases, either as a retained mediator or a court appointed Settlement Conference Officer. I frequently see cases where the costs have become so high they threaten the plaintiff’s ability to settle with any decent net monetary recovery. How does this happen?
As a starting principle, most cases do not involve powerhouse catastrophic injuries (think quadriplegia) where costs almost do not matter because the settlement will be so large. No, most cases are worth less than $100,000. Many are worth less than $50K or even $25K (think soft tissue injury cases, like neck or back strains). Costs can very quickly become a problem, especially since the plaintiff probably has to pay back a medical lien to this healthcare insurer (please see my blog on this site about liens).
What are examples of typical litigation costs? These are some rough figures:
Filing the complaint $500
Taking a deposition $500-1000 depending on length and if you videotape
Ordering a copy of deposition taken by the other attorney $300
Buying copies of subpoenaed medical and employment records– varies, but can easily hit $3000-5000 in an injury case involving prolonged medical treatment
Medical expert: $750 to $1000 per hour
Engineering expert: $500/hour
Expert witnesses are far and away the largest cost in a case. When I hire an engineer to do accident reconstruction, I know I am spending $5000 minimum and likely $10K if the case requires much work up. If I hire a rehabilitation physician to examine my client and write a report, I know I am looking at $10K. Same for a vocational rehab expert.
Depositions can be a large cost, because there can be 20 or more in a large case.
But the plaintiff’s main problem is in the smaller case. Let’s assume a case worth about $50,000 with a $10,000 medical lien that can probably be resolved for $6,600. So after the 1/3 attorney fees and the lien, the plaintiff nets about $27,000. Then there are the costs. If the case has settled without litigation, the costs should be low, around $1000 or less for medical records. If the case is litigated, count on depositions of the plaintiff ($300 for a copy), the defendant ($500), and ordering some subpoenaed records ($600). If the defense decides to depose doctors, there could easily be another $1000 in deposition costs. If plaintiff’s counsel decides she needs to talk to plaintiff’s doctors before the depositions (which is recommended unless the records show exactly what the doctor’s opinions are), that can be another $1000. The costs of a doctor’s report could be another $1000. If it is disputed liability accident, you might need a liability expert. Add another $5000. Just these costs add up to $9400, and that is a very realistic figure in my experience. Now the plaintiff only nets about $17,000.
Now imagine the above cost scenario in a $25,000 case with $5000 medical lien repayment. Do the math. You will see that plaintiff nets almost nothing with those costs.
How can an injured plaintiff avoid this problem of excessive costs?
If your case is worth less than the small claims max of $10,000, consider handling the case yourself. There are no costs in small claims court other than the filing fee of $50. You also won’t pay attorney fees, because there are no attorneys allowed in small claims court.
If your case needs an attorney, be sure to choose an experienced lawyer with a proven track record of resolving cases for satisfied clients. Newer lawyers oftentimes have “hung their shingle” and have a nice website, but have no idea how to keep costs low. They may also not have the kind of monetary reserves to fund a larger case. That’s a big problem, because the insurance company has unlimited funds to battle your case. Corollary point: the insurance carriers don’t care how much they spend to defend the case. They may spend just to protract the case and force you to waste resources.
Experienced lawyers will be sure not to let costs get out of hand, and will tell you if there’s a problem. Be wary of firms that want to hire lots of experts early. Someone has to pay these experts, and it’s you. (Be especially wary of firms that want to refer you to a chiropractor of their choosing. That can turn into a very expensive cost that you will pay eventually.)
What you can control is when you settle. If there is a fair settlement offer made halfway through the litigation before costs have gotten too high, that settlement may make more sense than “taking it to the mat” and getting close to trial or actually trying the case. You may net more by settling for a little less than your ideal amount, because your costs will rise as you get close to trial.
A word about trial: trials are very expensive, which is one reason few cases get tried. At Paoli & Geerhart, we pride ourselves on being one of the few firms that can actually try a case, and we have the track record to prove it. But be forewarned: your costs will go through the roof at trial. You may be able to recover some of these costs from the defense if you win, but you won’t get them all, especially expert fees unless you have beaten your CCP 998 offer. A physician may charge $5000 to 10,000 just for walking in the door at trial. It is not unusual for costs to reach or exceed $50,000-100,000 in a major injury trial. So your case had better be worth it if you choose to try it.
The takeaways: Be careful whom you retain as your lawyer– go for experience. Don’t be afraid to ask your lawyer what the costs are as your case progresses, or what your net recovery will be when an offer is presented. if your case is small, consider filing in small claims court and avoiding costs and attorney fees.