by John Darer CLU ChFC CSSC RSP CTLC
Someone asks "If I employ an attorney for 33 and1/3 percent of my settlement do they get a portion of my monthly payments as well as the lump sum?".
In short, the answer is no. The agreed percentage that a contingency fee lawyer will take after disbursements is based on the total cost of settlement. The retainer agreement, or letter of engagement should spell everything out.
It is also important to note that your law firm or your attorney may want to structure its, his or her attorney fees. If this is the case the attorney's future periodic payments will be set forth in the settlement agreement that you execute with the Defendants and/or their insurers. Furthermore, the cash portion of the attorney fees and the cost of the structured attorney fees should not exceed the agreed percentage.
For example, have a look at the math
$1,000,000.00 settlement funding amount
$500.000.00 cost of plaintiff structure paying $X per month for life
$166,666.66 plaintiff up front cash
$133,333.33 attorney fee cash
$200,000.00 cost of attorney fee structured settlement paying $X per month for 10 years beginning at the attorney's age 62.
Special note for New York cases
When calculating the attorney fees on the future damages in excess of $250,000 on a New York Structured Judgment pursuant to CPLR Article 50B, the 1/3 attorney fee is applied to the present value of the future damages net of apportioned disbursements. Furthermore, the gross amount of future damages payments to be paid periodically, which were used in the present value calculation, IS reduced by a percentage reflecting attorney fees and disbursements.