A couple of days ago, I had coffee with a new lawyer who had several promising employment discrimination cases. But since she had no experience, she decided to co-counsel with a big name plaintiff firm. The deal they offered would give her a share of the recovery proportionate to the hours she worked on the case. Of course, the firm took over the case and is giving her as little to do as possible.
This sort of co-counsel agreement and outcome are all too common, especially with inexperienced lawyers who have good cases. The new lawyer hopes to get experience and a sweet payday, but ends up with neither.
Here are some ways to take a big contingent-fee case to a big-name lawyer and get experience and a fair cut of any recovery.
Find a lawyer you think you can trust
It is more or less true that a lawyer’s “big” name can result in a big settlement — or at least an easier one. Plus, an experienced lawyer can be an invaluable resource when it comes to learning on the job.
But there is more to litigation and settlement than a name, and there is more than just one name that will do the trick. Spend some time getting to know the lawyer you want to work with, preferably before you even mention the case you have. Is she generous with her time? Does he seem genuinely interested in you and your practice? Are you getting a positive impression of what it might be like to work with her?
If so, you may have found a good lawyer to work with. But don’t take it for granted. You should still structure your co-counsel agreement to be fair to both of you.
The co-counsel agreement
Divvying up the recovery according to hours worked (usually after subtracting a percentage “off the top” for the lawyer who found the client or is bearing the costs) is intuitively fair, but it means the party assigning the work has a lot of control over who eventually gets paid. I like this arrangement when you know and trust the other lawyer, but it is risky when you are co-counseling for the first time.
One solution is to assign the role of lead counsel to yourself, making you the person who decides which lawyer does what. After all, if you are looking for experience, you probably want to do your own first drafts and get your co-counsel’s feedback on them, instead of the other way around. So put yourself in charge of the case.
If you do have more of a “ride-along” in mind, insist on a minimum percentage of the recovery, which will be increased if you share of the hours billed exceeds your minimum share of the recovery. That gives your co-counsel an incentive to give you some real work, while rewarding you if you do a lot. In other words, decide what is the smallest share of the work that you want to do, and make that your minimum.
Finally, you can just set straight percentages. One lawyer I have worked with always divides the proceeds 50-50. This works fine with a lawyer you are confident you can trust to do about half the work, but it can also encourage a “group work” mentality where one lawyer does all the work, and the other lawyer still collects half the reward.
Of these options, I prefer to (1) reimburse everyone’s out-of-pocket costs, (2) calculate the attorney fee under the retainer and give the client his share, (3) give the party that fronted the litigation costs 10% of the fee, and (4) if the party that got the client is not the same as #3, give her a 20% minimum, with an extra share if her proportion of time billed exceeds 20% of the total time billed (calculated by dollar amount, not time).
(I like to include an illustration of the expected calculations using round numbers, which helps ensure everyone is in the same page.)
Because it is impossible to anticipate every contingency and eliminate all risk, it is smart to think about termination up front. When doing so, you should provide for: (1) who keeps the client, and (2) what will the other attorney be paid?
I think the lawyer who found the client in the first case should get to keep the client, assuming that is what the client wants. And I think the lawyer who bails should be happy recovering his or her reasonable hourly fee, or if the recovery is not greater than the sum of everyone’s reasonable time billed (again, by dollar amount), a proportionally-reduced amount.
Get your client’s consent
Remember that the client must consent to the co-counsel agreement. I just include a signature line for the client under a notice that the co-counsel arrangement will not diminish the client’s recovery. Then I walk the client through the document in person so he has plenty of time to ask any questions.