The Contingency Fee Arrangment

Announcer: We promise we are not a bunch of stuffy old lawyers saying stuffy old things. You heard that right. This is the Insight to Injury Podcast, sponsored by Osterbind Law, PLLC, the podcast that reports to you, Central Virginia, about what's going on in the injury and disability world. We answer all the questions you don't even know to ask.

Announcer: Now here's your host, Brendon Osterbind. Let's get started.

Brendon Osterbind: Welcome back team Osterbind and thank you for joining us today as we enter into episode 10 of our podcast. Thank you for sticking with us through the first nine podcasts. This is a pretty big day. I'm going to use it and take a moment to celebrate because we are now in double digit. So we'll call this the first double digit pod, and just wait until we get the triple digits, we'll have to celebrate then too. I'm pretty excited that we've gotten through nine episodes, and now here we are on our 10th episode.

Brendon Osterbind: Just let me briefly recap a few things that we've talked about. Of course, we've talked about what to look for in hiring an injury or disability attorney, what type of insurance coverages you should have, how to tell the best story and why to tell the best story, why we're all readers and why we use our time wisely, how to use our time wisely, especially during this time period during the coronavirus where everything seems to be crazy, and for a period of time everything just kind of shut down and we all went home and worked from home. And of course the court shut down, so there was nothing really to do from that perspective. All of our cases, kind of got put on hold, but we still worked hard to try to push as many as we could, depending on each individual case.

Brendon Osterbind: I really liked a couple of our recent episodes. I really liked putting them together and then talking about those issues. For example, Lawyer Wellness Week, I thought that was a pretty important week. I had a conversation with an attorney yesterday at lunch, and I feel like there are a lot of unhappy attorneys out there. My perception is that if you're unhappy as an attorney, then go do something else, go figure out a way to live your best life, and don't complain about what you're doing now. Figure out a way to improve your situation, make it better and make it better for your family and make it better for you. Overall, you're not doing yourself any favors if you're practicing law, because you feel like you have to or you feel like that's your only option because that's where you went to school, you've got that degree. You've got that license. It doesn't mean that you can't do anything else, but I just don't feel like you're doing any favors to anybody by doing something that you don't love.

Brendon Osterbind: That's why at Osterbind Law one of the things we look for when we hire people is do you love what you do? And are you a happy person? Because happy people find work that is satisfying, find work that is transcendent, and they give it their all. I'm very proud of the team that we have created that we work with here at Osterbind Law, because when it comes to lawyer wellness here, I feel like we are doing it right. I really enjoyed talking about it in episode six of the podcast.

Brendon Osterbind: The other one that I really liked most recently was episode seven, how to handle your money after you win your case. We talked a lot about the financial piece principles, Dave Ramsey's principles. I'm a huge follower of Dave Ramsey and we follow him in our personal lives and with our business money and resources. I also follow the principle by Mike Michalowicz called Profit First in our business because not only do we practice law, but we are also a small business and we have to focus on that because if we can succeed as a business, then we can help more people and we can do more good in our community. That is ultimately what we are all about.

Brendon Osterbind: In the last episode, episode nine, we talked about why lawyers refer cases to us.

Brendon Osterbind: So now here we are in episode 10. Before we begin with this week's episode, I wanted to talk just a few minutes about where we are in the court system, as it relates to the coronavirus.

Brendon Osterbind: As you remember, I said earlier, and I sit on multiple other podcasts and in social media, that the courts have essentially shut down for everything other than non-emergency items, and that has pretty much changed a good bit. But one of the big things that's still shut down in a vast majority of course, across the Commonwealth is the jury trial. The jury trial is a very important constitutional right that everyone has, guaranteed by the Virginia Constitution. It's also guaranteed by the Seventh Amendment in civil cases, and in criminal cases, it's also guaranteed by both the Sixth Amendment and the Virginia Constitution.

Brendon Osterbind: The coronavirus pandemic has not taken away the right to a jury trial, but it has delayed the right to a jury trial. You've heard the phrase, "Justice delayed is justice denied." Well, that's kind of what we're dealing with here. I'm not saying that I disagree with the Supreme Court's order, judicial emergency order and what they've done here, but what I want to focus on just briefly is where we are in the right to a jury trial and what is going to happen next. Before I get to that, let me read to you the Seventh Amendment to the United States Constitution: Brendon Osterbind: "In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, other than according to the rules of the common law."

Brendon Osterbind: So what are we doing to preserve the right to a jury trial? That's what I want to talk about.

Brendon Osterbind: So far the Supreme Court of Virginia has entered nine judicial orders declaring a state of emergency, a judicial emergency, which essentially shuts down the courthouses depending on what exactly they're doing, and it does it for a period of 21 days. The statute that gives the Supreme Court the authority to do that, limits the duration of a judicial emergency to 21 day periods. And so far since March 16th of this year, the Supreme Court has entered a new order within every 21 days extending the order of declaration of judicial emergency. The last order was entered on August 20th of this year.

Brendon Osterbind: I want to date you back to the sixth order declaring a judicial emergency, which was entered on June 22nd of 2020. In that order, what the Supreme Court did was it directed the courts, the different judicial districts across Virginia to get together and to create a plan for how jury trials can be conducted safely, given the coronavirus pandemic and what the plan is to make sure that you can bring jurors into a room and conduct a jury trial without further spreading the virus and harming people. Because obviously things have shut down, businesses have shut down, churches had shut down, and so many different things had shut down for the coronavirus because it's the in-person close contact for a long period of time that perpetuates this virus, and as a result of that, that's exactly what a jury trial is.

Brendon Osterbind: So when we're talking about how do we stop the spread of this virus, how do we flatten the curve? One of the things that we've done as a state is to suspend the right to a jury trial. When the jury trial is suspended, how do you then preserve the right to a jury trial? Well, what the Supreme Court has done is they have ordered all of the judicial districts to come up with this plan. They were all due on August 17th of this year, so about nine days ago, as of the recording of this podcast. So all of these plans should have been submitted to the Supreme Court by now.

Brendon Osterbind: You might be wondering, well, how long is it going to take for them to start to approve them? Well, we have already seen approvals in four different states it appears, and in some of those states are able to start trying cases to a jury within the next 30 days of the date of the letter. I'm looking at a letter here, an approval from Chief Justice Donald Lemons to Allegheny Circuit Court that's dated August 13th of 2020. It says, "You may begin jury trials no earlier than 30 days after the date of this letter." So you're looking at around middle of September when Allegheny County can start trying cases to a jury again.

Brendon Osterbind: Again, the big problem with trying cases to a jury in the age of coronavirus is ... in a criminal trial, you get 12 jurors and you put them together, in civil trials, you get seven jurors and you put them together; the problem is when you first start and before you even get into jury selection, you have to end up getting 30 to 40 people inside this old courtroom that's not built for social distancing. So how do you get 40 people in one room, and then everyone is wearing a mask and trying to select a jury and all of that stuff? And how do you spread the jury out sufficiently so that there's an appropriate social distance between everybody? And how do you prevent the spread of this virus? That is what all of the courts have been hard at work trying to figure out.

Brendon Osterbind: A lot of the other aspects of cases have been able to go forward. Bench trials have been happening in certain districts, and hearings on motions, motions in limine. We had a plea and bar hearing on a sovereign immunity issue just recently. And if you follow us on Facebook or Twitter or Instagram, you'll see all of these; a couple of photos that we've taken going back to court after they've started to hear certain things. So while we are going back to court and starting to hear certain parts of cases, none of the plans in Central Virginia have been approved yet.

Brendon Osterbind: I had the privilege of serving with a couple of my other colleagues on the Lynchburg Bar Association Board to try and provide input to the judges in the Lynchburg Circuit Court about what our plan should include. It was an interesting experience just to sit down with a bunch of experienced litigators and say, "What do we need to do to make sure that a jury trial can go on, but make sure that it can be done safely?" We had some interesting conversations and I think some good ideas.

Brendon Osterbind: I believe that that plan has been submitted to the Supreme Court of Virginia, but it has not yet been approved. Once it gets approved, if you're interested in these things, you can search for it on the court's website. You can actually see if you go to the Supreme Court's website, it is courts.state.va.us, there is a link on top. There are these red letters. The first one is a list of all of the judicial emergencies in response to COVID-19. The second one is a list of appellate and local court information, because a lot of local courts had their own order saying what things can and cannot be done. And then right below that there is a link for approved plans to restart jury trials listed by court. Each court has created their own plan and that plan will be submitted to the Supreme Court, and it has to be approved by the Supreme Court before we can resume the jury trial.

Brendon Osterbind: So while the jury trial has been suspended now for the better part of six months, we are, I think, as a bar and as a court system, trying to figure out a way to satisfy that Seventh Amendment and preserve the right to a jury trial because it is that important. Jury trials are so important. They are what I like to call the original tort reform, because you have seven people who are sitting there listening to all the evidence and they get to decide what happens in this case. And if they think that an award of money is appropriate, then they will make that award. You're not trying the case to a judge. You're not submitting it to a mediator or an arbitrator. There's no unfairness whatsoever. It's an adversarial system. The other side gets to have a say in what gets presented and what information the jury hears, and the judge is an umpire calling balls and strikes and gets to decide what information gets in based on the law.

Brendon Osterbind: The original tort reform is the jury trial, and we need it to make sure that our clients who have been injured through no fault of their own get full value in their case and at the same time, the defendants get a fair shake as well. And the only way that both sides get a fair shake after an accident, a car accident, a slip and fall, medical negligence, whatever it may be, the only way that our clients will get a fair shake in those situations is through a jury trial.

Brendon Osterbind: Now, with all that said, let's get into what I want to talk about today. Now today I want to talk about an issue as you can see from the title of the podcast is the reasons for the contingency fee arrangement. A lot of times people will look at injury and disability lawyers and think, "Wow, you make so much money because you profit off of other people's misfortune." But I want to talk about the contingency fee arrangement and why we do what we do and why we get paid in the way that we get paid.

Brendon Osterbind: There are several reasons for why we implement a contingency fee arrangement instead of an hourly rate or a fixed fee or anything like that. The first reason is everybody needs to have equal access to the judicial system, especially when someone has been harmed by the negligence of another. If you think about it, if I required a hourly rate on a lot of my cases, I would charge a lot more than I would if I just charged a contingency fee situation.

Brendon Osterbind: Every case is different. Some cases we're able to resolve quickly based on what we do on behalf of our clients, but other cases take a long time. I've had some cases take upwards of five years. And when you have a case that takes that long, you really have no concept of how much time goes into those cases, and if I'm billing by the hour, and sending a bill to my client every single month, how many people do you think can afford to litigate a case for that long? Instead, we want to make sure that everyone has access to the judicial system, everyone has an opportunity to go to court and the fee is somewhat relationally fixed to the outcome of the case.

Brendon Osterbind: You don't want to have a situation where the fee is, we'll just throw out some numbers $30,000, but I recovered in a verdict $25,000. If I were billing by the hour, and I had an hourly retainer agreement that required some type of a significant deposit ... and a lot of people that do civil litigation cases they'll require a 10, 15, $25,000 retainer deposit before they'll ever start working on the case. I simply don't see how that's even possible in these personal injury cases, because personal injury or misfortune does not discriminate between the wealthy or the middle-class or the impoverished.

Brendon Osterbind: So all people are out there driving on the streets are subject to the same degree of risk when it comes to getting injured through the negligence another, and it doesn't matter if they have 25, 30, $50,000 to pay me, all that matters is they were injured and they're due justice. And that's what I look at when I evaluate cases; was this person injured? And are they entitled to justice? So instead of thinking, "Well, how much of a deposit can they put down and how much can I bill," my question is completely different. I'll look at a case from a value perspective and not from a billing perspective.

Brendon Osterbind: I'll tell you I just switched over to doing solely contingency fee cases; I've been involved in cases where lawyers will not do what's in the best interest of the client because they get to bill the client longer. So in other words, lawyers can give bad advice to their clients for the sake of billing more hourly time. And that I think is just distasteful. And that's one of the reasons why I stopped billing people hourly all together and I just focus on these contingency fee cases because I just don't like the concept that someone will tell their client, "No, don't take that offer," or "No, don't do this," because in the back of their mind, the case goes on. And if the case goes on, they get to bill more time and make more money.

Brendon Osterbind: Making money is a motivating factor. That's the second point. I think that not only are you dealing with giving access to the judicial system to everybody, regardless of where they are in the class structure, whether they're lower-class, middle-class or upper-class when talking about the amount of money they make every year, but everyone should have an equal right to the access to the judicial system, but it also motivates your attorney to win. So if you're dealing with an attorney who's simply billing by the hour, there is no motivation to win your case quickly. And that is just odd to me. Why is there no motivation to win the case quickly?

Brendon Osterbind: I think that we see that sometimes with defense attorneys who are billing insurance companies and the case drags on and on and on. There are some attorneys out there that we see this with more so than others. But if the case is dragging on, that means that the attorney gets to do more work on the file, and the more work on the file, the more money the attorney gets paid. We find that there are some attorneys out there on the defense side that have no motivation to settle the case. They would much rather go to trial because they can make more money that way.

Brendon Osterbind: Now that's not true of everybody. There are some really good attorneys out there, defense attorneys who are very honorable people and who will try to resolve a case when it needs to be resolved. Then there are just some insurance companies who just don't give a rip and they will do whatever they want, and the attorney will say, "I wish I had more money to give you, but that's all I have." So sometimes from that perspective, the defense attorney wants to resolve the case, but can't. It's the defense attorney who doesn't want to resolve the case and who just wants to bill the insurance company that I think illustrates this point, that your attorney has to be motivated to win your case, because in personal injury cases with a contingent fee, we only get paid a fee when we win.

Brendon Osterbind: That is as a business model, it's a blessing and a curse. We can have months where we're making a lot of money, months where we make no money. Most people don't see it that way. Our expenses are pretty much fixed. And even though we have fixed expenses, we have a rollercoaster of revenue. It's a motivating factor.

Brendon Osterbind: And just being completely frankly honest with you, it's a motivating factor for your attorney to resolve your case within a reasonable amount of time and not to spend exponential amounts of time on it just for the sake of spending that time. I think that's a waste of everybody's time. It's a waste of energy. And if the case can resolve for a reasonable value that a likely jury would award, then I think it should. And if it doesn't resolve in a settlement than it also pushes your attorney to try the case, because if the case just sits there and sits there and sits there, then your attorney is not making any money on that case. You're better off trying the case or getting it set for a jury trial so that the case can eventually resolve.

Brendon Osterbind: There are two ways that a case can resolve in a personal injury case. You can resolve the case by settlement, or you can resolve the case by verdict. One way or the other, the case needs to resolve, and your attorney needs to be motivated to resolve your case.

Brendon Osterbind: The third reason why we will use a contingency fee arrangement is that sometimes with great risk comes great reward. What do I mean by that? Well, an attorney when he or she takes a case on a contingency is taking a risk because if the case goes to verdict and it's a defense verdict, the attorney doesn't make any money, and at the same time, the attorney is taking costs that requires to bill this case up and spending his or her own money. So it might be in a case we could spend five, 10, 15, $20,000 of our own money to put this case in front of a jury, and that is a pretty significant risk when it comes to trying these cases, and with that risk ought to come a greater reward.

Brendon Osterbind: Let's just say if you took the hourly rate, you tried to calculate how many hours were put in on a case, and let's just say the hourly rate is a lot more than what a typical hourly rate would be it would serve as somewhat of a windfall to the attorney, if you will. In those situations, the attorney has taken on a great deal of risk in taking on that representation, because no matter what you got to keep pushing that case, and you got to keep spending that money one way or the other to get that case to where it will resolve. And if the attorney is taking on that great of a risk, there ought to be an equivalent reward.

Brendon Osterbind: In some cases it'll work out that the attorney will get a windfall because he didn't have to spend so much time on the case, and then other cases that work out to where the client will get a windfall, because the attorney had spent so much more time than the amount of money that he or she will get out of it. So there is a great risk when it comes to an attorney taking a case on a contingency, and I think that that has to be appreciated.

Brendon Osterbind: I was in a consultation with a free strategy session with a potential client a week or two ago. When I talked about what my fee was, this was an ERISA disability case, the potential client said, "Wow, that's a lot of money." And I said, "Well yes, but the alternative is to do it on an hourly basis and then I would require a deposit and most people simply can't afford to do that. And so as a means of providing access to the judicial system and access to the ability to win your case, we have to charge an equivalent amount to make it worth our time. You don't want an unmotivated attorney. Why would you want an unmotivated attorney to represent you on your case?"

Brendon Osterbind: There are motivating factors outside of money, of course, and I'll be the first to admit that. I am an achiever. That's my personality. So I like to achieve for the sake of achieving, but it's also nice to get paid for the work that you do. That is all something to consider.

Brendon Osterbind: And the last thing I'll say about contingency fee arrangements and why we need a contingency fee arrangement in injury and disability cases is because it reduces the risk of frivolous cases. Hello. Everyone complains about frivolous cases in our judicial system. And everyone wants to talk about tort reform and limiting exposure for businesses on certain things and limiting the amount that can be recovered in a medical malpractice case or in a personal injury case and all of that should just be thrown out of the window.

Brendon Osterbind: I'm just going to out there and say it; I'm a fairly conservative person politically. I don't like to talk about my politics often, but this is a point where I believe that conservatives have got the issue completely wrong. We should not be talking about tort reform. What is the original tort reform that we've already talked about in this podcast? The jury trial. If you think that an attorney can pull the wool over the eyes of a jury and get a verdict that the client does not deserve, then you're fooling yourself. I would ask you, once jury trials open up, to go sit in a jury trial, listen to the evidence, watch the testimony, hear the arguments, see the evidence that is presented to the jury and see how these things go along.

Brendon Osterbind: These are not frivolous cases, ladies and gentlemen. One of the reasons I will tell you that these are not frivolous cases is because I know when I take a case, I do not want a defense verdict case. Why don't I want a defense verdict case? Because I won't get paid. It's a contingency fee arrangement. And if I'm not going to get paid, why am I wasting my time on a case that has no merit? That's what you're saying are frivolous cases. So you want to limit the dollar number of a medical malpractice verdict. That's law in Virginia folks. Medical malpractice cases are capped at a dollar amount that is adjusted to inflation every single year.

Brendon Osterbind: We have to deal with this in evaluating medical malpractice cases, because if the client can have $5 million in medical expenses, but you know how much he or she can collect in a medical malpractice case? Let me tell you; 2.4 or 5 million. Even though the medical expenses are astronomically more than the cap, it doesn't matter; you are still capped at 2.4 or 5 million. That is just ridiculous. I think if a jury decides to award a medical malpractice victim $5 million, it ought to stand because a jury has seen the evidence, a jury has heard the testimony, a jury has heard the arguments, not just the arguments from the injured party, but also arguments from the doctor or the healthcare provider, and those arguments cut both ways.

Brendon Osterbind: The jury is the original tort reform. Let's rely on reasonable people who are selected by the attorneys and who have heard all the evidence to determine what the value of any particular case is. It is long past due that we do away with some of these restrictions that are so-called tort reform. They are not tort reform. They're flying in the face of the Seventh Amendment. The Seventh Amendment says that, "We shall preserve the right to trial by jury." Preserve it; not take it away. And that's what statutes like this do when they limit the amount of recovery that people can get. It takes away the right to a jury trial. If an independent jury of seven unrelated people who have nothing to do with this case, decide that the value exceeds the cap then the values should be upheld, not reduced to that cap.

Brendon Osterbind: There are all kinds of other proposals for tort reform that are out there that in my opinion, are ridiculous. Let us keep trying cases to the jury. Let the jury be the one who decides what the value of a case is. And if we get to the point where we try that case, and we put that issue in front of the jury, then the chances of an attorney taking a case that is "frivolous" are slim to none because you have to stand in front of seven people that you don't know, seven people who are not sitting there wanting to do me favors, those seven people are looking critically at me because they think that every personal injury victim is out to get money, which is completely false, by the way. Maybe we could talk about that in another podcast. But these perceptions of personal injury victims and medical negligence victims and personal injury medical malpractice attorneys are completely off base.

Brendon Osterbind: So not only are we dealing with these off base perceptions, we're dealing with these preconceived notions that tort reform is needed in our system. When we have the original tort reform, let's use it. Let's get back to trying cases to a jury. Let's ask a jury to decide the value of these cases. Let's ask a jury to say who's lying and who's telling the truth. Let's turn away frivolous cases by using a contingency fee arrangement. What lawyer in his or her right mind would take a frivolous case and try to turn it into money? And if you think that insurance companies and doctors or anyone out there, businesses, are just paying money for the sake of paying money, you're wrong.

Brendon Osterbind: Talk to a personal injury lawyer. Getting a recovery for our client against a business or an insurance company, or a doctor is difficult. It's not easy. And they don't just roll over and fork out their checkbook. They make you work for every dollar that you get. And if it's a frivolous case, they're not going to pay a dime. They would much rather pay the attorneys to go to court and stand in front of a jury and ask for a defense verdict.

Brendon Osterbind: I'll get off my high horse now. That's a bit of an issue for me. I feel like the conservative movement has gotten the issue completely wrong. Let's look back at what the founders put in place and say, "Yes, that's exactly what we need to be doing." Let's rely on normal people, such as yourself to decide these cases for us. And as long as the attorneys are using this contingency fee arrangement, this will flesh out those "frivolous" cases that everyone is so concerned at capping by statute.

Brendon Osterbind: Those are four quick and easy reasons for why we use a contingency fee arrangement. First, everyone has equal access to the judicial system. Second, it motivates your attorney to win your case. Third, with great risk ought to come great reward. And four, it reduces the risk of frivolous cases.

Brendon Osterbind: That's all for us today. I appreciate you sticking in and listening to this entire podcast. I hope it's been helpful. If you've liked what we've talked about today on this podcast, give us a five star review on Apple or Stitcher or wherever else you are watching or listening to this podcast. We would love to hear what you think.

Brendon Osterbind: If you have questions about personal injury or ERISA disability cases or workers' comp cases or med mal cases or anything that we do, you can see all those things listed on our website at wwwosterbindlaw.com. We would be happy to answer those questions, and maybe we can create a podcast just for you in response to your question. I think that would be awesome. If you are interested in getting on the podcast and maybe doing a question and answer conversation type of a podcast with me, reach out to me, send me an email at [email protected] I would love to chat with you about that and see how we can work together to provide value to the folks who are listening to this podcast.

Brendon Osterbind: I'm so grateful for all of you. This has really been a fun experience. Now that we are concluding our very first double digit pod, I just want to say, thank you for listening. It's been an honor. It's been a pleasure. We will see you back next week or so. We will publish another podcast and I'm looking forward to it.

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