QUESTION: About two years ago, my wife and I bought a new Winnebago motor home. I won't go into all the details, but will say that it has been a real pain. At one point, to get the dealership to agree to take it in for warranty repairs that should have been free, we were forced to sign a release of legal rights against Winnebago and the dealership.
My question has to do with finding an attorney. We have met with a lawyer who is quite knowledgeable about these types of cases. However, he is not willing to take our case on a contingency fee basis. All our friends say that this is not reasonable, and that most attorneys advertise that there is no legal fee unless we win or settle.
What gives here?
D.K., Suffolk, VA
ANSWER: Obtaining professional advice and assistance is quite expensive. For example, I am convinced that my dentist charges over $600 per hour for dental work! However, he is outstanding, and I have no real alternative.
Attorneys generally are retained by one of three payment plans. A fixed fee or flat rate is charged for work that is straightforward, such as for real estate title work and closings. I understand that the custom for bankruptcies is to charge a fixed fee at the outset.
The second way some attorneys charge is a "contingency" fee, as you know. The specific contingency is usually "success," through settlement or litigation. We often hear that these fees are between 30%-40% of any recovery eventually received. For example, in an auto accident case with personal injuries, the attorney might accept the case if the fee is 33% of the recovery via settlement, or 40% of the recovery if a trial is required. Most of the time the client is required to advance funds to cover filing fees, expert witnesses charges, and other costs that come along.
I often explain that this type of agreement results in a "free" lawyer unless something really good happens! The risk to the attorney is fairly obvious -- if a lot of time and effort only results in a small recovery, or even no recovery, he or she will not be able to pay the bills of running a law office. For example, if 100 hours of lawyer time are required to collect $10,000, and the fee is 33%, the lawyer recovers only about $33 per hour. If the office overhead is $100 per hour, the attorney in effect is paying out of his/her pocket $67 per hour for the privilege of representing a client. Obviously this arrangement would never work in many small-value consumer-type cases.
The hourly fee is the third way to compute fees and is the standard in the legal industry. This can be the lowest legal fee if the matter is resolved at an early stage, or the largest fee if a two or three day jury trial is required. In warranty disputes with motor home manufacturers and their well-heeled defense attorneys, legal fees of $30-50,000 reflecting two or three years of litigation would not be that unusual. To help good clients with solid cases, some lawyers offer monthly installment plans for collecting a portion of the fees and expenses. For example a commitment to pay $1000 per month would cover the costs of litigation (filing fees, experts, deposition transcripts, etc.) and a small portion of the attornes hourly fees. Here, the attorney hopes for a successful resolution that will permit him or her to get paid. However, for many, paying out an extra $1000 per month for legal fees would be prohibitive.
Actually there is a fourth category of fee arrangement: the "hybrid." All this means is that the client and attorney agree to an arrangement that might include all of the features of the three standard plans discussed here. As an example, an attorney might require a $5000 up-front, fixed fee to take case, a reduced hourly fee rate, a percentage of any recovery, and monthly installments to help stay out of debt.One final point: always require a written fee agreement before agreeing to retaining an attorney. The contract should be in sufficient detail to explain how the fee will be computed, and what obligations exist for client as well as attorney. In my agreements, we use a dispute settlement clause calling for arbitration of any fee or related disagreements that may arise. Arbitration is much less costly than the alternative, and the Virginia State Bar has a free arbitration program that is extremely fair and definitely underutilized.
In conclusion, for a warranty claim against Winnebago and your dealership, you should expect a seasoned attorney to offer an hourly fee arrangement, perhaps with an installment plan for your payments; it might include some of the aspects of a hybrid contract as well.
CONSUMER INFORMATION: or many consumer products, such as refrigerators, computers, boats, jet skiis, etc., warranty law exists to provide a remedy if needed. For example, if the new refrigerator keeps breaking after each repair effort, the consumer may decide that it will never be right, and make a formal warranty claim. To obtain a free brochure on warranty law and rights in Virginia, send a self-addressed, stamped envelope to Car Law at the address below.
NOTICE: The responses published herein are fact specific and intended for general educational purposes. These responses are not intended as a substitute for advice from your own attorney on your particular circumstances. Car Law may be contacted at 703-243-7938, by logging onto the Web at http://www.carlaws.com, or by Email at lemonlaw@erols.com. Attorney Swann's office address is 1110 North Glebe Road, Suite 200, Arlington, VA 22201-4795.
