USA Law and Practice Contributed by: Courtney Scobie and Jack Edwards, Ajamie LLP
2.6 Contingency Fees Contingency fees are permitted in the USA, and they are a common fee arrangement in civil litigation, par- ticularly in personal injury cases. This fee arrangement allows attorneys to represent clients without the client having to pay upfront legal fees. Instead, the attor- ney’s fee is contingent upon the successful outcome of the case. Some key features of contingency fee arrangements are as follows. • Percentage of recovery – in a contingency fee arrangement, the attorney’s fee is calculated as a percentage of the monetary recovery obtained through settlement or judgment. • No win, no fee – the defining feature of a contin- gency fee is that the attorney gets paid only if the case is successful. If the case is not successful, the attorney receives no fee. • Costs and expenses – in addition to the contin- gency fee, clients are generally responsible for reimbursing the attorney for case-related costs and expenses, such as filing fees, court costs, expert witness fees, and other out-of-pocket expenses. Depending on the terms of the agreement, the cli- ent may be responsible for these costs even if the case is unsuccessful. Ethical obligations require that a contingency fee arrangement is fair and reasonable to the client. The contingency fee provision must also be clear and transparent. 2.7 Time Limit for Obtaining Third-Party Funding There are typically no time limits by which a party to litigation must obtain third-party funding in the USA. It is advisable for parties to explore funding options early in the litigation process in order to allow suf- ficient time for negotiations and to ensure that their financial needs are met.
demand letter to the potential defendant explain- ing the dispute and suggesting a specific resolution. Some areas of law or contracts may require specific actions – such as exhausting administrative remedies, sending a demand letter, or mediating a dispute – before filing suit. However, unless required by statute, rule or contract, parties are generally not obligated to negotiate or mediate before filing a lawsuit. 3.2 Statutes of Limitations Statutes of limitations are time limits that determine the deadline by which a plaintiff (the party bringing the claim) must file a civil lawsuit. These time limits can vary based on the type of claim, the discovery of certain information, and the applicable jurisdiction. The trigger for the statute of limitations can vary based on the specific claim and specific facts of the case. In some instances, the clock starts ticking when the plaintiff discovers or should have discovered the harm Personal injury claims, such as those resulting from accidents, generally have a statute of limitations that ranges from one to three years. The statute is typically triggered on the date of the injury or the date when the injury should have been discovered (ie, the aforemen- tioned discovery rule). Contract Claims (the “discovery rule”). Personal Injury Claims Breach of contract claims generally have a statute of limitations that ranges from three to ten years, depending on the jurisdiction and the terms of the contract. The statute is typically triggered on the date of the breach. Property Damage Claims Property damage claims, such as those related to damage to real property, generally have a statute of limitations that ranges from one to six years. The stat- ute is typically triggered on the date when the damage occurred. Fraud Claims Fraud claims generally have a statute of limitations that ranges from one to six years. The statute is typi- cally triggered on the date of the fraud.
3. Initiating a Lawsuit 3.1 Rules on Pre-Action Conduct
Before filing a lawsuit, it is often prudent to engage in good faith negotiations and communication to try to resolve the dispute. This may involve sending a
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