Attorney contigency fee - construction defects

Our HOA is going to file a claim against the builder. Most likely it will be conducted in arbitration due to recent ruling in another state case, precedence. I'd like to hear your thoughts or experiences. We received a fee contingency basis offer from the lawyer. We are currently reviewing the fee agreement, but none of the board members have legal trial experience. It’s hard for us to comprehend which wording is unreasonable or could open us to great financial risk.

1. Is it good idea to hire another lawyer to review the contingency fee agreement?

2. If we don't get any settlement from the builder or lose the arbitration, will we need to pay our expert fees, court fees, expert witness fees, etc, except attorney fees? Is this common practice? What fees of the opponent would we also have to pay?

3. Is it common to include “recovery other than cash” clause in the contingency fee agreement in calculating value of attorney fees?

4. Is it common for attorney to give themselves sole discretion in choosing consultants or contractors to investigate client’s claim, client doesn’t have input in choices, in other words, attorney’s choice of consultants is not negotiable?

5. If the attorney terminates the relationship with client (us), are they allowed to reclaim attorney service fees from us? No matter whether the client or attorney terminates the agreement, is it common for the attorney to collect attorney service fees. Wouldn’t this cause the client to be quiet and follow whatever the attorney says with fear that they will terminate the agreement?

All comments are appreciated. Besides the above questions, could you provide any suggestions or tips from your legal proceeding experiences?

The questions you list should be asked of your Attorney. He or she can explain all your questions. Then if not satisfied seek a new Attorney.

Lisa,

I am not an attorney. I do not work in the legal profession.


This would be the same as getting multiple bids. I would not hire another attorney to look over the first attorney's agreement. However, I would meet with more than one attorney and discuss the issue and get various quotes/agreements for representing the owners. This provides two things:

1) allows you to compare agreements and, by this comparison, see what the norm typically is for your area.

2) find an attorney you feel comfortable with.


This is not an injury case where most attorneys will take a percentage of what they win. This type of case typically incurs legal expenses on an hourly rate for representation/research plus fees. Win or lose, you will be expected to pay these legal expenses.

The court may or may not award reasonable attorney fees and court costs to the winner.


Sounds like your attorney is basing some of their fees on a percentage of the damages awarded. However, if the issue is resolved by the contractor agreeing to fix the problem themselves, then no cash settlement is awarded. Since the attorney won the case by having the other side address the issue, they want to be paid and therefore would have some formula to calculate their fees if a settlement other than cash was awarded.


The Attorney works for the client.

Who is better able to determine what consultant or expert should be used in trial - you or the attorney? Similar to a Doctors medical opinion, an Attorney's legal opinion is provided based on their training and experience. If the client may chose to adhere to the opinion or not.


Typically an attorney will not terminate the relationship unless the client can't pay or the client refuses to take any of the attorney's advice.

Irregardless of who terminates a contract, you are responsible to pay for the services provided prior to the contracts termination.

Lisa,

I urge you and your Board to consult with 2 or 3 attorneys before deciding which one to go with.

Remember, you get what you pay for. If an inexperienced attorney charges $100 per hour but takes 5 hours to do research to answer a question and an experienced attorney charges $250 per hour but can answer the question in 1 hour (expecting both provide the same answer) which is the better bang for the buck?

There is nothing wrong with doing so but do not be surprised if attorney number 2 offers to do the job. There are more lawyers than paying clients. Also, expect attorney number 2 to charge you for his services.


This is common practice. Lawyers are not going to finance your case for you.

One of the serious risks of suing is that the losing party may be liable to the prevailing party for all of their costs. This includes attorney fees, witness fees, filing costs. The courts have a great deal of discretion in whether to award these fees.


Yes. If the attorney has agreed to be paid from the award of damages, he wants to be sure that he gets a percentage of everything.


If he is taking this on a contingency basis, which means he gets paid only if he wins, he is not going to do that if someone else starts calling the shots. This is normal practice. If you want to start making the legal decisions then you should plan on paying for an attorney by the hour.


It sounds precisely like what the client should do. See answer to question 4.

Essentially, this is the attorney's way of being sure that once you commence the lawsuit that you will see it to the end. He does not want to be left holding the bag if you get cold feet partway through or try to make a deal on your own with the defendant.

I did not read every reply, but this is my take on it.

I am a property manager in Colorado, and I have been through several defect litigation cases.

1) Have your general counsel look at the agreement. The contingency agreement sounds pretty standard, but again I'm not looking at it. The ones that I have seen are usually 33% of what is collected. That leaves the Association with quite a bit of money to make repairs.

2) If there are defects I would interview several defect firms. Look to see who has had lots of success and is well established.

3) If they are taking it on a contingency basis, chances are you have a good case and will collect.

4) It seems scary to put the Association on the hook for all the professional fees etc, but think about it this way. Even if you lose the case you would have to pay for them anyway to make the proper repairs. But chances are... You won't lose.

If you have stucco on your building, if doors and windows are getting stuck and are hard to open, water intrusion issues, roof leaking, balcony problems. Any of these issues are red flags of a substantial defect case.

Best of luck to you!

Your concern about revealing your HOA or builder information is up to you. It's probably irrelevant until the lawyer actually takes the case. However, let me give you a few words of warning that can save your HOA money IF you do indeed hire an attorney. First, only have 1 person from your board be responsible for the interaction between the lawyer and HOA. You don't want multiple people talking to the lawyer. Plus it needs to be understood that the lawyer is NOT for the individuals of the HOA to consult. The lawyer represents the WHOLE of the HOA. The members have a right to know the board has hired a lawyer on their behalf if they have agreed to it. Discretion can be made on how much detail is released as to keep it informational and general.

2nd tip after you hire a lawyer is to keep email, phone calls, or other methods of communication to a minimum. Lawyers after hired tend to charge for every email, phone call, or communications they make with their clients. So be careful if you leave a message to be called back. If you can't get them live on the phone, then just say you will call them back without leaving your information. Just find out when they will be in the office. You leave your information/name they may consider consultation and record it as such. So make sure to ask what all the lawyer charges for when you sign that dotted line. I found out it was $28 for a phone call!

I agree that I think this issue can still be resolved without a lawyer. It's part of the "Punch list" that many builders have with their clients. It's that list of details of repairs that need addressed before the builder walks away. This is what it sounds like to me on your building issues. The builder sounds like they are still willing to work on this punch list before leaving. Take advantage of it but don't toss a lawyer in to make things more difficult. Work things out first without the attorney. If you have issues your nervous about, then hire your own private attorney to consult and NOT use the HOA's money. Don't force all your neighbors into paying a legal bill they may not need.

Again, Lisa, I'm short on time. Larry is right!! Do NOT let your board try to deal with this. Before I lived here, the Board tried to negotiate with the developer, who charmed & stalled the Board long enough that a statute of limitation on one of our defects was blown (had expired). The cost to fix it? $410,000. You probably know by now that It is a huge mistake to believe that you have 10 years to file for defects. That's just plain wrong! This is especially the case if you fall under(CA) SB800, which for some kinds of defects only gives you a year or two.

Tell me again how old your HOA is. How many units? Detached homes? Or what configurations.

You mentioned something about "sound transference." Generally defect legal action in Cali only will cover "damage" that's been caused by a defect. I don't think you'll have case about sound transference. Or aesthetics/cosmetics. Stucco damage from water, probably. Water coming in windows, most likely. But, cosmetics?? Not likely.

Ask your defect attorney about the Aas (pronounced Oz) defense that the developer's attorney will use.

(No disresepct, but I suggest that Melissa's advice not be followed on this topic.)