The Recession and Client Cost Advances

People are becoming increasingly cost conscious. It is a natural reaction to the recession. This level of cost consciousness has already started to affect the way personal injury cases are handled and the dialog between injured clients and their attorneys.

It’s our practice to provide billing statements approximately once per month. However, we have had a number of new clients that request that statements be issued biweekly so that they can keep closer track of costs expended.

In Washington, attorneys are allowed to advance the costs associated with litigation. However, the Rules of Professional Conduct mandate that the client ultimately be responsible for these costs and is obligated to repay the attorney regardless of the outcome in his or her case. This shared responsibility (the attorney on the front end and the attorney and the client on the back end) coupled with the nature of the contingent relationship works to put the client in lockstep with the attorney (unless, of course, the client lacks the ability or intention to repay the costs in the event of an adverse result).

The Washington State Bar Association and Supreme Court of Washington toyed with the idea of changing the Rules of Professional Conduct to allow attorneys to enter into relationships with clients where the client is not obligated to reimburse costs advanced if there is a negative outcome and essentially allow attorneys to make (circumscribed) nonrecourse loans to clients.

This is viewed in Washington as a major step but in other states, such as Louisiana, attorneys are not only allowed to make nonrecourse loans for litigation expenses but also personal expenses.

It’s our understanding that in states like Louisiana this results in clients choosing not necessarily the attorneys who are most competent and are capable of handling the cases, but those who offered to loan them money. This obviously creates a perversion and something that we don’t want to see in Washington.

Do you think clients should be responsible for costs advanced by attorneys in their cases regardless of outcome? Do you think attorneys should be able to advance expenses to clients that are not necessarily related to prosecution of the case (for instance, by paying for medical treatment as opposed to just medical diagnosis)? This is a complicated issue. We’re interested to hear your thoughts.