Why Do Some Tennessee Personal Injury Lawyers Charge Interest on Case Expenses?

The preparation and trial of a personal injury case requires the expenditure of time and money. Typically, personal injury lawyers work on a contingent fee, meaning that they do not get paid for their work unless they are successful. 

The expenditure of money for case expenses is handled differently by different lawyers. Some lawyers make the client pay for medical records and deposition costs as they are incurred.  This is relatively rare, but occurs.   They do this because (a) they lack the money to advance the expenses for the client and / or (b) they lack confidence in the likelihood of success of the case and do not want to put their own money at risk.  You should make every effort to find a lawyer to take your case who will not charge you for these expenses as they are incurred.

Other lawyers pay all of the case expenses as they are incurred and then deduct those expenses from the monetary recovery obtained in the case.  In the event that the case is unsuccessful, these lawyers will either ask the client to re-pay the expenses or will waive expense reimbursement.

Still other lawyers advance case expenses but charge the client interest on the expense advancement.  Typically, there are other charges, such as "file opening fees" or "discount fees" charged to the client as well.  The annual percentage rate of interest charge varies, but the charging of fees can increase the APR significantly.   At the end of the case, the client re-pays the expenses, fees and interest.  If the case is unsuccessful, either the client will be responsible for the expenses, fees and interest or the lawyer will assume responsibility for all charges and the client will have no financial obligation to the lawyer.

Why do some lawyers charge interest and fees on case expenses?  Typically, these lawyers lack the financial resources to invest their money in the case and go to a lending institution to borrow the money.  Alternatively, these lawyers have their money tied up in other investments, and do not want to liquidate those investments to fund case expenses for their clients.

These lawyers then pass the expense of borrowing money to the client.  The lawyer makes no money from such arrangements, but just passes off the cost of borrowing the money to his or her client.

There is nothing unethical about borrowing money to pay case expenses and passing those costs on to the client, so long as the arrangement is fully and accurately set forth in the contract with the client.

The fact of the matter, however, is that hiring such lawyers costs the client more money than hiring a lawyer who does not charge interest or other fees on case expenses.  The exact cost depends on the case, but the cost increases as expenses increase and the length of time the case lasts increases.  In complex cases requiring multiple experts and depositions, hiring such a lawyer can result in the thousands of dollars of extra costs.

As you look for a Tennessee  injury lawyer or Tennessee wrongful death lawyer, one question you need to ask is whether you will be charged interest and fees on case expenses and how much those charges will be.   At the Law Offices of John Day, P.C., we do not charge interest or other fees on case expenses.  And, if your case is not successful, you do not need to re-pay us for the money we spent investigating or preparing your case or pay us an attorney’s fee.  We believe our contingent fee adequately compensates us for our efforts, including advancing money for case expenses, and thus we do not impose extra interest and fees on our clients.