Not a lot of people go into business or law thinking that they themselves will be sued. It takes away from the positivity behind starting out. Unfortunately, there is always the risk that a lawsuit will be brought against any type of business, service or law office due to negligence or errors & omissions. When this happens, the first thing that comes to mind is, “How much is this going to cost if I lose?” What should also be asked is, “How much will defense cost me?”

If you are sued, it is important to not only have the right attorney who can protect against lawsuits, but to also have insurance in place to provide company protection. This kind of insurance can be purchased locally like with professional liability insurance in Indiana options. While the total legal defense costs can vary depending on the suit itself, there are extra fees added on that you need to be prepared for.

Here’s a breakdown of what can generally be expected when it comes to lawsuit defense fees.

Contingent Fees

These fees are attorney fees based on results. In general, clients won’t have to pay the lawyers unless the client wins the case. Contingency agreements allow the lawyer to hold on to about 33% of the money damages a client receives after a successful case. The silver lining of the possibility of not winning a case is that the client typically doesn’t have to pay anything to a lawyer if they lose.

Retainer Fees

Lawyers are paid a set fee with retainer fees, possibly connected to what their hourly rate is. Think of a retainer as a down payment on lawsuit protection fees. This is usually placed in a special and specific account and the cost of services is taken out of this account. Retainer fees are non-refundable unless the fee is considered unreasonable by a court or judge.

Additional Costs

Attorneys may charge clients for personal work on a case, not to mention expenses and costs related to the daily grind of research and representation. Some extra costs include travel expenses, mailing postage, photocopying, filing fees with the court, costs of serving papers, etc. Even if a lawyer is working pro bono they may still require reimbursement in the end.

Lastly, don’t just consider the monetary costs of a lawsuit. Regardless of the case’s outcome, there is still the potential for secondary costs. Reputation damage and the subsequent drop in business are common effects of a lawsuit, and they can be even more difficult to overcome than the suit itself. Also consider the time that it will take your business to work through the lawsuit to a conclusion; this could also affect your business’s output.