Chi phí tố tụng trong chương trình EB-5

The cost of litigation can be very high and it is always more economically suitable for investors in a particular project to work together if they wish to pursue litigation against the parties they have invested with. Most attorneys (including litigators) charge for their services using an hourly rate. These rates are frequently many hundreds of dollars per hour–and given the unpredictable nature of litigation, there may be hundreds of hours involved. In these instances, the client usually also has to pay for the expenses associated with the litigation, including court fees, travel, translations, experts, etc. However, certain litigation attorneys who litigate cases for the sole purpose of collecting money will agree to handle the matter on a contingency basis or a semi contingency basis. In other words, these attorneys cover all of the costs associated with the litigation and will forgo any reimbursement or compensation until the case is resolved. And only if the case is successful will they be reimbursed (for the expenses they laid out) and paid (for their time and effort) from the amount that is recovered. In addition, some attorneys will agree to a “hybrid” fee structure, which may include a fee cap, a fixed budget, or a lower hourly rate with a lower contingency fee.

Funding for a Good Legal Team

Many investors will hesitate to hire another attorney, given the large sum of investment money they have already invested into the NCE and the other sunk costs paid for their EB-5 petition. However, the opportunity cost of not hiring an attorney might be losing a significant part–if not all–of one’s investment fund. Given that EB-5 investment issuers shield themselves from liability in their complex legal documents, litigation attorneys are a necessary protection against corporate threats and malfeasance during the EB-5 process. Investors should ensure their attorney is independent from the RC or any other party involved in litigation so that the attorney is generally looking out for their best interest.

The total cost of litigation is estimated based on:

• Number of parties represented (the plaintiffs)
• Amount of parties being sued (the defendants)
• Complexity of case/extent of fraud
• Jurisdiction the case will take place in
• Collectibility (i.e. whether the defendants can pay for damages)
• Interparty relationships
• Need for translators

Funding for attorneys is usually based on an hourly rate agreed to by both the attorney and the investor. In some cases, the attorney can offer contingency rates, in which the attorney funds the litigation costs themselves. Attorneys may offer contingency funding for a case based on the likelihood of winning, the collectability of the defendant, the jurisdiction, and other considerations. In these cases, an attorney has a financial stake in a case, and they only receive payment if their client wins the suit. However, when an attorney pays contingency for investors, they usually take a 40% cut of the financial recovery (i.e. damages) earned by an investor at the end of a trial. In some cases, the total attorney fee is decided by the court once the case has been won.

Additionally, if a pooled group of investors cannot pay steep legal fees, there are attorneys who work with litigation funders. Litigation funds are third parties who will fund an investment lawsuit with no upfront costs to the client.

Some investors may be tempted to restrict an attorney’s preparation time to cut down on paying their hourly rate. However, giving an attorney more time to prepare sturdy lawsuits usually means an investor group has a better chance at a successful litigation (less time = paying less money but higher chances of losing the suit; more time = more upfront cost in exchange for better prepared evidence for a suit). An attorney must compile a large amount of evidence, frequently collected through the “discovery” process, for the plaintiffs they represent. Plaintiffs bear the “burden of proof”, meaning they must be able to prove the defendant’s wrongdoing. An investor who heavily prepares for discovery with their attorney is likely to have more legitimacy in court than plaintiffs who are disorganized and unprepared.

In some cases, investors may qualify for full cost coverage of their litigation by a third party called a “litigation fund”. Investors with a clear-cut fraud case can apply for funding through these litigation funds, as long as the financial return from winning litigation is high enough to bring in a profit for the fund. These organizations look for high returns on their “investment” into the litigation, meaning they seek out cases in which the financial return is on average eight to ten times higher than the cost of legal fees. At the end of litigation, these organizations will take a substantial amount of the investor’s recovered damages in the same manner as a contingency case. The advantage here is that attorneys will be paid hourly fees by the fund. In “class” cases, an outside litigation fund is rarely, if ever, used. Some attorneys have strong working relationships with litigation funders, and litigation funders are usually very interested in evaluating new potential matters.

If a litigation fund seeks to sponsor an investor’s litigation, the benefits often include no costs incurred by the investor other than contingency fees. Additionally, this arrangement enables investors to work with lawyers who were previously outside of their financial reach, and allows lawyers to take on important cases without working “pro-bono” or at an extremely discounted rate.