When it comes to legal services, personal injury lawyers almost always receive monetary compensation for the work that they do and the services that they provide—except in pro bono cases when the lawyer agrees to work for free.
If you were in a motor vehicle accident, slip and fall accident, or some other accident in which you suffered serious injuries, such as spinal cord injuries, bone fractures, traumatic head or brain injuries, and/or other traumatic injuries, you may want to know how much a personal injury lawyer will cost. After all, many individuals involved in these types of accidents (and who suffer these types of serious injuries) do not have the money to pay for legal services.
Fortunately, even if you do not have money, that should not prevent you from being able to hire a lawyer since most personal injury lawyers work on a contingency fee basis. This means that the attorney’s fee and the costs of handling the case will be a paid from a portion of any settlement or judgment that the accident victim receives from his or her personal injury accident case. In most contingency agreements if there is no recovery, there are no fees or costs paid to the attorney.
If you are contemplating retaining a personal injury lawyer to represent you in your personal injury case, you should be sure to review the lawyer’s contingency fee agreement carefully and make sure that you understand everything. Your lawyer should be happy to answer any questions that you have about the agreement before signing it.
How Contingency Fee Agreements Typically Work
In a contingency fee arrangement, you will not owe your lawyer a fee unless and until you receive monetary compensation in your personal injury case. This compensation typically comes in the form of a settlement that you agree to before trial, or a judgment that you receive at trial. In other words, the payment of attorney’s fees is contingent on you recovering compensation (in some form) for your losses in your personal injury case.
Attorney’s Fee Percentage Under a Contingency Fee Agreement
Under a contingency fee agreement, at the conclusion of the personal injury case, your lawyer will be paid a percentage of your recovery as his or her attorney’s fee. The exact percentage is negotiable and appears in the contingency fee agreement.
Several factors determine the attorney’s fee percentage. These factors typically include whether the attorney will have to pay for case expenses, whether the attorney files a lawsuit or has to go to trial on your case, the complexity of the specific personal injury case, and the risk that the attorney is undertaking.
In personal injury cases that are more complicated, the attorney may require a higher contingency fee, as noted in the agreement. The same is true if the case involves significant risk or extensive costs are anticipated.
Another important factor is the question of whether your lawyer files a lawsuit in your case. If your personal injury case settles before your lawyer has to file a lawsuit, the contingency fee is typically lower. In most cases, the fee is somewhere around 1/3 of the total settlement offer.
On the other hand, if the parties cannot reach a settlement and the lawyer must file a lawsuit against the at-fault individual or entity, the fee may be 40 percent or more. The chance of an increase in attorney’s fees is especially likely if your personal injury matter ultimately proceeds to trial or arbitration. Again, any fee increase based on litigation should be clear in your contingency fee agreement, and you should direct any questions about these fees to your lawyer.
Finally, the amount of a contingency fee percentage may depend on whether or not the attorney is paying the litigation fees and expenses associated with your personal injury case—and if so, when he or she is paying those expenses. Litigating a personal injury case, no matter the type, always involves incurring expenses, including expert witness fees, discovery fees, filing and court fees, investigation fees, and overhead fees, such as copying documents and postage.
Under most contingency fee agreements, if the accident victim wins his or her personal injury case, the costs associated with these expenses will be reimbursed to the attorney who paid those costs in advance to achieve the recovery. Also, under the contingency fee arrangement, your lawyer may opt to take his or her attorney’s fee either before or after litigation costs and expenses are paid.
For example, let’s say the insurance company offered you an initial $30,000 settlement. You hired a personal injury lawyer, who helped you settle your case for $100,000. The lawyer takes out his or her contingency fee percentage (for example, 30 percent), and he or she then pays the litigation costs (for example, $15,000), making your total net recovery from the personal injury case $55,000. On the other hand, if your case settles for $100,000 and your attorney deducts the hypothetical $15,000 in litigation expenses before deducting his or her fee (30 percent of $85,000), you will receive $59,500 in net recovery.
In this example, even after deducting those fees and expenses, you have recovered far more than what you would have without your personal injury lawyer’s help.
Other Benefits to a Contingency Fee Agreement With Your Attorney
One of the greatest benefits of a contingency fee agreement with your attorney is that you do not have to pay if you do not recover any monetary compensation in your personal injury case. However, there are certain downfalls associated with these agreements. Sometimes, the attorney will ultimately end up being more compensation under a contingency fee agreement than he or she would have received by charging an hourly fee. This is especially true in personal injury cases that are valuable, yet simple to handle—and which may require only a letter or phone call to resolve completely. However the opposite is also often true, where the attorney works very hard to achieve a recovery in your case and the case results in a payment that is far less than what would have been paid if the client paid the attorney on an hourly basis.
In addition, an attorney may be less willing to take on a case where recovery is doubtful, even though the case may ultimately be successful, just because the attorney does not want to risk losing time and money. If the attorney does take your case, it’s a sign that the attorney believes in it.
Again, when it comes time to decide whether or not to retain a specific attorney to represent you in your personal injury matter, you should read the contingency fee agreement carefully and weigh all of the pros and cons for yourself. Learn more about the Bohn & Fletcher, LLP firm and what we stand for.