Contingency Fees in Personal Injury Cases
Personal injury attorneys usually work on a contingency fee basis. The word contingency is defined as “a future event or circumstance which is possible but cannot be predicted with certainty.”
The future event in question here is the outcome of your case and whether your attorney gets you an award. Your lawyer gets paid after your case is over. There are no upfront fees, and you do not pay while the case is open. This is how most fee agreements work.
Personal injury lawyers pay themselves a certain percentage out of your settlement award. Amounts will vary, but the average contingency fee ranges between 33%-40%. For example, if your award amount is for $6,500 and your attorney charges a 35% contingency fee, she would receive 35% of that amount for a total of $2,275 (35% X $6,500 = $2,275). You would receive the remainder.
Contingency fees are only billed when you receive an award. This does not include settlements for property damage. For example, if the insurance company denies your injury claim but settles for the total loss of your car, your attorney wouldn’t touch your property loss settlement.
Attorney Costs and Expenses
Attorneys have to incur their own costs to handle your case. For this reason, some offer free consultations. Not only are these visits to provide you with guidance and to explore your legal options, but it’s also an opportunity for an attorney to determine if this is a case that will merit her own time and resources.
What Are Some Attorney Costs and Expenses for Personal Injury Cases?
While attorney fees may sound excessive, the truth is that many of those fees go toward costs in handling your case. They can range from a few dollars for a police report to thousands of dollars for expert testimony such as medical examiner services.
In addition, your attorney has to pay salaries for their in-house staff, like their legal secretaries and court filing fees. Working with the legal system is not cheap, and it’s impossible to escape administrative fees.
A portion of attorney fees goes toward covering these expenses. So, what your attorney ends up taking at the end of the day is less than the contingency fee amount.
Sliding Scale Personal Injury Fees
In some instances, your attorney may agree to a sliding scale fee structure. A lot of your lawyer’s job is to negotiate with the opposing party. Each offer is followed through in writing with a demand letter. This can be a lengthy process with a lot of back and forth negotiating. If both parties refuse to settle the case it could go to trial.
In a sliding scale fee structure, your attorney might charge a different percentage depending on the stage at which your case settles. Usually, the sooner it resolves, the lesser the fee.
To give you an example, if the opposing party offers a pre-trial settlement the fee might be 33%. On the other hand, if the case goes to trial, it means your attorney has to spend more time and resources on handling your case. Going to court or arbitration would require additional time and expenses for preparation such as obtaining depositions, litigation fees, and travel expenses to and from the court. It could also mean you receive a more substantial award amount, or nothing at all if the jury decides against you.
But assuming your case does go to trial and the jury awards you a settlement, a sliding scale fee agreement could mean that your attorney takes 40% instead of 33%.
Medical Liens and Other Fees
If you were injured in an accident, you more than likely sought treatment for those injuries. In most cases, the other party’s insurance company would include your medical expenses in the award settlement. You are still responsible for paying for your medical treatment.
If your award amount includes $3,000 for medical bills, your medical providers still expect to be paid $3,000 and would hold a lien for their share of the costs.
Only after all liens have been paid, do you receive the final amount. Technically, your personal injury attorney is also a lienholder on your settlement amount.
Your Personal Injury Settlement Check is Sent to Your Attorney
Settlement checks are directly sent to your attorney’s law firm. Your attorney is responsible for issuing payment to lienholders on your behalf. Only after lienholders have been paid will you receive your portion of the settlement from the law office.
Looking at the Numbers in the Final Statement
Your settlement check will include a final statement and may look something like this:
Settlement Award: $50,000
Expert Witness Fees: $1,000
Court Reporter Fees: $500
Court Filing Fees: $100
(33% Contingency Fee) $16,500
Net Settlement Amount to Client: $31,900
Isn’t it Most Cost-Effective to Represent Me?
This question may not come up for someone who has a serious case that could go to trial. Most people are not inclined to do the job of an attorney represent themselves in court.
But, you might ask yourself this you were in a less severe car accident where your injuries did not require going to the hospital:
“Won’t I get more money if I just handle my own claim and not worry about paying a lawyer?”
To answer this appropriately really depends on several factors, but it mostly depends on the details of your accident case and the severity of your injuries. For example, if the facts of the accident are complicated and liability is disputed, it’s more likely you’ll need an attorney. But even in cases where liability is clear, if you have severe injuries, you might still need the legal expertise of an attorney.
Just because the other party accepts responsibility does not mean the insurance company will not question your injuries that the costs of your treatment. Accepting liability does not mean agreement with the value of your injury claim. An insurance company can analyze your medical bills and question the severity of your injuries. In fact, they can outright deny your claim or offer you an award that’s substantially less.
It might make sense to represent yourself in cases where there are no injuries or minor ones. However, handling your own claim doesn’t come without risks. It’s easy to assume you’ll receive 100% of the total settlement, and while that is true, the final settlement could be substantially less than it could have been with legal representation.
For this reason, your first visit with your attorney is an opportunity for both lawyers and clients to get to know each other and for you to get the right legal advice. Even if your attorney doesn’t take your case, you lose nothing by receiving legal advice during a first meeting.
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