Most personal injury firms charge clients in a fairly unique way -- as opposed to the hourly fee that many firms charge in other types of cases. The typical personal injury firm will charge a "contingency fee" to take an injury case. A contingency fee means that the firm will not get paid any attorney’s fees unless you recover money in your case. The law firm will get paid a percentage of money received from any injury settlement or jury verdict.
In this article, we'll take a closer look at how contingency fees work and what you can expect if you decide to hire a lawyer to handle your injury case.
The Contingency Percentage
The percentage that a personal injury lawyer can receive in a contingency fee agreement varies from state to state. The percentage typically ranges from 25 to 40 percent, and 33.33 percent (or one-third) is pretty standard. If you have a 33.33% contingency fee arrangement and you recover $90,000 in your car accident case, your attorney will receive $30,000.
Some states have shifting percentages based on the stage of your case and the amount of money recovered in your case.
A contingency fee may depend on whether or not the wrongdoer (defendant) in your case has responded or answered your legal complaint in court yet. If the case settles before there is an answer to your complaint in court, the allowed percentage is typically lower.
However, if settlement occurs after the defendant serves a formal answer to your complaint or if the case proceeds to trial and a jury verdict is reached, the allowed percentage may increase.
As an example, suppose you sent a demand letter to the wrongdoer in your case and you quickly reached a settlement agreement for $90,000. In this situation, the attorney would again receive $30,000 (33%). However, suppose that the case instead ended in a jury verdict of $90,000 and your state allows an attorney to receive 40% of a recovery after the complaint is answered. In this situation, the attorney can recover $36,000.
It is always important to speak with your attorney about the contingency fee and to carefully review the contract for legal services. If you do not understand the fee arrangement stated in the contract, ask your attorney to explain it to you.
Fees and Expenses
Depending on the law firm and your contract for legal services, you may or may not be responsible for upfront court fees and other litigation expenses.
These fees and expenses include court filing fees, cost of serving summonses and subpoenas, costs of obtaining medical records and police reports, court reporter fees, and expert witness fees.
Many personal injury firms require the client to pay the above-mentioned fees as they become due. If your contract states that you are responsible for these costs, you can expect a personal injury firm to call you and seek payment as the fees become due. If you cannot pay these fees, your case will likely not proceed until there is a payment.
Other personal injury firms (typically large firms), will cover all fees and expenses. However, the fees and expenses will be deducted from your settlement or final judgment. Again, let’s say that you settled your car accident case for $90,000. This time, your contract stated that costs and expenses would be deducted from your share of the settlement. Your attorney incurred $5,000 in costs and expenses. In this situation, your attorney would receive $30,000 for attorney’s fees and an extra $5,000 as reimbursement for the costs and expenses. You would end up receiving $55,000 as a final recovery ($60,000 - $5,000 = $55,000).
Other Fee Arrangements
Not all personal injury cases will involve a pure contingency fee arrangement. Personal injury firms may collect an initial retainer to begin your case and also collect a contingency fee at the end of your case. However, if you recover money in your case, the amount already paid to the attorney should be subtracted from the percentage that is due to the attorney at the end of the case. For example, if you paid $2,000 to the attorney as a retainer and recover $90,000 in settlement. The attorney will receive $28,000 from the settlement ($30,000-$2,000 = $28,000).
Most personal injury cases will not involve a flat fee payment for legal services. Flat fee arrangements are typically reserved for less-complex cases. A law firm may charge a flat fee where the legal representation is limited to drafting and responding to a demand letter. In that case, the fee may range from $300 to $1,000.