Why Do Personal Injury Lawyers Work on a Contingency Fee Basis?
If you need to file a personal injury claim, you may be worried about the cost of hiring a lawyer. Fortunately for accident victims, the majority of personal injury lawyers work on a contingency fee basis. Depending on your situation, this could help you receive the compensation you need to recover from your accident and move forward.
What is a Contingency Fee?
Most personal injury cases operate on a contingency fee basis. This means that the lawyer collects their compensation from their client’s settlement or jury award. With this type of agreement, the lawyer represents the plaintiff without any money upfront. The plaintiff only pays the lawyer if they win the case. If they do win, the lawyer receives the settlement check, deducts their percentage fee and other expenses, and sends the rest of the money to their client.
It’s important to note that there could be additional costs and expenses tied into your case after it settles. A personal injury lawyer will typically keep track of the money they put out for your case and deduct the total from your award. This deduction is in addition to their contingency fee percentage. Common expenses include obtaining medical records or police reports, postage, filing fees, costs for investigators, experts, or witnesses, or depositions. By the time all is said and done, the fees, costs, and expenses could total between 45 and 60% of your final award.
Contingency Fees and Percentages
Most contingency fee agreements give the attorney one third or more of the final settlement or award. For example, if you receive compensation for $60,000 from the at-fault party’s insurance company, your lawyer will receive $20,000. Prior to signing any agreements, you can try to negotiate a reduce percentage or alternative agreement.
Some law firms operate on a sliding scale basis. This means that the percentage of the award they receive can change depending on when the case is resolved. If you settle early on, the percentage is likely to be lower than if you need to proceed to trial.
Pros and Cons of Contingency Fee Agreements
The biggest advantage of agreeing to a contingency fee is that if you lose your case, you don’t pay the lawyer. This not only encourages your lawyer to build a strong case on your behalf so you win, but it allows people who otherwise would not be able to afford a lawyer to take legal action.
The primary disadvantage of a contingency fee is the final cost. As discussed, the agreed-upon fee is typically 33 to 40% of the final award. So regardless of whether it takes your lawyer one week or one year to settle your case, they receive the same payout. With a risky case, an attorney may want to negotiate a higher fee. Or, they may avoid high-risk cases altogether, because they’re under no obligation to offer contingency fees.
If you’re filing a personal injury claim with the help of an attorney, it’s more than likely you’ll be under a contingency fee agreement. Prior to signing any paperwork, be sure to scrutinize and understand the agreement completely. Know what you are responsible for and what percentage of your award will go to your lawyer if you win. This will ensure you don’t run into any surprises in the future.