Understanding Contingency Fees in Personal Injury Cases: A Guide for Finding the Right Attorney
If you have been injured in an accident, consider hiring a personal injury attorney to help you get compensation for your injuries and damages. Most personal injury lawyers work on a contingency fee basis, meaning the attorney only collects a fee if your case is successful.
What is a Contingency Fee?
A contingency fee is an agreement between an attorney and a client where the attorney agrees to accept a fixed percentage of the recovery amount as legal fees for their services. This means the lawyer only gets paid if the case results in a settlement or favorable verdict.
With a contingency fee agreement, the client does not have to pay any upfront legal or hourly attorney fees. The attorney agrees to wait to get paid until the case is resolved. This allows injury victims who cannot afford high retainer fees to obtain legal representation.
Contingency Fee Agreement: What Should It Include?
When hiring a personal injury lawyer on a contingency, ensure you understand and sign their detailed fee agreement. This contract should clearly explain:
- Agreed upon contingency fee percentage
- What case costs are covered
- When expenses and fees will be deducted
- Compensation for associate attorneys
- Terms if client terminates the agreement
- Details on lawyer’s contingency fee structure
Read any fee agreement carefully before signing. Ask questions so everything is clear. Only sign a complete fee agreement.
How Does a Contingency Fee Work in a Personal Injury Case?
Here is how a typical contingency fee arrangement works:
- The client signs a contingency fee agreement with the attorney to hire them.
- The attorney handles the personal injury case from start to finish, including investigation, negotiations, and trial if necessary.
- The lawyer pays all case expenses as the case progresses. This includes costs like filing fees, expert fees, records fees.
- If the case settles or there is a verdict in the client’s favor, the attorney’s fee will be a percentage of the total recovery amount (usually between 30%-40%).
- The client receives the remainder of the settlement or award amount after the agreed-upon percentage is paid to the lawyer.
- If the case is unsuccessful, the client does not owe the attorney any legal fees for their work.
In summary, a contingency fee structure means the injured client does not pay anything up front or throughout the case. The attorney only gets compensated if they successfully settle or win the case.
What Does ‘No Win, No Fee’ Really Mean?
Many personal injury attorneys advertise that they work on a “no win, no fee” basis. This means the same thing as a contingency fee agreement.
If the attorney does not recover compensation for the client through a settlement or favorable verdict, the client does not owe any attorney’s fees. They only pay the agreed-upon percentage if the case has a positive outcome resulting in a financial recovery.
However, it is important to note that while the legal fees are contingent, the client may still be responsible for paying any case expenses if they do not win. Some contingency fee agreements require the client to cover the costs if the case is unsuccessful. Make sure you understand your fee agreement terms.
The Pros and Cons of Contingency Fee Arrangements
There are several potential advantages and possible disadvantages to retaining a personal injury attorney on a contingency fee basis:
- Allows injury victims who cannot afford high retainer fees to obtain legal representation
- The client does not have to pay any upfront legal fees or hourly bills throughout the case
- The attorney is incentivized to get the best possible settlement because their fee depends on maximizing the recovery amount
- The client only pays if the attorney successfully wins your case or secures a settlement
- Easy to understand fee structure – client pays a percentage of what is recovered
- The client has less control over the process since the attorney makes strategic decisions
- Lawyers may be incentivized to settle cases quicker for a lower value to get paid faster
- There is no guarantee that the case will be successful – the client receives nothing if the case is lost
- The client may still be responsible for case expenses if there is no positive outcome
Overall, contingency fees allow most accident victims to pursue a personal injury claim when they cannot afford it. However, clients should understand the arrangement thoroughly before signing a contingency fee agreement.
How Are Fees and Costs Handled in a Contingency Fee Basis?
In most contingency fee agreements, the attorney will pay the necessary case expenses as they arise over the course of the case. These expenses may include:
- Filing fees for court documents
- Fees for medical records and reports
- Fees for police reports and accident records
- Expert witness fees
- Costs related to investigations and evidence-gathering
However, some contingency fee contracts require the client to pay back expenses if the case is unsuccessful. The client is only responsible for costs without a settlement or verdict.
To avoid surprise bills, the client must understand their obligation to repay case expenses under the contingency fee agreement before signing. Responsibility for expenses should be clearly outlined in the written fee agreement.
What Happens If a Case Settles or Goes to Trial?
If a case settles, the lawyer receives their agreed-upon settlement percentage. If the case goes to trial and results in a verdict in favor of the client, the attorney’s fee is a percentage of the award. However, if the case is lost, the lawyer does not receive a fee, but the client might still have to pay for certain costs associated with the case, like court filing fees.
Do All Personal Injury Lawyers Work on a Contingency Fee Basis?
The majority of personal injury lawyers work on a contingency fee basis. However, there are some exceptions:
- Lawyers handling high-value or complex cases like medical malpractice may require an upfront retainer fee and take a percentage of the recovery.
- Some law firms offer free consultations but require a flat fee upfront if the client wants to hire them to take on the case.
- Government-employed attorneys and legal aid organizations do not charge contingency fees.
- In very rare cases, a personal injury attorney may work hourly, although this is not typical.
- For small, straightforward claims, some firms may charge a set predictable fixed fee rather than basing their compensation on a percentage of settlement/award.
So while most personal injury attorneys rely on contingency fee agreements, some exceptions exist. It’s important to inquire about the fee structure during your initial consultation. Refrain from assuming the lawyer works on contingency.
Frequently Asked Questions:
Q: How are contingency fees structured in personal injury cases?
A: Contingency fees can be structured differently, but the most common arrangement is the attorney receiving a percentage of the client’s final settlement or court award. The percentage can vary, typically around 33-40% of the total compensation. It is important to discuss the fee structure with the attorney and have it clearly outlined in the fee agreement.
Q: How do I find a personal injury attorney who works on a contingency fee basis?
A: To find a personal injury attorney who works on a contingency fee basis, you can start by searching online or asking for recommendations from friends, family, or other attorneys. Many personal injury law firms offer a free consultation, where you can discuss your case and fee structure with the attorney before making a decision.
Q: What should I consider before signing a fee agreement with a personal injury attorney?
A: Before signing a fee agreement with a personal injury attorney, you should carefully review and understand the terms of the agreement. Pay attention to the fee structure, additional fees or expenses, and the attorney’s track record and experience handling personal injury cases. Feeling comfortable and confident in the attorney’s ability to represent your best interests is also important.
Q: Can a personal injury attorney charge an hourly fee in addition to a contingency fee?
A: Generally, personal injury attorneys do not charge hourly fees in addition to a contingency fee. The contingency fee is typically the sole method of payment for their services. However, it is important to clarify this with the attorney during the initial consultation and clearly state it in the fee agreement.
Q: What types of cases are contingency fee agreements used in?
A: Contingency fee agreements are commonly used in personal injury cases, where individuals have been injured due to someone else’s negligence. These cases include car accidents, slip and falls, medical malpractice, product liability. If you have a personal injury claim, it is worth exploring the possibility of hiring an attorney on a contingency fee basis.
Contingency fee agreements allow accident victims who could not otherwise afford legal help to pursue fair compensation with qualified representation. The contingency fee model levels the playing field against big insurance companies and corporations.
By only paying legal fees after a successful outcome, injured clients can file a claim without having high hourly bills and expenses throughout the case. This allows more people to fight for the maximum settlement they deserve.
When searching for the right personal injury attorney, always ask about the lawyer’s fee structure before signing any agreements. Ensure you understand your payment obligations and what happens if the case is unsuccessful. Understanding the contingency fee agreement terms and asking questions protects your interests as you pursue your claim.