Imagine you have been involved in a serious car accident. There are injuries, property damages, and one or more persons are likely to be out of work for several weeks, due to the accident. It’s easy to see how this type of situation can quickly lead to a civil suit and both parties will soon be concerned with what that will cost them. For the plaintiff, this is an especially important concern, because the answer may affect the damages he or she receives from the civil suit.
The good news is that you won’t need money up front when you work with a reputable personal injury lawyer. Personal Injury lawyers work on a contingency fee basis. This means that the attorney doesn’t get paid, unless he wins your case. It’s also very beneficial for the client as they don’t have to risk the costs of taking a complex case to trial.
The standard percentage among most personal injury lawyers varies greatly, though 25% to 40% is considered an acceptable range. Outlining this in practical numbers, a case which results in $90,000 in damages awarded to the plaintiff will earn the attorney a fee of $30,000.
In some states, there are other factors that may affect the attorney’s percentage. For example, some states require a shifting percentage, which is based upon the stage of your case, when the lawyer is retained, and the value of the damages awarded. Another factor has to do with the possibility of an out-of-court settlement. If the case settles before the defendant officially answers the complaint in court, the attorney percentage is usually lower. Conversely, a case going to trial will earn the attorney a higher percentage.
In the above example, suppose the defendant settled for the $90,000, before answering the complaint in court. In that situation, the attorney fee of 33% will earn him the $30,000 fee. However, if the case goes to trial in a state where the law allows the attorney to take 40%, the attorney can take a $36,000 contingency fee.
Of course, the attorney is required to discuss his fee arrangement with you, prior to signing a retainer. He should thoroughly explain his fee schedule and the conditions which may affect his percentage. As the client, it’s your responsibility to ensure you understand the terms and, if you find something confusing, you must speak up and ask the attorney to explain it further.
Because personal injury attorneys work on this contingency percentage, the initial consultation is often free of charge. During this first session, the attorney will go over your case with you and outline your best strategy. While the attorney can’t guarantee a win or any outcome, he can outline your best possible outcomes, based on the strength of your case and his past experiences. During this visit, the attorney will also discuss his fees, as well as how expenses will affect the amount you’ll be awarded.
You’ll also be responsible for paying expenses and fees associated with your case, but these expenses aren’t always paid up front. Instead of burdening the plaintiff with these costs as they happen, some law firms will foot the bill and deduct them from your damages in addition to the contingency fee. Other law firms may swallow the expenses as a cost of doing business and deduct them from their own share of the damages. It all depends on the laws of the state and the policies of the specific attorney’s office.
Expenses involved in pursuing a personal injury case include court fees, the costs associated with serving summonses and subpoenas, court reporter fees, costs of obtaining medical records and police reports, and expert witness fees. In cases where these expenses are expected to be paid by the plaintiff, the attorney may call his client as each fee is charged. If the client cannot pay one or more of the fees, the case will likely be put on hold, until payment is received.
Typically, the personal injury attorney will take his percentage from the “net settlement,” or the funds left over after all expenses have been paid. This is a common arrangement, but some attorneys may attempt to take their percentage from the gross settlement to increase their pay. It’s important for the client to object to this situation and insist on the more traditional payment arrangement.
The attorney may ask for an initial retainer in addition to a contingency fee. This can be a warning sign that the firm you’re working with may not have the resources to take the case all the way through trial. This will help the attorney get started on the case. In the event he wins damages for the plaintiff, the attorney will probably deduct that initial retainer fee from his contingency percentage, which is taken at the conclusion of the case. Using the previous example again, suppose the attorney requested an initial retainer of $2,000. Once the settlement of $90,000 was awarded at the conclusion of the case, the attorney would then take $28,000, instead of the $30,000 fee.
While that may seem like quite a bit of money and a very large percentage, in most cases the attorney earns that money. Certainly, a minor accident with just a few dents and bruises won’t require a lawyer, or even see litigation at all, more serious accidents are a different matter. You won’t just be battling a defendant in court; you’ll also be dealing with an insurance company eager for a quick settle. The settlement offered by insurance companies are often very low and not nearly enough to cover damages, so, for this reason alone, the 33.33% contingency fee for a personal injury lawyer may be well worth the cost. In the end, it’s up to you to determine if your case requires the expertise of a personal injury attorney.