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How Are Personal Injury Lawyers Paid?

May 13, 2019 | Auto Accident News

If you’ve been injured at the fault of someone else, you have probably considered hiring a lawyer, but you may be wondering if you can afford to pay attorney’s fees. You have likely already incurred many unexpected expenses due to your injury, and it may seem impossible to consider paying an attorney on top of these expenses. But personal injury lawyers are not typically paid based on an hourly fee and in most cases, you will not have to pay your lawyer anything up front. So how are personal injury lawyers paid?

The Contingency Fee

Most personal injury attorneys are paid using a contingency fee model—that is, their fee is contingent upon settling your case or winning it at trial. You may have heard commercials saying something to the effect of, “We don’t get paid unless you do.” This is what the contingency fee boils down to. If your attorney is not able to negotiate a settlement or does not prevail at trial, they don’t get paid.

There are several advantages to the contingency fee system. First, it allows people who have been injured, and who are already facing considerable hardship, to have fair and equal access to the justice system. It also gives clients peace of mind to know that, in the unfortunate circumstance that their case is unsuccessful, they will not be saddled with legal fees in addition to their other expenses.

The contingency fee model also ensures that your lawyer will do their best possible work on your case, since otherwise they won’t be paid for their efforts. Your attorney’s interests and your interests are completely aligned, so they have every incentive to win you the largest settlement possible.

Breaking It Down

So how does the contingency fee actually work? The attorney’s fees are deducted from the total amount of your settlement. Under this type of payment arrangement, attorneys are usually paid a percentage of the total settlement, rather than an hourly fee. This means that the more you get paid in settlement, the more your attorney also gets paid, which gives them an incentive to get you the largest settlement possible.

The specifics differ from state to state and from attorney to attorney, but a typical contingency fee is 33.3% or one third of the total settlement amount. Clients sign a contract with the attorney agreeing to all the particulars of the attorney’s fees, so you don’t need to worry about being surprised later on. Make sure you review the contract carefully and ask about any provisions you don’t understand.

Expenses

It’s important to be aware that the expenses for your case, such as court filing fees, deposition expenses, etc.—basically any money your attorney spends for services or items related to your case—are not included as part of the attorney’s fees and will also need to be paid out of your total settlement amount.

Talk about case expenses when hiring your lawyer. You may set a pre-determined spending limit. The attorney must get your approval for any costs above that limit. Or you may come to some other arrangement regarding expenses. Different attorneys will have different practices, so make sure you understand the specifics and that you are comfortable with the arrangement.

Another issue to be aware of is how exactly fees and costs are calculated. You will keep more of your total settlement if attorney’s fees are calculated after costs are deducted, rather than before. Most reputable attorneys do this as a matter of course, but make sure you have this in writing in your contract so you don’t get taken advantage of by unscrupulous lawyers.

Who Gets the Check?

It is common practice for your attorney to receive the settlement check. They will deduct their fees and costs and send the remainder to you. As we mentioned above, attorneys who work on a contingency fee basis are always taking the risk that they won’t get paid for some cases. So they want to be assured they will get paid for the cases they win or successfully settle. By sending the settlement check to your lawyer, the other side is making sure both you and your attorney get paid in a timely fashion.

What If You Switch Lawyers?

It’s unfortunate, but not all attorney-client relationships work out. So what happens if you part ways with your first attorney before the case is concluded? In general, that attorney will have a lien against your eventual settlement. They will be entitled to fees and expenses for the portion of the case that they handled.

However, if your lawyer is the one who decides to end their representation in your case, they are not usually entitled to fees or expenses. In either scenario, you will want to get the terms of their future fees, or lack thereof, in writing before moving on and finding a new attorney.

Other Fee Arrangements

While the contingency fee is the most common, some attorneys use other methods.

  • Mixed Hourly/Contingent: In this situation, you pay your attorney a reduced hourly rate as your case progresses, and they will also receive a percentage of the settlement if your case is successful.
  • Sliding Scale Contingency: This model takes into account how far your case progresses, and the contingency fee percentage increases accordingly. That is, your lawyer will get the lowest percentage of the total settlement if your case settles before a lawsuit is filed. They will get the highest percentage if your case continues all the way to trial.
  • Contingency Hourly: Like a normal contingency fee, the attorney only gets paid if they are successful, but instead of a percentage, they will calculate their hourly fees. This is not very common in personal injury cases. It may be used if your case goes to trial, and you win a judgment. Sometimes attorneys’ fees are included as part of the judgment, in addition to the damages paid to you. In this situation, your attorney may calculate their fee based on an hourly rate.
  • Hourly Rates: In this scenario, you would pay your lawyer by the hour while the case is in progress. When most people think of hiring a lawyer, this is probably what they picture; however, it is very rare for personal injury attorneys to charge this way.

No matter what arrangement you make regarding fees and costs, the most important thing is to get it in writing. All of the details should be included in your contract, and you should make sure not to sign it until you are sure you understand the terms and are comfortable with them.

If you have been injured, the experienced injury attorneys in Richmond, VA at Geoff McDonald & Associates are ready to help. Call (866) 369-9051 or contact us at our website to set up a free consultation.

Geoff McDonald and Associates: 866-369-9051.

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