People often suffer serious injuries in accidents, including motor vehicle collisions, slip and falls, workplace accidents, boating accidents, pool accidents, and motorcycle/bicycle accidents, through no fault of their own. In these accidents, victims may suffer a bone fracture, spinal cord injury, traumatic brain injury (TBI), soft tissue injury, or some other type of physical injury. Accident victims may need to go to the hospital, undergo a procedure, and complete medical treatment and physical therapy.
When someone else causes the accident, then the injured accident victim may be eligible to file a claim or lawsuit against the at-fault person or entity. Injured accident victims often retain the services of personal injury lawyers to represent them in their accident cases. A lawyer can work with the at-fault party’s insurance company to try and negotiate a favorable personal injury settlement, and if that does not work, the lawyer may file a lawsuit on the accident victim’s behalf. The attorney can then litigate the case through the court system, and if necessary, try the case in court before a jury.
When an accident victim looks to retain an experienced personal injury attorney, the first question on the accident victim’s mind is usually, “what is all of this going to cost me in the end?” Fortunately, personal injury attorneys work on a contingency fee basis. This means that the attorney’s fee (if any) depends on how much you recover at the end of your personal injury case—either by way of a settlement or a jury verdict.
Before beginning representation, your lawyer will have you sign a contingency fee agreement—or CFA. If you have any questions about the contingency fee agreement and how it works, you should direct those questions to the prospective attorney who you may end up hiring.
What Is a Contingency Fee Arrangement, and How Does It Differ from a Flat Fee or Retainer Arrangement?
A contingency fee agreement is a legal contract between an attorney and a prospective client that establishes how the attorney will get paid at the end of the case. Under a contingency fee agreement, the lawyer does not get paid unless and until the client receives money in his or her personal injury case—by way of a settlement or jury verdict. If the accident victim’s case does not settle (e.g., such as when the at-fault party’s insurance company issues a liability denial in the case or the jury awards a zero-dollar verdict at trial), then the attorney will not be entitled to recover a fee.
In cases where the accident victim does receive a monetary award, the attorney’s fee will be calculated based on a percentage of the total gross settlement or jury award. In most cases, that fee is either 33 and one-third percent or 40 percent of whatever the accident victim gets awarded. For example, the lawyer may charge a 33 and one-third percent attorney’s fee if the matter settles before filing a lawsuit. However, the lawyer may charge a 40 percent attorney’s fee if the case does not settle until after the attorney files a lawsuit in the court system.
Contingency fee arrangements are significantly different from flat fee, retainer fee, and hourly fee arrangements. Flat fee arrangements are just that. Specifically, a client pays an upfront fee before the attorney beginning work on the case. Under a retainer fee arrangement, the prospective client pays the attorney a certain amount of money upfront, known as a retainer, and the attorney withdraws from that retainer as expenses add up throughout the case.
At the end of the case, the attorney typically refunds any leftover money to the client. Similarly, if additional funding is necessary throughout the case, the client may add to the retainer. Under an hourly fee arrangement, the client pays the attorney by the hour for services rendered based on a set hourly rate.
Fortunately, personal injury cases are almost universally contingency fee cases. Therefore, an attorney’s fee and expenses will not typically be charged in a personal injury case unless the accident victim receives an economic recovery in the form of damages.
What Factors Determine the Amount (or Percentage) of an Attorney’s Contingency Fee?
Under the professional ethics rules that apply to attorneys in various jurisdictions, a lawyer’s contingency fee must be fair and reasonable under the circumstances, and it must not be unduly excessive. Thus, when a lawyer sets the amount (or percentage) of his or her contingency fee in a personal injury case, there are several factors they consider.
Those factors typically include:
- The overall complexity of the case – One factor that is used to determine the contingency fee percentage is the complexity of the personal injury case. If the case is likely to involve a significant amount of investigation or where there is more risk on the part of the lawyer, then the attorney may charge a higher contingency fee than in a simpler case, such as a rear-end fender bender accident case.
- The experience of the lawyer – Generally speaking, a more tenured and experienced lawyer is at liberty to charge a higher contingency fee than a less-experienced attorney who has a limited number of jury trials and other court proceedings under his or her belt.
- Whether the lawyer must file a lawsuit – In many instances, personal injury attorneys charge a higher contingency fee if it becomes necessary to file a lawsuit in the case, as opposed to favorably settling the case before the time that a lawsuit is necessary.
- Whether the case ultimately goes to trial – If a personal injury case goes to trial—and receives a successful jury verdict—a personal injury lawyer is more likely to charge an increased contingency fee, pursuant to the agreement that the client signs at the beginning of the case.
A personal injury lawyer’s contingency fee percentage must not be excessive under the circumstances. In most jurisdictions, this means that the fee must not be greater than 50 percent, absent truly exceptional circumstances (i.e., an extremely complex case with multiple issues that need to be litigated at trial).
When Might an Attorney Not Receive a Fee Under a Contingency Fee Agreement?
Under a contingency fee arrangement, a personal injury attorney is not typically entitled to recover a fee (or expenses) if they do not receive a fair settlement or if the jury does not award money damages at trial. There are many reasons why an accident victim may not receive a settlement or jury award. For example, the insurance company may deny liability and refuse to offer the accident victim compensation to settle the case. At trial, the jury may believe that the accident victim—who has the burden of proving fault and damages at trial—failed to satisfy one or both of these legal elements. Consequently, the jury may not award the accident victim compensation in the form of damages at trial.
What Exactly Is a Contingency Fee Agreement (CFA)?
A contingency fee agreement (CFA) is a written, legal contract between a personal injury lawyer and his or her prospective client. The client is required to sign the agreement if he or she agrees to it. The agreement itself establishes the percentage of the settlement/jury verdict that the attorney will receive as a fee after the personal injury case.
Before signing the CFA, you should review the agreement in its entirety—both on your own and with your attorney. If you have any questions about the fee arrangement or the agreement itself, you should pose those questions directly to your lawyer. It is extremely important that you completely understand all of the provisions contained in the agreement that you are signing. Once you sign and return the agreement, your lawyer will assume that you understood everything in it.
What Happens After I Sign My Contingency Fee Agreement?
After you sign and return your contingency fee agreement (either in person, by mail, or via electronic signature), your personal injury lawyer can begin working with you on your case.
Specifically, your lawyer may assist you with:
- Investigating your personal injury case – In many personal injury cases, there comes a point when the case requires some investigation. For example, your lawyer may need to obtain a copy of the police report and speak with witnesses to your accident. The insurance company can use this information to assess liability and damages in your personal injury case.
- Obtaining the necessary documentation from various sources – Personal injury cases in most jurisdictions are accompanied by a lot of paperwork. Your lawyer can assist you with gathering all of the necessary documentation that they will later forward to the insurance company. For example, your lawyer can obtain a copy of the police report, all of your medical treatment bills and records, copies of all of your lost wage documentation, and photographs that depict the accident scene, property damage, and your personal injuries.
- Negotiating with the insurance company on your behalf – Once your contingency fee agreement is signed and your lawyer gathers all of the documentation and evidence, your lawyer can submit a settlement demand package to the insurance company on your behalf. Your lawyer can then negotiate with the insurance company in an attempt to garner a favorable settlement offer for you. In many personal injury cases, settlement negotiations are back and forth, with the plaintiff’s attorney making demands and counter-demands, and the insurance company’s adjuster gradually increasing its settlement offer on the case.
- Litigating your case in the court system – Many times, negotiations between the accident victim’s lawyer and the insurance company reach a stalemate. When that happens, the personal injury lawyer will need to file a lawsuit on your behalf in the court system for your jurisdiction. Most personal injury cases happen at the trial court level. However, just because your lawyer files a lawsuit on your behalf does not mean that your case will necessarily go to trial before a jury. Once the lawsuit begins, your lawyer may continue negotiating with the insurance company on your behalf. The case can still settle at any point in time.
- Taking your case to trial, if necessary – You, as the injured accident victim, have the ultimate decision-making power when it comes to accepting or rejecting a pending settlement offer. You may also decide to take your personal injury case to trial, in the event the insurance company is not willing to offer you reasonable and fair compensation to settle your case. If you ultimately decide to take your personal injury case to trial, your attorney will be your advocate in the courtroom. He or she can call witnesses in support of your case and introduce various exhibits, including copies of your medical records and bills. Your lawyer may also call an expert to testify at trial, such as a medical doctor or other health care provider.
Signing and returning an attorney contingency fee agreement gets the ball rolling on any personal injury case. Once you sign and return the agreement, your lawyer can begin working on your case and bringing it to a speedy and final resolution. In some instances, your case may settle, while at other times, you may need to take your case all the way to trial.
Speak to a Knowledgeable Personal Injury Lawyer Near You Today
A knowledgeable and experienced personal injury lawyer near you can explain his or her contingency fee agreement in detail before you sign it. He or she can then answer all of your questions and ensure that you know what is going on. Once you sign and return the agreement, your lawyer can enter an appearance on your behalf. Your lawyer will zealously advocate for you in settlement negotiations and throughout your personal injury case, pursuing the best possible result on your behalf and helping you recover the compensation that you need for your injuries. Contact Brauns Law, PC today.