The amount that a lawyer will charge in legal fees depends on a variety of factors, including the type of case and the complexity of the legal issues involved. In most personal injury cases, including cases that involve medical negligence and medical malpractice, attorneys work on a contingency fee basis.
Under a contingency fee arrangement, the attorney only receives compensation if the client obtains a settlement award or favorable jury verdict. When that happens, the attorney will take a portion of that gross recovery as their fee, based on the terms of a contingency fee agreement. Other types of attorney fee agreements include flat fees, hourly fees, and retainer agreements.
Before retaining legal counsel to represent you in a case, understand the attorney’s fee agreement (which must be in writing) before you sign. The lawyer with whom you are consulting can answer any questions that you have and explain exactly how they assess fees. Before retaining counsel to represent you in a case, consult several lawyers and choose the attorney who is right for you and your case, and who offers you the most favorable terms.
Types of Cases Typically Accepted on Contingency Fee Agreements
Most attorneys who represent clients in personal injury and medical malpractice matters operate on a contingency fee basis. Personal injury cases are civil cases where accident victims suffer one or more injuries, usually because of someone else’s negligence. The injuries that a person suffers in an accident often depend on how the accident occurs and the seriousness of the accident, and the injuries an accident victim suffers can range from relatively minor soft tissue injuries to catastrophic traumatic brain injuries.
Some of the most common types of personal injury cases include:
- Motor vehicle accident cases – In motor vehicle accident cases, accident victims typically pursue monetary compensation from an at-fault driver’s insurance company (in states that use a fault-based system of recovery). Motor vehicle collisions often occur when motor vehicle operators violate the rules of the road or engage in distracted driving (such as using cell phones or other electronic devices to make telephone calls while operating a motor vehicle), causing a serious accident.
- Slip and fall accident cases – Slip and fall accidents fall under the umbrella of premises liability. Premises owners have a duty to keep their properties in a reasonably safe condition at all times. When premises owners fail to warn about dangerous conditions on their properties or fail to repair those conditions promptly, individuals can suffer serious injuries and damages, including back, spinal cord, and
- Bicycle and motorcycle accidents – When operators of motor vehicles are careless and negligent while on the road, they can cause their vehicles to collide with a bicycle or motorcycle, knocking the rider onto the road. In accidents that involve a collision between a large motor vehicle and a small vehicle, it is almost always the occupant of the smaller vehicle that suffers serious injuries.
- Boating accident cases – Just as with motor vehicle operators, boat operators have a duty to keep their watercraft reasonably safe at all times, for the benefit of every occupant on board. Moreover, boat operators have a duty to operate their watercraft safely by following all applicable boating regulations. When boats are defective, and boat operators behave carelessly and negligently, serious injuries and accidents can result.
- Dog bite injury cases – Different jurisdictions throughout the country treat dog bite cases differently. In some jurisdictions, dog owners are strictly liable for injuries resulting from a dangerous dog without regard to the dog owner’s negligence or fault. In other jurisdictions, dog owners can only be liable for injuries caused by their dog if they (the dog owner) behaved in a negligent manner, such as by failing to restrain the dog properly. Regardless of the jurisdiction, dog owners can be liable for bite injuries that occur because of their dangerous dog, and the dog bite victim can file a claim against the dog owner’s homeowner insurance policy.
In addition to personal injury cases, attorneys who practice medical malpractice often use a contingency fee arrangement. Medical malpractice (or medical negligence) occurs when doctors and other healthcare providers make mistakes that result in a patient’s injury or death.
For medical malpractice to occur, the defendant healthcare provider must have acted unreasonably under the circumstances by deviating from the standard of care. Doctors, for example, are typically held to the standard of care of a reasonable doctor acting under the same or similar circumstances. When it comes to medical specialists, such as orthopedic surgeons and cardiologists, for example, their standard of care is based on other physicians in their specialty.
A victim of medical malpractice typically needs to submit a certificate from a qualified expert to show the reasonable likelihood that a healthcare provider breached the applicable standard of care. A medical malpractice victim could recover monetary compensation if they suffer an injury or illness due to the alleged malpractice.
If you are the victim of a personal injury or illness that resulted from someone else’s negligence, including the negligence of a healthcare provider, an attorney can assist you with pursuing and recovering the monetary compensation that you need. When a personal injury or medical malpractice lawyer presents you with a contingency fee agreement, you should be sure to carefully read the contract and ask the lawyer about any questions you have. Once you sign and return the agreement, your lawyer will assume that you understood the agreement and that you are willing to adhere to all the terms of the contract.
What Is a Contingency Fee Agreement?
A contingency fee agreement is a type of lawyer-client agreement often used in personal injury and medical malpractice cases, among others. Under the terms of most contingency fee agreements, an accident victim or medical malpractice victim does not have to pay any fee if they do not recover compensation for the injuries suffered. Thus, the attorney receiving compensation in the form of a fee is contingent on the outcome of the case (such as the plaintiff receiving monetary compensation by way of a settlement, jury verdict, or arbitration award).
In some instances, this monetary compensation can come by way of a settlement reached with the at-fault party’s insurance company. At other times, personal injury and medical malpractice plaintiffs recover monetary compensation at trial by way of a favorable jury verdict. Finally, if the parties elect to pursue alternative dispute resolution, such as arbitration, the monetary compensation can come in the form of an arbitration award from a neutral third-party arbitrator.
Under the professional rules of conduct for most jurisdictions throughout the country, contingency fee agreements usually have to be in writing. They must explicitly state the percentage that the attorney will receive in fees upon settlement, arbitration award, or jury verdict. In many instances, the attorney’s fee will increase if the case has to go to trial or arbitration, as opposed to settling favorably out of court.
If you are thinking about retaining an attorney in your jurisdiction to represent you in a personal injury or medical malpractice legal matter, you should be sure to read the attorney’s contingency fee agreement carefully and ask any questions before signing and returning it.
Contingency Fees When a Case Settles or Goes to a Jury Trial or Arbitration
Under a contingency fee agreement, the amount of the attorney’s fee depends on the plaintiff recovering monetary compensation in their personal injury or medical malpractice case. If the plaintiff does not recover compensation, then under most contingency fee agreements, the attorney will not receive a fee.
Settlements
The majority of personal injury and medical malpractice cases settle out of court before a bench trial or jury trial ever takes place. In fact, courts often encourage the parties to settle if they can since it would be a tremendous waste of judicial resources for every pending dispute to proceed to trial.
In many personal injury and medical malpractice cases, it takes several rounds of negotiations between the at-fault individual’s insurance company and the plaintiff’s attorney before the plaintiff receives a number that they will accept. Under an attorney contingency fee agreement, depending on the percentage, the plaintiff’s attorney will receive a portion of the settlement recovery as their attorney’s fee.
Jury Trials
In some personal injury and medical malpractice cases, however, the parties eventually reach an impasse, or the plaintiff is completely unwilling to accept the final settlement offer that the insurance company makes to try and resolve the case. When that happens, the case will go to a jury trial where a jury will decide all pending issues in the case. In many instances, the jury must resolve the issue of damages and decide what, if any, damages the plaintiff is entitled to recover based on all of the written evidence and testimony the parties present at trial.
If the jury ultimately decides to award the plaintiff monetary compensation in the form of damages, a portion of that recovery will compensate the attorney in the form of attorney’s fees. The remainder will pay off any outstanding medical bills and liens, after which the attorney will issue a lump sum payment to the plaintiff.
Arbitration
In some instances, the parties might let an arbitrator (a neutral third party who is usually an independent lawyer or a retired judge) decide the pending issues in the case. Arbitration can be voluntary or required under certain contracts.
The parties will present their case in front of the arbitrator, much like they would in court at a jury trial, and the arbitrator will make the final decision in the case about damages. In the case of binding arbitration, the arbitrator’s decision is final, and the plaintiff does not have a right to appeal the outcome of the case. Assuming the arbitrator awards the plaintiff money (often determined by certain monetary parameters that the parties set going into the arbitration), a certain portion of the award, specified in an arbitration agreement, will go to the attorney.
The percentage fee that an attorney will receive following a settlement, jury verdict, or arbitration award should be in the contingency fee agreement. You should make sure that you read and understand the entire contingency fee agreement and the percentage fee that your attorney will be entitled to receive when the case comes to an end.
How Much Is the Attorney’s Fee Percentage in a Contingency Fee Agreement?
The attorney’s fee percentage in a contingency fee agreement depends on a variety of different factors, including the nature and complexity of the case, the amount of risk that is involved, and the point at which the case resolves (whether the case is resolved before filing a lawsuit versus, as opposed to resolving at trial or some alternative dispute resolution proceeding).
In many personal injury and medical malpractice cases, for example, lawyers will charge a one-third contingency fee (33 and 1/3 percent) if the case resolves via settlement before filing a lawsuit in the state court system. Therefore, if the case settles for $75,000 before litigation, the attorney’s fee would be $25,000. Under this same contingency fee agreement, if a lawsuit ultimately has to be filed, the lawyer can then charge a forty percent attorney’s fee ($30,000).
Under other contingency fee agreements in personal injury and medical malpractice cases, attorneys charge a one-third fee if the case settles before the lawyer files a lawsuit, but they will only charge a forty percent fee if either the case goes to trial and the jury returns a damages verdict in the plaintiff’s favor or an arbitrator awards the plaintiff money during a binding or non-binding arbitration.
If a jury trial or arbitration does not turn out the way the attorney and their client hopes, some attorneys reduce their fee percentage to even things out. So they can keep your business, many attorneys will work with you on the attorney’s fee. However, going into the case, assume that your attorney will receive the entire amount that you agreed to pay them under the agreement.
If the case does not settle, or if the case goes to trial or arbitration and the plaintiff does not receive an award, then under most attorney contingency fee agreements, the lawyer will not charge any fee whatsoever. Many lawyers will also foot any expenses, such as filing fees and the expenses associated with obtaining medical records and bills, for the plaintiff, in the event the plaintiff does not recover any damages in the case. You should always discuss who will cover expenses in an unsuccessful case with your lawyer before signing an agreement.
What Factors Determine the Percentage of an Attorney’s Contingency Fee?
Contingency fee agreements are not one size fits all. In fact, numerous factors determine the size of an attorney’s fee percentage in a contingency fee agreement.
Some of the most important factors that determine an attorney’s contingency fee percentage include:
- Novelty and complexity of the personal injury or medical malpractice case – Not all personal injury and medical malpractice cases are the same. Some require significantly more work and effort for the attorney to prevail. One of the main factors that attorneys use to determine the percentage of their contingency fee is the novelty or complexity of the personal injury or medical malpractice case they are handling. If the case is one that is likely to require a significant amount of investigation, witness coaching, and other preparation, the attorney’s contingency fee percentage can be higher than if the case were a simple soft-tissue-type district court case. Moreover, if the economic and non-economic damages in a case are high, the attorney who is handling the case can insist on a higher contingency fee than they would otherwise.
- Risk associated with the personal injury or medical malpractice case – Some personal injury and medical malpractice cases have riskier outcomes than others. In cases where the attorney handling the case is facing a higher amount of risk, the attorney can charge a higher contingency fee percentage than if the case were more straightforward or if there was a higher probability of winning.
- Experience of the attorney who is handling the personal injury or medical malpractice case – Personal injury and medical malpractice cases require attorneys who regularly practice law in those areas. Generally speaking, attorneys who have knowledge or experience in a particular area of law can charge a higher contingency fee than if the attorney did not practice in that area generally. Moreover, when it comes to contingency fees, the length of time that an attorney has been in practice counts. Therefore, a lawyer who has been practicing a specific area of law for a certain number of years can charge a higher contingency fee percentage than a lawyer who is less experienced.
- Stage of the medical malpractice or personal injury case – Under most contingency fee agreements, the time when the case concludes matters. For example, under some agreements, the contingency fee percentage that a particular attorney charges can be less in the event the case settles without having to file a lawsuit or take the case to court. However, if the lawyer files a lawsuit or takes the case to a jury trial or arbitration, the lawyer’s contingency fee percentage can increase. The most common arrangement in attorney contingency fee agreements is a one-third (1/3) contingency fee if the case settles before filing a lawsuit and a forty percent (40 percent) contingency fee post-suit if the case settles or the plaintiff receives a favorable jury verdict, judgment, or arbitration award.
In addition to attorney contingency fee agreements being in writing, the attorney contingency fee percentage must be reasonable, taking into account the complexity or novelty of the case, the lawyer’s background and experience, and the stage of the case when it resolves (such as before filing suit or after filing suit).
In most instances, the attorney’s contingency fee percentage must be less than 50 percent deemed “reasonable.” In other words, to be reasonable, the attorney’s contingency fee percentage should not be more than one-half of the plaintiff’s gross compensation for the personal injury or medical malpractice case. Of course, there are some exceptions, such as with an extremely difficult or risky case.
What Does an Attorney Do in a Contingency Fee Case?
The fee that an attorney receives at the end of a contingency fee case covers all of the legal services rendered throughout the case, such as:
- Investigating the circumstances surrounding the accident or medical malpractice that led to the damages the plaintiff ultimately suffered
- Submitting a demand package to the insurance company and negotiating with the insurance company’s adjusters in an attempt to reach a favorable settlement in the case
- Filing a lawsuit in the case and litigating the case to a conclusion, including taking part in written and oral discovery (depositions)
- Attending hearings that occur while the case is litigated, including pretrial conferences, settlement conferences, and mediation conferences
- Finalizing the case in the event the case settles before trial
- Handling all aspects of the jury trial and wrapping up the case after the trial concludes
- In the event the plaintiff decides not to take the case to trial, handling alternative dispute resolution proceedings, such as mediation, binding arbitration, or non-binding arbitration
Other Expenses Associated With Retaining an Attorney and Pursuing a Case
In addition to an attorney’s fee under a contingency fee agreement or some other agreement, there are always fees and expenses that are associated with personal injury and medical malpractice cases. The attorney’s contingency fee percentage under a particular agreement often depends on whether the attorney will be responsible for paying these expenses. The contingency fee agreement should state who is responsible for paying litigation expenses and when they will pay these expenses.
Potential expenses that are often associated with personal injury and medical malpractice cases include:
- Investigation fees – In some types of complex cases, especially those in which an insurance company is disputing fault or liability, investigations are necessary to determine exactly how an accident or incident of medical malpractice occurred and who was responsible. The fees associated with retaining an expert in a particular field, such as an accident reconstructionist, are a common expense that is associated with personal injury and medical malpractice cases.
- Overhead fees – In addition to investigation fees, numerous overhead fees are associated with personal injury and medical malpractice cases. Those fees pay for sending out paperwork, as well as for obtaining and copying medical records and bills to distribute to the insurance company as part of a settlement demand package.
- Expert witness fees – Just like with investigators, retaining experts to testify in a case costs money. In a personal injury case, for example, a medical expert, such as a treating healthcare provider or a specialist, can be called on to causally connect a person’s injuries to an accident. Similarly, in a medical malpractice case, a healthcare provider can be called on to testify that a patient’s treating doctor made a medical mistake, proximately resulting in the patient’s injury or illness.
- Discovery fees – Conducting discovery in a personal injury or medical malpractice case can involve taking depositions. Taking depositions typically requires the services of an experienced court reporter who will prepare a verbatim transcript of the deposition. Some attorneys also choose to take a video deposition of a witness. These services cost money and are an expense that is often associated with litigating a personal injury or medical malpractice case to a conclusion.
- Court filing fees – In addition to fees associated with litigation discovery, litigants will typically have to pay court filing fees. For example, if the plaintiff chooses to file a lawsuit against the at-fault party in a case, they must typically pay a filing fee to the court. If the court for that jurisdiction does not accept filing online, there will often be postage costs associated with filing court pleadings and exchanging discovery documents with the other parties who are involved in the case.
Depending on how the contingency fee agreement is written and worded, your attorney can subtract the costs associated with these expenses from the gross settlement award or court judgment. Depending on the agreement, the attorney can take out the fee that they are owed after deducting for litigation expenses or before deducting for those expenses.
For example, if a personal injury case settles for $100,000, the attorney takes out a contingency fee of 30 percent, and the attorney pays out litigation costs of $15,000, then the plaintiff’s total net recovery for the case would be $55,000. However, if the attorney’s contingency fee agreement provides that the expenses come out first, then the attorney’s fee of 30 percent would be based on $85,000, leaving the plaintiff with a total net recovery of $59,500.
When it comes to attorney contingency fee agreements, make sure you know who will pay all of the expenses associated with litigating your case and whether to deduct before or after the attorney’s fees.
Benefits of Attorney Contingency Fee Agreements
There are several benefits associated with attorney contingency fee agreements. One of the greatest benefits for accident and medical malpractice victims is that they do not have to pay anything upfront or if they are unsuccessful in their cases. This means that victims do not need to drain their savings accounts to hire a lawyer to protect their rights after an accident.
Too many people assume they cannot afford an attorney, and they often end up with far less compensation than they deserve—or even no compensation at all. Instead of leaving money on the table, you should always recognize that you can hire a personal injury lawyer for nothing out of pocket because of contingency fee arrangements.
In addition, a contingency fee aligns a lawyer’s interests with your own. You might worry your lawyer might not work as hard or pay proper attention to your case since they received no fees upfront. However, injury attorneys know that if they do not win, they do not receive payment. This gives them a personal incentive to fight for your rights, in addition to a commitment to their practice of law.
Other Types of Fee Agreements Besides Contingency Fee Agreements
Although contingency fee agreements are most common in personal injury and medical malpractice cases, there are other ways that attorneys can get paid, depending on the type of legal matter at issue.
Other types of attorney fee agreements besides contingency fee agreements include:
- Hourly fee agreements – The attorney sets a certain per-hour rate and bills their services to a client in tenths of an hour.
- Retainer fee agreements – A client deposits a certain amount into a retainer, from which the attorney deducts expenses incurred throughout the litigation process and that the client can replenish as the circumstances require.
- Flat fee agreements – The client pays an agreed-upon amount in a lump sum or pursuant to a payment plan, usually before the lawyer begins working on the case (or while the attorney is working on the case).
Speak With a Lawyer About Their Fee Agreement
Before signing on with a lawyer and executing a fee agreement, you should always make sure that you read the agreement thoroughly, that you ask the lawyer any questions that you have, and that you fully understand the agreement before signing it. Your lawyer is the best person to go to when you have questions and concerns about the fee agreement and who is responsible for paying which expenses. Ensuring that you fully understand the fee agreement is essential to having the best possible lawyer-client experience in your personal injury or medical malpractice case. Contact the Duluth personal injury lawyers at Brauns Law Accident Injury Lawyers, PC for a free consultation today.
