It’s no secret that attorneys charge some of the highest hourly service fees in the United States. Surveys indicate that prospective clients often hesitate to contact lawyers due to fee-based concerns. Legal practitioners understand that claimants who need lawyers the most—those suddenly injured by unlawful conduct –are already struggling to pay medical bills and recover lost wages. Many families cannot afford standard consultation fees, much less pay to retain legal counsel.
Most personal injury attorneys do not charge hourly fees for this reason. Instead, plaintiffs’ lawyers generally work on a contingency fee (delayed payment) basis. This fee structure allows clients to retain needed counsel without any upfront fees or out-of-pocket charges. Standard contingency fees for personal injury cases range widely, depending on state law, case complexity, and attorney experience. Here’s what to look for in standard contingency fee agreements.
Cases Eligible for Contingency Fee Arrangements
According to the American Bar Association, qualified lawyers may offer contingency fee contracts to personal injury/worker’s compensation claimants. Instead of charging hourly fees, lawyers take a percentage of their clients’ overall financial recovery as payment.
This arrangement generally means your lawyer does not get paid if you don’t recover personal injury compensation. Therefore, any attorneys’ fees come directly from money received through negotiated insurance settlements and/or jury verdicts. Many law firms also front all litigation fees and costs in viable accident cases.
While you can always discuss alternative fee structures with local counsel, most lawyers only offer contingency fee contracts in cases likely to result in lump-sum monetary payouts.
The most common cases accepted on a contingency fee basis include:
- Car, truck, and motorcycle accidents
- Bicycle and pedestrian injuries
- Medical malpractice
- Nursing home abuse and malpractice
- Intentional physical and sexual assault
- Workplace injuries
- Defective product cases
- Dog bites
- Any other unlawful conduct resulting in injury or illness
Only plaintiffs (claimants making the injury claim) may generally request contingency fee contracts. Those defending themselves in personal injury cases must typically pay attorneys by the hour or work with insurance-provided lawyers. Due to public policy concerns, attorneys may not charge contingency fees in family law and divorce cases.
In limited cases, defendants might discuss contingency fee arrangements with personal injury counsel if they have viable injury claims stemming from the plaintiff’s negligent conduct. This situation often occurs when parties disagree over motor vehicle accident liability or claim self-defense during assaults.
Experienced personal injury attorneys frequently accept cases on a preliminary basis to conduct accident investigations. Law firms may present prospective clients with contingency fee agreements after reviewing the available evidence, including police reports and photographs, if it appears they have viable personal injury claims.
Contents of Standard Contingency Fee Contracts
Prospective clients must negotiate and sign contingency fee contracts with lawyers before the representation begins. There’s no standard contingency fee contract or fee. Law firms draft their own attorney-client agreements based on case type and value. However, prospective clients should request the following contractual provisions.
Scope of Representation
Whether you want to litigate or file auto insurance claims, attorneys add value to nearly all personal injury cases. Some claimants don’t want to sue, especially if the accident involved negligent friends or loved ones. They may instead work with lawyers to request insurance settlements for medical bills or lost wages. In other cases, lawyers may need to file litigation for injured clients.
Many high-value cases involving life-altering or disabling injuries such as brain trauma, spinal cord damage, and burns exceed insurance policy limits. Some insurers might also deny liability or refuse to offer reasonable settlements, necessitating judicial intervention. In other cases, clients may wish to switch attorneys after unsuccessful litigation.
These lawyers may appeal the initial judgment, which takes a different skill set. Most attorneys offer full representation, including claims, litigation, and appeals services. However, you must set forth the scope of the relationship in the fee agreement.
Fee Rate and Structure
The agreement should specify that it’s a contingency fee arrangement and set forth the percentage charged. The fee may depend on the case type. Some attorneys use sliding-scale contingency fees, especially in medical malpractice cases. Sliding-scale fees change based on the overall settlement amount. The higher the settlement, the lower the fee rate, but the lower the settlement, the higher the fee rate. This arrangement protects the attorney’s financial interest in high-risk cases.
Other firms use sliding-scale fees based on federal poverty guidelines and family size. Other lawyers charge different fees based on the representation’s scope. Insurance-only cases may result in quicker, easier settlements supporting lower contingency fees. In contrast, cases necessitating multi-defendant litigation and appeals often require additional time and skill, supporting higher contingency fee charges.
Litigation Costs and Expenses
Every case involves legal expenses. It costs money to order medical records, hire expert witnesses, pay court costs, prepare trial exhibits, and mail documents. Some law firms front these fees and reimburse themselves from the settlement/verdict, while others charge clients for claims-related expenses. Most attorneys give clients the option of either paying litigation costs out-of-pocket or allowing the firms to cover basic costs. Prospective clients should ask attorneys to include a list of anticipated litigation costs and specify the payment structure.
Fee Disputes and Termination
Clients may always fire retained counsel, but this often results in fee disputes. Both the first and second lawyers may demand their fair share of the settlement for their case contributions. Clients may also disagree with the attorney’s final fee calculations and distributions following settlement.
In such cases, the money must remain in escrow while the parties resolve the disagreement. This dispute process may involve attending arbitration or mediation. Retainers should contain fee dispute and termination provisions to avoid prolonged financial disputes, which ties up the client’s settlement money.
Compensable Personal Injury Damages
The majority of contingency fee cases involve civil lawsuits alleging negligence or carelessness leading to injuries or illness. The law limits the financial damages available to claimants in such cases. Personal injury plaintiffs may only recover the money necessary to fully compensate them for any past and anticipated losses associated with the injuries. However, these damages can include compensation for the pain, frustration, and mental suffering associated with your injuries.
Direct economic damages available to claimants might include:
- Hospital, ambulance, and emergency care expenses
- Physician, dental, and chiropractic bills
- Physical and occupational rehabilitation
- Medications, medical equipment, and pharmacy expenses
- Nursing costs
- Necessary household help
- Lost income and related employment benefits (healthcare or 401K contributions)
- Missed promotions or career opportunities
Claimants may also demand non-economic compensation—pain and suffering damages—for certain non-monetary losses. These financial awards may include damages proportional to the client’s physical pain, emotional anguish, lost hobbies, and daily frustrations. Most insurers calculate non-economic compensation by multiplying the claimant’s total direct damages by an appropriate seriousness factor.
For example, a claimant disabled after a truck accident might recover $100,000 in direct damages (lost wages and medical expenses) and $200,000 in pain and suffering damages—resulting in a $300,000 insurance settlement. Personal injury claimants don’t generally receive punitive damages in negligence cases, but your attorney will evaluate your claim to see if they’re available.
Discuss your case’s insurance value with local counsel. Nearly all viable personal injury cases settle with insurance adjusters. However, liable insurers only cover damages up to certain policy limits. These limitations may result in settlement offers, even policy payouts, for less than the claimant’s total compensable damages.
Because most individual defendants cannot afford to pay large personal injury judgments, these factors may limit each case’s available lump-sum compensation. Experienced injury lawyers might demand additional damages from the claimant’s uninsured/underinsured motorist policy or private disability insurance carrier. Local counsel can typically review each case’s facts, including liable defendants and insurance coverage, and give claimants reasonable settlement and fee estimates.
Calculating Attorneys Fees and Take-Home Payments After Personal Injury Settlements
If a personal injury attorney negotiates a settlement that the client accepts, the attorney will calculate and subtract their contingency fees, litigation costs, and potential third-party liens from the final settlement/judgment amount. As such, claimants must consider whether the offered settlement’s final balance will cover their injury-related expenses.
Lawyers typically calculate their contingency fees as follows:
- Final settlement offer = $300,000
- Agreed contingency fee = 33 percent of $300,000 = $100,000
- Remaining balance = $200,000
- Costs and expenses = $10,000
- Remaining balance = $190,000
- Litigation liens = $50,000
- Remaining balance = $140,000
- Final payout to client = $140,000
What makes the attorney worth such a payment? Let’s say the initial insurance company settlement offer was only $50,000, and your medical bills were $60,000. Had you accepted that offer, you would have owed your doctors $10,000. In this case, your lawyer may have more than paid for him or herself. Moreover, technically, you didn’t have to pay your lawyer anything—the other party did.
Not every case involves litigation liens, such as unpaid doctor bills, expert witness fees, or high court costs. However, these numbers add up in high-value cases. Insurance settlement offers do not reflect the client’s take-home value in contingency fee cases.
Clients must consider whether their actual pocketed settlement will cover past and future expenses. Legal counsel can estimate this value for clients. In some cases, attorneys may recommend rejecting the initial settlement and demanding higher payouts. They may also agree to file personal injury litigation to strong-arm insurers into offering higher settlements. Because attorneys make more money when their clients do, contingency fee agreements often motivate lawyers to obtain the most money possible. Legal counsel will not typically recommend settling cases unless they’ve obtained the highest offer feasible for their clients.
Benefits of Retaining Experienced Personal Injury Counsel
Potential clients often wonder whether they’ll obtain higher insurance settlements without private legal representation and, in turn, contingency fee payouts. It may seem overwhelming when lawyers ask for 25 to 40 percent of the money you need to cover necessary bills. As such, many potential clients hesitate to sign contingency retainers after accidents. Consider the following direct benefits of retaining personal injury counsel on a contingency fee basis.
Higher Insurance Settlements
Injured claimants must recognize that insurers seldom, if ever, offer fair financial settlements to unrepresented claimants. Adjusters often immediately undervalue cases and offer nominal payouts—between $500 and $5,000—after convincing claimants they have no real legal standing. Insurers often unlawfully and unfairly deny unrepresented claimants reasonable payouts simply because, without a lawyer, claimants cannot hold them accountable in court. Once you accept this low settlement, you cannot request additional payouts. This ends insurer liability and protects the policyholder (negligent defendant) from being sued.
Even after accounting for attorneys fees and costs, represented claimants often take home substantially higher personal injury settlements. The legal services pay for themselves nearly three times over. Lawyers frequently work with private investigators and medical experts to gather the evidence necessary to support your claims. Most firms even front the costs of these services, which claimants might otherwise struggle to obtain.
Legal Protection and Administrative Assistance
Reputable personal injury firms offer multiple client services related to the accident. These services frequently include providing paperwork to private health insurers, helping clients navigate the insurance benefits process, appealing denials, responding to insurance requests, and protecting claimants from collection agents.
Bill collectors must generally go through counsel if the claimant has representation. Lawyers can also collect and protect all essential evidence and answer legal questions related to your claims. Many attorneys also help clients get the medical treatment they need by locating in-network treatment facilities and setting up litigation loans as necessary.
Lawyers Don’t Get Paid if You Don’t
If your attorney cannot recover reasonable financial damages after accepting your case, the attorney does not get paid. You can typically walk away and, if desired, hire another lawyer. Most firms must even cover prepaid litigation costs. There is little risk associated with contingency fee agreements, and they typically favor personal injury claimants.
Charging percentage-based fees also encourages lawyers to obtain more money for clients. This structure often creates stronger attorney-client relationships, as the parties benefit from the same success and financial payout. Attorneys working on a fixed fee basis get paid the same no matter the outcome, potentially leading to possible poor work ethic in injury cases. There’s little to no risk associated with discussing contingency fee agreements with local counsel. Most clients only benefit from this arrangement. Contact Brauns Law, PC for more legal advice.