LAWYERS' FEES IN YOUR PERSONAL INJURY CASE
Personal injury lawyers usually work on a contingency fee
basis, sometimes referred to as "no win, no fee". Thus, they only take on a case that they
believe they can win in court or get a quick settlement. In our experience, they mostly care for their
pocket book and not for the victims pocket book. So do not buy the lip service, just get a
competent, experienced lawyer based on referrals from friends, relatives,
etc. Also make sure you check their references,
credibility, etc.
In most personal injury cases, a lawyer will charge a
contingency fee. This system allows the injured party to hire an experienced
lawyer without having to front the cost of legal fees.
In a contingency fee arrangement, a lawyer’s fees will be
deducted from the final settlement in your case -- or from the final verdict at
trial. Most personal injury lawyers will also deduct any expenses that were
covered by the lawyer. The lawyer’s contingency fee percentage will typically
vary based on the stage of your case. In the sections that follow, we'll cover
some things to keep in mind when it comes to your injury settlement and
how your lawyer will be paid.
Contingency Fee Percentages
The typical personal injury lawyer will charge a contingency
fee to handle your case. Some state statutes limit the percentage that a lawyer
can take as a contingency fee.
Most
contingency fees are between 33 and 40%, but you can always try
to negotiate a reduced or alternative agreement. In the majority of cases, a
personal injury lawyer will receive 33.33% (or one third) of any settlement.
For example, if you receive an offer of $30,000 from the wrongdoer or
his insurance company in your case, you will receive $20,000 and your
lawyer will receive $10,000. (Learn more about hiring and firing your
attorney and when it makes sense to represent yourself.)
Settlement Before
Filing a Lawsuit
Most states provide shifting fee limits based on the stage
of the case. Your lawyer should send a demand letter to the person or business
(wrongdoer) that injured you. The letter will explain the injuries and demand
payment. If you have a good case, the wrongdoer will typically make a
counteroffer and there will be further negotiations. This all occurs before you
file a lawsuit (file a formal complaint in court). Where you settle before filing
a lawsuit, it is likely that the lawyer cannot receive more than 33% of the
settlement.
Settlement After Filing
a Lawsuit
The wrongdoer may not take settlement negotiations seriously
or may fail to answer your demand letter altogether. At this point, if you have
a strong case, you will file a lawsuit. In many states, if your settlement
occurs after filing the lawsuit, your lawyer is permitted to receive a higher
percentage of the settlement, usually 40%. Where your case settles for $30,000,
but this time after you file the lawsuit, your lawyer can recover $12,000.
Additionally, before choosing to reject a pre-suit settlement offer, you should
consider the expenses of a personal injury lawsuit. As your case progresses, it
will likely get more costly.
Costs and Expenses
Many personal injury lawyers will cover costs and expenses
and then deduct them from your share of the settlement. Other lawyers will
charge you for costs and expenses as they become due. Where you are responsible
for paying for each cost and expense, your case will likely not proceed until
you make the payment.
Costs and expenses in a personal injury case include:
medical records
police reports;
expert witness fees;
postage;
filing fees;
investigators;
depositions; and
trial exhibits.
Costs and expenses may be high, especially if settlement
does not occur until close to trial. The lawyer’s final percentage with all
fees, costs, and expenses may end up totaling between 45 and 60% of the
settlement.
For example, suppose you settle your personal injury case
after the lawsuit is filed for $30,000. There were various costs and expenses
that your lawyer covered totaling $4,000. The lawyer will receive 40% of the
settlement amount as lawyer’s fees which is $12,000. The lawyer will also
deduct $4,000 for costs and expenses from the $30,000 settlement. In this case,
the lawyer will receive $16,000 of the final settlement amount.
For more detail and some helpful tips, see Managing Costs
& Expenses in a Personal Injury Case.
Your Lawyer Will Receive the Settlement Check
It is common practice for the settlement check to be sent to
the lawyer. This ensures that your lawyer will get paid for the legal services
performed. Many personal injury lawyers only take contingency cases and,
therefore, risk not getting paid if they do not receive the settlement check.
The lawyer will contact you when he or she receives the settlement check. The
lawyer should also explain the amount he or she will be deducting from your
settlement check to cover lawyer’s fees and costs and expenses.
If you dispute certain charges, the lawyer should place the
disputed amount in a trust account. However, the lawyer should still send the
undisputed amount to you.
