Dealing with a personal injury can be overwhelming. On top of recovering from a physical and emotional trauma, you're faced with mounting medical bills, lost wages, and the daunting prospect of taking on insurance companies. The last thing you need is the stress of paying for a lawyer by the hour. Fortunately, there is a better way.
The personal injury lawyer contingency fee allows anyone to afford legal help. Instead of upfront hourly rates, the lawyer is paid only if they win your case. This ensures access to justice for all, allowing individuals to challenge powerful entities without financial burden.
If you’ve been injured and are concerned about the cost of legal help, a confidential consultation can provide clarity on your options. Contact our firm today for a free review of your case.
What is a Contingency Fee Agreement?
A contingency fee agreement is a written contract between you and your personal injury attorney. This agreement outlines the terms of your legal representation and, most importantly, how your lawyer will be compensated. Unlike traditional attorney fee arrangements that charge on an hourly basis, a contingency fee system is based on a percentage charged from the final settlement or court award. This percentage is typically between 33% and 40%, though it can vary depending on the complexity of the case.
A contingency fee eliminates upfront legal payments, like a retainer. If your lawyer doesn't win your case, you owe nothing. This motivates them to work diligently, as their payment depends on a successful outcome.
Understanding the Details of the Contingency Fee
The typical contingency fee percentage is around one-third, or 33.3%, of the gross settlement amount. However, this percentage can increase if the case goes to litigation. Many personal injury law firms use a "sliding scale" where the percentage increases at different stages of the legal process. For instance, the fee might be 33% if the case settles before a lawsuit is filed, but it could increase to 40% if the case proceeds to a trial. This sliding scale compensates the lawyer for the additional time, resources, and risk involved in preparing for and conducting a trial.
The agreement outlines the handling of legal expenses, separate from attorney's fees. Costs like court fees and expert witnesses are crucial to understand, as they may be deducted before or after the lawyer's fee. Typically, these expenses are covered from the client's share after the lawyer's fee, safeguarding clients from paying out-of-pocket, even if the case is unsuccessful.
The Costs and Expenses Covered by a Contingency Fee Arrangement
While the contingency fee covers the attorney's time and legal expertise, it doesn't cover the wide range of expenses incurred during the legal process. These expenses, often called litigation expenses or case expenses, are a necessary part of building a strong case. Some common examples include:
- Court Filing Fees: Every lawsuit requires a filing fee to be officially submitted to the court.
- Medical Records and Police Reports: Obtaining these documents, essential for proving liability and damages, often comes with a cost.
- Investigation Expenses: This can include fees for hiring private investigators to gather evidence or locate witnesses.
- Expert Witness Fees: Many personal injury cases rely on the testimony of experts, such as accident reconstruction experts, medical experts, or life care plan experts. These individuals charge substantial fees for their time and opinions.
- Deposition Costs: This includes fees for court reporters and videographers for video depositions of treating physicians, accident reconstruction experts, and other key witnesses.
- Trial Expenses: Costs associated with litigation, such as creating medical illustrations or other demonstrative evidence for a jury.
Your lawyer's firm will typically advance these costs on your behalf. They keep a detailed record of these expenses and, upon a successful resolution, these costs are reimbursed from the final settlement. This system ensures that accident victims are not burdened with the financial responsibility of building their case while they are already dealing with financial hardship due to their injuries.
Related Content: What Does a Personal Injury Lawyer Do?
The Role of Contingency Fees in Personal Injury Law
Contingency fees are vital in personal injury law, enabling individuals to access justice without upfront costs. They level the playing field against large insurers, ensuring fair settlements as clients are backed by skilled legal representation.
The American Bar Association and Model Rule 1.5(c) of the Rules of Professional Conduct permit and regulate the use of contingency fees in a civil context, such as personal injury cases. The rule ensures that the terms of the contingent attorney fees are clearly stated in a written agreement, protecting both the client and the lawyer. The Illinois Supreme Court has also upheld the use of contingency fees as a valid way for accident victims to get the legal help they need.
Critics of the system claim contingency fees cause frivolous lawsuits. However, personal injury law firms only take cases they believe they can win, as their fees depend on it. This filters out weak cases, ensuring only valid claims proceed, thus controlling legal costs and unnecessary litigation.
How the Payment Process Works
Once a settlement is reached or a court verdict is awarded, the process for payment is straightforward. The money is first sent to a client escrow account managed by your personal injury law firm. From this account, the funds are distributed in a specific order:
- Payment of Expenses: The legal expenses that were advanced by the law firm are paid back first. This includes all the costs we discussed, such as court costs, deposition expenses, and expert witness fees.
- Payment of the Attorney's Fee: The lawyer's percentage of the net settlement is then transferred from the escrow account to the firm's operating account.
- Payment of Liens and Medical Bills: Any outstanding medical liens, such as those from healthcare providers, and unpaid medical bills are paid off. Your lawyer will work with these providers to negotiate these down to reduce the amount you owe.
- Client Payout: The remaining funds are then transferred to you, the client. This is often done via a check or a bank-to-bank transfer.
This process ensures that all financial obligations related to your case are handled correctly and transparently, leaving you with a clear picture of the final financial outcome. It also protects your settlement from creditors and other parties, as the funds are professionally managed until all debts are settled.
Contingency Fees vs. Other Attorney Fee Structures
To fully appreciate the value of a contingency fee, it helps to compare it to other common attorney fee structures:
- Hourly Fees: In this model, the client is billed for every hour of the lawyer's time. This can be incredibly expensive and unpredictable. A simple case could rack up tens of thousands of dollars in hourly fees, putting immense financial pressure on the client, regardless of the outcome.
- Retainer Fees: This is an upfront payment made to an attorney to secure their services. The lawyer bills against this retainer for their time, and once it's used up, the client has to replenish it. This model is common in family law and criminal defense but is rarely used for personal injury cases.
- Fixed Fee: A flat rate for a specific legal service. This is common for things like drafting a will or simple legal documents, but it is not suitable for complex personal injury claims, where the amount of legal work is unpredictable.
For accident victims, the contingency basis is a no-brainer. It eliminates the financial risk and ensures that a person's ability to get justice is not determined by their ability to pay. It aligns the interests of the attorney and the client perfectly: the more the client wins, the more the attorney earns.
Final Thoughts on a Personal Injury Lawyer Contingency Fee
When you are an accident victim and need to file a claim for a car accident, slip and fall accident, or any other injury, hiring a lawyer on a contingency basis is a smart and strategic choice. It provides you with high-quality legal representation without the burden of upfront costs.
The contingency fee system empowers you to seek justice against well-funded insurance companies and gives your lawyer a powerful incentive to win your case. It is a win-win arrangement that has stood the test of time and is a cornerstone of the American legal system.
Don't let the fear of legal costs prevent you from getting the compensation you deserve. At Marks Law Group we would be happy to review your case, tell you about our contingency fee, and tell you how we can help you find a resolution. Book your free initial consultation and let us review your case.