If you’re involved in a car accident, and another party is at fault, you’ll be able to hire an attorney on a contingency basis. Find out when it’s worth the cost.
If you’ve been in a car accident, and someone else is to blame, you’ll be looking for a plaintiff’s car accident lawyer. We all know lawyers are expensive, but how much will you need to pay?
Most car accident attorneys charge clients in a fairly unique way — as opposed to the hourly fee that many firms charge in other types of cases. The typical auto accident lawyer will charge a “contingency fee” to take an injury case. A contingency fee means that the firm will not get paid any attorney’s fees unless you recover money in your case. The lawyer or law firm will get paid a percentage of money received from any insurance settlement or jury verdict.
In this article, we’ll take a closer look at how contingency fees work and what you can expect if you decide to hire a lawyer to handle your car accident case.
The Contingency Percentage
The percentage that a lawyer can receive in a contingency fee agreement varies from state to state. The percentage typically ranges from 25 to 40 percent, and 33.33 percent (or one-third) is pretty standard. If you have a 33.33% contingency fee arrangement and you recover $90,000 in your car accident case, your attorney will receive $30,000.
Some states have shifting percentages based on the stage of your case and the amount of money recovered in your case.
A contingency fee may depend on whether or not the wrongdoer (defendant) in your case has responded or answered your legal complaint in court yet. If the case settles before there is an answer to your complaint in court, the allowed percentage is typically lower.
However, if settlement occurs after the defendant serves a formal answer to your complaint or if the case proceeds to trial and a jury verdict is reached, the allowed percentage may increase.
As an example, suppose you sent a demand letter to the wrongdoer in your case and you quickly reached a settlement agreement for $90,000. In this situation, the attorney would again receive $30,000 (33%). However, suppose that the case instead ended in a jury verdict of $90,000 and your state allows an attorney to receive 40% of a recovery after the complaint is answered. In this situation, the attorney can recover $36,000.
It is always important to speak with your attorney about the contingency fee and to carefully review the contract for legal services. If you do not understand the fee arrangement stated in the contract, ask your attorney to explain it to you.
Also, just like everything in a contract, the fee is negotiable. If yours is a “cut and dry” case – liability and damages are clear, the defendant is well insured or has “deep pockets”, and there’s plenty of evidence backing up your claims – you can certainly negotiate a lower contingency percentage. You don’t need to give up a third of your compensation simply because you need the leverage of “lawyering up.”
Fees and Expenses
Depending on the lawyer and your contract for legal services, you may or may not be responsible for upfront court fees and other litigation expenses.
These fees and expenses include court filing fees, cost of serving summonses and subpoenas, costs of obtaining medical records and police reports, court reporter fees, and expert witness fees.
Many personal injury firms require the client to pay the above-mentioned fees as they become due. If your contract states that you are responsible for these costs, you can expect a personal injury firm to call you and seek payment as the fees become due. If you cannot pay these fees, your case will likely not proceed until there is a payment.
Other personal injury firms (typically large firms), will cover all fees and expenses. However, the fees and expenses will be deducted from your settlement or final judgment. Let’s say that you settled your car accident case for $100,000. This time, your contract stated that costs and expenses would be deducted from the settlement. Your attorney incurred $10,000 in costs and expenses. In this situation, your attorney would receive $10,000 as reimbursement for the costs and expenses, and $30,000 for legal services. You would end up receiving $60,000 as a final recovery ($100,000 – $10,000 – $30,000 = $60,000).
Make sure that your lawyer takes their fee out of the “net settlement” – that is, the amount left after case expenses are deducted. This arrangement is typical. However, some law firms may try to increase their pay by taking their money out first. Let them know that you won’t accept that, and if it becomes a deal breaker, it’s probably best to find another lawyer.
Other Fee Arrangements
Not all cases will involve a pure contingency fee arrangement. Lawyers may collect an initial retainer to begin your case and also collect a contingency fee at the end of your case. However, if you recover money in your case, the amount already paid to the attorney should be subtracted from the percentage that is due to the attorney at the end of the case. For example, if you paid $2,000 to the attorney as a retainer and recover $90,000 in a settlement, the attorney will receive $28,000 from the settlement ($30,000-$2,000 = $28,000).
Most car accident cases will not involve a flat fee payment for legal services. Flat fee arrangements are typically reserved for less-complex cases. A law firm may charge a flat fee where the legal representation is limited to drafting and responding to a demand letter. In that case, the fee may range from $300 to $1,000.
Is a Car Accident Lawyer Worth The Cost?
The general rule is this: The more serious the injuries, the greater the value of hiring a lawyer. If you were in a minor fender bender with little or no injury, you can probably negotiate an acceptable settlement yourself. You would be doing yourself a disservice to pay a lawyer a third of a simple — and almost guaranteed — settlement.
On the other hand, if you were injured and needed any significant medical treatment, the settlement value of your case rises quickly. This means the insurance adjuster will work to minimize your damages and try to get you to accept a very low settlement offer – they are in the business of making money, not spending it. This fact is evidenced by a 1999 study by the Insurance Research Council who concluded that, on average, claimants represented by a lawyer received 3