Car Accident Lawyer FeesBy Stewart J. Guss on June 20th, 2019
After a car accident, your financial stresses are probably mounting quickly. You want help getting compensation for your medical bills and lost wages, but you don’t want to stretch your finances any further to pay for a lawyer. The good news in this situation is that car accident lawyers understand your situation and want to help. This is why these lawyers use specific fee arrangements that allow you to get legal help without paying up front out-of-pocket.
While lawyers in many practice areas charge by the hour, personal injury lawyers generally charge accident victims in a different way, as they use something called a contingency fee. In short, this means that payment to the lawyer is contingent on them successfully winning your case, which means obtaining a settlement or award for your losses. If your lawyer fails to get a settlement or judgment for you, you don’t pay a cent.
Does this sound too good to be true? It’s not. The legal field understands that every injury victim deserves the right legal representation, but many people cannot afford hefty retainers or hourly fees. This is why the contingency arrangement exists.
Read on for more information about car accident lawyer fees.
Are the Fees Worth It to Hire a Car Accident Lawyer?
First off, when you hear about the percentages a lawyer will take as their fees, you may think it’s not worth the cost to hire someone to represent you. However, in many car accident cases, it’s almost always worth it to seek legal help. This is because a lawyer can often secure a much higher settlement or award than a car accident victim can on their own. Consider the following scenario.
You decide that you don’t want to pay for a lawyer because you want to keep your entire settlement. Your losses—as you calculated them—are about $15,000 based on your medical bills and the two weeks you missed work. The insurance company challenges certain losses or claims you were partially responsible for the crash, which causes them to reduce your settlement offer to $10,000. You negotiate with them and finally agree to accept $12,000. This leaves you responsible for paying $3,000 of losses out-of-pocket.
On the other hand, you decided to speak with an experienced car accident lawyer right after the crash, and you agree to a contingency fee. The lawyer carefully reviews your situation and determines that in addition to the $15,000 in medical costs and lost wages, you also deserve payment for future medical expenses, ancillary expenses, and pain and suffering. The lawyer estimates your losses at $28,000, but is likely savvy enough to start negotiations even higher.
When the insurance company makes a lowball offer, your lawyer knows how to combat the insurer’s assertions, and ends up getting a settlement for the full $28,000. The costs of the claim were $1,000, which the lawyer deducts. Then, the lawyer takes the 33.33 percent share of your $27,000 net settlement, which is $9,000. This leaves you with $18,000. Instead of having to pay $3,000 out-of-pocket for your losses, you now have $3,000 MORE THAN what you initially expected. More than that, most attorneys are willing and able to help negotiate reductions on outstanding medical bills, or health insurance subrogations, leaving you with even MORE “net” money in your pocket.
The above is only one example of why it is worth it to pay for a car accident attorney. The higher the value of your case, the more critical—and worth it—it usually becomes to hire a strong attorney. This is especially the case if your case will likely go to trial.
If the insurance company gives you any trouble, you shouldn’t hesitate to call a car accident attorney right away to weigh your options.
How the Contingency Fee Works
As mentioned above, a contingency fee means that you only pay once you receive your settlement or jury award. But how much will you pay then? It’s not worth it to hire an attorney to get you a settlement if the entire thing will go right back to the attorney! The good news is that this won’t happen, as contingency fees will only be a previously set percentage of your settlement.
Each state has its own specific rules regarding possible percentages for contingency fees. Generally speaking, they range from about 30 percent to 45 percent, with the standard being right around one-third, or 33 percent for cases that settle without the necessity of a lawsuit being filed. Often times fees for premises liability claims can be higher, because these cases are generally harder to win and take significantly more effort on the part of the attorney and their staff.
Some contingency fee agreements will have different percentages based on how your case gets resolved and the amount of work the case requires. For example, an agreement could include the following:
- 33 percent if the case settled during the initial process but before a lawsuit is filed
- 40 percent if you and the attorney agree that it is necessary to file a lawsuit
- 45 percent in the even of an appeal or second trial
No matter what arrangement a car accident lawyer proposes, you should always ensure that you completely understand it before you sign an agreement. This payment system can confuse people, so clarify any confusion or ask any questions you may have about the payment contract. The car accident attorney should fully address your questions or concerns.
How Does the Lawyer Charge for Expenses?
As part of the contingency fee agreement, you should know who is responsible for covering various litigation expenses. Such expenses can include:
- Investigators and experts
- Court filing fees
- Costs of service and subpoenas
- Fees to obtain police reports or medical records
- Fees of court reporters
You should carefully review the agreement to determine whether you’ll be responsible for reimbursing your lawyer for these fees and expenses if you prevail in your case.
Some car accident law firms expect the client to cover such costs as they arise, and if you cannot make the required payments when they are due, your case may stall in the meantime. On the other hand, many firms have the resources to cover these costs up front for you. When you receive a settlement or award, your lawyer will deduct those fees from the settlement along with the agreed-upon percentage from the gross amount of the settlement.
Other Possible Fee Arrangements
While a contingency fee arrangement is the most common in car accident cases, some attorneys may use a different type of fee arrangement. Some arrangements may involve paying an up-front retainer as well as a contingency fee. In these cases, your retainer should be subtracted from the agreed-upon percentage you owe the lawyer once your case is over. If you paid a $2,000 retainer and the lawyer’s percentage comes to $100,000, they should only take $98,000 from your settlement.
It’s rare for a car accident attorney to charge a flat fee for an injury claim, as they might for a criminal case. However, if all you want a lawyer to do is draft a demand letter for you (or a similar one-time task), they may agree on a flat fee for that service. This is something you’ll need to discuss with each individual attorney.
Selecting the Right Car Accident Law Firm for You
Fee arrangements should definitely be a factor when you are deciding which car accident lawyer to hire. The following can help you evaluate each attorney based on the way they want to charge for their services:
- What percentage of your settlement are they asking for?
- Will they require you to pay expenses as you go, or will they cover those costs and deduct them later?
- Did the law firm give you a realistic range of outcomes to expect?
- How much do they estimate they will spend in costs and expenses? Does the number seem realistic based on the complexity of your case?
- Does the law firm seem like they are being realistic and fair, or are they just trying to “sell” you?
Cost should not be the one and only factor in choosing the right attorney. “Budget” lawyers who charge very little may not have the experience, resources, or confidence to handle high-dollar claims and demand standard percentages. However, cost can be part of your decision, especially if different car accident law firms are charging in different ways.
Ethical Considerations Regarding Contingent Fees
Car accident lawyers cannot simply charge whatever they wish for their services. Lawyers have to comply with many ethical rules, and there are rules regarding fees and payment. Some of these rules address the following:
- All contingent fee agreements should be in writing.
- Fees and expenses must be reasonable under the circumstances of the specific case. Charging a 50 percent contingent fee for a relatively simple car accident insurance claim, or charging $10 per in-house copy is not reasonable.
- Lawyers should promptly establish the basis and rate of any legal fees.
- Fees must be in line with any applicable state laws.
- Fee agreements should never cause a lawyer to curtail services or act against a client’s best interests.
- If two law firms are splitting a fee, the client should only be billed once.
- Disputes over fees should be handled in accordance with any mandatory or recommended dispute resolution procedures in the state, such as mediation or arbitration.
Overall, a contingent fee aligns a car accident lawyer’s interests with your own, since they will not get paid a DIME unless you successfully recover for your losses.