Learn all about standard attorney fees for personal injury cases. See how fees, costs, and liens affect your final payout.
When you’ve been seriously injured because of someone else’s negligence, you’ll need a skilled personal injury attorney to get the full amount of compensation you deserve.
Fortunately, you won’t have to pay upfront for legal fees and expenses when you’re hurt and can’t work. Injury attorneys work for a portion of your payout.
Attorneys who specialize in defending criminals or advising businesses usually charge an hourly fee and collect a retainer up front. Some attorneys charge a flat fee for services like writing a will, real estate closings, or handling an uncontested divorce.
Paying a personal injury attorney is different. Most offer a free consultation and work on a contingency fee basis, meaning they won’t charge any legal fees unless your case settles or you win a verdict in court.
Standard Personal Injury Attorney Fees
The most common fee arrangement is one-third, or 33.3 percent, with an increase to 40 percent if a lawsuit is filed. An attorney’s fee must be reasonable given the difficulty of the legal issues in your case, the level of skill needed to handle those issues, and the time and effort they put into your case.
Occasionally an attorney may be willing to collect their fee percentage on a sliding scale. They might only collect 25 percent if your claim settles shortly after they send the first demand packet, up to 33 percent if negotiations continue to settlement, and 40 percent or more if your case proceeds to court.
Fees increase when a lawsuit is filed because it takes months for a case to be brought to trial and requires many more hours of the attorney’s time than negotiating a settlement directly with the insurance company.
Preparing for a court trial requires discovery and litigation activities, such as:
- Researching relevant caselaw and verdict awards
- Preparing and filing legal pleadings
- Attending court hearings
- Depositions of the at-fault party and witnesses
Your attorney is obligated to do everything they can to protect your interests. A good attorney will do everything necessary to prepare for trial, even if the case will likely settle along the way.
Lawsuits settled before trial are usually for much larger amounts of compensation, precisely because the insurance company recognizes the attorney was prepared to fight.
An accident attorney’s fee arrangement is known as a “contingency fee.” The terms of the contingency fee agreement, including fees and costs to be paid by the injury victim, must be clearly explained in writing.
The American Bar Association rules state, in part:
“A fee may be contingent on the outcome of the matter for which the service is rendered… A contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party.
Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.”
Most attorneys take their fee percentage from the gross recovery, then costs and liens are deducted.
Difference between legal Fees and Costs:
- Fees are the wages paid to an attorney for their work.
- Costs are the expenses incurred while handling the case, like medical record copy costs, court filing fees, hiring expert witnesses, court reporter expenses, and more.
Some attorneys first deduct legal costs from the settlement or court award, then deduct the percentage of their legal fee. Read the contract carefully and ask the attorney to explain how their fee amount is calculated.
Attorney contingency fees aren’t set in stone. If you’ve already done a lot of the legwork for your injury claim, you can try to negotiate the fees for your case during your initial consultation.
Understanding the Contingency Fee Agreement
Contingency fee agreements make it possible for injury victims to afford experienced legal representation against corporate giants and ruthless insurance companies. With a contingency fee agreement, there are little or no charges for the client to pay until the case is over.
Most personal injury clients think a contingency fee means their attorney will get one-third of the final settlement, and the client will get the other two-thirds. But it’s a little more complicated than that. Medical liens and other costs can take a big bite out of your final payout.
Your attorney should explain exactly how the attorney’s fees will be calculated, and what else will come out of any potential settlement or court verdict.
Attorneys are legally required to explain their fee structure, but you’re responsible for reviewing and understanding the fee agreement before you sign it.
Some attorneys are better than others at explaining the terms of their contingency fee agreements. Contracts can be confusing to anyone, so don’t be afraid to ask questions.
When you’re given the contract, take your time and read it thoroughly. You can even take it home overnight to review. As you do, write down any questions about legal terms or passages you don’t fully understand.
Pay Attention to Payout Clauses
Carefully read the entire agreement, paying especially close attention to the clauses that control your payout. Remember, if you have questions about these clauses or any others, ask your attorney for a full explanation before you sign the agreement.
Typical clauses found in contingency fee agreements cover the deduction of costs and medical bills, as well as the net amount a client will receive.
Costs Clause Example:
“Attorney will advance all Costs in connection with Attorney’s representation of Client under this agreement. Attorney will be reimbursed out of the client’s gross settlement amount, court verdict, or arbitration award before any money is paid to the client.
If there is no settlement or award after a trial or arbitration hearing, or if the amounts of the settlement, court verdict, or arbitration award are insufficient to reimburse Attorney in full for costs advanced, Attorney will bear the loss and Client will owe nothing.”
Medical Liens Clause Example:
“Items which are not Costs, but which must first be paid out of the client’s settlement, court verdict or arbitration award before any money is paid to the client are any medical or therapeutic treatment expenses incurred by Client which have not yet been paid and which are directly related to the client’s treatment.
These medical and treatment expenses include, but are not limited to: physicians, hospitals, therapists, chiropractors and other like providers.”
Net Amount to Client Clause Example:
“Client will receive the amount remaining after costs, attorney fees and medical or other legitimate liens are deducted from the “total amount” of the settlement, court verdict or arbitration award. That amount will be considered the “net amount” which is due and payable to Client.”
The above are examples of attorney fee contract clauses. Your contract may be different, so read it carefully. For example, you may be responsible for paying some or all of the case costs, even if your case doesn’t settle or you lose at trial.
The attorney fee agreement is a legal contract that sets out the exact amount of your attorney’s fees and should also explain how other expenses are deducted. Once you sign it, you’re bound by its terms.
Paying Costs In Addition to Legal Fees
Costs are the expenses your attorney pays while preparing and negotiating your case. Legal costs can be low or high, depending on the complexity of your case and if a lawsuit must be filed.
Costs might include office and copying costs, deposition expenses, expert witness fees, court document filing fees, travel expenses, and more. Costs are typically deducted from the settlement or verdict award after the attorney’s fees have been deducted.
There are three ways legal costs can be handled:
- Most personal injury lawyers advance all legal costs that are later deducted from the settlement.
- The attorney may require the client to pay a small deposit towards costs at the beginning, and the remainder is deducted from the settlement or verdict award.
- Some attorneys may require the client to pay costs as they occur.
If your attorney isn’t successful at settling your case or winning it at trial, you may still be responsible for some of the court costs and litigation expenses.
Your legal fees and costs will depend on the severity of your injuries and the complexity of your case.
Car accident, slip-and-fall, and dog bite cases are often settled out of court with the at-fault party’s insurance carrier. In addition to the attorney fees, cases settled directly with the insurance company will typically have copy costs and small charges for things like the police report.
Workers’ compensation cases may have more in the way of costs, like medical expert expenses, especially if the insurance company is fighting a disability claim. On the other hand, most states limit attorney fees for workers’ comp cases.
Some of the most expensive case types, like birth injuries and other forms of medical malpractice (that almost always end up going to trial), are also the kinds of cases that can result in compensation awards reaching hundreds of thousands of dollars.
Lawyer’s Fees for Court Appeals
Not all personal injury attorneys are willing or able to handle an an appeal on your behalf. If your attorney is willing to represent you in appellate court, a new and higher fee schedule will almost certainly apply.
In the American legal system, the party that loses their case at trial has the right to file an appeal with a higher court. Although most personal injury claims settle out of court, large jury verdicts in favor of the injured party are often appealed by the losing side.
Essentially, the purpose of an appeal is to argue to a higher court that the lower court made an error. There is an appeals process in both state and federal courts.
If you won your case in a local trial court, the losing party can appeal to the state’s supreme court. Very few cases are appealed from state appellate courts to the U.S. Supreme Court.
Personal injury lawsuits against corporations, like the talcum powder lawsuits against J&J, are often tried in Federal Court. If you won your case in a U.S. District Court, the losing party may appeal to the Circuit Court of Appeals. A party may ask the U.S. Supreme Court to review a decision of the U.S. Court of Appeals, but the Supreme Court usually is under no obligation to do so.
There’s no “typical” fee arrangement for appellate cases. Because appeals cases are based on legal technicalities and interpretations, an enormous amount of legal research and legal writing is required. The more issues raised in the appeal, the more time and effort must be expended in response.
Video: How Contingency Fees Affect Your Payout
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