Legal fees in personal injury cases are almost always based on what is known as a contingency fee. A contingency fee is a type of financial arrangement where the lawyer’s payment is based on a percentage of the winnings of a lawsuit or settlement agreement. Contingency fees will be established at the onset of the legal agreement.
What Percentage of a Settlement Does a Personal Injury Lawyer Get?
A standard contingency fee in a personal injury case pre-litigation is one-third (33 1/3%) of any gross settlement or award in a claim or lawsuit. That percentage might vary, based on the complexity of the case and the level of risk undertaken by the attorney. On that basis, it’s not unusual for a contingency fee in a personal injury case to be as high as 40% or as low as 25%.
Why Are Contingency Fees Used in Personal Injury Cases?
Imagine attending college and suffering a seriously fractured leg in a traffic accident as a result of the carelessness and negligence of somebody who ran a red light. You have tens of thousands of dollars of medical bills from a surgery and hospitalization, and now, you’ve also lost a semester of school that you already paid for.
The law is clear that you’re eligible for compensation for your injuries and damages, but you’re going nowhere in trying to get the opposing insurance company to accept your claim. You’re a poor college student and you got into an accident with only a permit and neither you nor your family has the financial ability to pay a lawyer hundreds of dollars an hour to represent you.
Without a contingency fee agreement, that other driver and his insurance company walk away from justice because you can’t afford to open the front door of the courthouse. A contingency fee agreement with a quality personal injury lawyer opens that door for you.
Are There Costs and Expenses Involved in a Personal Injury Case?
Aside from legal fees, there are other costs that a personal injury victim should be aware of when bringing any claim or lawsuit for damages. It’s impossible to avoid those costs, but nearly all personal injury lawyers will advance them on the client’s behalf.
As an example, here are some of the costs involved in bringing an auto accident case that are advanced by personal injury lawyers:
- Obtaining a copy of the police report.
- Ordering copies of all medical records and bills.
- Costs of a liability investigation.
- Court filing fees.
- Court reporter and deposition transcript fees.
- Subpoena Fees.
- A fee of an expert if such a witness is needed.
Retainer Agreements Based on Contingency Fees
The general rule is that any retainer agreement between an attorney and a client that is based on a contingency fee must be in writing. That’s for the protection of the client. The agreement must expressly state the percentage of any legal fees to be paid upon a settlement or award along with whether it will be paid before or after the costs involved in the claim or lawsuit are deducted.
How Do Lawyers Collect Payment of Their Fees in a Personal injury Case?
When a personal injury lawyer undertakes the representation of a client on a contingency fee basis, a Notice of Attorney’s Lien is forwarded to the opposing party and their insurer along with a notice of representation. That operates to advise them that the attorney has an interest in any proceeds that he or she derives on behalf of the client.
When settlement occurs, or an award is rendered, a check is issued to the injured claimant and his or her attorney. That check is then mailed to the attorney. Thereafter, the check gets deposited into the attorney/client trust account.
How Long Can a Personal Injury Lawyer Hold onto a Settlement Check For?
When proceeds from a settlement or award have transferred from an insurance company’s bank to the attorney’s client trust account, and after resolution of any applicable medical liens, the attorney will direct the appropriate disbursements to be made thereafter.
This will include the client’s net proceeds which are paid by check directly from the attorney’s client trust account. Legal fees and costs that were advanced by the lawyer are also reimbursed at this time. Agreed upon figures for resolutions of medical liens are also paid.
How Much Should I Expect to Get from a Settlement?
This question is impossible to answer at face value. The compensation amount is completely subject to the nature of the injury and the impact on the victim’s life.
The same fracture of the same leg at the same location of the tibia can have entirely different effects on two different people. One might be affected for life, while the other heals and goes about their life unaffected.
Beware of injury calculators on some personal injury lawyers’ websites. They are a gimmick to get injured victims in the door and can set unreasonable expectations.
Do Personal Injury Lawyers Give Advances on Settlements?
In California, lawyers are permitted to give advances on settlements after the lawyer is retained by the client if the agreement to lend money to the client is based on the client's written promise to repay the loan. There must also be no conflicts of interest prior to doing so.
Do I Need a Copy of My Contingency Fee Agreement?
In an initial consultation, feel free to ask the attorney who you meet with whether he or she will be taking your case on a contingency fee basis. If the answer is yes, get it in writing, and be sure that it clearly addresses how costs will be handled. Then, after signing off, make sure that you leave the lawyer’s office with a copy of that agreement. It’s for your protection.
