Many people call attorneys with questions and they get the same initial answer—”it depends.” While this answer may be frustrating to car accident victims looking for definitive answers, it is simply a fact that many questions must be answered over time, as an attorney learns more about your case.
The same goes for the above question—how much will a lawyer cost for your car accident case? The answer is, “it depends,” as your attorney’s fees will depend on the details of your case, how the matter is resolved, and more. There is one important thing that most car accident lawyers CAN and always SHOULD tell you, however, and that is how they charge you for their services, known as their attorney’s fees.
When you’re shopping for a car, a house, a new television, or even clothes, the price may be a driving factor in your decisions. However, when looking for a car accident attorney, the price may not be as important as you think, given that most car accident attorneys work under a contingency fee agreement. This means that you’ll probably end up paying your attorney around one-third of any settlement or court award you receive. If you spend too much time shopping around for a lawyer based on the specific cost, you may lose focus on more important factors that should drive your decision, such as a lawyer’s experience and approach to claims like yours. However, you should always fully understand what a lawyer charges and how they expect to get paid.
What Is a Contingency Fee?
A contingency fee agreement is the primary type of fee arrangement when an attorney takes on a case for a plaintiff in a personal injury case, including a car accident case. With this agreement, the lawyer doesn’t get paid at all unless they are able to obtain financial recovery for the client. When the plaintiff gets paid, the attorney also gets a certain percentage of the total recovered amount. The standard for a contingency fee percentage in most car accident and other personal injury cases is 33 percent or one-third. However, depending on the state where the lawyer practice, how long it takes for the case to settle, and the complexity of the legal issues in the case, the percentage for a contingency fee might range between 30 percent and 45 percent.
The situation can get a bit more complicated when you consider how litigation costs and other necessary expenses must get paid. For a car accident lawyer to handle a case, there will usually be expenses for the following and more:
- Obtaining records and documents, including police reports, medical records, and employment records
- Copies, postage, and mailings
- Expert witnesses
- Court and filing costs
- Process servers for summons and subpoenas
- Court reporters for depositions
During the course of a case, costs and expenses can add up quickly and may even be worth thousands of dollars.
Depending on the specifics of the contingency fee arrangement, the attorney may cover these expenses as soon as they become due, and they may be deducted from any personal injury settlement obtained for the client.
For instance, let’s imagine a contingency fee agreement states the lawyer will receive one-third (33 percent) of the amount the client recovers, and the case settles for $300,000 with $15,000 in litigation costs and expenses. Note that the contingency fee is almost always deducted from the gross (total) settlement, so it is important to make sure that your attorney keeps you up to date on expenses. In this case, an attorney with a one third contingency will deduct $100,000 in fees, but will also deduct $15,000 in case expenses. It is important that you communicate with your attorney and understand exactly how funds recovered will be distributed. Always make sure to get that in writing before the case is completed!
Other Fee Arrangements
While most—by far—car accident lawyers use a contingency fee arrangement, some personal injury attorneys may use other fee arrangements in specific situations.
The Option of Hourly Fees
This is another common method of billing in the legal industry, though car accident attorneys who represent plaintiffs don’t employ this method much. Hourly billing is more common with insurance and car accident defense lawyers. With this manner of billing, the lawyer receives a specific amount of money for each hour of work they complete on the case, and they get paid the hourly rate whether or not their client wins the case. The hourly rate will depend on the legal market, the type of law firm, as well as the attorney’s skill and experience level, but a client might agree to pay a lawyer anywhere from $100 to $500 per hour.
An agreement to pay a flat fee is just as it sounds—a lawyer charges a flat fee for a specific type of legal work. This probably the least-used type of billing by car accident lawyers unless a client only wants assistance with a specific task. For example, if you want the insurance demand letter to come from an attorney but that is that only assistance you seek at the time, the lawyer may charge a certain, one-time amount for that one set task. Aside from this scenario, however, it is very rare for a lawyer to charge a flat fee to handle a car accident claim.
Retainer Plus Contingency
In this hybrid approach, a lawyer requires a client to pay a retainer at the start of the case, which is a set advance payment for the lawyer to hold, and if the plaintiff wins, the attorney also receives an agreed-upon percentage as a contingency fee. In car accident cases, the retainer can often range from a couple hundred to a couple thousand dollars.
Once the case is over, the attorney takes their contingency fee from the settlement minus the original retainer amount. Imagine that the set contingency fee percentage is 33 percent and a client paid $1,000 for a retainer. If the plaintiff recovered $30,000, the lawyer would take $10,000 as the 33 percent minus the retainer amount, so the lawyer would ultimately get $9,000.
Advantages of a Contingency Fee Agreement
The main advantage of contingency fees is that you do not have to pay your lawyer anything out-of-pocket (as long as there is no retainer requirement). This means that while you are stressed about your medical bills and other losses, you don’t have to find a way to come up with substantial legal fees to put down just to get started. Contingency fees can also be negotiated, just like any other contract, giving clients some flexibility. In many ways, a contingency fee arrangement allows lower-income clients the ability to seek legal help when they otherwise would not have afforded to do so.
Another advantage is that your lawyer does not collect a fee if you lose, though you still may be responsible for costs and expenses the lawyer paid for your case. This can provide some peace of mind for you as well—if your lawyer is willing to risk not collecting a fee based on your case, then you probably have a good shot at winning your lawsuit. In fact, personal injury lawyers usually don’t take on cases they think they won’t win because they know they won’t be able to collect a fee in that situation. Even if your attorney believes the case is closer than your attorney would like, you can rest assured that your interests are aligned and that the attorney will be highly motivated to do everything possible to ensure that the case is successful for you.
Possible Disadvantages of a Contingency Fee Agreement
One disadvantage of a contingency fee is that it may end up costing you more than you would have paid for standard hourly billing. This may occur in claims involving serious injuries and high dollar amounts. In addition, you agree to pay a percentage of your settlement or award regardless of whether it takes a week to settle an insurance claim or a year for the case to be resolved through the courts. Some lawyers may offer a flexible contingency fee depending on the result of your case, but not all lawyers do this.
Another disadvantage is that car accident attorneys who use contingency fees can be very selective of the cases they will handle. Lawyers who use contingency fees will sometimes avoid any cases they think won’t be easy victories. Attorneys who decide to take on risky cases will often want to charge higher fees as a result.
Questions to Ask Before You Sign a Fee Agreement
Even if you understand the basics of a contingency fee agreement, you need to make certain that the specifics of a fee agreement between you and your lawyer are crystal clear. Like any other type of contract, you should never sign on the dotted line unless you know exactly what you’re agreeing to. For this reason, it’s always a good idea to ask questions of a lawyer and clarify all provisions of your fee agreement before you sign a contract.
Will the way my case is resolved affect my lawyer’s fees?
You should always determine whether the attorney will take the same percentage no matter how your case gets resolved or whether the percentage will vary. Some lawyers may take 33 percent if the case ends with an insurance agreement, 40 percent if it ends during negotiations after filing a lawsuit, and 45 percent if the case goes to trial, though not all firms work this way.
What do you expect my costs to be?
Your lawyer can’t give you a definitive answer about your future legal costs and expenses, though they should be able to give you an idea based on prior cases they handled that were similar to your own.
Are costs collected up front or after a settlement?
Always know if you will need to pay your costs during the course of your case or whether they will come out of your settlement. If you don’t have the funds to cover costs as they arise, your case may be paused until you can pay them, and you may want to seek out a different attorney.
Is there a way I can reduce the costs in my case?
Sometimes, a lawyer will advise you on ways you can help make your case go smoother and, therefore, possibly reduce the costs and expenses of your litigation.
Discuss Your Options with an Experienced Car Accident Lawyer
As described above, you should pay NOTHING unless an attorney wins your case, and learning about whether you have a possible claim should always be completely FREE OF CHARGE.