Read On For Contingency Fee Checklist
It’s a sad situation we hear all the time: someone gets hurt in an accident, but they hesitate to contact a lawyer because they’re afraid of the costs. With medical bills for their injury piling up and missed paychecks from time taken off work, they’re worried they can’t afford to hire a lawyer.
The truth is they don’t need to worry at all. Experienced, skilled personal injury lawyers almost always work “on contingency,” which means they charge nothing up front. Instead they only get paid a percentage of the money they recover for their client when the case closes.
What is the standard contingency fee that a lawyer gets paid? There isn’t one, really. Fees vary depending on the agreement between the client and the personal injury lawyer, and the amount of money the lawyer obtains for the client.
Let’s take a look at how a typical contingency fee arrangement works.
The Three Basic Types of Legal Fees
- Hourly: Most lawyers charge their clients fees in one of three basic ways. The traditional method is hourly fee billing, which is just what it sounds like. Lawyers set a rate – usually hundreds of dollars per hour – and charge clients based on the amount of work they do, regardless of how a legal matter turns out. It’s no surprise that clients do not like this billing method, as it often means wasting money on uncertainties or even unfavorable results. Personal injury lawyers don’t generally charge hourly rates.
- Flat fee: The second method is flat fee billing, which clients tend to like more than hourly billing because it caps their expenses. Lawyers, however, only offer flat-fee billing when they can confidently predict the amount of work a legal task will require. They do not want to get caught by surprise and end up stuck doing more work than a case is worth. That’s why only lawyers who take a high volume of the same type of case or legal task offer flat-fee billing, such as for filing straightforward divorce paperwork, preparing wills, representing people in simple one-off criminal matters, and similar types of “cookie-cutter” legal jobs. Personal injury attorneys don’t usually work on a flat fee, either.
- Contingency fees: Finally, there is contingency fee work. This method of payment is favored by nearly all personal injury lawyers, including ours. The lawyer gets paid nothing up-front, and instead works for an agreed percentage of the money the lawyer’s efforts obtain for the client. The more money the client gets, the more the Lawyer costs, and everyone is satisfied.
How Contingency Fees Work in Personal Injury Cases
At the very beginning of their relationship, an injured client and the personal injury attorney they hire will enter into an agreement. The agreement will lay out the scope of the work the lawyer will do for the client, and how the lawyer will get paid. This agreement can have various names, including a fee agreement, a legal services agreement, or a retention agreement. Regardless of what the lawyer and client call it, one of the most important parts of this agreement is its description of the lawyer’s contingency fee.
The typical agreement on a lawyer’s contingency fee has two parts:
- The percentage of any financial recovery the lawyer will earn.
- How the lawyer and client agree to deal with case expenses.
The Lawyer’s Percentage
The simplest contingency fee agreements set a fixed percentage the lawyer will receive from any financial recovery at the conclusion of the case.
Lawyers and clients can negotiate that percentage. Often, the agreement will set a sliding scale of percentages based on the amount of money the lawyer obtains, and/or the amount of time or effort the case takes. For example, a lawyer and client might agree that the lawyer receives a certain percentage of any recovery up to a certain dollar amount, and then a different percentage of any amount above that. Or, the lawyer and client might agree the lawyer gets a specified percentage if the case settles quickly, and a different rate if the case goes to trial. Or they could agree on some combination of these options.
What this all boils down to is you should feel free to discuss percentages when you hire a personal injury attorney to represent you. Contingency fee agreements do not have to be one-size-fits-all. They can, and often should, get creative to address a client’s and lawyer’s specific needs and goals in a case.
Lawyers, like anyone in business, have running costs. Some of those costs represent overhead (like office rent, utilities, and staff salaries), while others arise in connection with a particular case (like court filing fees, travel expenses, and paying experts and investigators).
Lawyers cover their overhead on their own. However, a typical contingency fee agreement will almost always address case-related costs in one way or another. In some agreements, the client agrees to pay the out-of-pocket expenses for the case. Case expenses can range from hundreds of dollars at the low end to tens of thousands of dollars (or more) at the top-end, so if you agree to pay case expenses, be sure to ask the lawyer for a ballpark estimate first. Expert witness expenses, in particular, can get pricey.
In other situations, the lawyer can agree to pay for case expenses. Under that arrangement, the fee agreement will typically address if, how, and when those expenses get reimbursed when the case is eventually settled. Some lawyers might treat simple expenses (like travel and filing fees) as overhead and not seek to recoup them at all. Or, the lawyer and client might agree that the lawyer gets reimbursed for those expenses out of any recovery in addition to the lawyer’s contingency fee. This model is common, for instance, in cases that involve hiring the services of expensive expert witnesses.
Either way, you should always pay attention to how the fee agreement proposes to deal with case expenses. Insist that your agreement explains things clearly. In simpler cases, case expenses might not matter much to the bottom line, but in some matters they can really add up.
Why Do Personal Injury Lawyers Work on Contingency?
You might wonder why lawyers would work for an uncertain fee, when they could just charge by the hour and get paid no matter how a case turns out.
Two words explain why: access and incentives.
It Gives Clients Access to Top-Quality Legal Representation They Could Never Otherwise Afford
Personal injuries can happen to anyone, anywhere, at any time. No one can really prepare to get into a massive car accident, or to have scaffolding collapse onto them on a job site, or to take a nasty spill on wet tile at the grocery store. Those incidents just happen, and they leave many people struggling physically, emotionally, and financially. Personal injury lawyers dedicate their careers to helping these victims. When a person has suffered an unexpected injury because of someone else’s dangerous actions, they deserve help and guidance.
Lawyers for injured people have to take them as they come. It’s all well-and-good for another lawyer to set a rate of $500/hour, but when someone has just undergone multiple back surgeries, lives in chronic pain, and hasn’t been able to work for months, that price is a real turn-off. And that lawyer is unlikely to get hired.
Most people who get badly hurt in a preventable accident caused by someone else simply cannot afford to pay a lawyer right now, even though they desperately need legal representation.
Personal injury lawyers solve that problem by working on contingency. The injured client gets access to a top-quality lawyer without the financial burden of paying money up-front or receiving huge hourly bills. This is why patience and diligence are key attributes for lawyers in successful injury claim settlements. For us, instant gratification is not the name of the game.
It Gives Lawyers the Right Incentives to Obtain Top-Dollar Results
Sure, working on contingency comes with plenty of risks… for the lawyer. If an attorney working for a contingency fee does not deliver results and put money in their client’s hands, they end up with nothing to show for their efforts.
On the flip side, taking that risk gives lawyers a strong incentive to win as big as possible. After all, the more money their work delivers for a client, the more money the lawyer earns.
As personal injury lawyers, we’ve found contingency fees work out well, because they put us in the same boat as our clients. Unlike some lawyers who just want a client who can pay on time, even if the case does not turn out in their favor, we strive for the result that benefits our clients the most, because it benefits us the most, too. Additionally, while lawyers who bill by the hour earn more money the longer things drag out (which clients hate), we have the same interest as our clients in seeing a case come to its best possible resolution as quickly and efficiently as possible.
Personal injury lawyers work on contingency because it really is best for our clients and for us. You’re more than just a case number to us. Our goals align with your goals, and your victory is our victory.
Contingency Fee Checklist
Alright, let’s put the info above into practice. Say you’ve suffered a bad injury because someone else made a reckless decision, or maybe an accident happened and you can’t quite tell who is to blame, but you know it wasn’t you. These situations are when you should talk to a personal injury lawyer who will work for you on contingency!
So, how do you get started, and what should you do along the way? Here’s a quick checklist:
- Search online for a lawyer who handles personal injury cases exclusively, and has represented people for the specific kind of injury you suffered in the specific kind of accident or incident that harmed you.
- Reach out for a free consultation (verify there is not a consultation fee)to get an opinion on the strength of your case. Many consultations can be conducted via phone or video chat, if you prefer.
- During the consultation, confirm they have experience with your type of accident and injury, and have delivered results for clients like you in the recent past through both settlements and jury trials.
- Pick the lawyer who seems best equipped to handle your case, to communicate with you clearly and in language you understand, and who just feels like the right fit.
- When the lawyer gives you the proposed fee agreement, read it. (It should be written in plain English, no “legalese!”)
- Review the lawyer’s percentage and how the lawyer proposes to handle expenses carefully.
- Don’t hesitate to ask the lawyer to revise or negotiate the percentage or expenses with you. Talk to the lawyer about your goals for a case, and how changing the fee terms might help you achieve them.
- Only after you and the lawyer have a clear, written understanding on fees, sign the agreement and let the lawyer get to work for you… without having spent any money upfront!
- Your lawyer will probably still send you periodic statements reviewing the progress of your case, the work done, and the expenses in the case. This is not a “bill” (unless you have agreed to pay case expenses), but you should still read it because it will give you an idea of the type of work the lawyer has done on your behalf without you having spent a dime!
- If the lawyer’s efforts result in monetary awards, expect to receive your share after the lawyer deducts their percentage and any expenses you agreed on. Review the lawyer’s calculations to confirm they’re right.
Above all else, remember: As the client of a personal injury lawyer, you have the right to expect clear, straightforward, transparent information about all lawyer’s fees. No injured client should ever feel confused about how their lawyer earns money. If you feel uncertain about anything at any point, ask your lawyer to explain. By working on contingency, the lawyer wants the same result as you do. Never feel afraid to ask questions. Know your rights and protect your interests.
So, what are you waiting for? Contact an experienced personal injury lawyer who can work for you on contingency. The sooner a lawyer gets started representing you, the better your chances of obtaining top-dollar for your personal injury claim.