Imagine you have been involved in a serious car accident. There are injuries, property damages, and one or more persons are likely to be out of work for several weeks, due to the accident.
It’s easy to see how this type of situation can quickly lead to a civil suit and both parties will soon be concerned with what that will cost them. For the plaintiff, this is an especially important concern, because the answer may affect the damages he or she receives from the civil suit.
Car Accident Lawyer Fees
The good news is that you won’t need money up front when you work with a reputable personal injury lawyer. Personal Injury lawyers work on a contingency fee basis. This means that the attorney doesn’t get paid, unless he wins your case. It’s also very beneficial for the client as they don’t have to risk the costs of taking a complex case to trial.
What is the contingency percentage?
The standard percentage among most personal injury lawyers varies greatly, though 25% to 40% is considered an acceptable range. Outlining this in practical numbers, a case which results in $90,000 in damages awarded to the plaintiff will earn the attorney a fee of $30,000.
In some states, there are other factors that may affect the attorney’s percentage. For example, some states require a shifting percentage, which is based upon the stage of your case, when the lawyer is retained, and the value of the damages awarded. Another factor has to do with the possibility of an out-of-court settlement. If the case settles before the defendant officially answers the complaint in court, the attorney percentage is usually lower. Conversely, a case going to trial will earn the attorney a higher percentage.
In the above example, suppose the defendant settled for the $90,000, before answering the complaint in court. In that situation, the attorney fee of 33% will earn him the $30,000 fee. However, if the case goes to trial in a state where the law allows the attorney to take 40%, the attorney can take a $36,000 contingency fee.
Of course, the attorney is required to discuss his fee arrangement with you, prior to signing a retainer. He should thoroughly explain his fee schedule and the conditions which may affect his percentage. As the client, it’s your responsibility to ensure you understand the terms and, if you find something confusing, you must speak up and ask the attorney to explain it further.
Because personal injury attorneys work on this contingency percentage, the initial consultation is often free of charge. During this first session, the attorney will go over your case with you and outline your best strategy.
While the attorney can’t guarantee a win or any outcome, he can outline your best possible outcomes, based on the strength of your case and his past experiences. During this visit, the attorney will also discuss his fees, as well as how expenses will affect the amount you’ll be awarded.
Taking A Case To Trial Can Be Costly
You’ll also be responsible for paying expenses and fees associated with your case, but these expenses aren’t always paid up front. Instead of burdening the plaintiff with these costs as they happen, some law firms will foot the bill and deduct them from your damages in addition to the contingency fee.
Other law firms may swallow the expenses as a cost of doing business and deduct them from their own share of the damages. It all depends on the laws of the state and the policies of the specific attorney’s office.
Expenses involved in pursuing a personal injury case include court fees, the costs associated with serving summonses and subpoenas, court reporter fees, costs of obtaining medical records and police reports, and expert witness fees.
In cases where these expenses are expected to be paid by the plaintiff, the attorney may call his client as each fee is charged. If the client cannot pay one or more of the fees, the case will likely be put on hold, until payment is received.
Typically, the personal injury attorney will take his percentage from the “net settlement,” or the funds left over after all expenses have been paid. This is a common arrangement, but some attorneys may attempt to take their percentage from the gross settlement to increase their pay. It’s important for the client to object to this situation and insist on the more traditional payment arrangement.
How much does a lawyer charge for a car accident, in other cases?
The attorney may ask for an initial retainer in addition to a contingency fee. This can be a warning sign that the firm you’re working with may not have the resources to take the case all the way through trial. This will help the attorney get started on the case.
In the event he wins damages for the plaintiff, the attorney will probably deduct that initial retainer fee from his contingency percentage, which is taken at the conclusion of the case. Using the previous example again, suppose the attorney requested an initial retainer of $2,000. Once the settlement of $90,000 was awarded at the conclusion of the case, the attorney would then take $28,000, instead of the $30,000 fee.
While that may seem like quite a bit of money and a very large percentage, in most cases the attorney earns that money. Certainly, a minor accident with just a few dents and bruises won’t require a lawyer, or even see litigation at all, more serious accidents are a different matter.
You won’t just be battling a defendant in court; you’ll also be dealing with an insurance company eager for a quick settle. The settlement offered by insurance companies are often very low and not nearly enough to cover damages, so, for this reason alone, the 33.33% contingency fee for a personal injury lawyer may be well worth the cost. In the end, it’s up to you to determine if your case requires the expertise of a personal injury attorney.
How Much Will a Car Accident Lawyer Cost You?
If the other driver is at fault for your car accident, you'll probably be able to hire a personal injury attorney on a "contingency fee" basis. Find out when it's worth the cost.
If you’ve been in a car accident, and it's pretty clear that the other driver was at fault, you’ll be looking for a plaintiff’s car accident lawyer (one who represents the person filing a personal injury lawsuit, when a case makes it to court). But how much will you need to pay?
Most car accident attorneys charge for their services in a fairly unique way—as opposed to the hourly fee that many firms charge in other types of cases. The typical car accident lawyer will charge a "contingency fee" to take on an injury case.
A contingency fee means that the firm will not get paid any attorney’s fees unless you recover money in your case. The lawyer or law firm will get paid a percentage of money received from any car insurance settlement or jury verdict (if the case goes all the way to trial).
In this article, we'll take a closer look at how contingency fees work and what you can expect if you decide to hire a lawyer to handle your car accident case.
The Contingency Percentage
The percentage that a personal injury lawyer can receive in a contingency fee agreement varies, but typically ranges from 25 to 40 percent, and 33 percent (or one-third) is pretty standard. So, if you have a 33% contingency fee arrangement and you recover $90,000 in your car accident case, your attorney will receive around $30,000.
A contingency fee percentage may vary depending on whether a personal injury lawsuit has to be filed against the other driver (the defendant). If the case settles before it goes to court, the percentage may be on the lower side.
However, if settlement occurs after suit is filed and after the defendant has served a formal answer to your complaint—or if the case proceeds to trial and a jury verdict is reached, the attorney's share may increase to 40 percent.
As an example, suppose your lawyer sent a demand letter to the other driver's insurance company in your case, and you quickly reached a settlement for $90,000. In this situation, the attorney would again receive $30,000 (33%). However, suppose that the case instead ended in a jury verdict of $90,000 and your agreement (and/or the law in your state) allows the attorney to receive 40% of a recovery after the complaint is answered. In this situation, the attorney can recover $36,000.
It is always important to speak with your attorney about the contingency fee and to carefully review your contract for legal services. If you do not understand the fee arrangement as stated in the contract, ask your attorney to explain it to you.
Also, just like everything in a contract, the fee is negotiable. If yours is a "cut and dry" case—fault for the car accident and your damages are clear, the defendant has plenty of car insurance, and there's ample evidence backing up your claims—you can certainly negotiate a lower contingency percentage. You don't need to give up a third of your compensation simply because you need the leverage of having a lawyer on your side.
Fees and Expenses
Depending on the lawyer and your contract for legal services, you may or may not be responsible for upfront court fees and other litigation expenses, like the cost of obtaining medical records and police reports, court reporter fees, and expert witness fees.
Many personal injury firms require the client to pay the above-mentioned fees as they become due. If your contract states that you are responsible for these costs, you can expect a personal injury firm to call you and seek payment as the fees become due. If you cannot pay these fees, your case will likely not proceed until there is a payment.
Other personal injury firms (typically large firms), will cover all fees and expenses. However, the fees and expenses will be deducted from your settlement or final judgment.
Let’s say you settled your car accident case for $100,000. This time, your contract stated that costs and expenses would be deducted from the settlement. Your attorney incurred $10,000 in costs and expenses. In this situation, your attorney would receive $10,000 as reimbursement for the costs and expenses, and $30,000 for legal services. You would end up receiving $60,000 as a final recovery ($100,000 - $10,000 - $30,000 = $60,000).
Make sure that your lawyer takes their fee out of the "net settlement"—that is, the amount left after case expenses are deducted. This arrangement is typical. However, some law firms may try to increase their pay by taking their money out first. Let them know that you won't accept that, and if it becomes a deal breaker, it's probably best to find another lawyer.
Other Fee Arrangements
Not all cases will involve a pure contingency fee arrangement. Lawyers may collect an initial retainer to begin your case and also collect a contingency fee at the end of your case. However, if you recover money, the amount already paid to the attorney should be subtracted from the percentage due to the attorney at the end of the case. For example, if you paid $2,000 to the attorney as a retainer and recover $90,000 in a settlement, the attorney will receive $28,000 from the settlement ($30,000-$2,000 = $28,000).
Most car accident cases will not involve a flat fee payment for legal services. Flat fee arrangements are typically reserved for less-complex cases. A law firm may charge a flat fee where the legal representation is limited to drafting and responding to a demand letter. In that case, the fee may range from $300 to $1,000.
Is a Car Accident Lawyer Worth The Cost?
The general rule is this: The more serious the injuries, the greater the value of hiring a lawyer. If you were in a minor fender bender with little or no injuries, you can probably negotiate a personal injury settlement without a lawyer. On the other hand, if you were injured and needed any significant medical treatment, the value of your case rises quickly.
This means the insurance adjuster will work to minimize your damages and try to get you to accept a very low settlement offer—they are in the business of making money, not spending it, after all. In that situation, having an experienced lawyer on your side becomes essential.
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