The Contingency-Fee Agreement.
Generally speaking, a personal injury attorney in Texas normally gets paid by a “contingency-fee” agreement. But what does that mean? It means that the lawyer agrees to represent the client and will get paid out of the proceeds of any settlement or recovery in the client’s case. If there is no recovery, then the attorney gets nothing. Likewise, the attorney’s fees are “contingent” or “conditioned” upon there being some recovery in the case.
“No Recovery, No Fee” or “”We don’t get paid unless you win.”
You often see TV commercials where the attorney uses catch phrases like “No recovery, no fee.” Or, “We don’t get paid unless you collect.” These phrases are essentially describing the same thing: The “contingency-fee agreement.”
When you are injured in an accident, many times the client doesn’t have the funds to pay an attorney by the hour. Not only does that become very expensive, there is no guarantee that you are going to collect enough to cover the attorneys fees you paid. So, the contingency fee agreement is the best solution for such situations.
How Does a Contingency Fee Agreement Work in Texas?
The Attorney is normally paid a percentage of the settlement amount.
When you sign a contingency fee agreement, you are essentially entering into a partnership with your attorney. You agree to have the attorney represent you in your injury case and your attorney will work toward getting compensation for your injuries. The compensation is normally a money settlement paid by the insurance company for the responsible party. If the attorney is unable to collect anything on your case, then the attorney is not entitled to a fee.
The agreement normally provides for a percentage of the gross recovery to be paid to the attorney. In Texas, the usual percentage for a personal injury case is 33.33%, or one-third of the total settlement amount. For example, if your case settles for $30,000, then your attorney will be paid $10,000, out of the settlement proceeds.
Can the Attorney’s percentage be negotiated?
Yes. Like almost anything is life, the percentage can be negotiated. Even though 1/3 is the usual rate for a personal injury attorney in Texas, some attorneys charge a higher percentage, even as high as 35% and even 40%. The percentage may be negotiable depending on many factors such as the case’s settlement potential or whether the client has any prior dealings with the attorney.
Just ask the attorney if they can lower the fee percentage. It never hurts to ask. However, be careful and don’t be greedy. If the attorney is only getting a small percentage compared to his other cases, you might create a disincentive for the attorney to work as hard on your case as their other cases. As I stated before, when you hire an injury attorney, you are essentially entering into a partnership with your attorney. And the partnership works best if all the partners are happy.
Can the Attorney’s percentage increase during the case?
Yes. The fee percentage can increase during the case and the client needs to be aware of that. Many agreements provide for different rates if a lawsuit has to be filed. For instance, the agreement might state that the attorney’s percentage is 1/3 prior to any lawsuit being filed. But if a lawsuit is filed, the percentage might increase to 40% or 45%.
This happens because the attorney must invest more time and money into the case when filing a lawsuit is necessary. Furthermore, settlement of the case can be delayed for a year or more. And some agreements even provide for a higher percentage if a trial is necessary or the case is appealed. So, the moral of the story is to find out from the very beginning if the fee percentage increases and by how much.
How are case expenses handled?
Every case may have certain expenses and costs. For instance, if your attorney requests a certified copy of the police report for a car accident, the police department charges a fee for that report. Additionally, there are fees associated with public records such as 911 recordings or bod-cam videos. Other expenses might include fees for obtaining medical records, postage, courier fees, court costs and other litigation fees.
Generally, the case expenses are not that much in the early stages of a case. If a case settles without the need for a lawsuit, the expenses are usually a few hundred dollars or so. But if a lawsuit is filed, the case expenses can increase dramatically. A typical litigation case can accumulate expense of $1,500 – $2,000, for filing fees, depositions, mediation fees, etc. And if expert witnesses are necessary, such as a doctors or an accident reconstruction expert, these expenses alone can be well into the thousands and even tens of thousands.
The expenses are normally collected from the settlement proceeds is addition to the attorney fees. For example, let’s say a case settles for $30,000. If the attorney fees are 1/3 and the attorney has paid $250 in case expenses, then the attorney will collect $10,250 from the settlement proceeds ($10,000 for attorney fees and $250 for the expenses).
So make sure you understand that the case expenses are separate from the attorneys fees. However, your attorney is usually very aware of the case expenses and how to monitor it for every case. Some cases justify more expenses than others. Your attorney should be able to keep your expenses at a manageable level which is usually decided on a case-by-case basis.
How are the medical expenses paid?
Medical expenses are paid from the client’s portion.
Now that we have discussed the attorney’s fees and expenses, there is still the matter fo the medical expenses. The medical expenses are normally paid from the client’s portion of the settlement proceeds. Here is an example:
Let’s say your case settles for $30,000 and the client has medical expenses of $17,000. If the attorney is paid 1/3 ($10,000), then that leaves $20,000 to pay the medical expenses and the client. Under this example, the medical expenses are $17,000, leaving $3,000 for the client.
Are the medical expenses negotiable?
Generally speaking, the medical expenses are negotiable. How negotiable they are depends on the circumstances. The doctors and hospitals need to understand that the client has the final say in settling the case. If the client cannot net a satisfactory amount, then there is no incentive for the client to settle. In that case, the medical bills might not get paid at all.
Back to our prior example, if your lawyer is able to negotiate the medical expenses from $17,000 to $12,000, that puts an extra $5,000, in the client’s pocket. So, now instead of netting only $3,000, the client will net $8,000. The settlement now looks more appealing to the client. If the client agrees to settle, then the doctors will get paid the negotiated amount which is better than possibly getting nothing.
Your attorney will usually approach the doctors and hospitals and try to negotiate their bills. As I stated earlier, some medical bills are more negotiable than others. However, your attorney should know how to the approach them depending on the circumstance of each case.
How is Robert C. Slim different?
Now that we have discussed the typical contingency fee agreement, how is my fee agreement different?
“Lower-Fee Guarantee.”
In my contingency fee agreement, I have a provision called my “Lower-Fee Guarantee.” When I was a young personal injury lawyer in Dallas, I learned from my mentor that a lawyer shouldn’t take a fee that is greater than the net recovery of his client. When I went off on my own to start my own practice, I took that same philosophy with me.
Unfortunately, many personal injury attorneys in Dallas do not follow this practice. Instead, they will enforce their fee percentage to the fullest regardless of how it compares to the client’s net recovery. With this in mind, let’s look at our prior example again.
In our prior example, the attorney was able to negotiate the medical expense so that the client can net $8,000, out of a $30,000 settlement. However, the attorneys fees are $10,000. Should the attorney walk away with a higher dollar figure than the client? Some attorneys think so. I do not.
My Lower-Fee Guarantee provides that I will negotiate and arrange the settlement in a way that the client nets more money than the attorney. This is my pledge even if I have to reduce my fee!
In our prior example, I will therefore, reduce my fee down from $10,000, so that my client nets a higher figure than me. Therefore, I would reduce my fee from $10,000, to something like $8,800. This way, my client’s net recovery increases from $8,000 to $9,200, and the client walks away with a higher dollar figure than my attorney’s fees.
This is the way I’ve been taught and this is the way I’ve handled my personal injury cases for the past 30 years of practice in the Dallas/Fort Worth area. Unfortunately, not all attorneys follow this practice. Not only do I follow this practice, I put it in writing in my contract.
Contact me and let’s talk about your injury case today. The consultation is absolutely FREE!!!