Apr
11

Personal Injury Cases and Contingency Fees

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“No fees unless you collect.”  What does this mean? Most, if not all, personal injury lawyers agree to represent a client on a “contingency fee” basis.  Simply put, a contingency fee is a fee paid to an attorney that is contingent, or conditioned, upon any recovery in the case.  Since most injured clients are unable to pay an attorney on an hourly basis, the attorney and client enter into an agreement whereby the attorney will be paid in the event there is any monetary recovery.  If there is no recovery, then there is no fee.  Almost always, the contingency fees are calculated as some percentage of the recovery.  For instance, if the contingency fee is one-third (33 1/3%), and your case settles for $60,000, the attorney would be entitled to $20,000, for attorney fees.  Then, upon disbursement of your settlement, remainder of the proceeds are used to pay any case expenses, medical expenses and to pay the client.  However, there are some issues that the client should be aware of before entering into a contingency fee agreement.  You can also learn more about my Lower Fee Guarantee.

What is the percentage and does it increase for any reason? Most of the time, a contingency fee agreement begins with an initial percentage of 1/3 (or 33 1/3%) in the event the case settles without the need for filing a lawsuit.  This is usually the lowest of the percentages.  Customarily, however, the percentages may increase if the attorney has to file a lawsuit in your particular case, and the percentage may even increase further if the case has to go to trial or even an appeal.  This is so because the attorney has now invested much more time, effort , and money into prosecuting your case.

Does the attorney also get to recover case expenses over and above the contingency fee? Almost every personal injury case is going to involve some expenditures such as records fees, filing fees, investigative expenses, and litigation expenses.  Under normal circumstances, the attorney pays these expenses and then recovers the expenses out of the settlement or recovery.  Generally, expenses are recovered in addition to, and separate from, the attorneys fees.  What the potenial client should look for is the type of expenses being deducted.  Obviously, direct expenses should be recouped from the settlement or recovery.  However, the client should note if other indirect, or overhead, expenses are being charged.  Examples would include fax fees, stationary fees, mileage, etc.  These are generally overhead expenses and, in my opinion, should not be charged to the client’s case.  Nevertheless, it is not uncommon for an attorney to provide for recovery of these types of overhead expenses and the potential client should be aware of this upon reviewing any contingency fee contract.

What happens if my case doesn’t settle or I lose my case at trial? Then the attorney gets nothing for his fees.

What if I decide to drop my attorney? Keep in mind that when you sign a contingency fee contract, you are essentially assigning a percentage of your case to the attorney.  Likewise, if you drop your attorney without good cause, the attorney can still enforce his right to recover his fees and expenses.  If you drop your attorney for good cause, then the attorney would only be able to collect the “reasonable value” of his work.  Whether the attorney is dropped with or without good cause will almost always be disputed between the attorney and client.  Likewise, if you hire another attorney, your new attorney will probably have to agree to make some split of his fees with your previous attorney in order to avoid any future disputes.  The best way to avoid this issue is to feel comfortable with the attorney you are hiring from the very beginning.  If you have any hesitation, then go home and sleep on it.  Another suggestion is to CALL A LAWYER you can trust.

Other article that might interest you:

Lower Fee Guarantee – An Example of My Personal Injury Disbursement

Should I Hire a Car Accident Attorney?

Don’t Represent Yourself.

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