Car Accident Lawyer Fees
September 4, 2021 | Car Accidents
One of the most important factors to consider when you hire a car accident lawyer is legal fees. This is also one of the most common sources of disputes between lawyers and clients.
Having a conversation with your lawyer about fees can help you to avoid misunderstandings when it comes time to pay the legal bills.
Most injury lawyers charge a contingent fee. A contingent fee provides many benefits to car accident victims. However, you must review the terms of your fee agreement carefully.
Here is a guide to car accident lawyer fees and some of the details to look for in a lawyer’s fee agreement.
How Contingent Fees Work
Injury lawyers often charge a fee that is contingent on the outcome of a case. Contingent fees can provide all clients with access to a lawyer, regardless of their current financial situation.
Contingent fees have two key characteristics that can put a lawyer to work on your case, even if you do not have the money to hire an hourly fee lawyer:
- You’ll pay nothing unless the lawyer wins or settles the case
- You won’t have to pay anything upfront
Instead of charging by the hour, the lawyer calculates a contingent fee as a percentage of the compensation they recover for you.
For example, suppose that your lawyer settles your injury case for $25,000. If the lawyer charges a contingent fee of 33%, the lawyer will receive $8,333.33, and you will receive $16,666.67 to cover your losses.
Advantages of a Contingent Fee
In addition to helping clients who don’t have the financial means to hire an hourly fee lawyer, contingent fees have a few advantages over an hourly fee.
Protection for the Client
The lawyer only receives a percentage of the compensation recovered. As a result, a client does not need to worry about spending the entire settlement or damage award on legal fees.
This preserves the client’s compensation for future medical expenses and diminished earnings that might result from their injuries.
Incentives for the Lawyer
The lawyer’s fee will increase as the size of the settlement or damage award increases. This provides the lawyer with an incentive to get the largest possible settlement or damage award.
The lawyer does not receive a fee until they settle or win the case. This means that the lawyer has an incentive to resolve the case as quickly as possible.
Reviewing the Contingent Fee Agreement
Pennsylvania’s Rules of Professional Conduct require written contingent fee agreements. When you hire a lawyer on a contingent fee, you should receive a copy of the contingent fee agreement to review and sign.
Unless you have impending deadlines in your car accident case, you should take the time to review the contingent fee agreement carefully.
If you have questions, you can ask the lawyer to go over the fee agreement with you. You can also contact another lawyer to help you review the fee agreement.
Some issues to watch for as you review the contingent fee agreement include:
Injury cases usually involve hard costs such as:
- Court filing fees
- Court reporter fees
- Mileage reimbursements for witnesses
- Expert witness fees
- Courier fees
- Copying fees
Contingent fee lawyers usually cover these costs during the case. They want to make sure that your resources go toward your medical treatment and day-to-day expenses. But most contingent fee lawyers expect reimbursement for these advances at the end of the case.
Issues to Watch
When you review your contingent fee agreement, you should watch for three main issues:
- Which costs will the lawyer cover?
- Is the lawyer reimbursed for costs before or after calculating the contingent fee?
- Do you need to reimburse the lawyer if you lose?
The way that a lawyer handles costs could substantially increase how much you pay for your legal representation.
If a lawyer does not advance costs for your case, you will need to pay for them out of pocket. Similarly, if the lawyer expects reimbursement if you lose, you will need to go into your pocket at the end of the case rather than paying out of the money you recover.
The way the lawyer deducts costs can reduce your compensation, even when you win. For example, suppose that you litigate your case and win a damage award of $100,000. Perhaps the lawyer incurred $5,000 in expenses for expert witnesses, filing fees, and court reporters. They also charge a contingent fee of 35%.
If the costs get deducted before calculating the contingent fee, you receive $61,750. But if the lawyer deducts costs after calculating the contingent fee, you receive $60,000.
This might seem like a minor point. But bear in mind that this damage award will likely provide your only opportunity to recover compensation for your unpaid medical bills and lost income.
Tiered Contingent Fees
Some lawyers charge a different percentage depending on whether they file a lawsuit. For example, a lawyer could charge a 30% contingent fee if the case settles before filing a lawsuit. But they may increase the fee to 35% if they need to file a lawsuit.
Pay attention to how the fee agreement defines each tier. If filing a lawsuit triggers a higher percentage, the lawyer receives a higher fee, even if the case settles before or during the trial.
Services Covered by the Fee
Most contingent fees will cover negotiation with the auto insurer for the at-fault driver and litigation if the negotiations do not prompt a settlement. However, most contingent fee agreements do not cover post-trial appeals.
If you win and the insurance company appeals, you will probably need to pay an additional fee for representation and legal services. You may even decide to hire a different lawyer to defend your winning verdict on appeal.
Hiring a Lawyer on a Contingent Fee
If you accept the terms of the fee agreement, you will sign it. This will formally authorize the lawyer to start working on your case. You will also need to sign a HIPAA release, which allows the lawyer to gather your medical records from your doctors.
From this point forward, your lawyer will receive the agreed-upon fee if they win or settle your case.