After an accident, you’re probably dealing with a lot of expenses. You probably have vehicle repair costs to worry about, along with medical expenses. With bills flooding in, you may think you can’t afford to hire an injury attorney—however, an attorney may not be out of your reach.
Unlike criminal defense lawyers, injury attorneys can charge contingency fees. However, before agreeing to this fee structure, understanding the terms of contingency fee agreements is crucial. After all, you don’t want to enter into an agreement with an attorney you don’t understand.
What is a Contingency Fee Agreement?
A contingency fee agreement is a specific payment structure personal injury attorneys are allowed to offer their clients. Contingency fees are limited to personal injury law for a simple reason.
Attorneys working on a contingency fee basis are only paid a percentage of their client’s award in injury cases. If the attorney doesn’t win the claim, they don’t receive payment for their services.
So, since a criminal lawyer is not seeking a financial award for their client, contingency fees don’t apply. In simple terms. Contingency fees allow you to hire an attorney even when you can’t pay upfront or hourly rates.
A Look at a Standard Contingency Fee Agreement
Before we start looking at the terms of a standard contingency fee agreement or the amount your attorney may receive, let’s cover a few basics.
The contingency fee agreement must be in writing. If for some reason both parties (the attorney and client) are unable to sign the agreement, the court may allow a recorded verbal agreement. However, since the likelihood of it being impossible to put the contract in writing is slim, this rarely comes up.
The contract must also be signed by the attorney and client. A witness should also be present, preferably someone not associated with the claim. Okay, with that being covered, here’s a look at what’s included in a contingency fee agreement.
Fee Amount
The contingency fee amount should be one of the first things covered in the agreement. Don’t be afraid to negotiate a bit with your attorney. Remember, your goal in filing a claim is to cover your damages. So, don’t negotiate too low.
On average, contingency fees range between 30% and 50%. If you’re wondering about the wide range in fee amounts, it typically depends on the type of claim. Worker compensation and personal injury claims are usually easier to settle. Fault is easier to determine and these types of claims usually require less legal work. Contingency fees tend to stay around 30% to 35% for these injury claims.
If your personal injury claim is part of a class action lawsuit, contingency fees can be as high as 50%. You should also expect to pay higher fees for personal injury lawsuits. If your claim is in the lawsuit stage, your attorney will be preparing a legal case in civil court. Appealing a denied claim also tends to have a higher contingency fee.
Are There Additional Charges
Contingency fees may not cover everything. Yes, paying 30% and higher can be pricey but it may not be enough to cover all of the work the attorney puts into your case. To avoid unpleasant surprises, your contingency fee agreement should include any extra costs you may be responsible for. These typically include things like:
- Costs for obtaining medical and accident reports
- Fees for expert witnesses, such as accident reconstruction experts
- Court filing fees
- Deposition costs
You may also have administrative costs like postage and copying. Your agreement should also include how these costs are deducted. Will your attorney deduct the costs from your settlement before or after calculating their contingency fee? You also want to know if you’re still responsible for paying extra costs if your claim is unsuccessful.
How Will You Receive the Settlement
Most insurance settlement checks don’t come in the mail. The amount may be deposited into your supplied bank account or one your attorney set up. Most attorneys working on contingency fees create an escrow account for their clients.
If the claim is successful, the insurance check is deposited into escrow until you meet with your attorney. Your attorney deducts their contingency fee and you receive the rest.
Are Contingency Fees Your Best Option
Even personal injury attorneys often charge contingency fees, it’s not the only payment structure they can use.
Hourly Fees
Attorneys can charge a fee for every hour they work on your case. If you have a simple personal injury claim and only need some assistance with negotiations, this may be a good option.
You may only need the attorney’s services for a couple of hours and this can be significantly lower than contingency fees. If your case is complicated. Hourly rates can quickly add up, especially if you go to trial.
Flat or Fixed Rates
Flat or fixed rates aren’t too common in personal injury law; this fee structure is more commonly used for drawing up contracts and drafting wills. However, a flat rate lets you know how much legal services are going to cost. You don’t have to worry about extra costs when your case is settled.
Fixed rates aren’t always recommended in personal injury cases. If your claim goes to trial, your attorney may not be motivated to put in the additional effort and time.
Blended Rates
Blended rates are rarely used in personal injury law. As the name implies, this payment structure combines different types of fees.
You may pay an hourly rate to calculate your damages and fixed fees during negotiations. While not common, you may want to ask your attorney about blended rates.
Contingency Fees Can Make Legal Representation Affordable
While contingency fees aren’t the only payment structure to choose from, it’s often the best option. You receive legal representation without having to pay upfront or hourly costs. However, make sure you have a contingency fee in writing and that you understand any potential extra charges.
If you’re comfortable with the terms of the agreement, contingency fees can help ensure you have legal representation.
