If you suffer injuries in a car accident and someone else caused the accident, you need a car accident attorney. Everyone knows that attorneys cost money, but what will yours cost?
The majority of car accident lawyers charge their clients on a contingency basis. Unlike most attorneys in other fields (such as immigration, tax and criminal defense), car accident attorneys usually will not get paid any fees unless you recover money in the lawsuit. So, your attorney does not get paid unless you do – they actually get paid a percentage of what you win. As you may imagine, this arrangement means that your attorney is strongly motivated to get you a large settlement or verdict.
Let’s take an up close look at just how contingency fees work, as well as what to expect if you hire an attorney to handle your car accident case.
How Contingency Percentages Work
The amount that a lawyer may receive in a contingency fee contract varies by state. In Oregon, a typical contingency fee is 1/3 of the total monies recovered in the case, but this can vary. Whatever the fee arrangement is with your attorney, be certain that it is clearly stated in writing.
So if the contingency fee agreement is 33.33%, and you win $100,000, your lawyer receives $33,333.33.
Note that the contingency fee could depend upon whether or not the defendant has responded to your legal complaint. If your accident case is settled before your complaint is answered, the percentage paid may be lower.
For instance, let’s say that you send a demand to the defendant and you reach a settlement for $100,000. The attorney on your case will receive $33,333.33, and your state allows the attorney to receive 50% of a recovery when the complaint is answered. So your attorney will receive $16,666.66.
Please discuss the contingency fee arrangement with your attorney. If you do not understand the fee structure in the contract, ask your attorney to make it clear to you.
Remember that just like anything in a contract, a fee is entirely negotiable. If your car accident case is very straightforward – that is, damages and liability are obvious, the defendant has plenty of insurance and/or is wealthy, and there is a lot of strong evidence to back up your claims – you should be able to work out a lower fee. If the lawyer does not have to do that much work on your case, you can make a strong argument that he or she does not deserve 1/3 of your award.
Fees and Expenses
Depending upon your attorney and the contract, you may or may not have to pay up front court fees and other related litigation costs.
Fees and expenses may include:
- Court filing fees
- Costs of serving a summons or subpoena
- Cost of getting medical records from a physician
- Police report
- Fee for court reporter
- Fees for expert witnesses
Many personal injury lawyers will mandate that you pay for these fees out of your pocket. If the contract states that you must pay these fees, expect your attorney to contact you for payment when they become due. If you cannot pay, your case may be delayed.
However, some large personal injury law firms cover all expenses and fees; just know that these will be taken out of the final judgment or settlement. So, if your car crash case settles for $100,000, let’s assume that your legal contract states that the costs and fees are deducted from the settlement.
If your lawyer incurred $10,000 in costs/fees, that would be deducted from your settlement, along with the $30,000 for his or her legal services. You will receive a final recovery amount of $60,000.
Your attorney should take the fee out of the ‘net settlement’. That is the amount after all expenses have been taken out. That is the typical arrangement. That said, some lawyers will take their money out first. You should tell them you will not allow this.
Different Fee Agreements
Not every car accident case has a pure contingency fee agreement. Some lawyers may want to collect a retainer to start the case, and a contingency fee at the end. However, if you win or settle, the amount that you paid your lawyer up front should be taken out of the percentage of the contingency fee. So, if you paid $2000 to the lawyer up front, and win $90,000, your lawyer will receive $28,000 of the settlement.
The majority of car accident cases do not have a flat fee arrangement. Flat fee arrangements usually are for very straight forward, cut and dried cases. A lawyer could charge you a flat fee if the legal work is simply drafting and filing a demand letter. This might be covered for a flat fee of $300 to $1000.
Should You Pay for a Car Accident Attorney?
Here’s your rule of thumb: The more serious your car accident injuries, the more your attorney is worth.
If you are in a minor fender bender with a scratch on your face, you may want to just settle it with the insurance company. It would not be worth 1/3 of your settlement to pay for an attorney.
However, if you are hurt more seriously and need medical treatment, the settlement value of your potential case rises fast. The insurance adjuster will be working hard to minimize your damages and get you to accept as little as possible. They make money by minimizing your settlement.
This fact is backed up by a 1999 insurance study done by the insurance Research Council. It determined that claimants who retained counsel received 3.5 times more in settlement money. Of course, they had to pay ~1/3 of their award to the attorney, but they still came out well ahead.
In a case where there are substantial injuries, you will nearly always benefit greatly from having an experienced car accident attorney negotiating your damages. Also, the threat of a pending lawsuit and trial often encourages the insurance company to give you a fair settlement.