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Will My Personal Injury Attorney Charge Me

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Posted on August 6, 2021

Lawyers like other laborers do not work for free. They instead receive compensation for the legal services they provide. Remember, besides government lawyers, law firms are businesses at heart. However, unlike most areas of law where an attorney is compensated by the hour, or based on a flat fee, personal injury attorneys are paid via a contingency fee. Personal injury attorneys assist with recoveries monetary compensation from insurance companies for slip and falls, injuries from a car/truck accident, work accident, or the like.

Why Contingency Fees are Necessary

When someone is injured in an accident or harmed through no fault of their own, they very quickly begin to see the bills stacking up. These bills come from the hospital, the ambulance, x-rays and MRI’s, blood tests, and the like. Typically, with these mounting costs, most victims would be unable to then pay an attorney the prevailing hourly rate to fight their case. This is where a contingency fee benefits a victim.

What is a Contingency Fee

Contingency fees on their face seem simple enough to understand. Your attorney receives compensation for his services after you receive monetary recovery in you case. Stated a different way, the attorney’s fee is contingent upon you receiving some amount of compensation. This seems like a win for victims because the victim does not have to pay the upfront costs of the attorney’s services, and the victim does not have to pay for the attorney’s services if the attorney is unsuccessful. It also puts the risk mostly in the hands of the attorney, because sometimes the attorney will spend a significant amount of time and money on a case, but unless the victim receives a settlement or a jury award at trial, the attorney will lose the advanced costs and time.

To equalize this, the attorney’s contingent fee is traditionally one-third or thirty-three percent (33%) of the victim’s award or settlement. This percentage has long been held to be sufficient to adequately compensate the attorney for the risks of losing the advancing costs and time spent, while not taking too much of a client’s award. It also provides a financial incentive for the personal injury attorney to maximize the client’s award because the more money that is awarded, the more the attorney is compensated.

Downsides to Contingency Fees

While the vast majority of personal injury contingency fee cases favor the victim receiving the maximum settlement possible, there are certainly remote occasions where a client would have been better off paying costs out of pocket. For example, when insurance limits are paid out by an insurance company weeks into a case because liability is clear, and injuries are catastrophic.

A few years ago we represented a child victim of a vicious dog attack, where the dog removed the entire front end of the child’s nose. The victim quickly incurred over $100,000 in medical bills and the homeowner’s policy limits were quickly tendered. In this particular case, the attorneys at We Win Injury Law were only compensated for out-of-pocket costs because of how quickly the insurance company had tendered limits. If you have a similar case, you should ask the personal injury lawyer’s whether or not a reduced percentage or fee is possible.

What if my Medical Bills Exceed the Policy Amounts?

A follow up to the above scenario, you might ask, what do I do if my medical bills exceed the policy limits of the insurance policy? There are various methods to solving this problem. In automobile accident cases, once policy limits are tendered by the at-fault party, we then proceed to file a claim against your own policy for under-insured motorist (UIM) claims. Additionally, your health insurance will typically step in to cover excess costs.

However, there are times when UIM or health insurance are not available, for example in non-automobile cases, or if you do not have health insurance. Additionally, even if there is UIM insurance available, your medical bills may even exceed that. When this occurs, it is up to your attorneys to fight your medical providers for reductions in their costs, and typically the attorney will also reduce or match the reduction by medical providers. However, remember that your attorney cannot force your medical providers to reduce their costs, but generally they will do so.

What are the Costs and Fees the Attorney Advances In My Case. 

This is not intended to be an exhaustive list of all of the costs and fees an attorney advances in a contingency fee case, the following are some of the costs and fees advanced by your attorney:

Pre-Litigation Costs

Your attorney has to cover the costs of both staff and the compiling of your medical bills and medical records to the insurance companies. Additionally, your own medical providers charge to supply your attorney with copies of your medical bills and medical records. Additionally, the attorney must also cover the fees for his own time in talking with the insurance companies, drafting documents to send to the insurance companies, and the administrative costs of paying your medical providers once a settlement is reached.

Litigation Costs

Should your case not settle, your attorney will be required to file a lawsuit on your behalf, there are costs related to preparing court documents, using process servers, court fees, costs of transcripts, costs for court reporters, costs for experts, and travel fees and costs. Just as an example, for a simple deposition your attorney will have to hire a court reporter and pay for the transcript. Depending on the complexity of your case, a single deposition can exceed over $1000, and this doesn’t include any fees for the attorney’s time, and in most cases, multiple depositions are required. Another example is expert witnesses. Not only will the attorney be required to pay in advance most of your experts’ costs for depositions, but expert trial costs can also quickly exceed $10,000.

Sample Breakdown of a Contingency Fee Settlement 

As a quick example, a recent case settlement from We Win Injury Law where a case settled for approximately $98,000.00. There was approximately $8000 in fixed costs from experts and non-firm expenses and $29,000 in combined medical bills from our client. The breakdown looked like this:

Total Settlement: $98,000

Non-Firm Expenses: $8000

Client Medical Bills Paid: $29,000

Attorney Contingency Fees: $30,000

Settlement to Client: $31,000.

In the above example, the client received $61,000 in total settlement, but the firm was required to pay back medical providers $29,000 first, so the client received a check for $31,000.