A contingency fee is a standard way of compensating lawyers for their legal services and it’s a common practice in the field of personal injury law. Under this arrangement, your lawyer will only receive their payment if the case is successful (either through a settlement or a court judgment).
Simply put, if you don’t win, then your lawyer does not get paid.
Before any payment is made, however, you must agree to the resolution of the case. A settlement agreement is usually included in a release document, while a court judgment is a formal decision issued by a judge specifying the amount of money the at-fault party (defendant) must pay you (plaintiff).
Does a Contingency Fee Arrangement Mean I Won’t Pay for Anything?
In a contingency fee arrangement, not all expenses incurred during the legal process are necessarily covered. While the attorney’s fee is contingent upon the success of your case, there may still be additional charges.
Most lawyers don’t require a reimbursement for these special charges if the case is unsuccessful. However, if you win, your lawyer may request for reimbursement for these expenses. This is why it’s important to discuss any potential charges and reimbursement policies with your lawyer before entering into a contingency fee agreement.
Benefits of a Contingency Fee Agreement
Contingency fee agreements offer several benefits, first of which is that it makes legal representation accessible to those who cannot afford to pay for legal services upfront. So, with no initial costs, you can pursue compensation for your car accident.
Another advantage is that it’s risk-free. Remember, your lawyer will only receive payment if they win your case.
They will also work hard to strengthen your case and get the highest possible compensation. The higher the compensation, the higher the lawyer’s pay will be.
It’s also worth noting that if the lawyer agrees to a contingency fee, it means that they believe there is strong evidence and a significant potential for success.
Witness accounts can significantly impact claim settlements, providing crucial evidence and perspectives to assess liability and damages accurately.
How Contingency Fees Are Calculated
All lawyer’s fees, including contingency fees, are governed by the reasonableness standard set by the state to ensure fair pricing.
This standard bases an attorney’s fee on 8 factors, namely:
- Time and Labor
- Complexity of the Case
- Likelihood of Acceptance
- Local Custom
- Results Obtained
- Time Limitations
- Professional Relationship
- Attorney’s Reputation and Skills
How Do Car Accident Attorneys Get Paid?
Lawyers use various payment methods, ranging from flat rates to hourly fees. A flat rate is a fixed fee for a specific service. It could range from $300 to $600. On the other hand, hourly fees range from $100 to $500 per hour.
In hourly arrangements, lawyers often require an upfront payment known as a retainer. This initial payment establishes the lawyer-client relationship and serves as a pool of funds from which fees are drawn. The client may receive monthly bills or be asked to replenish the retainer once it’s depleted.
Most car accident attorneys use contingency fees. As mentioned earlier, the client will not pay any upfront fees or retainers. Instead, the lawyer’s payment hinges on the case’s success.
So, if the case is unsuccessful, the lawyer receives no payment. Conversely, if the client wins, the lawyer takes a percentage of the settlement or verdict. This explains why contingency fee cases are often termed “no win, no fee” cases.
How Much is the Average Contingency Fee in Car Accidents?
The average contingency fee arrangement for car accident cases is around 33-40% of the recovery, net of other fees and expenses. Contingency fees are not standardized and can vary depending on several factors. Some key determinants that influence the attorney’s fee include:
The Complexity of the Case
Cases involving multiple vehicles, trucking accidents, or intricate legal issues may command a higher contingency fee.
The Severity of Injuries
The extent and severity of injuries sustained in the accident can impact the fee percentage of your lawyer.
Settlement vs. Trial
If the case proceeds to trial it may mean a higher contingency fee.
Do Contingency Fee Agreements in Car Accident Cases Cover Case Expenses?
In legal matters, there is a clear distinction between fees and costs. Fees would be the compensation paid to a lawyer for their services, while costs are those expenses incurred to facilitate the case such as court filings, expert witness fees, accident investigations and deposition expenses.
While some lawyers may require their clients to cover these costs, the majority do not. Typically, if the case is successful, your lawyer will deduct any incurred costs from the settlement or verdict and then deduct their percentage.
If the case fails, some lawyers may bear the financial burden of these added costs but others will expect you to cover them. Make sure you thoroughly understand the terms of your contingency agreement/contract, particularly regarding costs and expenses. Read the fine print several times before you sign the document.