A car accident lawyer can often help you get the best possible outcome in your case. But having a legal expert on your side doesn't come cheap. Here's an overview of how car accident lawyers get paid and the factors you should consider when deciding whether hiring a lawyer in your car accident case is worth the cost.
Most car accident attorneys charge for their services in a fairly unique way—as opposed to the hourly fee that many firms charge in other types of cases. The typical car accident lawyer will charge a "contingency fee" to take on an injury case. A contingency fee means that the firm will not get paid any attorney's fees unless you recover money in your case. The lawyer or law firm will get paid a percentage of the money you receive in a settlement or court award (if the case goes all the way to trial).
The percentage that a personal injury lawyer can receive in a contingency fee agreement varies, but typically ranges from 25% to 40%, and 33% (or one-third) is pretty standard. So, if you have a 33% contingency fee arrangement and you recover $90,000 in your car accident case, your attorney will receive around $30,000.
A contingency fee percentage may vary depending on whether a personal injury lawsuit has to be filed against the other driver (the defendant). If the case settles before it goes to court, the percentage may be on the lower side.
However, if settlement occurs after a lawsuit is filed and after the defendant has served a formal answer to your complaint—or if the case proceeds to trial and a jury verdict is reached, the attorney's share may increase to 40%.
As an example, suppose your lawyer sent a demand letter to the other driver's insurance company in your case, and you quickly reached a settlement for $90,000. In this situation, the attorney would again receive $30,000 (33%). However, suppose that the case instead ended in a jury verdict of $90,000 and your agreement says the attorney is to receive 40% of a recovery after the defendant answers the complaint. In this situation, the attorney can recover $36,000 (40% of $90,000).
It's important to talk with your attorney about the contingency fee and to carefully review your contract for legal services. If you don't understand the fee arrangement as stated in the contract, ask your attorney to explain it to you.
Also, just like everything in a contract, the fee is negotiable. If yours is a "cut and dry" case—fault for the car accident and your damages are clear, the defendant has plenty of car insurance, and there's ample evidence backing up your claims—you can certainly negotiate a lower contingency percentage. You don't need to give up a third of your compensation simply because you need the leverage of having a lawyer on your side.
Depending on the lawyer and your contract for legal services, you may be responsible for upfront court fees and other litigation expenses, like the cost of obtaining medical records and police reports, court reporter fees, and expert witness fees.
Some personal injury firms require the client to pay these types of "costs and expenses" as they become due. Other personal injury firms cover fees and expenses with the understanding that they will be deducted from your settlement or final judgment. Let's say you settled your car accident case for $100,000. This time, your contract stated that your attorney's contingency fee rate was 30% and costs and expenses would be deducted from your settlement. Your attorney incurred $10,000 in costs and expenses. In this situation, your attorney would receive $10,000 as reimbursement for the costs and expenses, and $30,000 for legal services. You would end up receiving $60,000 as a final recovery ($100,000 - $10,000 - $30,000 = $60,000).
Make sure your fee agreement clearly states who is responsible for covering each type of fee and expense whether you win or lose your case. Ask your lawyer to take the lawyer's fee out of the "net settlement"—that is, the amount left after case expenses are deducted. Many law firms try to increase their pay by taking their money out first.
Learn more about legal fees and costs in personal injury cases.
Not all cases will involve a pure contingency fee arrangement. Lawyers may collect an initial retainer to begin your case and also collect a contingency fee at the end of your case. However, if you recover money, the amount already paid to the attorney should be subtracted from the percentage due to the attorney at the end of the case.
Most car accident cases will not involve a flat fee payment for legal services. Flat fee arrangements are typically reserved for less complex cases. A law firm may charge a flat fee where the legal representation is limited to drafting and responding to a demand letter. In that case, the fee may range from $300 to $1,000.
The general rule is this: The more serious the injuries, the greater the value of hiring a lawyer. If you were in a minor fender bender with little or no injuries, you could probably negotiate a personal injury settlement without a lawyer.
On the other hand, if you were injured and needed any significant medical treatment, the value of your case rises quickly. This means the insurance adjuster will work to minimize your damages and try to get you to accept a very low settlement offer—they are in the business of making money, not spending it, after all. In that situation, having an experienced lawyer on your side becomes essential.