In most personal injury cases, a lawyer's services are offered on a "contingency fee" basis. If you win your case or reach a settlement, you will pay your lawyer a percentage of the money you receive. But if you lose your case, you don't have to pay your lawyer a fee. Win or lose, you'll probably have to pay some or all "costs and expenses" like court filing fees.
If you're thinking about hiring a personal injury lawyer, here's what to expect when it comes to lawyers' fees:
In most personal injury cases, a lawyer's contingency fee is between 33% and 40% of whatever compensation the lawyer gets for you. A lawyer who takes a case on a contingency basis is making a high-risk, high-reward gamble on your case. You get the benefit of not having to come up with a lot of money upfront in exchange for giving the lawyer a pretty high stake in your case.
In the majority of cases, a personal injury lawyer will receive 33% (or one-third) of any settlement or award. For example, if you receive a settlement of $30,000 from an at-fault party's insurance company, you would receive $20,000 and your lawyer would receive $10,000.
Win or lose, you will likely be responsible for reimbursing your lawyer for some expenses the lawyer paid to investigate, negotiate, and pursue your claim (called "costs and expenses"). It is to your advantage to have the costs and expenses deducted before the lawyer's fee is calculated.
You can always try to negotiate for a reduced contingency fee. For example, if you've already investigated your case and gathered all the documents you need to support your claim, some lawyers might be willing to accept a lower percentage contingency fee.
Some lawyers offer a contingency fee arrangement that takes into account the extent to which a case has progressed before settlement. This is often called a "sliding scale." For example, if your lawyer can settle your case solely by negotiating with an insurance adjuster, your lawyer might agree to receive a 25% contingency fee.
But if your lawyer has to file a personal injury lawsuit in court before you accept a settlement offer, your lawyer's fee percentage will likely be the standard 33% (40% if the case is scheduled for trial). The closer your case gets to trial, the more work your attorney will have to put into the case, and the higher the contingency fee percentage is likely to be.
Sometimes a lawyer's fee percentage might vary based on the complexity of the case. A lawyer might want a higher percentage of your recovery when your case is particularly complicated or risky, but accept a lower percentage when you have a straightforward case that is likely to settle quickly.
Most personal injury lawyers will cover routine costs and expenses as they come up, and then deduct them from your share of the settlement or court award. It's rare for a personal injury lawyer to charge a client for costs and expenses as they become due.
Costs and expenses in a personal injury case may include:
Costs and expenses can add up quickly, easily reaching thousands of dollars. It's common for lawyers' fees and costs and expenses to total between 45% to 60% of your settlement, sometimes more.
For example, suppose your personal injury case settles for $30,000 after you file a lawsuit. You have to reimburse your lawyer for costs and expenses totaling $6,000. Your lawyer will deduct $6,000 off the top of your settlement, leaving $24,000. Then your lawyer's fee will be $7,920 (33% of $24,000), leaving you with $16,080.
Some lawyers might try to deduct their fee first and then costs and expenses, which will leave you with a smaller piece of the pie. Make sure your fee agreement says that costs will be deducted before your lawyer's fee is calculated.
Your settlement check will probably go to your lawyer first. Your lawyer will deposit the check in a special account. Your lawyer will pay any liens against your settlement (like for unpaid bills to your healthcare providers or insurers). Then your lawyer will deduct costs and expenses and legal fees consistent with your fee agreement.
For example, if you receive a settlement for $100,000, your lawyer will deduct $33,000 if you have a 33% contingency fee agreement. You will receive the remaining $67,000 in your settlement check, minus any liens and costs and expenses.
Your lawyer should provide you with an itemized list of deductions. If you have a problem with your lawyer's bill, your local or state bar association might have a fee dispute arbitration program to help you resolve the issue.
If you switch lawyers or decide to represent yourself, you will probably still owe your former lawyer fees and expenses incurred on the case prior to the switch. Depending on state laws and the language in your fee agreement, your former lawyer may even hold your case file until you pay fees and costs owed to the lawyer.
Your former lawyer may also sue you to collect unpaid fees and costs or file an attorney's lien to recover unpaid fees and costs out of the final judgment in your case.
Learn more about firing a personal injury lawyer.
Contingency fees are only one type of fee arrangement that lawyers use. Other common types of fee arrangements include:
If you don't want to pay a personal injury lawyer a contingency fee, you might consider hiring a lawyer to give you advice on a particular issue. In an advice-only situation, you might be able to pay the lawyer by the hour. For example, you could hire a lawyer to review a demand letter you plan to send to the other driver's insurance company after a car accident. The lawyer would not take over responsibility for your claim, but might spend an hour or two helping you fine-tune your letter to get the best possible settlement offer from the insurance company.
In the United States, the general rule (called the "American rule") is that—win or lose—you pay for your own lawyer.
The only time you might be able to get the other side to pay your lawyer fees is when:
To learn more about the American Rule and exceptions to the rule, check out: Attorney Fees: Does the Losing Side Have to Pay?
You might be able to save money on lawyers' fees by handling your own claim, but most people benefit from the advice and assistance of a lawyer.
If are looking to sue someone over a car accident, slip and fall, or dog bite, you'll probably have to pay lawyers' fees only if you win your case because most personal injury lawyers work on a contingency basis.