In the legal community, there’s a saying that if you ask a law student a question, the answer is “I don’t know,” but if you ask a lawyer the same question, the answer is “It depends.”
This saying holds true both for substantive legal matters and also for payment of legal fees. This is especially true when you are the plaintiff in a personal injury case, where attorneys work on commission and there are several factors that go into calculating the plaintiff’s overall compensation.
Here is what you should know about the cost to hire a personal injury lawyer.
Personal Injury Lawyers Nave No Up-front Fees
In the legal world, there are generally three billing methods. First, attorneys may bill on an hourly basis, drawing from a retainer. This is common in civil and criminal defense work. Second, attorneys may offer flat fees to complete tasks, payable before work commences. Estate planning and bankruptcy firms generally use this approach.
The third billing method is on commission, where attorneys take nothing up-front. Instead, they take a percentage of whatever money is recovered at the conclusion of the case. The plaintiff’s personal injury attorneys in the United States almost exclusively bill their clients on this third method. Just like those late-night ads say, personal injury lawyers won’t get paid unless you do.
The vast majority of personal injury cases will eventually settle with one or more insurance companies. The company will send money to the personal injury attorney, who will subtract his or her fees and costs, then forward the remainder to the plaintiff.
Costs that your personal injury attorney may incur while pursuing your legal claim can include:
- Certified medical records;
- Copies of police reports;
- Court filing fees;
- Fees for personal investigators and expert witnesses; and
- Costs for obtaining depositions and transcripts.
The benefit of this approach is that, if you’ve been injured and want to seek compensation, you can someone helping you from the very beginning. This means that you’ll have someone speaking for you while you recover from your injuries so that you can focus on healing. You’ll also avoid making costly mistakes that could affect your monetary recovery in the future. This can be especially helpful if you’re out of work while you’re healing.
Personal Injury Lawyers Can Take up to 33% or More of Your Payout
When you hire a personal injury attorney, the contract will discuss payment terms. The fee for most personal injury attorneys is usually between 20 and 40% of the total amount recovered. After taking their percentage, attorneys will then subtract the costs from the settlement. Depending on how involved the case was, the costs might be significant.
With some personal injury firms, the attorney’s commission percentage may be calculated on a scale. If the case settles early, the attorney may take a lower overall percentage. However, if the case goes to trial, the attorney will have put in significantly more work, meriting a higher percentage of the eventual recovery.
For example, your personal injury attorney may be able to negotiate an acceptable settlement by sending a demand letter and making a few phone calls. If the total settlement check is $20,000, your attorney’s percentage might be 25% at this stage, so they would get $5,000 in fees. Costs may be very low at the beginning stages of the case, so you could take home close to $15,000.
However, if the case is very complicated and goes to trial, the attorney’s percentage of the overall payout could increase to 40%, If the case eventually settles for $50,000, your attorney could take home $20,000 for fees, plus their costs, which would be significantly higher at this stage. You may only end up bringing home $25,000 of the eventual payment.
It’s also important to remember that attorneys work for you as your agent. Attorneys can’t accept or reject an offer, or make a counteroffer, without your approval. Although personal injury lawyers will be able to advise you about when to settle or when to push for more, at the end of the day, this is your decision to make.
Your attorney will be able to advise you about potential fees and costs at each stage of your settlement negotiations.
Hiring a Personal Injury Attorney Can Significantly Increase Your Compensation
When looking at these numbers, it’s very common for people to scratch their heads and wonder why they would hire an attorney if they have to give away such a large percentage of the settlement.
However, having an attorney handle your personal injury case can increase the likelihood of getting a payout, and it can also significantly increase your compensation.
According to one study, people with personal injury cases who hire an attorney received a payout 91% of the time, while people who handled the case on their own only received a payout 51% of the time. Those who worked with an attorney also received, on average, three times as much as those who worked alone, even after deducting their attorney’s fees and costs.
Most attorneys will offer free consultations before signing a contract. This lets you ask questions about your potential personal injury claim, as well as how the payments to the law office work. Although attorneys can’t make promises or guarantees about a particular outcome, you should ask for some example figures, so you can see how the finances might work out.
Don’t be afraid to shop around – just like with doctors and diagnoses, consider getting a second or third opinion from other personal injury lawyers in your area. Only you know who is the best fit for you, your loved ones, and your case. Matt Freeman is the managing partner of the Law Offices of Freeman and Freeman, headquartered in Santa Rosa, California. He has spent more than 20 years as a trial attorney working with personal injury plaintiffs across the state.