The Basics of Contingency Fees in a Personal Injury Case
When your lawyer talks about contingency fees to represent your personal injury case, you may be unsure what they’re talking about. Before you hire them to work on your case, it’s important to understand the fee structure and how a settlement affects it.
What’s a Contingency Fee?
The fee structure for personal injury cases is uniquely designed. Instead of paying your lawyer by the hour for the work they do, they receive a percentage of the amount recovered. This is called a contingency fee. The beauty of this system means that anyone can hire the best personal injury lawyer in Venice, FL, without having to pay expensive legal fees upfront.
If the case is decided in your favor and you receive a payout, that’s the moment when your lawyer will get paid as well. While you may not like the idea of sharing your settlement with your lawyer, you have to think about it from their perspective, too. In a personal injury case, they take all the risk. If you lose your case and receive nothing, then your lawyer also leaves empty-handed and has essentially done the work for free.
How Is the Fee Calculated?
The contingency fee is always expressed in percentages. Your lawyer will take a percentage of the settlement they negotiate for you. The higher the settlement, the more money your lawyer earns, too. This setup ensures that your attorney’s objectives are perfectly in line with yours, and they will work hard to earn you as much money as possible. The percentage of the fee is negotiated on a case-by-case basis, but fees between 33 and 40 percent are customary.
Contingency Fees and the Settlement
If the case is settled before a formal lawsuit is filed, the wrongdoer will make a settlement payment to your lawyer. It usually requires several back-and-forth negotiations to determine the appropriate amount. Many states limit contingency fees in this type of case to 33 percent.
If a settlement can’t be reached, your attorney will file a lawsuit. At this point, your lawyer may be entitled to receive a higher percentage of the fees should a settlement occur before the case goes to trial. These are typically 40 percent. This may not sound as appealing to you, but if the case goes to trial, it will likely get more expensive for you, which makes an early settlement desirable.
If your case goes to trial or is settled right before trial, your lawyer will have incurred additional expenses on your behalf. They are entitled to be compensated for these expenses. The expenses are in addition to the lawyer’s fees. For example, if you receive a settlement of $30,000, your lawyer may receive $12,000 of those under a 40 percent contingency agreement. If he incurred additional expenses of $3,000 to defend your case, your lawyer will end up with $15,000 from the settlement check, which leaves you with $15,000.