Being injured in an accident means facing several decisions; you’re making decisions regarding your treatment and if it makes more sense to repair or replace your damaged vehicle. You also need to decide if you’re going to accept the insurance company’s initial settlement offer.
Your Guide To Contingency Fees in Personal Injury Cases
If you haven’t already retained legal
representation, now is the time to think about finding an attorney and dealing
with the fees. Do you pay upfront or on a contingency basis? There are advantages of contingency fees but you can
also run into a couple of downsides.
What are Contingency Fees
Contingency fees are a common practice,
especially in personal injury cases. Have you ever paid attention to
commercials where an attorney promises they won’t get paid until you do? This
is a perfect example of contingency fees.
Basically, a contingency fee is a binding
agreement between you and your attorney; the agreement states that you’re not
being billed by the hour or even the case. Instead, you’re agreeing to give the
attorney a percentage of your compensation. For example, if you’re awarded
$100,000 in damages and your contingency fee is 10%, you’ll pay your attorney
$10,000 out of your settlement.
What is the average contingency fee? There’s
no set average. Your attorney may charge as little as 5% or as high as 50%.
This is one of those times when it often pays to shop around for a personal
injury attorney. However, before you automatically go with the lawyer charging
the lowest rate, do a little research.
Sometimes the lowest rate doesn’t necessarily
mean you’re getting the best legal representation, and this can also apply to
attorneys charging higher contingency fees.
Advantages of Contingency Fees
Not having to pay upfront costs for legal
representation in a personal injury case is a huge bonus. After all, you’re
already dealing with medical costs, and your injuries may be keeping you out of
work. Without a steady paycheck coming in, it’s often difficult to afford
attorney costs. With contingency fees, you can have legal representation
without worrying about how to pay another bill.
Some people believe attorneys are more
motivated when they’re working on a contingency basis—remember, your attorney
isn’t getting paid until your case is successfully settled. Since pretty much
no one wants to or enjoys working for free, your attorney may be more motivated
to settle your case as quickly as possible.
Since their fee is based on a percentage of
your settlement amount, they may be more likely to push the insurance company
to up their offer. This works out in everyone’s favor, except for maybe the
insurance company.
You may be surprised to learn that not every
personal injury claim is successfully settled. Sometimes, claims fall apart in court, resulting in the
case being dismissed. Why this happens depends on a few reasons. For instance,
you may not have grounds for a personal injury claim or the statute of
limitations has run out, and these are only a couple of examples of why a
personal injury case may fail.
However, even if you lose your case, you’re
not on the hook for attorney fees. Since there’s a contingency agreement in
place, neither you nor your attorney walk away with any financial gains.
Potential Downsides to Contingency Fees
Agreeing to contingency fees can come with a couple of
risks. If your personal injury case is relatively simple to resolve, you may
end up paying more in a contingency agreement than in hourly fees. Some
attorneys may turn down your case if they consider it to be risky. In other words,
they are only looking for personal injury cases that almost guarantee an easy
win.
Before you agree to a contingency fee plan,
discuss your case with the attorney. Find out how much work your case will
involve and inquire about hourly rates. If you’re not completely comfortable
with the attorney’s answers, don’t be afraid to take your case to another
personal injury lawyer.
Most attorneys offer free consultations, so
take advantage of this time to ask any questions you may have about their
contingency fee plans.
Can You Lower Your Contingency Fee Agreement
Trying to lower your contingency fee after
signing an agreement with an attorney isn’t easy. Remember, you’ve entered into
an agreement with a lawyer, and most are pretty good at drawing up ironclad
agreements. Finding a loophole is rarely easy, and this is if one even exists.
With this being said, you may be able to
petition the court to lower your contingency fee agreement, but don’t get your
hopes up. Most courts allow attorneys and their clients to work out a fee
arrangement and rarely want to get involved. The judge may see it as setting a
bad precedent, but there can be exceptions.
The primary exception is if the court finds
the agreement to be unreasonable. So, what will the court look at?
●
The amount of time the lawyer
spent preparing and working on the case
●
The amount of work the lawyer had
to turn down to meet the demands of this case
●
Typical attorney fees for similar
types of cases
●
The amount of money in question in
the case and the final total amount of damages awarded
●
The experience, reputation, and
ability of the lawyer
●
The likelihood of success in the
case
If the court finds that all of the above meet
reasonable expectations, you’re probably stuck with the original contingency
fee agreement. But, if the court decides one or more terms of the agreement
aren’t reasonable, your contingency fee may be lowered.
What About Negotiating with Your
Attorney
By all means, go ahead and start negotiating a
lower contingency fee with your attorney if you feel the original agreement is
unfair. Whether or not you succeed will depend on your case and the attorney.
However, don’t hold your breath. Chances are,
your attorney is going to stick with the original fee arrangement.
Contingency Fees May Be Right for Your Case
Each personal injury case carries its own set
of circumstances, and this individuality extends to contingency fee
arrangements. It's essential to have a thorough discussion with your attorney
about the specifics of your case and the details of the contingency fee
agreement before accepting it.
Contingency fees, where the attorney's payment
is a percentage of the settlement or award, can be advantageous as they often
allow access to legal representation without upfront costs. However, it's
crucial to fully understand all aspects of such an agreement.
Being fully informed helps ensure that you
make a decision that aligns with your best interests and the specifics of your
situation. Remember, a good attorney will be transparent and willing to explain
all these details to you.
