If you suffer some physical injuries caused by a negligent party, you can seek the advice of an attorney to help you receive some monetary compensation.
Lawyers do not work for free, and many people will choose not to go to court as they believe it will be too expensive. This is not the case. Many personal injury lawyers work on a contingency fee basis. This is essentially a no-win, no fee service.
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This is not a very common way for lawyers to charge. If they charge like this, they will track their working time in 10-15 minute increments.
This can cause the cost of legal fees to add up very quickly and this tends to only be applied to lawyers working for very wealthy clients or large firms. This is not common for standard personal injury lawyers.
How does a contingency fee work?
As mentioned above, it is essentially a protective guarantee to prevent you from suffering undue expense. Your lawyer will only charge you legal fees if they manage to secure you a financial settlement in or out of court.
The percentage of your settlement taken by the lawyer is decided before the settlement is awarded. It is a fixed percentage that both the client and the attorney settle on. This often falls somewhere between 33 and 40% of your total settlement amount.
To put this into context, let’s say your contingency fee is 33%. If your lawyer manages to secure you a $60,000 settlement they will get $19,800 and you will keep $40,200. This is the most common percentage taken by lawyers, but you can always try to negotiate with them to reduce their percentage.
What is the point of a contingency fee?
Many people do not have the financial resources to hire a lawyer without some guarantee of protection. This is where the contingency fee comes in.
This gives poorer people the ability to hire someone with adequate training and knowledge to fight their case properly. This increases your chances of winning a compensatory settlement with a greatly reduced risk.
They also have a motivational purpose. Your attorney does not get paid unless they win your case, and so they will be much more likely to work harder. The knowledge that their work will be unpaid if they lose is highly motivating and they are likely to work to the best of their ability.
What is a sliding scale?
This is a different way that lawyers may choose to work out the cost of their fees. The amount they take will change depending on the stage at which a settlement is reached.
If you manage to reach a settlement out of court through demand letters, counteroffers, and negotiations, their fees will likely be lower. This can be the standard 33% of the total settlement or may be even lower depending on the work done.
If your lawyer must file a lawsuit then they are likely to charge a higher fee. This is likely to be closer to 40% of the settlement amount. If you progress onto a trial, this could increase even more.
If your lawyer offers a sliding scale fee, consider your options. While you may get a reduced overall amount if you accept a pre-lawsuit settlement, this could end up being more money in your pocket. You may well get awarded more in damages in court, but you will keep a lesser percentage of this amount. It is wise to consider this before rejecting any offers.
Are there any additional costs?
Your attorney may boost up the percentage of your settlement to cover additional expenses. These are often other costs pertaining to your case. They may include fees for record requests (such as medical reports), deposition and trial exhibits, costs of postage, police reports, and fees for expert witnesses or investigators.
These costs do not always come at the expense of the client. If your lawyer is intending to charge you for them, it is vital that they make you aware of this beforehand. These costs can push their legal fees up to anywhere from 45 to 60%.
In the case of a $60,000 settlement, your attorney could take up to $36,000. This will vary from firm to firm and you should always discuss the fees for your case prior to signing on an attorney.
How do you get your settlement?
To ensure the lawyers get paid correctly, the common practice is for the court to send your settlement check to the firm’s offices. This means that they can easily take out their cut and send the cheque on its way to you. It ensures that the lawyer will get fairly paid for their work and you cannot cheat them out of their share.
If you choose to challenge any of the costs that your lawyer is charging you for, this money will be placed into a trust account. You can then go through a conflict resolution system to settle the dispute and resolve the problem.
What would happen if you fire your lawyer before the case is finished?
If you fire your lawyer, change to a different lawyer, or opt to represent yourself in court this opens up legal issues.
Your original lawyer has a right to hold onto your property in their hands until you have settled your debt to them. This is known as a lien and refers to any fees or expenses that they have undergone during the process of fighting your case.
They have the right to sue both you and your new lawyer if this occurs, for the reason that you did not honor and protect the original lawyer’s lien.
If you are really sure that you wish to fire your attorney, you should always get a written document. This should state that they agree not to seek interest on expenses or fees from the case. You should forward this to the defendant before a settlement is reached.