Contingent Fee Agreements for Personal Injury Cases
THE ATTORNEY’S FEE AGREEMENT
Personal injury lawyers usually use what are known as contingent fee agreements. These are agreements that base the attorney’s fee on a percentage of the overall settlement. The lawyer’s fee is contingent upon settlement of the case. These agreements have been called the key to the courthouse for many people, since the client usually does not have to pay any money up-front to the lawyer.
For a sample fee agreement, click here. Feel free to call me if you would like to discuss this. My number is 610 642 7676.
Some feel that contingent fee agreements promote litigation. There is no doubt that more people sue because of these agreements. Many countries do not allow such agreements and have much less litigation. However, others feel the empowerment they provide to the average citizen and the accountability they force upon big business justifies their use. Contingent fee agreements are the great equalizer. They allow both the indigent and the middle class to engage in expensive litigation to recover for losses.
The typical contingent fee agreement calls for the client to receive two-thirds of the settlement, with the balance of one-third going to the lawyer. These agreements give the attorney a stake or ownership interest in the litigation. The lawyer gambles that the outcome of the case justifies the time expenditure, monetary investment, and stress involved.
Do not hesitate to try to negotiate a better deal with your lawyer. Especially if you have a good case, your lawyer will be willing to reduce the fee if he or she thinks you will shop for a more favorable arrangement. For example, you could offer 20% if the case settles before a suit is filed; 25% if a suit must be filed; and, 33% if a trial is necessary.
This country is filled with lawyers. There are many dishonest, unscrupulous PI lawyers. But there are also many skilled, honest, and energetic personal injury attorneys to choose from. It is a client’s market and you should take advantage of that fact. If you feel that the fee your lawyer wants to charge to handle your case is too high, let him or her know that you would like to negotiate a fee arrangement that will result in you receiving a larger part of the settlement proceeds.
You are free to take your case and leave if you are not satisfied with the terms the lawyer offers. You will be amazed at how willing a lawyer will be to renegotiate if he or she senses that you are ready to head for the door.
At the same time, the fee agreement the lawyer is willing to offer you is not the most important factor in choosing a lawyer. It is more important that you choose a lawyer who is honest, hard-working, and experienced in personal injury work. If you shop around for the best possible fee agreement, you may find a bad lawyer who will outbid the rest. Be sure you know what you are getting into before you sign on the dotted line. Again, speak to friends you trust or consult your local bar association before retaining a lawyer.
There is an element of uncertainty for the lawyer with contingent fee cases. The lawyer assumes the risk that there may be no or little recovery after years of work and thousands of dollars of the attorney’s own money invested in the costs of litigation. Because of this risk, it is fair that personal injury lawyers sometimes earn more on a contingent fee case, than if they were paid hourly.
Lawyers usually bill on an hourly basis for cases that do not involve personal injuries. The insurance company’s lawyer, in defending against the personal injury claim, generally bills the company in this manner. Hourly rates of $150 or more are commonplace. Lawyers who work on an hourly basis are often criticized for putting in unnecessary time on the case. This is called padding the time sheet. Attorneys who work with contingency fees are not subject to this criticism, since more time spent on the case does not necessarily translate into higher attorney fees: In fact, the criticism is just the opposite. The clients of PI lawyers frequently complain that they cannot reach their attorney. The lawyer may avoid the client because the lawyer cannot bill the time and may feel that client contact is unnecessary or a nuisance.
Contingency fee agreements motivate the lawyer to work efficiently. Since the lawyer cannot bill hourly, he or she hopes to settle the case for as much as possible, as soon as possible. The lawyer does not get paid until the conclusion of the case. This arrangement, at least theoretically, rewards diligence and hard work. It works for trial lawyers and it works for their clients. When big business and the insurance industry complain about contingent fee agreements, they are thinking only of their self-interest.
One of the most attractive aspects of contingent fee agreements is that the client owes no attorney’s fees if the case is not won. This should provide the lawyer with strong motivation to aggressively handle the case in order to obtain a large and prompt settlement.
Insist on receiving a copy of the fee agreement for your records. There is a sample contingent fee agreement in Appendix A of my book, Winning Your Personal Injury Claim.