Every car accident client wonders what it will likely cost to hire a personal injury lawyer. Clients worry a lawyer may charge too much and legal fees will eat up their entire settlement or damage award.
Accident lawyers usually charge a contingent fee. These types of fees compensate a lawyer based on the outcome of the case. The fee also ensures you keep the bulk of your insurance check or judgment.
Here are some of the things you should know about contingent fees and how much you can expect to pay a lawyer in a car accident case.
What Does It Cost to Hire a Lawyer?
The Maryland rules of professional conduct do not prescribe a specific structure for lawyer fees. Maryland allows lawyers to charge any fee that is reasonable under the circumstances.
Most lawyer fees fall into three categories, which include:
Lawyers who charge hourly fees will track their time spent working on a client’s case and bill the client based on their hourly rate. Lawyers charge hourly fees for cases in which the amount of work is unknown. For example, a lawyer might charge an hourly fee to write a contract. Injury lawyers very rarely charge an hourly fee.
Some transactions require a predictable amount of work. This allows lawyers to charge a flat fee to represent the client in the transaction. Some examples of flat fee work include incorporating a business or filing a trademark application. Accident lawyers do not usually charge a flat fee.
Contingent fees are calculated based on a percentage of the outcome of a case. Any lawyer may charge a contingent fee, except for lawyers handling a divorce, child custody proceeding, or criminal defense. Almost all personal injury lawyers charge clients using a contingent fee agreement.
How Do Contingency Fees Work?
Lawyers usually quote contingent fees as a percentage or fraction of an award.
The lawyer multiplies the percentage or fraction by the settlement or damage award obtained in the case to calculate their total fee.
A contingent fee at a one-third fraction will result in a legal fee of $10,000 from a $30,000 settlement. A contingent fee of 40% will earn the lawyer $20,000 on a damage award of $50,000.
Common Contingent Fees
State rules prohibit lawyers from collecting unreasonable fees, but reasonable contingent fees can vary widely. That said, most contingent fees will range between 25% and 40%. Some of the factors that determine the fee percentage include:
- The experience, skill, and reputation of the lawyer
- The time and labor involved in the case
- The fee other lawyers typically charge for the same services
- The lawyer’s workload
Maryland requires written contingent fee agreements. The fee agreement must be signed by both parties to be in effect.
What Contingent Fees Cover
The written fee agreement will probably describe the services that will be covered by your contingent fee. Although every lawyer’s fee agreement differs, most contingent fees include:
- Communications with the lawyer, including phone calls, emails, meetings, and letters
- Legal advice about the substance of your case and the procedures used to obtain your desired outcome
- Correspondence and negotiation with the person at fault for your injuries and their insurance company
- Collecting evidence to prepare for trial, including depositions and written record requests
- Preparing pleadings and motions to file in court
- Presenting your case to a jury at trial
Not every case will involve all of these services. About 95% of car accident cases settle without going to trial.
Occasionally, a contingent fee agreement will specify a different percentage for cases that settle and cases that go to trial. For example, a fee agreement might specify a 30% fee for cases that settle and a 35% fee for cases that go to trial.
What Contingent Fees Do Not Cover
The written fee agreement must list all expenses that will be deducted from the compensation recovered. In a typical case, the lawyer will advance money to cover these expenses out of pocket. But when the case ends, you will be responsible to reimburse the lawyer for those expenses out of the settlement or damage award.
Some expenses that must be reimbursed include:
- Expert witness expenses
- Court reporter costs
- Filing fees
You should remain involved in the planning of your legal strategy. As you make decisions in your case, ask your lawyer about the costs and benefits of each decision.
For example, if your lawyer recommends hiring an expert witness, make sure you understand how much the expert will cost and how the expert’s testimony will help your case. In some cases, like wrongful death, you might need experts to explain the cause of death and the economic losses you experienced from the death of your loved one.
Benefits of Contingent Fees
Contingent fees provide clients with many benefits, including:
No Upfront Fees
Lawyers start work on a contingent fee case without any fee advance, retainer, or deposit. This can enable your lawyer to meet any impending deadlines. It can also shorten the length of time you’ll have to wait until you receive compensation for your injuries.
No Ongoing Fees
You might need money for medical treatment and you may be unable to work while you recover. Since your lawyer calculates your contingent fee at the end of your case, you will not receive monthly bills from your lawyer. You will be able to preserve your resources at a critical time for recovery.
No Fees Unless You Win or Settle
If you do not win or settle your case, your lawyer will not have secured any recovery. If your lawyer recovers nothing on your case, the contingent fee will also be void. This will motivate your lawyer to maximize the compensation you recover. Larger compensation will mean a larger contingent fee.
Mechanics of a Contingent Fee
When you meet with your lawyers about your case, ask for a copy of their fee agreements. You should review the agreements carefully and ask any questions that you have upfront.
You must sign the fee agreement to be bound by it. Do not sign it until you understand it thoroughly.
When you win or settle your case, your lawyer will prepare a fee statement. This statement will list each expense deducted from your recovery and how the lawyer calculated the contingent fee.
Lawyers want to avoid fee disputes with their clients. Fee disputes can ruin a solid attorney-client relationship. Getting questions answered upfront can help you to feel more comfortable using a contingent fee agreement.