When serious injuries sustained in a car crash or other catastrophic event have you laid up in the hospital, the most important thing you can do, other than receive the medical care you need, is to contact a personal injury attorney. You may be hesitant to do so, however, because you don’t know how you can possibly pay his or her attorney’s fee on top of your skyrocketing medical costs. But what if you don’t have to pay him or her out of your own pocket? That is exactly what a contingency fee arrangement allows you to do.
In a contingency fee arrangement, your lawyer does not charge you an hourly legal fee. Instead, he or she charges you a percentage of the ultimate settlement or jury award he or she obtains for you. You never pay him or her out-of-pocket. If for some reason he or she fails to successfully resolve your case, you owe no attorney’s fee at all.
Virtually all personal injury attorneys and law firms offer contingency fee arrangements, and there are two main types as follows:
Flat Percentage Contingency Fee
As its name implies, in a flat percentage contingency fee arrangement, your attorney charges you a flat percentage of your ultimate settlement amount or jury award, regardless of how much time and effort he or she has to put into that result.
Sliding Scale Contingency Fee
In a sliding scale contingency fee arrangement, your attorney charges you a certain percentage, usually somewhere around 35%, if he or she is able to settle your case, and a higher percentage, usually somewhere around 50%, if he or she has to conduct a full-blown jury trial to get you the compensation you deserve.
After you meet with your prospective attorney in what will undoubtedly be a free initial consultation and decide to hire him or her, he or she will draft a written employment contract setting forth exactly what legal services he or she will perform for you, what contingency fee he or she will charge for these services, and how and when that fee will be paid.
Do not hesitate to question any provision of the agreement that you don’t understand. Your lawyer will be happy to thoroughly explain each and every provision so that both of you know exactly what to expect. Once you and he or she are in agreement as to the terms of the employment contract, both of you will sign it and your lawyer will give you a copy of it.
Contingency Fee Advantages
The obvious advantage of a contingency fee arrangement is that you never pay your lawyer out of your own pocket. This, in turn, means that you can receive the benefits only an experienced personal injury attorney can provide you without fear of the cost those benefits entail.
When you think about it, however, you can see that a contingency fee arrangement also shifts the risk of losing to your attorney and gives him or her an added incentive to get the maximum compensation for you allowable by law. After all, the more compensation he or she obtains for you, the larger the attorney’s fee becomes.
As you shop for a personal injury lawyer after your accident, keep in mind that some law firms, usually the larger ones, will not only charge you a contingency fee for their legal services, but will also front the costs of litigation for you, recovering them from your ultimate settlement or jury award as well.
You’ve probably never thought about it, but litigation costs can add up quickly for things such as the following:
- Court filing fee
- Copies of your medical records
- Court reporter fees
- Expert witness fees
- Deposition costs
If you choose a lawyer whose law firm has the resources to pay these costs as they occur, your employment contract will specify that you don’t have to pay them out of your own pocket. Instead, the firm will recover these costs out of your ultimate settlement or jury award.
Unpaid Medical Bills
As part of a contingency fee agreement, many personal injury attorneys will agree to speak with your hospital, doctors and other medical personnel regarding your unpaid medical bills. It is often true that when these medical professionals realize that you have hired an experienced personal injury lawyer to pursue your case to a successful resolution, they will agree to wait for payment of their bills until your case concludes, receiving such payment out of your ultimate settlement or jury award.
Whichever type of contingency fee arrangement your lawyer offers you, the Rules of Professional Conduct require that the attorney’s fee must be reasonable. There is no one-size-fits-all definition for what constitutes a reasonable attorney’s fee. Instead, a number of factors, including the following, come into play:
- The time required to thoroughly investigate the circumstances surrounding your accident and pursue your case to a successful conclusion
- The legal skills required to negotiate with the insurance companies for a settlement and, if necessary, to conduct a jury trial
- The fee normally charged in your area for similar legal services
- The experience, ability and reputation of your lawyer
Obviously, given the number of factors involved in determining the reasonableness of a legal fee, they can vary from lawyer to lawyer. It’s therefore always wise to discuss fee amount and structure during your initial consultation.
Contingency Fee Example
To help you better understand how a contingency fee works, here is an example, using the following suppositions:
- $500,000 settlement obtained for you
- Written employment contract calling for a 35% attorney’s fee
- $4,000 in litigation expenses fronted by law firm
- $50,000 unpaid medical bills
When your lawyer settles your case, the insurance company sends the check to him or her rather than to you. He or she deposits the check in the firm’s trust account and makes the following distributions:
- $500,000 settlement – $175,000 attorney’s fee (35%) = $325,000
- $325,000 – $4,000 litigation cost reimbursement = $321.000
- $321,000 – $50,000 payment of your unpaid medical bills = $271,000
He or she then sends you a check for the $271,000 balance.
Judd Shaw Injury Law – Your Law Firm of Choice
Here in New Jersey, we truly believe that Judd Shaw Injury Law firm should be your law firm of choice after your accident. Why? First because we only practice personal injury law, so you can be assured that we know what we’re doing. Second, because we have an outstanding track record of obtaining high settlement amounts and jury awards for our injured client. Third, and perhaps most importantly, we also have an excellent record of client service and satisfaction.
So contact our team of dedicated lawyers and legal professionals today. Your initial case evaluation is free, and you may be sure that our contingency fee arrangements are not only fair, but also advantageous to you and always in writing. Our only goal is to relieve you of as much stress as possible while you’re going through this painful and confusing time in your life and give you peace of mind knowing that you have a team of experienced, dedicated attorneys working diligently on your behalf.
Content edited by personal injury attorney Judd Shaw. From the beginning, Judd established a set of Core Values laying out the pursuit for excellence in client service. He is a regular host of the Working The Wow podcast, with the belief that providing an exceptional client experience is just as important as delivering a quality service or product. You can find us in Red Bank and Tom‘s River, New Jersey.