Personal injury lawyers do not receive a fee unless and until you receive a fee. We work on contingency. But pay attention to 3 things.
If you hire a personal injury lawyer to handle your personal injury claim, you’ll sign a contingency fee agreement. That agreement will explain how the lawyer’s fee is handled. Generally, the lawyer will receive 33% of any recovery. If the claim is not settled by a certain period of time, however, then the lawyer will receive a higher percentage. In most cases, it will be 40%. Lawyers justify the increase on the ground that more work was required to obtain a recovery. For example, maybe the lawyer had to try the case in order to get a monetary judgment. Not every contingency fee agreement follows those percentages, but most do.
You need to be aware of costs. Litigation costs money. There are filing fees, deposition costs, travel costs, costs for medical records, and other copying costs. Lawyers handle costs in two ways. One, the client can give the lawyer a retainer for costs. The lawyer then pays the client’s costs from the retainer. Or two, the lawyer pays the costs on the client’s behalf. In that case, the lawyer has two choices for repayment. He can make the repayment contingent on whether there is a recovery. Or he can require the client to pay back the costs even if there is no recovery.
Costs are deducted either before (‘net) or after (‘gross’) the attorney’s fee is taken from the recovery. This makes a difference in how much you recover. Here’s what I mean.
There’s a recovery of $12,000. Costs are $2,000. If costs are deducted before the attorney’s fee (‘net’), the lawyer’s fee is $3,300 (33% * $10,000). You get the remaining $6,700. But if costs are deducted after the attorney’s fee (‘gross’), the lawyer’s fee is $3,960 (33% * $12,000). You get $6,040 ($12,000 – $3,960 = $8,040 – $2,000 = $6,040). In other words, costs are deducted from your portion after the lawyer took his fee.
If you want a sample fee agreement from the State Bar of California, go here. The agreement is located under Law Practice Management.
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