If you have been injured and are thinking of hiring an attorney, you may be wondering, “How much does it cost to hire a car accident attorney? Can I even afford it?”
We all know that hiring a lawyer can be expensive. In fact, for many families, legal representation is a solution to their legal problems they just cannot afford. For this reason, many car accident and personal injury attorneys offer a unique billing solution to their prospective clients: the contingency fee agreement.
Common Ways Attorneys Bill Clients
To understand exactly what a contingency fee agreement is, let’s first discuss other common ways attorneys bill for their services.
1. The Hourly Rate
This is the most common and traditional way attorneys bill clients. Under an hourly fee agreement, an attorney is paid on a cost per hour basis. With this arrangement, the attorney keeps a record of three things:
- Work completed for the client.
- Time taken to complete tasks.
- Costs and expenses paid by the attorney (like filing fees and court costs).
At various intervals, the attorney sends the client a bill for the work. Here is an example. Atticus Attorney bills his work at $400 per hour and does three hours of work in a week for his client and files a lawsuit with the county court. Atticus would send his client a bill for $1,200.00 for the work he completed. That bill would also include the filing fee for the lawsuit and the cost to have the papers delivered to the Defendant. This usually costs a little over $300.00, but can end up costing a lot more if there are complications.
As you can see, the cost of legal representation under an hourly fee agreement can get expensive quickly!
2. The Flat Fee
This type of fee is pretty easy to understand. The attorney charges one fee up front for all of the work and costs that will be incurred throughout representation. While not necessarily inexpensive, this type of fee arrangement often allows the everyday client to feel more comfortable with hiring an attorney. There is no fear of getting into a situation where they can no longer afford legal fees to see their matter through. The issues that fit a flat fee arrangement are typically those that:
- Last for a (somewhat) predictable amount of time.
- Attorney can foresee most of the costs that will be incurred.
So what if the attorney cannot reasonably predict how much time or expense will go into a case? Or the client does not have the money to pay an hourly or flat free agreement? Well, that brings us to our third common fee arrangement.
There are so many people with legitimate injuries who cannot afford to pay hourly to get the justice they deserve. Also, the attorney cannot reasonably predict his time or costs in many of these cases. Because of this, personal injury attorneys will work their case under what is known as a contingency fee agreement. So, let’s take a deeper dive into this common billing method.
What Does a Contingency Fee Mean?
A contingency fee is simply an arrangement where the client does not pay the attorney any money up front for representation. In exchange, the attorney receives a percentage of the amount recovered at the end of the representation.
How Much is a Contingency Fee?
The common contingent fee agreement for a car accident case is 33% to the attorney if the case settles before litigation, and 40% if it settles after the attorney begins litigation or if the attorney must take it all the way through trial. In addition, the attorney will also often cover any expenses and fees associated with the case. Here is an example with some easy math.
You hire Pete Personal, injury attorney, for a case in which you ultimately recover $100,000.00. You paid Pete nothing up front, but in the end, he is paid $33,000.00 from the money recovered. If the attorney expended $5,000.00 in pursuing the case, then he is reimbursed his expenses as well. After that, unpaid doctors’ bills and any outstanding liens have to be settled. If the doctors’ bills and liens totaled $20,000.00, then the client in this example pockets $42,000.00 in cash.
The attorney takes a significant risk in putting his time and money into another person’s case, therefore he often earns a little higher in fees than he would under a flat fee or an hourly representation agreement. After all, it is possible for a jury to decide that no money be awarded at all!
What Standards Must a Case Meet to Qualify for a Contingency Fee?
Because of the risk, there are often certain standards a case must meet before an attorney can agree to represent a person on a contingency fee basis. Case evaluation is actually quite complicated, but we will boil it down to the basics here.
1. The Case Value
The first factor most attorneys consider is how much money the case is worth. Attorneys have to consider this factor. As we have mentioned, both client and attorney invest great amounts of time during representation in an injury case. The attorney is investing money as well. The case value is a way to measure whether these risks are worth it for everyone involved.
The second factor an attorney will consider when thinking of taking a case on a contingency basis is whether or not the potential defendant was liable for the accident. If the defendant is denying that he is at fault for the accident, then the attorney has to determine whether or not there is enough evidence to prove liability at trial.
3. Can Anyone Pay the Damages?
The third factor the attorney must consider is if you are successful with the case, is there a source from which the money awarded can be recovered. In the case of a car accident, this usually means that the liable driver must either be independently wealthy, have an insurance policy which will cover the damages from the accident, or the injured driver has an insurance policy that carries uninsured or underinsured insurance coverage. (Click here to read more about the different types of insurance coverages)
This sounds unfair when you are the injured person. Keep in mind though, if there is no one who can pay the money to compensate you for your injuries, you will only waste your time with a lawsuit.
Take Away Points
Contingent fee agreements are a little bit like gambling at a casino. An attorney agrees to invest his time and money in your case without knowing what the outcome will be because she believes in your case and that you deserve justice for your injuries. Because of the risk, however, not all cases are suited for contingency agreements. A worthwhile attorney will discuss the ins and outs of your case to decide if contingency is right for you.