What is a Personal Injury Contingency Fee and How is it Determined?
A personal injury contingency fee is a common payment arrangement for personal injury and wrongful death lawsuits. The person filing suit does not have to pay the attorney unless and until a personal injury suit payment or settlement is received. Legal expenses such as expert witness fees and research may be charged to the client in addition to the personal injury contingency fee.
While these additional expenses are advanced to the client and deducted from the lawsuit payout at the end, not all attorneys are up front with their clients about the risk of these additional costs. If the contingency fee is 33% and additional expenses eat up another 7% of the settlement, the lawyer’s firm will take 40% up front before the client receives the rest.
Advantages of this system include:
* All injured parties can file suit, regardless of their ability to pay.
* If the case is lost, the injured party does not owe legal fees in addition to their medical costs.
* The person filing may agree to pay a percentage of the payout. If the court issues a small settlement, the victim still receives part of the money, instead of risking a legal bill that eats up the entire settlement.
* Attorneys who receive a percentage of the personal injury fee will work to ensure that a large settlement is reached instead of seeking to close the case quickly and move on to the next one.
Disadvantages of this system include:
* Lawyers can refuse to take personal injury cases that have a low chance of winning.
* Under this system, they often refuse to take cases that do not pay well.
* Lawyers tend to take their contingency fee before taxes. Clients if not their legal representatives must be careful to ensure that the settlement covers both personal injury contingency fees and taxes with enough left over to pay medical costs, living expenses and lost income.
* Attorneys who have lost a number of cases may decline to take other cases and charge hourly rates to other clients to ensure that their payroll is met.
* Settlement mills take claims and seek settlement quickly to collect the personal injury contingency fee. While they appear to be personal injury lawyers, they see their job as filing claims and take the first large sum offered to collect the fee. A good Toronto personal injury lawyer will seek the maximum allowed, not just settle to get payment quickly.
* Unscrupulous firms will refer victims to third parties to borrow money against the impending settlement to pay for medical costs, legal expenses and living expenses.
Factors that determine contingency fees:
* The law there are caps on what contingency fees a lawyer can charge. Depending on the jurisdiction, these fees may be capped at 40-50% of the awarded amount.
* The law firm Contingency fees will vary between law firms and sometimes even between legal professionals. Shop around. Ask questions. Firms with a higher success rate may offer lower fees. A few percentage points difference in contingency fees could result in thousands of dollars more that you can keep from the settlement.
* The type of lawsuit Automobile accident cases tend to charge rates around 33%. Medical product liability cases are more complex. Expert witnesses and medical examinations are required to make the claim. Multiple appeals and court appearances are necessary. In these cases, contingency fees in excess of 40% are not unknown.