Inside a Typical Car Accident Lawyer Fee Agreement

An in-depth look at different types of fee agreements, and what to watch out for when it comes to "costs."

If you have been injured in a car accident, you might be faced with bodily injuries, mounting medical expenses and perhaps even a loss of income. At this point you're probably considering hiring a car accident attorney to handle the complex ins and outs of an insurance claim or even a lawsuit.

Before you meet with an attorney, it is important to understand the different aspects of a lawyer fee agreement. Of course, a good attorney will explain everything related to the fee agreement in language you can understand, and will also address any questions you might have. But read on so that you'll have an idea of what to expect.

Consultation Fees

Most personal injury lawyers do not charge a fee to meet with you for an initial meeting to discuss your case. However, there are some lawyers who do charge such "consultation fees." Before you meet with an attorney for the first time, you should ask whether you are expected to pay an initial consultation fee.

Retainer Fee Agreements

A retainer fee is simply an initial amount of money you pay to the lawyer at the time that you sign your attorney-client representation agreement, to secure that lawyer's services for your case.

However, generally speaking, personal injury lawyers do not require clients to pay a retainer fee at the outset of the case. Again, it is a good idea to ask the lawyer about any requirement for the payment of a retainer before you sign any fee agreement.

Contingency Fee Agreements

The vast majority of personal injury lawyers utilize "contingency fee" agreements. This type of agreement generally means that the attorney gets paid "only in the event" that he or she obtains any monetary recovery for you. The lawyer gets paid through a percentage of the amount the lawyer ultimately obtains for you as compensation, generally in the range of 33% to 40%.

In many ways a contingency fee arrangement provides the least amount of financial risk to an injured client. The client is not required to pay the attorney any initial fees out of the client's own pocket. The client is also not required to "pay as you go" each month, as in an hourly fee agreement.

Although the lawyer's fee may ultimately total thousands or tens of thousands of dollars, it is deducted as a percentage of the recovery from the other driver or that driver's insurance company. So, as a client you do not have to come up with the money to pay your lawyer until you receive a settlement check from the other insurance company (or if your case goes to trial and you obtain a judgment).

As mentioned above, a lawyer contingency fee is based on a percentage of the total monetary recovery. However, the manner in which the fee percentage is established is mostly left to the lawyer's discretion. Often a lawyer's contingency fee percentages are determined by a sliding scale based on the case's particular stage in litigation. An example of a typical sliding fee scale is:

  • 25% For any claim that is settled before a lawsuit is filed.
  • 33% For any recovery after a lawsuit has been filed, but where it is settled before going to trial.
  • 40% For any recovery, whether through settlement or judgment that is made after the court trial starts.

It is important to note that lawyers are not required to use a sliding scale. Many personal injury attorneys utilize fee arrangements that call for a single fee percentage, e.g. 35%, for any monetary recovery on your behalf regardless of when the matter is resolved. Under that type of fee arrangement the lawyer takes the same fee percentage whether the attorney settles your case a few days after being hired or a year later.

What are "Costs"?

"Costs" are another important aspect of a typical contingency fee agreement. Litigation is expensive, and there are many types of expenses that the lawyer will incur as part of the litigation. These costs can include:

  • court filing fees
  • process server fees
  • witness fees
  • deposition-related expenses
  • court reporter services, and
  • document copying and retrieval.

Expenses like these are very common in litigation and are unavoidable in most cases.

Most lawyers do not require that you pay these expenses as you go through the claim process or litigation. Rather, the lawyer will pay for these costs and keep a running account. Then, when the personal injury claim is ultimately resolved through settlement or verdict, the lawyer is reimbursed for the expenses. This reimbursement is separate and apart from the fee percentage that the lawyer takes out of the recovery.

For example, let's say that you hire an attorney for a contingency fee of 35%. The lawyer then obtains a recovery for you of $10,000.00. However, in pursuing the litigation, the lawyer incurred costs of $1,500.00. So, the equation used to determine your net recovery might look something like this:

  • Total Settlement $10,000.00
  • (minus Attorney Fee/35%) $3,500.00
  • (minus Reimbursement of Costs) $1,500.00
  • Net to Client $5,000.00

One of the important aspects to know about contingency fee agreements is how the agreement deals with "costs."Most lawyers require you to repay any costs even if your claim is not successful. So, if you go all the way to trial with your case, but the jury returns a verdict against you, you are generally required to reimburse your lawyer for the expended costs even though you did not ultimately recover any money on your claim.

As you go through the process of locating and selecting the right attorney to represent you, it is important to understand that an attorney fee agreement is just like any other contract: the terms are negotiable. If the attorney declines to negotiate the contingency percentage rate, you certainly have the option of interviewing other lawyers to find one who is willing to agree to more favorable terms.

Learn more about the Costs and Benefits of Working with a Car Accident Lawyer.

Talk to a Lawyer

Start here to find personal injury lawyers near you.

How it Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you
Make the most of your claim

Get the compensation you deserve

We've helped 225 clients find attorneys today.

How It Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you