Understanding Personal Injury Fee Agreements
"Changing the reputation of lawyers, one client at a time."
Introduction
Make no mistake, we are not winning any friends within the legal community by writing this page.
In fact, even writing about personal injury fee agreements or discussing contingency fees in advertising has always been considered taboo by the injury lawyers. They just don't do it.
Have you ever seen a personal injury lawyer tell you what the actual percentage of the contingency fee is? Have you ever seen a personal injury lawyer tell you how the costs of the case are actually taken out of the total money recovered?
The public will be best served, and injured clients will receive more money in their pockets if they know and understand the facts about contingency fee agreements and costs.
The Contingency Fee Agreement
Most people already know that a contingency fee agreement means that the lawyer only gets paid if monies are recovered. Most people in western Pennsylvania have seen television commercials or billboards advertising that there is a not a fee, unless they get money for you. This is called the contingency fee agreement.
1. Contingency fee agreements are negotiable.
Almost all personal injury lawyers, if there is merit to a case, will offer representation on a contingency fee agreement.
The amount of the contingency fee agreement will typically range between 25% to as high as 50%. The standard within the western Pennsylvania legal community is 40% of any and all monies recovered.
Lawyers are outspending one another on television, radio, billboards, and the internet to get these personal injury cases. If you have a good case, you can find a good lawyer to offer representation on a reduced contingency.
I have heard war stories about lawyers 25 years ago, who tried to lower their contingency fees to 25% and advertised 25% contingency on all monies recovered. The trial lawyers were furious. This is 15% less than the standard 40%.
What this means is that on a $1,000,000.00 settlement, you would be keeping $750,000.00 in your pocket as opposed to $600,000.00 in your pocket thus saving you an extra $150,000.00.
Who needs the extra $150,000.00 more, the lawyer or the injured victim whose case was worth a million dollars? Should the lawyers receive 40%? Or is 25% adequate?
My answer to you is, it depends. If you have a difficult medical malpractice, then I think 40% can be fair and having the most competent medical malpractice attorneys will help and is worth the fee. However, I do not believe clients need to pay 40% contingency fees on all Pennsylvania car accidents, truck accidents, or other personal injury cases.
The bottom line is do not be afraid to negotiate contingency percentages when interviewing lawyers. Don't be intimated by nice office furniture and expensive suits. Injured victims need all the money they can get.
Our philosophy is to offer a contingency fee agreement specific for the facts of each case. We review each case for free and then offer a contingency fee based upon what we believe is most fair to that specific client. We do not have an office policy that states 40% regardless of the facts of the case.
Each case is unique, but injured victims can save a lot of money by negotiating the fee agreements when their case is strong.
What you don't know #2:
2. You end up paying the costs, be careful.
First, everybody already knows, that there is no fee unless there is money recovered.
What most people do not know is that the costs of the case are deducted from the clients' money. This is the reason why some personal injury lawyers actually receive more money than their clients in settlements and verdicts.
EXAMPLE:
Case settles for $100,000.00
Lawyer Charges 40%: (or $40,000.00)
Client's portion is 60%: (or $60,000.00)
However, what you do not know is the costs. You never hear lawyers explain in advertising how the costs are then deducted.
For example, if the lawyers spent $11,000 on costs, then the client would only receive $49,000.00 (their share $60,000.00 minus the costs $11,000.00 = $49,000.00) and the lawyer would receive $51,000.00 (atty fee $40,000.00 + costs $11,000.00 = $51,000.00.
The lawyer received more than the client?
Listen carefully, it is absolutely necessary for personal injury lawyers to spend money on case costs. However, lawyers have a lot of lee-way in how they spend money to pursue cases. Clients are rarely ever told their options about the costs of experts or otherwise.
Lawyers can very easily spend excessively to pursue a case, knowing that the money will ultimately be paid back by the client.
For example, is your lawyer flying first class or coach? What hotel is your lawyer staying at? You are paying your lawyer to get money for you, not to spend your money on first class plane tickets.
I always recommend that clients stay involved with the costs as the case progresses. Ask your lawyer to always send you a copy of every check spent on costs. This will save you money, because lawyers will be more cognizant of the spending.
What makes our Pittsburgh law firm different:
What makes us our Pittsburgh law firm different is the fact that we believe this information should be public. We believe that individuals who have serious personal injuries should keep as much money of the settlement as possible. It is your money, not ours.
If you are seriously injured, do not be afraid to negotiate your contingency fee agreements. 25% to 33 1/3% contingency fee agreements are usually fair for most personal injury and auto accident cases.
Medical malpractice cases tend to be higher, but should be no higher than 40%. Do not be bullied by lawyers who refuse to reduce their fees in appropriate cases; shop around, there are a lot of good lawyers in Pittsburgh.
There are a lot of good lawyers who will fight just as hard for you for less money. Keep the money in your pocket.
Second, remember, keep track of the costs. Do not let your lawyer have blank checks to spend whatever money they choose. It is your money that they are spending.
FLAHERTY FARDO, LLC
This article was written for educational purposes only and should not be relied upon for legal advice