There are three common ways an attorney can get paid when they represent automobile accident cases. They may agree on a contingency fee which is a percentage of what is collected when the case has settled. A flat fee is another means of payment. It is an amount agreed on that is unchanging. The other means is by utilizing an hourly fee.
Contingency Fee: In most automobile accident cases a lawyer is paid on a contingency fee. This is different from an hourly rate or a flat fee. A contingency fee is a fee arrangement that pays the attorney a percentage of what is collected at the time the case is settled. The contingency fee is usually 1/3 or 33 1/3% of the total settlement. For example, if your settlement is $90,000 the attorney fee is 1/3 or $30,000. Under most contracts the client is responsible for any costs associated with the prosecution of the case. These costs are deducted from the clients’ portion of the settlement. Some attorneys will offer a 25% contingency fee. Others will raise their fee as the case progresses. For example if the case settles the fee is 1/3 (33 1/3%). If a lawsuit is filed the fee goes up to 40%. Should the case actually go to trial the fee is again raised, this time to 45%. Then if there is an appeal the fee goes up again to 50%. I do not agree with this. I believe it is a disservice to the client and a conflict of interest between what is good for the client and what is good for the attorney’s pocket. In affect the attorney benefits by pushing the case farther and farther into the litigation process.
A contingency fee is a good deal for almost anyone who is involved in an auto accident. After an accident in which you were injured it is likely that you will be off work for a period of time. If this is the case you probably do not have the extra money to hire an attorney. You have your normal living expenses to pay with less money or no pay check at all. This type of fee allows you to retain an attorney without paying any money up front. The attorney usually fronts all of the costs of litigating your case. This is usually considered a loan without interest but be aware that some attorneys may charge you interest. The attorney assumes all of the risk of your case concluding with a successful result. If the attorney is unfortunate enough to lose your case you do not owe him a fee. Not one penny. This means no risk to you.
Flat Fee: A flat fee is just what it sounds like. It is a fee that is set at the beginning of the case. This is negotiated and agreed to by the attorney and the client at the time the attorney is retained. The fee never changes. It stays the same no matter how much time and effort the attorney puts into your case. It is a bird in the hand, so to speak, for the client and for the attorney.
Hourly Fee: Hourly fees are another way lawyers can get paid. The client pays the lawyer an agreed upon hourly rate for every hour that the attorney works. The client will receive a detailed bill, usually at the end of each month, outlining all the work the attorney performed on their case for that time period. The attorney will bill the client each month for services rendered. It is also the client’s responsibility to pay for any costs and expenses incurred.
If you have been in an accident and are hiring an attorney discuss all of the options available and decide with your attorney what is best for you and your particular situation.
