After the first shock of a car accident, most people start to worry about whether they will be unable to work, how they will pay their everyday expenses, and how they will pay the enormous medical bills they are facing. Once they realize they need legal advice and protection, they may worry about how they will pay an attorney.
Unless they have had experience with the legal system, they may not know how an attorney charges or what to expect. There is no fixed amount a lawyer can charge for representing a client in a car accident claim. However, there are certain common fee structures that most personal injury lawyers follow.
Attorneys base their fees on a combination of factors, such as the type and difficulty of the legal task, the amount of time required, the experience and knowledge of the attorney in that particular type of case, and the attorney’s overhead.
Overhead is the cost of doing business and usually includes such expenses as rent, salaries, equipment, and continuing education, all of which may amount to approximately 35 percent to 50 percent of the legal fees charged. Understanding the different types of fees allows you to make well-informed decisions.
What are attorney fees?
Attorney fees vary widely among states and from one law firm to another. The amount charged by the firm depends on the education and experience of the attorney, as well as the reputation of the firm. Fees typically cover legal advice, the production of documents, negotiation, and research, negotiations, and representation in court.
Hiring an attorney usually starts with an initial consultation. During this time, the attorney will discuss the details of your case and answer all of your questions. One of the important questions you should ask is the amount the attorney charges the expected payment schedule of the fees. If you feel uncomfortable with the lawyer, or do not feel you can ask these questions, you should consider consulting someone else.
A car accident lawsuit is a type of personal injury case. If you suffered an injury in an accident that was not your fault, then under Florida law, you may be entitled to compensation. Only about 4 percent of personal injury cases go to trial. The majority of car accident cases settle out of court.
In a typical settlement agreement, the injured person receives compensation in exchange for ending the lawsuit or if the injured person has not filed a lawsuit, releasing the responsible party from future financial liability.
How contingency fees work
Many personal injury lawyers charge a contingency fee. These are commonly used in cases where a person has suffered an injury and is seeking financial compensation for their losses. The client and attorney agree that the attorney represents the client with no payment upfront, but the attorney may receive a portion of the client’s financial settlement if and when the client wins monetary compensation.
If the lawsuit is not successful, the client does not have to pay attorney fees. However, if the case is successful, the attorney receives a share of the recovery as payment based on the terms that the parties agree to in their contingency fee agreement. The advantage to this system for the client is that the injured person does not need to worry about paying attorneys fees while the case is making its way through litigation.
After the case, the attorney collects their fee out of the money from the settlement, verdict, or judgment.
Once the client has decided to retain a lawyer, they will sign a contingency fee agreement, which includes the fees and all the details of the parties’ working relationship. The contingency fee agreement must be in writing. The client should carefully review the terms of the agreement and ask any questions before signing.
Average contingency fees for car accident lawyers
A written agreement between the client and attorney determines the contingency fee.
The amount varies from one state to another. For example, in Florida, contingency fees are set forth as follows (unless there is prior court approval):
- 33 1/3 percent of any recovery up to $1 million if the case settles before certain procedural steps occur. These include the filing of an answer or demand for appointment of arbitrators, or if a settlement is reached before the time limits before those steps expire.
- 40 percent of any recovery up to $1 million if the case settles out of court or won before the other side files an answer or demands arbitration through the entry of the judgment or after the deadlines for these procedural steps expire.
- The lawyer may charge an additional fee of up to 30 percent of any additional recovery between $1 million and $2 million, whether the case was settled or tried in court. The lawyer may also charge up to 20 percent of any additional recovery above $2 million either by settlement or trial.
Each case is different. For example contingency fees may be different in cases against a governmental entity, such as the city, county, state, or federal government. All contingency fee agreements should be carefully discussed and fully understood before signing.
Retainer plus contingency
In this hybrid approach, a lawyer requires a client to pay a retainer at the start of the case, which is a set advance payment for the lawyer to hold, and if the plaintiff wins, the attorney also receives an agreed-upon percentage as a contingency fee. For car accident cases, the retainer can often range from several hundred to several thousand dollars.
Once the case is over, the attorney takes their contingency fee from the settlement minus the original retainer amount. Imagine that the set contingency fee percentage is 33 percent and a client paid $1,000 for a retainer. If the plaintiff recovered $30,000, the lawyer would take $10,000 as the 33 percent minus the retainer amount, so the lawyer would ultimately get $9,000.
Lawyers may charge flat or fixed fees for services such as wills, immigration, or criminal law cases. Several factors determine these fees, including the amount and complexity of the work required, the extent of the responsibility involved, and the customary fees charged in the area for similar legal services. Car accident lawyers rarely use this type of billing, unless the client wants help with a certain, specific task, such as a demand letter.
In this type of billing, the client pays the attorney for each hour of work completed. The lawyer receives the hourly rate whether or not the case is successful. The hourly rate will depend on the legal market, the type of law firm, as well as the attorney’s skill and experience level.
According to The Florida Bar’s recent Economics and Law Office Management Survey, the median hourly rate for Florida attorneys is $300. That means half of in-state Florida Bar members bill at over $300 per hour. Some firms charge different rates for different types of work, such as court hearings or tasks performed by a paralegal.
A retainer means that the client pays the lawyer in advance for representation in a legal matter. For example, if the client hires an attorney to represent them in a contract dispute, the lawyer may charge a retainer fee to handle the matter. When setting the fee, the attorney estimates the amount of work required, usually based on experience in handling such matters.
The lawyer keeps track of their time for work such as drafting legal documents and deducts the hourly rate from the retainer fee. If costs exceed the retainer fee, the attorney charges an additional amount to cover the overage. The client and attorney may agree that the retainer is either paid in full or by an installment plan.
You may have heard of referral fees. If one lawyer refers a client to another lawyer, the lawyer who receives the case may choose to pay a fee, called a referral fee, to the first lawyer as a thank-you. This is legal, but the client must consent to the referral fee in writing and both lawyers participating in the firm must sign the contract.
Deposits for costs
This charge is different from attorney’s fees.
Fees associated with filing a car accident claim include:
- Court and filing fees
- Process servers for summons and subpoenas
- Photocopying fees
- Shipping or postage fees
- Charges in connection with obtaining medical records, police reports, employment records, and other documents
- Court reporters for depositions
- Expert witness or investigator fees
- Expenses associated with transcripts, and trial exhibits
Your lawyer will deposit advances on fees and costs into a special bank account called a trust account. A trust account is an account that an attorney or law firm uses to deposit and hold clients’ funds. Attorneys must maintain specific records and these records are available to the client for examination.
Before hiring an attorney, they may estimate the total costs for your type of lawsuit. If the costs exceed the initial deposit while the case is still in progress, your attorney may charge an additional fee. However, personal injury lawyers often cover the extra expenses as they come and then deduct them from the settlement or award at the end. The attorney typically refunds any unused cost deposit to the client when the case is concluded.
Fees deducted from your settlement
In a car accident case, medical expenses often mount up quickly. A medical lien is a guarantee to a lienholder, such as medical providers, health insurance companies, and other agencies to recover medical costs associated with a personal injury, usually from a car accident.
In many cases with auto injuries, you won’t pay the doctor that treats you until after the case. The payments for these bills and liens will come out of your accident settlement.
When the lawsuit ends, before distributing funds, the attorney usually prepares a settlement disbursement sheet. This document will list the total amount of the settlement or jury verdict at the top and will account for the various deductions, including the attorney’s fee, costs, medical bills, and lien amounts to subtract from the gross funds. The bottom of the settlement disbursement sheet will list your net proceeds.
Distribution of the funds
If your case settles, or the court or a jury verdict awards compensation, the settlement check is usually sent directly to your lawyer. Your lawyer deducts the fees and expenses itemized on the settlement disbursement sheet, takes their percentage as their contingency fee for their services, and pays you the remaining balance from your settlement.
Understanding the cost and benefits of hiring a lawyer
It is important to understand the costs and benefits of hiring a lawyer to handle your car accident case. You may be injured, unable to work, and lost in a legal world unfamiliar to you. However, your attorney is in their natural environment and can help you get the compensation you deserve.
You should not delay retaining a lawyer because of fear you can’t afford the payment. Hiring a knowledgeable attorney can also relieve a great deal of the stress associated with being in a car accident. Your attorney not only has the legal skills necessary, but they also will not take an offer from an insurance company that is too low.
Insurance companies and opposing attorneys tend to take their negotiation skills seriously. And finally, they are willing to fight for the best result. If you are concerned about the cost of hiring a lawyer, make sure you are comfortable with the person you choose. Then never hesitate to ask any questions you may have about the fees involved.