After the first shock of a car accident, most people start to worry about whether they can work, how to pay their everyday expenses, and how to pay their enormous medical bills. Once they realize they need legal advice and protection, they may worry about how to pay an attorney.
Unless they have had experience with the legal system, they may not know how an attorney charges or what to expect. A lawyer doesn’t charge a fixed amount for representing a client in a car accident claim. However, most personal injury lawyers follow common fee structures.
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 expenses such as rent, salaries, equipment, and continuing education, all of which may amount to approximately 35 percent to 50 percent of the legal fees. 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 depends on the education and experience of the attorney, as well as the firm’s reputation. Fees typically cover legal advice, document production, research, negotiations, and court representation.
Hiring an attorney usually starts with an initial consultation. During this time, the attorney will discuss your case details and answer all your questions. Ask what the attorney charges and the payment schedule. 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. Under Florida law, you may be entitled to compensation if you suffered an injury in an accident that was not your fault. 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 for ending or pledging not to file a lawsuit.
Most insurance companies prefer to settle cases instead of taking them to trial because the costs of going to trial can often be very high, and an insurer will also risk a possible judgment that exceeds their settlement offer. Many settlements are agreed to before a case ever gets to court, but it is also possible for cases to settle during trials.
In the demand letter, a victim will write to an insurance company and describe an accident, list relevant facts, include a list of damages, and discuss the liability of the party the insurance company covers.
An insurer may accept your demand and agree to pay you what you request, but more than likely, they will make a counteroffer. Your attorney will know what your case is worth and fight to get that amount from the insurance company.
How contingency fees work
Many personal injury lawyers charge a contingency fee. These are common 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. Still, the attorney may receive a portion of the client’s financial settlement if and when the client wins monetary compensation.
If the lawsuit is unsuccessful, 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 of the 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. Specifically, the agreement states what percentage of the settlement or award will go to the lawyer as fees before the claimant receives the rest.
The amount varies from one state to another. It also depends on the complexity of the case and whether the case settles directly with an insurance company or requires litigation. A lawyer may charge more for a case that requires a jury trial than a case that settles, as the lawyer puts in substantially more work and time for trial preparation.
Each case is different. For example, contingency fees may differ in cases against a governmental entity, such as the city, county, state, or federal government. You should carefully discuss and understand all contingency fee agreements 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. 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 recovers $30,000, the lawyer will take $10,000 as the 33 percent minus the retainer amount, so the lawyer will 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 specific task, such as a demand letter.
Lawyers usually charge flat fees in simple or routine cases, such as common traffic ticket offenses, creating wills, mortgage foreclosures, or getting uncontested divorces. Flat fees are usually an option when an attorney handles significant volumes of one of these particular kinds of cases.
Flat fees can have a wide variety of ranges, with some cases costing less than $100 while others can be more expensive and may involve fees of more than $1,000. Many lawyers consider flat fees far more ethical than hourly fees.
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, and 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. 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.
Rules of Professional Conduct establish that a division of fees between lawyers not working in the same firm can occur only when they charge a reasonable total fee. Each lawyer assumes joint legal responsibility for the representation and then agrees to consult a client. An agreement fully discloses a plan to divide the fees.
The Rules of Professional Conduct provides, however, that as it relates to lawyers who are not in the same firm, a division of any fee must be on the following basis:
- A minimum of 75 percent of a total fee to the lawyer assuming primary responsibility for the legal services to a client.
- A maximum of 25 percent of a total fee to the lawyer who assumes secondary responsibility for legal services on behalf of a client and any fee over 25 percent will be presumed excessive.
- The 25 percent limitation will not apply to cases in which two or more lawyers or firms accept significantly equal active participation in providing legal services.
- The percentages required by this subdivision will be applicable after deduction of any fee payable to separate counsel retained, especially for appellate purposes.
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 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 and deduct them from the settlement or award. The attorney typically refunds any unused cost deposit to the client when the case concludes.
Fee deductions from your settlement
In a car accident case, medical expenses often mount up quickly. A medical lien guarantees 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 from your accident settlement.
When the lawsuit ends, the attorney usually prepares a settlement disbursement sheet before distributing funds. This document will list the total amount of the settlement or jury verdict at the top. It 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.
Florida has over 200 statutes allowing for an award of attorney’s fees in legal actions, and judges set most fees. Guidelines for a judge setting such fees are in the Rules of Professional Conduct.
Factors that determine reasonable fees include:
- The amount of time and labor necessary, the novelty, complexity, and difficulty of all legal questions, and the skill to perform a legal service properly
- The likelihood that acceptance of particular employment will preclude other employment by a lawyer
- The fee or rate of fee customarily charged in a locality for legal services of a similar or comparable nature
- The responsibility involved in such representation and the obtained results
- Any time limits imposed or additional or special time demands or requests of an attorney by a client
- The nature and length of a professional relationship with a client
- The experience, reputation, diligence, and ability of a lawyer or lawyers performing services and skills, experience, or efficiency of effort reflected in the actual providing of services
- Whether a fee is fixed or contingent, and whether a client’s ability to pay rests to any significant degree on the outcome of the representation
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.
The cost and benefits of hiring a lawyer
Your accident may have left you injured, unable to work, and lost in an unfamiliar legal world. 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 necessary legal skills but will also not take an offer from an insurance company that is too low.
Soon after a car accident, an insurance company may offer you a lump-sum settlement to resolve your case. Still, the proposed amount will almost certainly be significantly less than what you actually deserve. You have no obligation to accept a settlement offer, and it is always in your best interest to let a skilled lawyer handle all settlement negotiations instead.
While initial settlement offers may surprise some people, keep in mind the lifetime costs you will face, not just your current bills. People who rush to accept settlements from insurers cannot pursue additional damages if they later learn that they need more money than they accepted.
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.