Experts In This Article
- Michael T. Gibson, Esq., Lead Attorney & President at Michael T. Gibson, P.A., Auto Justice Attorney, Catastrophic Injuries Expert and Licensed for 17 years
- Todd Curtin Esq., Partner & Lead Trial Attorney at Michael T. Gibson, P.A., Auto Justice Attorney and Licensed for 8 years
- Amit Jhalli, Esq. Attorney at Michael T. Gibson, P.A., Auto Justice Attorney, Personal Injury Pre-suit Investigation & Brain Injury Expert and Licensed for 9 years
If someone else injured you because of their negligent or careless actions, you may know that you could obtain compensation. You may also know that you stand a much better chance of getting compensation if you have an attorney represent you. However, you likely have concerns about how much money the lawyer will get from an accident settlement, and this concern may stop you from contacting an attorney for help.
Insurance companies are difficult to deal with sometimes, but they often take claims more seriously when a lawyer files a claim. Other benefits of having an attorney file your claim for you include: 1) the lawyer can file your claim properly and on time to help you avoid mistakes that could jeopardize your chances for recovering compensation, 2) a lawyer can deal with the insurance company for you and negotiate to get a higher settlement. Personal injury attorneys offer many other benefits as well, and they will always look out for your best interests and help you get the maximum compensation possible.
The exact amount a lawyer gets in a settlement depends on multiple factors but primarily hinges on what they charge for fees. Below we take a closer look at how lawyers determine attorney fees, what types of attorney fees they charge, and specific situations that can impact how much a lawyer gets in a settlement.
How Do Personal Injury Lawyers Determine Fees?
Personal injury law firms have overhead like every other business. Their cost of doing business typically includes commercial rent for the building where they work, office equipment, payroll, and expenses for continuing education for lawyers. Although exceptions exist, overhead is typically 35 to 50 percent of fees charged, according to the Florida Bar.
When a lawyer determines fees for an injured client, they look at overhead and:
- The difficulty of a case
- The time they need to spend on the case
- Their experience
Cases that require more research and thorough investigation take longer to prepare. As a general rule of thumb, the more time a lawyer spends on a case, the more money they receive in a settlement.
Upfront Costs in Personal Injury Cases
Lawyers in Florida and throughout the nation are prohibited from engaging in frivolous lawsuits, so they typically charge upfront fees, cost deposits, or a retainer to take on a new client.
This is not the case in personal injury lawsuits. Personal injury lawyers receive their fees once they secure a settlement agreement or jury award for their clients. Clients do not pay an upfront retainer or attorney fees like they would with a divorce, criminal defense, or real estate attorney.
Contingent Fees in Personal Injury Cases
Many lawyers charge fixed fees for simple transactions or hourly fees for ongoing services. Personal injury attorneys operate on a contingent fee basis when representing a client. This means the lawyer only receives a portion of the settlement or jury award their client receives as payment for their services if they recover compensation for the client.
The law requires that the attorney and their client enter into a written agreement outlining the representation terms. Specifically, the agreement lays out what portion of compensation the lawyer will get from a settlement or jury award, and it lists other expenses that might be deducted from any compensation the client receives on behalf of their lawyer’s effort.
In most cases, the fee is a fixed percentage of the total damages a client receives. Some agreements include more detail if the case needs to be tried again or appealed.
Contingency fee agreements typically stipulate that the lawyer does not receive attorney fees unless they win their client’s case or recover compensation for them. However, clients are sometimes still responsible for other costs of representation, such as witness expenses and administrative fees for filing court documents. Unless your contingency fee contract states explicitly that you owe nothing if you lose your case, you will likely have to pay these extra costs to your lawyer.
Ultimately, the amount a lawyer can keep as a contingency fee depends on what stage of the case their client is in when the case is resolved. Settlements come before trial, even if they occur the day before court. Litigation is expensive, so contingent fees are always less with a settlement agreement than if a personal injury case goes to trial.
The Florida Bar has limitations related to recovery in personal injury cases, and other states have the same or similar stipulations. If you and your lawyer agree on a higher fee, you must get permission from the court to increase the percentage.
Florida assumes that lawyers who charge more than the following percentages without court approval are charging excessive fees:
- If your case settles before arbitration or litigation, your lawyer can take 33 1/3 percent of any compensation received up to $1 million.
- If your case settles or you win your case after demanding arbitration, your lawyer receives 40 percent of any compensation up to $1,000,000.
- Your lawyer can charge up to 30 percent of any compensation between $1 million and $2 million, regardless of whether it is by settlement or jury award.
- Your lawyer can charge up to 20 percent of any compensation over $2 million, regardless of whether it is by settlement or jury award.
- If the party you are suing admits liability but disagrees with compensation for damages, you might have to go to court over damages. In this case, your lawyer can charge up to 33 1/3 percent for the first $1 million, 20 percent between $1 million and $2 million, and 15 percent for any compensation over $2 million.
- If the other side appeals a settlement or your attorney must help collect the compensation for a settlement or judgment, they can add 5 percent to their fee.
Contingent Fees in Medical Malpractice Claims
Many states have laws that govern the amount of recovery in medical malpractice cases, impacting contingency fees. In Florida, lawyers cannot charge more than 30 percent of the first $250,000 in compensation and no more than 10 percent of all compensation of about $250,000.
However, this does not mean a lawyer will not charge more. If you have a medical malpractice claim, your lawyer can charge over the legal guidelines, but you must consent with a notarized signature. If you waive your right to the above limits, your lawyer must provide a detailed waiver form.
Key points of the waiver include stating that:
- The client understands they are giving up their state constitutional right when signing the waiver.
- The lawyer advised the client they could talk with another independent attorney before signing.
- The client can ask for a hearing where a judge explains the waiver.
- The client has selected the lawyer representing them.
- The client could not hire the lawyer without waiving their right.
Why Do Personal Injury Lawyers Use Contingent Fee Agreements?
Contingent fee agreements ensure everyone can afford a lawyer to seek compensation when they have fallen victim to negligence.
Consider the following situation: A fatigued semi-truck driver falls asleep at the wheel, wakes up, and slams on his brakes when he sees he’s headed off the interstate. He skids and jackknifes his truck, causing two vehicles to smash into his trailer. Both drivers suffered severe injuries that forced them to take time off work and spend weeks in the hospital recovering. Both motorists also suffer permanent injuries because of the accident the truck driver caused.
These are where the similarities end.
Now, let’s see how things might play out if personal injury lawyers did not conduct business with contingent fee agreements.
Motorist A
The first driver recently inherited her father’s estate now that both her parents have passed. She’s not a multi-millionaire, but she has some money in the bank. She has little debt because she is nearing retirement, and she has incredible health benefits from her employer.
If she had to pay thousands of dollars for a retainer to hire a lawyer to sue for damages, she wouldn’t like it, but she could afford it. She also has enough money to cover medical expenses and lost wages during hospitalization. Her permanent injury might force an early retirement, causing her a financial hit until she can collect Social Security and withdraw from her retirement accounts without penalty.
Motorist B
The second driver is in his mid-40s with two kids in college. He and his wife still carry a relatively large mortgage on their house and have one car loan. After being laid off from his job for six months, he had to drain his emergency savings and run up credit card debt to pay monthly bills, buy groceries, and help kids with some college expenses.
The car accident came at the worst possible time. He has no money to hire a lawyer to help him recover damages from the negligent truck driver, and he has spent weeks in the hospital after going back to work for only three weeks. Now, with a permanent injury, it’s unlikely he can ever return to work. With no income and medical bills piling up, the driver might not be able to afford to pay his health insurance in the coming months.
Both motorists in the examples above suffered the same physical consequences from their truck injuries, but the financial impact of the accident varied greatly. One is not more deserving than the other to recover damages related to their injuries and other losses from the accident.
Yet, Motorist B cannot afford to hire a lawyer to help, leaving him at the mercy of the insurance company. If he recovers losses, he might not recover maximum compensation because the insurance company isn’t taking his claim seriously. Additionally, the financial impact could ultimately lead to a repossessed vehicle, home foreclosure, and other economic struggles.
Personal injury lawyers know the challenges injured people face and can often help them recover damages when another person or business causes harm. It’s standard to accept new clients on a contingent fee basis because of the underlying belief that everyone deserves legal representation when they suffer harm. The ability to seek justice and recover damages should not be reserved for only those who can afford to hire an attorney.
Contingency fee agreements also benefit clients because they provide an incentive for lawyers to do their best work. Personal injury lawyers have to successfully negotiate a settlement or secure a verdict for their client to receive their attorney fees. They risk walking away with nothing to show for work if they don’t win a client’s case.
Dividing Attorney Fees Among Multiple Lawyers
Sometimes, attorneys need to hire another lawyer to help with a case. This may happen if the lawyer doesn’t have a lot of experience handling a specialized area, like medical malpractice or product liability. However, a lawyer cannot bring on another attorney without your permission in writing.
In Florida, the primary attorney gets at least 75 percent of the contingent fee, and the secondary lawyer gets no more than 25 percent of the fee. When attorneys need to share fees, it should not impact the amount a client receives in a settlement. The lawyers will work out the split, with the court’s help, and divide their portion between themselves.
Other Costs of Legal Representation in a Personal Injury Case
Legal fees for a personal injury case include more than attorney fees. As mentioned above, your lawyer will have other costs that factor into the amount they deduct from your settlement.
Examples of common expenses related to a personal injury case include:
- Fees for obtaining medical records
- Fees for obtaining police reports
- Fees for securing expert witness testimony
- Postage
- Fees for filing court documents
- Fees for hiring investigators and/or specialists to build a case
- Costs for taking depositions
- Travel expenses if a lawyer has to travel for a case
Receiving Your Settlement Money After Injury
In most cases, the insurance company, court, or legal defense team involved with your case will send the settlement check to your attorney, not you. This is a common practice that protects lawyers from clients who try not to hold up their end of a contingency fee agreement. Also, when you sign the settlement agreement, you will also sign a waiver promising not to pursue additional compensation in the future.
Once your lawyer receives the compensation, they deduct the appropriate fees and expenses, pay any outstanding medical bills you have, and send the remainder to you.
By the time you factor in attorney fees and other costs of representation, you might receive 50 percent or less of the settlement amount. Keep in mind, though, that you will probably recover far more compensation overall than if you didn’t hire a lawyer.
Regardless of how much you must pay out of your settlement, the cost is well worth it to secure competent, effective legal representation. Without a lawyer, you may not receive any compensation at all—or worse, the insurance company could prove you were responsible for the accident, and you will have to pay compensation to the other party.
It’s always best to discuss fees and other expenses with your personal injury attorney so you do not have any surprises if you reach an agreeable settlement. You should never let your concerns with how much of your settlement check your lawyer will get prevent you from retaining a personal injury attorney for help.
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