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What Are Contingency Fees In A Personal Injury Claim?

What Are Contingency Fees In A Personal Injury Claim

Typically, clients seeking justice are required to pay a retainer fee before an attorney agrees to start working on their case. As such, clients who can’t afford to pay the fee may have difficulties accessing legal assistance or justice. Fortunately, many lawyers accept payments on a contingency basis for personal injury claims.

You can file a personal injury claim if you have sustained injuries from an accident or a slip and fall accidents due to another party’s negligence. In these cases, you will be entitled to reimbursements for the medical expenses you incurred, the total value of the damaged property (if any), and compensation for the pain, suffering, and trauma you experienced. 

You don’t need to stress about legal fees at the beginning of your case because most personal injury attorneys handle personal injury cases on a contingency basis. In other words, you don’t have to pay your attorney a retainer fee or acceptance fee. They can start working on your claim and collect their fee once your claim is successfully settled.

This article will discuss contingency fees and how they work in a personal injury claim. It also answers questions like, do lawyers get paid if they lose the personal injury claims? Read on to know more. 

What Are Contingency Fees?

Contingency fees are the cut your attorney receives after you’ve been compensated for your personal injury. The fees are either proceeds of a settlement or a verdict. For example, if you settle your claim out of court, you’ll pay the contingency fees out of the settlement gains. On the other hand, if your case goes to trial and you win, part of the verdict proceeds will be used to cover your legal fees.  

Contingency fees can be fixed or sliding, as discussed below.  

  • Fixed Contingency Fees 

A fixed contingency fee means that you’ll pay your lawyer a predetermined amount once your claim is settled. In this case, it doesn’t matter how much you are compensated. For example, if you and your attorney agreed to a fixed contingency fee of $20,000 and you only received $50,000 instead of your original claim of $100,000, the attorney’s fee will remain the same. The same applies if you receive a higher amount of compensation.

  • Sliding Contingency Fees 

On the other hand, sliding contingency fee arrangements are more flexible. This means that your personal injury attorney receives a portion of the compensation awarded to you after a verdict or a settlement. The flexible nature of these contingency fees means that your attorney will make more money if you receive high compensation.  

For instance, the percentage of contingency fees awarded to personal injury attorneys is often 33%. Therefore, if your compensation is $100,000, your lawyer will get $33,000 from the settlement. Similarly, if your compensation is $200,000, your attorney will receive $66,000.

Contingency Fee Arrangements In A Personal Injury

Most lawyers accept personal injury cases with a sliding contingency fee arrangement, especially in cases where a huge settlement can be expected. The total amount of personal injury claims can vary due to many factors. This includes the complexity of your case, the extent of your injuries, pain and suffering, property damage, and so on.  

Things To Consider Before Entering Into A Contingency Fee Arrangement

Contingency fee agreements are legally binding. A written agreement, as well as the client’s signature, is necessary to formalize the contract. Before signing the contract, you need to know a couple of things, as mentioned below. 

  • An approximation of the compensation you might receive for your personal injury claim 
  • The likelihood of your personal injury claim succeeding  
  • A rough estimate of the contingency fee the attorney will charge  
  • Any potential liability costs you may need to cover if the case is unsuccessful 

In addition, make sure you’ve read the contract thoroughly and ensure you seek clarification for anything you don’t understand or find confusing. More importantly, educate yourself about the personal injury laws in your state. This is because there may be limits to the percentage a personal injury attorney can charge in your state. So, make sure your attorney is not overcharging.

How To Negotiate Contingency Fees In A Personal Injury Claim

Most lawyers agree to work on personal injury claims that are likely to be successful because their compensation is dependent on winning. Therefore, your contingency fee may be negotiable when a personal injury attorney takes your case.  

It’s worth noting that the percentage most lawyers charge under sliding contingency fee arrangements ranges between 25% to 40%. The portion may be lower if your claim is settled out of court. It can also be higher if your claim is resolved in a trial. Knowing these charges is essential because they can help you negotiate successfully with an attorney.

What Happens If Your Personal Injury Claim Is Unsuccessful?

An unsuccessful personal injury claim means that you don’t get compensated for your personal injury via a settlement or a verdict. Under contingency fees, attorneys are only paid if their client wins. Therefore, if you lose your personal injury claim, you’ll not need to pay your attorney anything. 

However, contingency fee arrangements motivate personal injury lawyers to represent their clients well to secure payment. Most lawyers won’t agree to take a personal injury case on a contingency basis if they can determine that the claim is inherently weak.

Advantages Of Contingency Fees In A Personal Injury Claim

Some of the benefits of contingency fees in a personal injury claim include the following: 

  • Ease of accessing legal services – Contingency fees aren’t paid upfront, so financial constraints will not hinder you from accessing legal services. Additionally, if you lose your personal injury case, you won’t owe your attorney anything.  
  • Higher chances of securing a settlement – Under a contingency fee agreement, attorneys know they may not get anything if the personal injury claim is unsuccessful. Thus, they know the risk once they take on your case. This makes them determined to put extra effort to ensure a successful outcome. 

Final Note

Contingency Fees In A Personal Injury Claim

Under contingency fee arrangements, an attorney is compensated for their legal services only after a successful outcome of the case. The opposite outcome means that attorneys don’t receive any form of compensation. As such, most personal injury attorneys consider the likelihood of success before taking on a case.  

While contingency fees have benefits, you need to ensure you get the most out of your arrangement. Understanding contingency fee arrangements and the ins and outs of negotiating your contingency fees will help you achieve that.