April 15, 2020

Pitts Carr and Alex Weatherby

How does a personal injury lawyer get paid?

This depends on whether the lawyer is working for the plaintiff (the injured person) or the defendant (the person claimed to be at fault). 

Fees for a Plaintiff: When working for an injured person, the plaintiff’s attorney is generally paid on a contingent fee basis. A contingent fee means that the fee is “contingent” on the outcome of the litigation. If the litigation results in recovery, the attorney receives an agreed-upon percentage of the recovery. If the lawsuit results in no recovery, the attorney receives nothing. This is why you see a lot of advertisements that say “no fee unless you win” or the like. This means that the lawyer is receiving a percentage of the outcome of the lawsuit.

In general, percentages for personal injury cases vary between 1/3 to 1/2 of the recovery. The amount of the percentage depends on a number of factors. One of the key factors is the amount of work involved. A lot of lawyers increase their fees based on the stage of litigation. If the claim is settled pre-suit, for example, there will generally be a lower percentage than if it is settled after suit is filed. Other factors include the facts of the case, the likelihood of recovery, the expense involved, the risk involved and more. 

These percentages are at this level because there are significant risks for a plaintiff’s attorney. The attorney usually fronts the expenses for the case (which is typically in the many thousands of dollars). The attorney also usually works for a long time before receiving payment. If the case goes poorly, the attorney may lose significant resources in expenses and lost time. At the outset of your relationship, the attorney should explain to you the contingent fee contract and how it may affect your case.

Fees for a Defendant: When representing a Defendant, the fee is usually paid on an hourly basis. This means that the attorney will bill the Defendant hourly for the work incurred at an agreed-upon hourly rate.The various hourly rates are too many to list. It depends on the size of the firm, the size of the client, the amount of work estimated, the location of the lawyer/client/lawsuit, and the experience of the lawyer, among others. It will almost certainly be in the hundreds of dollars per hour. The lawyer will generally send bills to the client at an agreed-upon interval, every month or every few months. 

A defense attorney may require a retainer to begin work. A retainer is an amount of funds that the client advances toward the defense of the case. The lawyer, then, bills toward the retainer. When the retainer reaches a certain level, the lawyer may request that the retainer be replenished to continue work. The amount of the retainer varies significantly and depends on a number of factors, like those detailed above for hourly work.

There is a third type of defense arrangement, which is a fixed monthly rate. This is the least common arrangement and often used only by insurance companies or other businesses with significant, consistent litigation exposure. This is because the monthly fee only makes sense if litigation is consistent.There are a lot of different fee arrangements depending on the facts and circumstances of your case. Please contact us today for a free consultation on your legal issue.