Did you suffer damages in a car accident? If so, you may be able to recover compensation for some or all of your losses. This means trying to navigate personal injury law, which can be a frustrating experience. You may also be risking your chances of recovering full compensation.
An accident attorney can help, but this is another expense. Contingency fees can help offset the costs but it may not be your best option. We’re exploring alternative payment methods to contingency fees so you’re better positioned to make the best decision for your financial situation.
What Are Contingency Fees?
Personal injury attorneys can offer their clients a few payment structures that include contingency fees. If you’re not sure what contingency fees are or how they can help you afford an accident lawyer, the premise is fairly simple. Contingency fees allow you to retain legal representation without having to pay any money upfront. You also aren’t going to be hit with a legal bill midway through your claim.
Contingency fees are an agreement between you and your attorney. The agreement states your attorney will work on your claim or injury lawsuit without receiving any form of payment. If your claim or case is successfully settled, your attorney takes an agreed-upon percentage.
What happens if the lawyer loses your claim? You don’t receive a settlement check, and your attorney doesn’t get paid. So, in a nutshell, your personal injury attorney is only paid if you win your claim.
Everything sounds pretty good so far. You have an attorney without having to scramble to come up with hourly rates or a flat feel. However, you will need to follow a few basic rules, and contingency fees can also have a couple of downsides.
Rules Governing Contingency Fees
Before the legal system recognizes your contingency fee agreement with your attorney, you need to follow a few simple steps. Not following these steps can cause the court to reject your partnership with your attorney, and this can negatively impact your accident claim.
You may need to start the claim process from the beginning with a new attorney. If your claim has turned into a civil lawsuit, your case may be thrown out of court. With that being said, here are the requirements to ensure your contingency fee agreement is legally binding and meets court standards:
- Everything must be in writing: You may trust your attorney’s promise and vice-versa. Unfortunately, handshake agreements are usually not considered legally binding by the judicial system. Instead, everything must be written down in a legal document. The agreement must also be signed by the attorney and their client. If you skip this step, the law doesn’t recognize the contingency fee agreement.
- Have a witness ready to sign the agreement: Having a third-party witness sign a contingency fee agreement isn’t always required, but it’s a good way of ensuring the document is a legally binding contract.
- Percentage of the contingency fees: Your attorney receives a portion of your settlement award. How much depends on the contingency fee agreement. On average, personal injury attorneys typically charge anywhere from 25% up to 50%. A few factors go into determining the percentage your attorney receives, such as case complexity. You should expect to pay more in contingency fees for more complex accident claims. An example of a complex claim can be a multi-car pileup. Attorneys typically charge more if your claim is likely to turn into a personal injury lawsuit.
Don’t forget to have your attorney list any potential costs not covered by contingency fees, which typically include costs associated with picking up copies of your accident report and medical records.
Court filing fees and payment for expert witness testimony are other examples of potential extra costs. These extra costs are also a downside of contingency fees. The extra costs can quickly add up and eat away at your settlement amount.
Additional Payment Methods for Accident Lawyers
Contingency fees can make hiring an attorney after an accident more affordable, but it’s not always the best payment structure for everyone. Don’t forget that contingency fees can increase when additional expenses are involved. If you don’t feel like contingency fees are the right payment structure for your injury claim, you have other options.
Retainer Fee
A retainer fee is also known as an upfront payment, which is money you give your attorney at the start of your case. A retainer fee typically comes into play after consulting with the attorney. The lawyer reviews your claim, and you decide if they’re the right person to work on your case. If everyone agrees, the attorney asks for a retainer fee before getting to work on your claim.
How much an attorney charges as a retainer varies, typically on the complexity of the claim. You may also be billed throughout the process if your case is more complex than the attorney initially thought. After your claim is resolved, your attorney refunds any monies left over, if any, from the retainer fee.
Flat Fees
Sometimes, flat fees are the best way to go if you can come up with the attorney’s asking rate. With a flat fee, you pay your attorney once to work on your personal injury claim. The upside of a flat fee payment method is you aren’t going to have any surprise expenses after settling your case. Your flat fee should cover everything from the start to the end of your claim.
A potential downside of flat fees is most personal injury lawyers don’t offer this payment method. Flat fees are typically reserved for relatively straightforward cases like an uncontested divorce or filing for bankruptcy.
Hourly Rates
Hourly rates are a common payment structure with attorneys regardless of their practice field. You’re billed for every hour your attorney works on your personal injury claim. If you have a complex claim that ends up going to court, hourly rates can quickly become expensive. However, if the insurance company is all but ready to settle your claim, hourly rates can be an affordable payment option.
Find the Payment Method That’s Best for You
While contingency fees are a common payment method for personal injury attorneys, they aren’t the only option. It’s important to review your claim, consider its complexities, and consult with an attorney before making a decision on how to proceed.
By discussing fee structures and exploring your options, you can ensure that you’re not paying more for legal representation than is absolutely necessary. Careful consideration upfront can save you money and help you make the best financial decision for your case.
