There are three common ways an attorney can get paid when they represent an accident victim’s case. One method is a contingency fee. This is when the attorney is paid a certain percentage of what is collected when the case is settled. Another method is a flat fee. This is an agreed upon amount between the client and attorney. The other method is by utilizing an hourly fee.
Related: Warning Kentucky Accident Victims: Understand Your Contract
What is a contingency fee?
In most automobile accident cases, an attorney is paid on a contingency fee basis. A contingency fee is a fee arrangement that pays the attorney a percentage of what is collected at the time the case is settled. The contingency fee is usually 1/3 or 33 1/3% of the total settlement. Under most contracts, the client is responsible for any costs associated with the prosecution of the case. These costs are deducted from the client’s portion of the settlement. Some attorneys will offer a 25% contingency fee. Others will raise their fee as the case progresses. For example, if the case settles, the fee is 1/3 (33 1/3%). If a lawsuit is filed, the fee goes up to 40%. Should the case actually go to trial, the fee is again raised, this time to 45%. Then, if there is an appeal, the fee goes up again to 50%! Some believe that this is a disservice to the client and a conflict of interest between what is good for the client and what is good for the attorney’s pocket.
Are contingency fees good for the client?
A contingency fee is a good deal for almost anyone who is involved in an accident. Many accidents cause injuries; these injuries could cause you to take time off of work. If this is the case, you probably do not have the extra money to hire an attorney. You have your normal living expenses to pay with less money or no pay check at all. This type of fee allows you to retain an attorney without paying any money upfront. The attorney assumes all of the risk of your case concluding with a successful result. If the attorney is unfortunate enough to lose your case, you do not owe them a fee. Not one penny. This means no risk to you.
Related: Do I Have An Accident Case?
A flat fee is just what it sounds like. It is a fee that is set at the beginning of the case. This is negotiated and agreed to by the attorney and the client at the time the attorney is retained. The fee never changes. It stays the same no matter how much time and effort the attorney puts into your case. This can seem like a great deal if you case ends up being very complicated or having to go to trial. However, it can turn into not a great deal for the client if the case settles quickly and there was little work done your attorney. Unfortunately, you can never be sure what direction a case is going to go until it’s settled.
Attorneys also work on an hourly fee basis. The client pays the attorney an agreed upon hourly rate for every hour that the attorney works. The client will receive a detailed bill, usually at the end of each month, outlining all the work the attorney performed on their case for that time period. The client is then expected to pay for the attorney’s services every month. It is also the client’s responsibility to pay for any costs and expenses incurred.
Make sure that when you hire an attorney that you understand their terms and payment method. You don’t want to sign an agreement that may not be in your favor. To avoid this, make sure to read and understand the contract. If there is something that you don’t understand, make sure to ask the attorney. They will help you in any way that they can.