Many people who were injured in an accident avoid hiring an attorney. While there are several reasons why a person would decide to seek compensation without the assistance of an attorney, the most common reason is that they are afraid they can’t afford the lawyer fees.
However, a personal injury lawyer is one type of legal professional that is affordable for anyone who needs legal services. Here’s why:
You Can Talk to a Lawyer about Your Case for Free
For starters, most personal injury lawyers provide free case evaluations. This allows you to speak with an experienced attorney about your case without paying for their time. You are also not obligated to sign on for more of their services. The free case evaluation allows you to receive guidance on the strength of your claim and the legal options for compensation available to you.
The attorney who provides your free initial consultation can also give you more information about the law firm, their overall vision for personal injury claims, and the services they can provide to assist you. At the end of the conversation, if you and the attorney decide that you would like to keep working together on your case, you will be given instructions on how to hire the attorney.
The Contingent Fee Billing Method
Unlike other types of lawyers who may charge a retainer fee, hourly rate, or a down payment, most personal injury lawyers—including all personal injury attorneys in New York and New Jersey—work on a contingent fee billing method, commonly known as contingency fees. This method allows them to perform the legal work needed on your case and—instead of collecting hourly fees for those services—will enable you to withhold payment for the law firm’s work until there is a positive outcome to the claim. This can help alleviate any undue financial strain the client might be experiencing, considering they may also be dealing with medical bills and other expenses related to their personal injury.
Most contingency fees average between 25% and 40%. However, New York and New Jersey both have laws that cap contingency fees in personal injury cases at one-third of the sum recovered, or 33.33%. The percentage charged may depend on various factors. For example, a more experienced attorney or a law firm with a proven track record may charge a higher percentage, but their attorney’s fees cannot exceed 33.33%.
Each state uses different methods for determining legal fees:
How Contingency Fees Work in New York
New York law allows two separate methods for how the one-third contingency fee is calculated. The difference comes down to when case costs and litigation expenses—such as court costs, expert testimony, mailing and postage costs, and other legal fees—are deducted. Here’s how the two methods work:
- Method 1: Case expenses are deducted from the total settlement recovered and then the 33.33% is taken from what remains. This option is often referred to as one-third of the net recovery.
- Method 2: The one-third percentage for attorney’s fees is deducted from the total settlement and the client is responsible for case expenses from the remainder.
How Contingency Fees Work in New Jersey
In New Jersey, contingency fee arrangements are a bit less complicated. New Jersey law requires lawyers to charge no more than 33.33% of the net recovery in any personal injury case.
Cases that Involve Contingency Fee Arrangements
Personal injury cases that involve contingency fees include:
- Claims resulting from injuries sustained in traffic accidents.
- Claims involving injuries caused by property hazards or defective products.
- Claims seeking compensation for injuries incurred as a result of nursing home negligence.
- Workers’ compensation claims resulting from workplace injuries or illnesses.
- Claims from family members seeking compensation for the death of a loved one due to someone else’s negligence.
Personal injury attorneys can help recover compensation for all manner of injuries. Common personal injury claims stem from catastrophic injuries, such as those that will likely impair the sufferer’s ability to earn an income or live the life they previously enjoyed. Catastrophic injuries range from traumatic brain injuries or spinal cord injuries to disfigurement and internal injuries and everything in between.
How Contingent Fees Work
When individuals decide to retain legal counsel to assist them with their claims, there is paperwork involved in formalizing the attorney-client relationship. The contingent fee agreement is one document you must read carefully before signing. This agreement outlines the services that the attorney will perform during the representation of your claim.
Additionally, the agreement explains that a percentage of the compensation received for your claim will pay the attorney. Some attorneys determine one fee if the claim settles before trial and a higher percentage fee if the case involves litigation. This is because litigation is expensive. The preparation for presenting a case in court is often far more extensive than negotiating payment directly with the at-fault party’s insurance provider. Sometimes called recovery fees, they are just a percentage of the total recovery for the claim.
As mentioned above, lawyer fees for personal injury lawyers in New York and New Jersey cannot exceed one-third of the total compensation recovered whether or not the case goes to trial go to trial.
The contingent fee agreement also outlines other costs involved in the personal injury claims process, such as the costs associated with receiving police and medical reports and court filing fees. Some attorneys require these additional costs to be paid for by the client as they arise. In contrast, others include provisions by which the attorney covers these costs and includes them in the recovery fees after the claim.
It is essential to read over the contingent fee agreement carefully and ask any questions you may have before signing it.
When You Pay the Contingent Fee
After the claim, the negotiated settlement agreement or award will go directly to the claimant’s attorney.
The attorney deposits the funds in a legal trust. From those funds, the lawyer will deduct their payment, per the contingent fee agreement. The attorney will also satisfy other types of debts outlined in the agreement, such as payment of medical liens placed on the settlement by healthcare providers and group health insurance providers.
After these payments are satisfied, the client will meet with the attorney to finalize the case. They will sign paperwork and receive documentation, such as a copy of their signed release of the at-fault party and their insurer from any further legal obligations. The attorney will provide the claimant with an accounting of their fees and other costs deducted from the settlement or award. The remainder of the compensation will go to the client to use as they wish.
The Benefits of the Contingent Fee
There are many benefits to the contingent fee billing method for both the client seeking compensation for their injury and the legal team assisting them with their case.
These benefits include:
- The client does not have to worry about paying a retainer or keeping up with hourly billing to have work done on their case.
- The ability of the legal team to begin working on the claim right away, without waiting for the client to come up with money.
- If the client loses the case, they are not required to pay the attorney for their services.
- Because the attorney only gets paid if there is a positive outcome to the claim, the client can rest knowing that the insurance company will take their case seriously and complete work promptly.
- The client knows how much their attorney will receive upfront rather than facing wildly fluctuating hourly bills throughout the case.
- The client also has the peace of mind of knowing that the lawyer working on their case believes they have a chance to win. Most attorneys will not take cases that are impossible to win on a contingent fee basis.
Are There Drawbacks to the Contingent Fee Billing Method?
While the contingent fee billing method is an essential mechanism for providing legal representation to those who would not otherwise be able to afford it, there are some things to consider about the arrangement. Because they do not get paid until a successful outcome to the claim, many personal injury attorneys are highly selective about the types of cases they will work on. If a claimant has a low-value or incredibly complex claim, they may have difficulty finding an attorney.
Not All Legal Services Rely on Contingent Fees
In addition to personal injury cases, other types of claims involving a lawyer working on a contingent fee include workers’ compensation claims, wrongful death claims, and some matters involving employment law.
As explained by the American Bar Association, attorneys may not charge contingency fees in certain legal claims, including:
- Domestic relations matters in which payment is contingent on securing a divorce or upon receiving alimony, child support, or a property settlement.
- Representing defendants in criminal cases where a client does not stand to obtain a monetary settlement after the case.
- Cases involving representation by lawyers from two different firms, without the informed consent of the client as to how to distribute the fees at the end of the case, the use of reasonable fees for attorney services, and a written contract outlining the portion of the services that each attorney will perform.
Key Components of a Contingency Fee Agreement
While perhaps the most important part of the contingency fee agreement is the provision about how much the attorney will collect upon the successful conclusion of your claim, several other aspects of the agreement are also necessary to read and understand before signing. Here is a look at those aspects.
Other Attorney Responsibilities
There are many costs involved in a legal claim beyond simply paying the attorney.
Some of these costs include:
- The cost of obtaining copies of documentation needed to prove expenses.
- The cost of preparing evidence exhibits for court.
- Court filing fees can cost several hundred dollars, depending on the state.
- Fees associated with hiring an investigator to work on the claim.
- Fees involved in hiring an expert witness to analyze information about the claim or to testify in court.
Some attorneys advance these additional costs, meaning they pay for the costs upfront, with reimbursement due after the case. However, other attorneys leave these costs to the client to determine how to pay. Be sure you understand how the attorney you’re working with handles the costs of the case.
The Graduated Contingent Fee Schedule
Some attorneys work on a graduated contingent fee schedule. This means that the attorney will charge one percentage for simple claims and a higher percentage for more complex cases or cases involving litigation. Suppose your attorney charges fees on a graduated scale. In that case, you must understand the thresholds that will result in a higher percentage.
Provisions for If You Are Unhappy With Your Lawyer’s Services
The assumption at the beginning of any attorney-client relationship is that the client will pay the attorney for their efforts. At times, a client is dissatisfied with their attorney or realizes that the attorney is not a good fit.
Just as an individual need not hire an attorney to help them with their claim, they’re also not required to keep an attorney on the case if they’re dissatisfied. However, individuals who have entered into a contingent fee agreement with an attorney still have some responsibility to compensate the attorney for the time they worked on the case.
Your contingent fee agreement spells out how your attorney will be paid for their work and your responsibilities should you wish to end the agreement.
A Limited Power of Attorney
Not all settlements or court awards involve payment from just one party. Many cases involve liability from multiple sources, which can result in payments from multiple sources. A contingent fee agreement generally contains a limited power of attorney that gives your attorney’s firm the ability to sign and deposit checks on your behalf.
The Requirement of Your Consent for Settlement
Personal injury lawyers have an ethical requirement to act in the best interests of their clients. They may provide information regarding how the claims process works, how their case is valued, or the settlement amount.
However, an attorney is not permitted to make decisions for their client regarding accepting a settlement or filing a lawsuit in court. Those decisions remain firmly with the client. A contingent fee agreement will usually include a provision stating that your consent is required to accept a settlement.
Hire a Personal Injury Lawyer Today
The skilled legal team at Jacoby & Meyers, LLP, will investigate your claim, obtain necessary documentation, such as medical records and police reports, and handle the paperwork for your case, while you focus on recovering from your injury and coping with any permanent damage. We also remain empathetic to the fact that you might financially struggle as a consequence of your injury, so we handle personal injury cases on a contingency fee basis, deducting our attorney fees from any compensation you receive.