More About Contingency Fees
While many different things stop a person from getting legal help in personal injury cases, fear of significant expenses remains the most prominent one. However, to ensure that everyone who has been carelessly and undeservingly hurt by someone gets justice, lawyers started charging on a contingency basis.
This particular method of receiving the fees from the people in trouble allows them to take help from an experienced lawyer without always worrying about how much money they have left in their pocket. Let’s understand the contingency fee structure and see how it will affect your legal actions in a particular case.
What’s a Contingency Fee Structure?
When a lawyer says that he will charge you contingency fee what he means is that he is not going to cost you anything upfront. He will take up your case, review it and contact the offending party to see if a settlement can become reached before filing a lawsuit i.e. taking the case inside the court.
- When and if the case gets settled, the lawyer will take his fees from this settled amount.
- In addition to his fees, he will also make sure to deduct any expenses he had to take from his pocket while pursuing a settlement.
Contingency Fee In Detail
In most injury cases today, you will meet lawyers who will charge to take care of your case on contingency fee basis. It is important to note here that some states have put a limit on the percentage of the amount that a lawyer can take.
- Some states feel that contingency fee should be scrutinized more.
- After all, the lawyer takes a fee from the final settlement so they want the client to get something after costs and expenses, etc.
- Usually, California does not interfere with the retainer contract unless a compelling state interest lies in your case.
Are Protected People, Like Minors’ and Incompetents’ Settlements Universally Scrutinized?
Yes. Absolutely. This is a case where there is a compelling state interest in protecting a class incapable of protecting themselves.
Examples where an earned fee could be reduced or limited in California include:
- Some elders
So these are highly scrutinized contingency fee contracts in California and other states. In California, for example, you will need to set up a trust, and conservatorship in most cases. This is all very complex, time consuming and expensive.
So What is the Typical Contingency Fee Amount in a Personal Injury Case?
Mostly, you will be looking at contingency fees in the range of 35% and 40% of the gross amount you will receive as part of the settlement.
- Another common figure is the one-third. Here, your lawyer takes 33.33% of the total settlement amount.
What is a Shifting of Limits Attorneys’ Fee?
Another term you might come across as you go in the details of contingency fee structure is “shifting of limits.” What this means is that your lawyer can charge you a different contingency fee based on the condition of the case it is in when the agent picks it up.
After analyzing the situation, your condition, your damages, etc., the contingency fee lawyer dispatches a letter to the offending party. Here your lawyer lets them know of the demand for the final settlement. So if the offending party agrees to pay this amount the settlement, the case never enters the court.
This is an easy way to reach the end of a case, and so you won’t have to pay more than 33.33% to the lawyer as his contingency fee in this scenario. However, things can change if the offending party doesn’t agree to pay the compensation amount or completely disagrees to take the blame for the personal injury.
Now, in this particular scenario, the case will be taken to court for a trial. This is also referred to as filing a lawsuit. In this given situation where the case ends up in the court, your lawyer receives a higher percentage of the final settlement amount – a 40% fee in most cases.
Contingency Fees Might Not Be The Only Deductions
Reading the information above might put you under the impression that contingency fees are the only thing that needs to be deducted from the final settlement amount when a case is closed, but that’s not the case every time. As the lawyer is handling the case, he’s doing a lot to collect the evidence and investigate the case to strengthen the case from your side.
All of this requires him to collect reports, hire people to perform various tasks, etc. The lawyer can choose to pay for these expenses either from his pocket or ask you straight away to pay for these expenses.
If your lawyer has asked you to pay for these extra legal fees, then your final settlement will be the amount less the attorney’s fee. However, if the agent has been making these expenses from his pocket, then the sum of these expenditures will be taken from your final settlement check.
In this case, if you don’t have the money to pay these fees the case will come to a stop.
The many areas where the money is spent while handling a personal injury case include:
- Witness fees
- Trial exhibits
- Medical records
- Police reports
- Filing fees
The longer the case lasts for the higher the expenses will be and the bigger the amount will be deducted from your final settlement. In some scenarios, the percentage that comes as the victim is 45% to 50% only.
Benefits Of Contingency Fee Structure
There are several benefits of choosing lawyers that work with contingency fee structure. The biggest benefit is that people who don’t have enough money in their pockets to start pursuing compensation in a personal injury case can actually pursue it because they don’t have to pay anything upfront.
Another huge benefit is that the lawyer works in the best interests of its clients because his income is tied with the winning of the case. If the lawyer takes his fees upfront then there are higher chances that he might not work on the case with the required passion because his interests and motivation have died in such a scenario.
How Is a Contingency Fee Taken?
The settlement check from the offending party is sent to the lawyer in your case. The draft is deposited into the attorney-client trust account. This ensures that your line holder and lawyer get paid their fees, and any other extra contractual expenses before the proceeds you are owed go into your personal bank account.
Also, it remains the responsibility of your lawyer to inform you as soon as he has received the settlement check. He should give you complete details on how much money he’s going to take the form the settlement check. And you lawyer should also explain the expenses in detail.
To make things even better, today the lawyers are encouraging their clients to start pursuing their personal injury cases with a free first consultation in addition to contingency fee plan. Ehline Law Firm based in Los Angeles, California is one such reputable firm, handling personal injury cases on a contingency for years (learn more.)