If you decide to hire a lawyer to help you get the most out of your personal injury claim after a car accident, slip and fall, or any kind of mishap caused by someone else's negligence, it's pretty common to have questions about the monetary side of things.
How much of the gross amount recovered in your case -- whether by settlement, arbitration award, or judgment after trial -- will you receive when all is said and done? The answer lies in the fine print of the representation agreement you signed with your attorney. In this article, we'll explore the financial aspects of this agreement, including the difference between attorney’s fees and costs and the interplay between both in personal injury lawsuits.
What are Fees in a Personal Injury Case?
Fees refer to what an attorney charges a client for his or her services. In personal injury cases, attorneys typically work on a contingency fee basis, where the attorney’s fee is contingent upon the outcome of the case. The attorney receives an agreed-upon percentage of any settlement, arbitration award, or judgment that is obtained for the client. If there is no recovery, there is no fee.
Attorneys in personal injury cases typically receive a percentage of between thirty-three and forty percent as a contingency fee. Oftentimes, they may charge thirty three percent, or a third, before a trial date is set, and forty percent thereafter (on what's known as a "sliding scale"). The percentage is negotiable. In some states, however, attorney’s fees are capped for certain personal injury cases, such as medical malpractice cases, or cases involving injury to minors. Also, court approval may be required for contingency fee agreements in cases involving minors or persons with disabilities.
What are Common Costs in Personal Injury Cases?
Separate from fees, "costs" refer to the expenses that are necessary to prepare and pursue your personal injury case, from pre-lawsuit investigation and discovery all the way through trial (and in some cases, appeal). Costs can vary greatly from case to case, but they typically include:
- filing fees for the personal injury complaint (the document that starts the lawsuit) and any other legal documents
- fees for serving the complaint, summons, and other documents on the defendant
- investigation costs such as charges for medical records, police reports, and locating witnesses
- court reporting fees
- witness fees
- expert and consultant fees and expenses
- mediation fees
- jury fees
- administrative costs, such as phone, postage, copying, etc., and
- mileage or travel costs.
In personal injury cases, attorneys generally advance the cost of litigating the case. Whether your attorney is entitled to recover costs from you, in the event that your claim isn't successful (you don't receive anything via settlement or you lose at trial) should be specified in the contingency fee agreement. If you are concerned about costs, you may also set a limit on costs and ask for regular accountings when negotiating the representation agreement.
How are Fees and Costs Calculated?
Whether case costs are deducted before or after the attorney’s fee is calculated can impact the total amount of costs and fees that you pay. If the costs are deducted before the fee percentage is calculated, you will pay less than if the costs are deducted after the fee percentage is taken out. For instance, let’s assume that you negotiated a thirty-three percent contingency fee, the litigation costs total $10,000, and the case settles for $100,000.
- Costs before fees: If the agreement calls for costs to be deducted from the settlement amount before the attorney’s fee is calculated, the costs will be $10,000 and the attorney’s fees will be 33.33% of $90,000 ($100,000-$10,0000), i.e. $30,000. Costs and fees total $40,000.
- Costs after fees: If the costs are deducted after calculating the fee, the attorney’s fee will be 33.33% of $100,000 i.e. $33,000, and the costs will be $10,000. Costs and fees total $43,000.