After an injury, finding an ethical and skilled lawyer can feel overwhelming, but understanding how they charge you for representation is one of the most important factors to consider when choosing which attorney to hire.
Most personal injury lawyers work on a “contingency fee” basis, and, rarely, you might encounter a personal injury attorney who charges by the hour. Let’s jump in to what that means.
Contingency Fee Lawyers (Most Common in Injury Cases)
With a contingency fee, your lawyer only gets paid if you win. Period. If there’s no recovery, you don’t owe them anything for their time. Some billboard attorneys make this sound like a special perk, but in reality, it’s the industry standard for personal injury cases. Essentially, the attorney will collect their fees by keeping a percentage of what you collect in your case.
Quick side note: This is why many personal injury attorneys are reluctant to take riskier cases.
Most Common Fee Structure:
- Up to 33% if your case is settled before trial
- Up to 40% if your case goes to trial
- Up to 45% if your case is appealed
For example, if your case settles for $100,000, your attorney will typically receive between $33,000 and $45,000.
These are just examples, because each case and lawyer is different. Importantly, local ethical rules or firm policies may affect these numbers. Always ask for a copy of the fee agreement and review the terms carefully before signing.
Nonetheless, if a lawyer is charging more than this, there should be a very good reason, and you should be asking questions. This structure has its advantages and disadvantages:
Advantages:
- There are little to no up-front cost;
- The lawyer shares your risk;
- The lawyer is incentivized to produce high quality work;
- You gain access to top-quality legal representation, regardless of your financial situation; and
- Attorneys are more selective about which cases they take, meaning if they take your case, they believe there is a higher likelihood of success.
Disadvantages:
- The total fee of the attorney might be more than if you just paid the attorney an hourly rate;
- You may feel pressured to settle early if there is less likelihood of increasing the case’s value at trial; and
- The percentage the attorney keeps is substantial on larger settlements.
Note: Some states (like California or Florida) impose caps on contingency fees in certain types of cases, such as medical malpractice. These are less common in the personal injury world, but it may be appropriate to ask your lawyer if any caps apply to your situation.
Case Costs: The Not-So-Hidden Fees
One more thing to watch for is that even with contingency fee arrangements, many attorneys require clients to cover up front ‘case costs’, which are out-of-pocket expenses like filing fees, depositions, or expert witnesses. These can add up fast and can sometimes exceed thousands of dollars. Make sure you understand whether you’ll be expected to pay for these costs as they come up, or whether the attorney will advance them and deduct them from your share of the recovery later. This can significantly affect your financial burden in different stages of the case.
Common Case Costs Include:
- Filing Fees ($200 – $500)
- Medical Record Retrieval ($50 – $500)
- Expert Witness Fees ($1,500 – $15,000)
- Deposition Costs ($500 – $2,500 per deposition)
- Mediation Fees ($1,000 – $3,000)
- Trial Exhibits ($500 – $5,000)
These are separate from the lawyer’s fee and are incurred in nearly every lawsuit. Even if your attorney only gets paid if you win, you may still be responsible for reimbursing these costs if they lose. In most cases, law firms will cover these expenses and deduct them from your share of the recovery at the end. It is critical to understand how your attorney handles these costs, because they can and do add up quickly.
Case costs often result in an unfortunate surprise: you might win your case and still feel underwhelmed by your final payout or even potentially owe money. Why? Because case costs and fees come out first. That’s why understanding how fees and expenses are handled is just as important as knowing your odds of winning.
If the cases costs and your attorney’s fee exceeds your recovery, then you may end up having to pay out of pocket.
Understanding the Contingency Contract
Make sure you read and understand the entire contingency fee agreement before you sign it. While the entire contract is important, pay special attention to the following:
- Fee Percentages at different stages of the litigation (pre-litigation, after filing suit, trial, appeal, etc.);
- How are case costs handled (are the case costs advanced by the firm or covered by you?);
- Whether the attorney’s percentage is calculated before or after the costs are deducted; and
- Termination clauses (what happens if you fire the attorney and switch to a different attorney?).
Hourly Lawyers (Rare for Injury Cases)
With an hourly fee, you pay the lawyer as they work – win or lose. You may need to put down a large retainer and be billed monthly. The hourly rate varies widely from state to state, but it’s typically between $300 and $1,000 per hour, depending on the attorney’s reputation and experience.
Pros:
- You may be more involved and have more say in the day-to-day strategy since you’re actively paying for each task;
- Potentially cheaper for short, simple matters; and
- You keep 100% of any settlement or judgment because you’ve paid the attorney and the case costs as time goes on.
Cons:
- You pay up front;
- You risk paying the attorney and still walking away with nothing if you lose;
- You are expected to pay case costs and the total costs are unpredictable and can easily exceed expected amounts; and
- You need substantial financial resources to hire and maintain legal representation.
A quick example: if a case drags on for a year and your attorney bills $450/hour, you could easily end up paying $50,000–$100,000 in legal fees even if you lose. That’s why hourly arrangements are rare in injury cases unless liability and damages are very clear upfront.
Hybrid Fee Arrangements
Some attorneys offer hybrid arrangements, such as:
- Reduced hourly rate plus smaller contingency: For example, $150/hour plus 15% of recovery
- Sliding scale contingency: The percentage decreases as the settlement amount increases
- Flat fees for specific phases: Fixed amounts for pre-litigation, discovery, mediation, etc.
These arrangements are less common but might be worth discussing if you have concerns about standard contingency fees.
Ask These Questions Before You Sign Anything
- What percentage will you take if we settle? If we go to trial? If we appeal?
- Who pays for case costs? What typical costs might arise in my case?
- Are costs deducted before or after your percentage is calculated?
- Can you provide an estimate of what my take-home amount might be under different scenarios?
- What happens if I terminate our agreement before the case concludes?
Don’t be shy about asking these questions. A trustworthy lawyer won’t hesitate to answer them clearly and in writing. If the attorney is dodgy about these questions, that may be a serious red flag.
Bottom Line
Contingency fees are usually the better option unless you’re in the rare situation where you’re extremely likely to recover a large amount early and can afford to pay out of pocket. Make sure you talk openly with the attorneys you are considering hiring. Just make sure you:
- Understand the percentage structure;
- Know what happens if the case goes to trial or appeal;
- Not being overcharged without justification;
- Are clear about how case costs are handled and who pays them; and
- Get everything in writing before proceeding.
Whichever route you go, make sure to get the fee agreement in writing, ask for clarification on costs and expenses.
And of course, if you want help finding a trustworthy attorney, I’m more than happy to discuss things with you and help walk you through the process.
