When pursuing a personal injury claim, one of the first questions you may have is, “What percentage do most personal injury lawyers take?” People require the services of personal injury lawyers every day. However, the thought of paying expensive legal fees can be daunting. At Gelb & Gelb, we believe that high legal fees should not deter or hinder obtaining effective legal representation. Most personal injury lawyers work on a contingency fee basis. This means we only get paid if we win or settle your case. However, the percentage we receive as a legal fee depends on the method by which we resolve your case.
The rationale behind the contingency fee is it allows injury victims to return to normalcy without having to pay exorbitant legal costs upfront. Moreover, a contingency fee is always proportionate to the value of your case. Imagine that you are in a terrible accident. Whether it is a car accident, truck accident, hotel slip and fall, or anything else, the world throws at you. If you are injured due to someone else’s negligence, you are entitled to compensation. Now, suppose that you hire an attorney, pay an expensive retainer upfront, get billed hourly as questions arise, and still lose your case. In this scenario, you have expensive medical costs and potentially an inability to work due to your injuries. Then, without a contingency fee arrangement, you would still have to pay legal fees. This is not the case at Gelb & Gelb.
Thus, if you lose, the answer to your question, “What Percentage Do Most Personal Injury Lawyers Take?” is zero.
Understanding Contingency Fee Agreements
Contingency fee agreements are a common payment structure in personal injury cases, allowing clients to secure legal representation without paying upfront fees. Whether we charge a legal fee is contingent on whether we win your case. If we do win your case, there is a legal fee. However, if a personal injury law firm is unsuccessful in resolving your case, there is no fee. Of course, this may vary by firm. The structure offers significant advantages for clients who might not otherwise afford legal representation, as the financial risk of pursuing a case is shifted to the firm. This is because, in addition to the law firm not taking an upfront fee, the firm advances all costs. Litigating and even settling a case can be expensive.
At the least, there can be hundreds of dollars in costs associated with pursuing a personal injury claim. These fees include postage, copies, faxes, obtaining medical records, police reports, deposition costs, etc. While these costs are ultimately reimbursed if there is a recovery, there is risk involved for the injury firm if they are unsuccessful in pursuing your claim. If your lawyer files a lawsuit on your behalf, then the costs can increase substantially. A good personal injury lawyer with your best interest in mind will consider the costs you may be on the hook for if you win against the ultimate recovery you would receive if successful.
Benefits of Contingency Fees for Clients
There are countless benefits of contingency fees for clients. Here, we highlight four of the most significant benefits that may directly affect you in your case.
No Upfront Costs
When you get injured due to someone else’s negligent or intentional conduct, you may have a viable claim against the defendant. However, the vast majority of lawyers charge a retainer. They do this partly to avoid the risk of a client not paying them after their case. This can be an issue, especially if the lawyer is unsuccessful. However, the percentage most personal injury lawyers take if they are unsuccessful is zero.
Risk-Free Legal Representation
This is not to say there is zero risk if you hire a bad attorney. If your lawyer does make a critical mistake in your case, you may lose your right to make a claim for your injuries. This may entitle you to a legal malpractice case against your former attorney. This is something the attorneys at Gelb & Gelb have experience handling. The risk-free aspect refers to the percentage most personal injury lawyers take. That is to say, there is no financial risk.
Aligned Interests
A personal injury law firm takes a portion of the recovery as a charge of legal fee. Thus, the more you get in your pocket after your injury, the more the law firm profits. Having aligned interests is rare in law. While there is an ethical duty to work in your client’s best interest in all fields of law, only personal injury law perfectly aligns and incentivizes lawyers to get as much compensation for their clients as possible. Consider a large law firm with 60 associates billing hourly for a corporation. Or, consider a criminal defense lawyer who bills a client hourly. You may hesitate to ask that lawyer a question because you know it will run up your bill.
Additionally, that lawyer may be overly verbose in answering questions that can be answered more effectively with fewer words. At the worst level, it is possible they could advise you to go to trial when that is not in your best interest merely because they can bill more. While that is a cynical perspective, it is natural when interests are not properly aligned. Meanwhile, a personal injury lawyer wishes to get you as much compensation as possible, as our interests align perfectly with yours. If we believe it is in your best interest to settle, we will suggest that you do that.
Accessible Justice
Perhaps our favorite benefit of the contingency fee arrangement is that anyone can afford access to the best legal representation available for a personal injury. In fields of law, besides personal injury, only the ultra-wealthy can afford the best legal representation available. That is not the case with what most personal injury lawyers charge and is a significant advantage to this system. Instead, it is the merit of your case that attracts the best legal counsel to represent you. Thus, when you ask, “What percentage do most personal injury lawyers take?” you now know that you will pay the percentage on your case regardless of the skill level of your attorney.
Typical Percentage Ranges
A personal injury lawyer typically charges either one-third of the recovery or 40% of the recovery. To be clear, one-third of the recovery is 33.33%. If a number must be rounded down, it will be rounded down because a lawyer should not charge more than what he contracted with his client. Below, we examine when one of these legal fees will apply.
One-Third (33.33%)
This is a common starting point for cases resolved through a settlement without litigation. An attorney will rarely stray from this percentage if they settle your case. Sometimes, a potential client may try to negotiate their legal fee with the attorney. There is an argument to be made that it is unethical for an attorney or law firm to reduce their legal fee to sign a client. When the legal fee is one-third in an ordinary car accident case, the lawyer will probably take one-third, the doctor will take one-third, and the client will take one-third. This is an equitable distribution. An experienced attorney will likely negotiate a reduction of your medical expenses to get you as much compensation as possible. Of course, this equitable distribution can vary significantly.
For example, if you have a lost wage claim as part of your bodily injury claim, you will likely recover more than your medical provider. Additionally, if you are in a more serious accident that involves broken bones, head trauma, paralysis, or really anything beyond soft tissue injuries, your recovery as the plaintiff will also probably be above this equitable distribution. However, this is taken on a case-by-case basis and is best discussed with your attorney.
40%
Once a personal injury lawyer files a lawsuit on your behalf, the fee increases from one-third to 40%. This is for several reasons. Primarily, litigation is both time-consuming and expensive. So, the law firm requires more of a financial investment to put forth a good-faith effort on your case. This may include $10,000s on expert witnesses alone. Beyond that, there are deposition costs, mediation costs, filing fees, and more. Moreover, a larger time investment is necessary for a lawsuit.
20% or 25%
Under 28 U.S. Code § 2678, an attorney must charge a legal fee of either 20% or 25% in specific circumstances. This is most commonly true if the lawsuit is against a government entity.
When Do Lawyers Take a Higher or Lower Percentage?
Very few instances exist where a personal injury lawyer believes you have a case and still refuses to offer counsel. The best example that may arise is when you are in an accident, and there is already a policy limit offer made by the insurance company. For example, suppose in this extreme example that you suffer a debilitating injury with damages in the millions of dollars range. In this hypothetical, the insurance company offers $50,000, which is the maximum allotted under the defendant’s auto insurance policy. If your insurer then offers its own maximum policy offer under your insurance policy, and there is no other reasonable defendant to sue, then nothing more can be done. While we could sue the other driver, there is a high probability that they could not cover a judgment in the millions of dollars.
Sometimes, we can sue the state as an additional defendant. We may argue that a yield sign, a stop sign, or something else should have established liability. In this instance, we would step in. However, absent an additional defendant being liable, our options would be exhausted. We believe it would be unethical to charge a legal fee to organize your settlement when we cannot get you a better settlement amount.
Additional Costs and Fees
Some costs or fees are necessary to litigate or even pursue settlement for your case. You would be responsible for these costs independent of hiring an attorney. Thus, they are not part of a personal injury law firm’s legal fee and are additional costs for which you are ultimately responsible if there is a recovery. Of course, if there is no recovery, there is no fee, and you are not responsible for any costs.
- Court Fees:
- Filing fees for submitting legal documents, such as the initial complaint, motions, or other court-required paperwork.
- Fees for scheduling hearings, depositions, or trials.
- Obtaining Records:
- Healthcare providers charge medical record retrieval fees.
- Costs for acquiring police or accident reports from law enforcement agencies.
- Expert Witness Fees:
- Payments to medical, financial, or accident reconstruction experts who may testify or provide reports to support your case.
- These fees often include their time for preparation, analysis, and court appearances.
- Investigation Costs:
- Hiring private investigators or specialists to gather evidence.
- Conducting background checks or tracking down witnesses.
- Depositions and Transcripts:
- Fees for court reporters to transcribe depositions.
- Travel expenses for witnesses or experts to attend depositions.
- Miscellaneous Expenses:
- Postage, courier fees, or photocopying large volumes of documents.
- Technology costs include creating demonstrative evidence (e.g., animations or visuals for trial).
How to Ensure You Get a Fair Fee Agreement
Almost all personal injury lawyers take the same amount as a legal fee. The best thing to do is inquire with the injury attorney during your consultation and identify the legal fee. While it is likely exactly as described above, that is not always true. Our firm and the American Bar Association (ABA) believe that a contingency fee agreement charging one-third for a settlement and 40% when the firm files suit is a fair fee agreement. This compensates attorneys for the work they put into your case and still gets you, on average, four times more than you would without legal assistance. However, you should be confident in your fee agreement.
Thus, we recommend written documentation stating clearly how much the legal fee is for your case. This should be in the retainer agreement the attorney provides you and asks you to sign. It would be exceedingly rare for this not to be in writing as it is required under the Rules of Professional Conduct. Ensure you have adequate time to review the document and do not rush into signing if you are not comfortable.
Contact Gelb & Gelb, P.C. Today
If you have any questions regarding what percentage most personal injury lawyers take, call our office today for a free consultation at (202) 331-7227. We look forward to speaking with you.
