Car accidents are a leading cause of injuries and death in California. Following a car accident, people may experience trauma or pain and not know where to turn. Studies show that nearly half of those surveyed said they decided to consult an attorney after a car accident because a family member, friend, or doctor suggested they do so. They were also motivated to obtain the highest possible settlement.
Unless they have experience with the legal system, they might not know how an attorney charges or what to expect. Many accident victims dealing with rising medical bills, unpaid regular bills, and lost income, are understandably concerned about the cost of hiring a lawyer to represent them in a car accident case.
California law prohibits an attorney from charging unconscionable fees for legal representation. This law means that legal fees cannot be unreasonable or outrageous. There is no set amount a lawyer can charge for representing a client in a car accident claim. However, there are specific common fee structures that most personal injury lawyers follow.
Before choosing a lawyer, it helps to understand the basics of these fee arrangements. This information allows you to ask the right questions and make well-informed decisions. Once you narrow down your possible choices, hiring an attorney begins with a consultation.
The first consultation
Many attorneys offer free consultations and paid consultations, depending on your needs. Typically, the attorney may charge a small fee if you have a legal question without further pursuing the matter. Otherwise, if the purpose of the consultation is to help you decide if you want to hire the attorney and for the attorney to decide if they can help you with your legal issue, the consultation is likely free. Be sure to ask in advance.
Most personal injury lawyers offer a free consultation, which is a critical first step in moving forward with your claim. The purpose of this consultation is to help you and the lawyer decide if you want to enter into an attorney-client relationship. During the consultation, you can briefly review your situation. Then the lawyer can provide you with essential legal advice, assess your chances of recovery and discuss the steps to move forward with your claim. One of the basic questions you should ask is how the attorney charges fees for representation.
Contingency fee agreements
Car accident cases fall within personal injury law, which means that if you suffered an injury in an accident that was not your fault, then the at-fault person or entity may owe you compensation for your injuries.
Most plaintiff personal injury law firms charge for accident cases on a contingency fee basis. This process means that the attorney’s fee is contingent upon your recovery. Your attorney does not charge you a fee unless you receive compensation. The attorney’s fee comes from the judgment or settlement proceeds.
The vast majority of personal injury cases settle out of court. According to the U.S. Department of Justice’s Bureau of Justice Statistics, the percentage of personal injury cases that go to trial in the U.S. is around 5 percent, meaning that about 95 percent of cases settle before trial. Therefore, if your case settles out of court, you pay the contingency fee and expenses out of the settlement proceeds, and the settlement agreement releases the liable party from future financial responsibility.
After payment, the plaintiff receives a check for the net amount. If the case goes to trial and the judge or jury awards money, the attorney collects a set percentage of the total damages.
Once the client decides to retain a lawyer, the attorney prepares a written contingency fee agreement. This document covers all the terms of a contingency fee agreement. The client should always read the agreement carefully and ask questions before signing.
Benefits of a contingency fee agreement
Some benefits of a contingency fee agreement include:
- The client has legal representation without paying upfront legal fees or bills based on hourly charges.
- The incentive for attorneys to fight for the largest possible compensation, not only for the client’s sake but because the more money the client receives, the more the attorney receives.
- The law firm has the resources to cover expenses such as copying and expert witnesses, reducing the immediate financial stress on the client.
Average contingency fees for car accident lawyers
Contingency fees for car accident lawyers vary. They’re often a percentage rather than a fixed rate. Therefore, you won’t owe more attorney fees than your recovered compensation. The average contingency agreement in California sets legal fees between 33.33 and 40 percent of the total funds recovered.
Medical malpractice cases are an exception to this rate. For these cases, the California Business and Professions Code establishes the maximum percentages that the attorney can charge. Attorneys recover contingency fees off the top of the gross settlement amount. The lawyer will also deduct any expenses or costs advanced by the law firm from the gross settlement.
Fees deducted from your settlement
When the case concludes, the attorney typically prepares a settlement disbursement sheet, which sets forth the total amount of the recovery. The disbursement sheet lists any deductions, including the attorney’s fee, costs, medical bills, and lien amounts.
Costs and fees deducted might include:
- Court and filing fees
- Process servers for summons and subpoenas
- Charges in connection to obtaining medical records, police reports, employment records, and other documents
- Medical liens (a guarantee that the settlement amount will cover unpaid treatment from a medical provider)
- Investigation fees
- Fees for expert witnesses
- Trial exhibits
Other types of fee arrangements
Retainer plus contingency
In a retainer plus contingency agreement, the client pays the lawyer a retainer upfront. This fee may be anywhere from several hundred to several thousand dollars. The attorney also receives an agreed-upon percentage as a contingency fee if the client wins.
A retainer means that the client pays the lawyer in advance for representation in a legal matter. An attorney generally uses retainers when they expect to spend a certain amount of time on a case and want to ensure payment or when the client wants to use an attorney for ongoing legal services.
Lawyers generally use retainer agreements with hourly fee agreements. The lawyer estimates the amount of work necessary. Then they keep track of their work time, such as preparing legal documents or appearing in court. Finally, they deduct their hourly rate from the retainer fee. The retainer may be paid in full or in installments by agreement between the parties.
With an hourly fee, the attorney gets paid for their work according to a set hourly rate, whether or not the case is successful. Hourly rates range widely between $100 and $400 or more. The average in California is approximately $308, the third-highest in the U.S. This fee is based on the location, type of law firm, and the attorney’s skill and experience. In addition, some firms charge different rates for different types of work, such as tasks performed by paralegals or other staff.
Lawyers may charge flat or fixed fees for services such as a simple, uncontested divorce or a will in a straightforward estate. The fee reflects the amount and difficulty of the work involved on average for similar work. Car accident lawyers rarely use this type of billing unless it is for a limited, specific task.
A statutory fee is a payment set and approved by a court, state, or federal statute. These fees are common in matters dealing with probate or bankruptcy, although they can also appear in other types of proceedings. Fee-shifting refers to the practice of requiring the losing party in a legal action to pay for the legal bills of the winning party.
In some cases, one lawyer refers a client to another lawyer. This occurrence usually happens when the subject matter of the case is outside the lawyer’s area of expertise. When referral happens, the lawyer who receives the case may pay a referral fee to the first lawyer. The client must consent to the referral fee in writing, and both lawyers must sign the contract.
The California rule for referral fees permits referral compensation without requiring the referring lawyer’s continued involvement in the matter.
What should a fee agreement include?
When hiring a lawyer, you will typically enter into a written fee agreement with the lawyer. The client should read the agreement, go over it with the lawyer, and not sign unless they fully understand the terms. If you have a concern that the fee agreement doesn’t address, ask to include it. Although lawyer fees can differ based on various factors, they must make all legal fees reasonable. If a fee dispute arises, contact the California Bar Association.
The key points of a fee agreement include how the lawyer will charge and how much. For example, if the lawyer is charging on an hourly basis, the agreement should disclose the hourly rate, billing practices, and minimum billing increments, if any. The agreement should set forth the fee arrangement in clear, understandable terms.
Fee agreements may also cover other aspects of the attorney-client relationship, such as:
- When and how the fees accrue
- What portion might be refundable and under what conditions
- The circumstances under which another lawyer might substitute for your original lawyer
- Anticipated costs and office expenses, including court and filing fees
- Frequency the law firm submits bills;
- How the lawyer itemizes bills;
- The threshold for expenses or legal fees that reach a certain amount
- The firm’s policy regarding file retention; and
- The process that concludes the client’s legal matter and the lawyer’s representation of the client.
Understanding the importance of having a lawyer
Car accident victims often worry about the cost of hiring a lawyer. However, you should not delay consulting a lawyer because of your money concerns. When you speak with an attorney, discuss your financial situation, and together you can work out an acceptable arrangement for both of you.
You must trust and feel comfortable with the lawyer you choose. Never be afraid to ask questions about the fees and expenses associated with your case.
If a car accident injured you, your primary focus should be your recovery. Your attorney can handle the burdens of filing claims, dealing with the insurance company, and negotiating the settlement you deserve.
If you anticipate hiring a lawyer, make sure you are comfortable with the person you choose. Never hesitate to ask any questions about the fees involved. For more information or a free consultation, reach out to a personal injury lawyer near you.