One of the biggest concerns people typically have after being injured in an accident is if they can afford to hire a qualified personal injury attorney. Medical bills are piling up, you might be missing work (and wages), and the last thing you want to worry about are expensive legal fees cutting into an already strained budget.
The good news? Many personal injury attorneys in North Carolina, including Flexner Houser Injury Law, work on what is called a contingency fee basis. This payment structure is designed to make quality legal representation accessible to everyone, regardless of their financial situation.
But what exactly is a contingency fee and how does it work? Understanding this can help you make an informed decision about your legal representation and provide peace of mind during what is, most likely, already a very stressful time.
What is a Contingency Fee?
A contingency fee is an arrangement regarding payment with your attorney where they only get paid if they successfully recover money for you through a settlement or court judgment. The simplest way to describe it is that your lawyer’s fee is “contingent” upon them winning your case or securing a favorable settlement.
Under this type of arrangement, you don’t pay any attorney fees upfront, and you won’t owe legal fees if your case is unsuccessful. The attorney takes on the financial risk of working your case, investing their time, resources, and expertise with the understanding they will only be compensated if they deliver results.
This is a particularly common fee structure in personal injury cases, including auto accidents, wrongful death lawsuits, slip and fall incidents, and medical malpractice claims. It allows an injured victim access to an experienced attorney without having to pay hundreds or thousands of dollars in advance.
How Contingency Fees Typically Work in Personal Injury Cases
Let’s take a look at how the contingency fee process typically works from initially meeting an attorney to the close of your case:
- Initial Consultation: Most personal injury attorneys offer free initial consultations, allowing them to evaluate your case and explain their fee structure. This is the meeting where you will discuss their contingency fee specifics, including what it covers.
- Signing the Agreement: If you decide to work together, the lawyer will have you sign a contingency fee agreement that outlines the fee structure including the percentage your attorney will receive, what costs are covered, and what happens in various scenarios.
- Work on Your Case: Your attorney will investigate your claim, handle all communications with involved parties, gather evidence, and negotiate on your behalf. This is all done without charging you an hourly fee.
- Recovery: When your attorney successfully settles your claim, or wins at trial, they will deduct their contingency fee percentage from your total recovery before you receive the remaining amount.
- No Recovery, No Fee: If your case ends unsuccessfully and no money is recovered, you typically won’t owe attorney fees. You may still be responsible for certain expenses related to your case, depending on your signed agreement.
What Costs are Covered vs. What You are Responsible for
When discussing contingency arrangements, it is important to differentiate between attorney fees and case expenses.
Attorney Fees (Covered by Contingency): This is the time your lawyer is working on your case, including investigating, negotiating, preparing documents, appearing in court, and communications with you and other parties.
Case Expenses (May be Separate): Depending on your agreement with your attorney, you may be responsible for certain out-of-pocket expenses, such as court filing fees, expert witness fees, retrieval of medical records, investigation expenses, and deposition costs. You may be responsible for these fees upfront, or your attorney may deduct them from your final settlement. Make sure you understand your agreement regarding these expenses prior to signing.
The key is to have a clear, written agreement that clearly outlines which costs are covered by the contingency arrangement and which ones you will be responsible for.
Advantages of Contingent Fee Arrangements
Entering into a contingency fee agreement with your personal injury attorney offers many benefits for clients:
No Upfront Costs: It’s safe to assume that not everyone has thousands of dollars saved up to hire an experienced attorney if they should need one. This levels the playing field between individual injury victims and large insurance companies with nearly unlimited legal resources.
Aligned Interests: Your attorney will only get paid if you win, therefore their interests are directly aligned with yours. While their compensation should not be the driving motivator of your attorney, it does play a role in them achieving the best possible outcomes for your case.
Risk-Free Consultation: You can explore your legal options without out-of-pocket financial expenses. If an attorney does not think your case is strong enough to take on contingency, that gives you important information about the viability of your claim.
Access to Quality Representation: As we’ve mentioned before, contingency fees allow you to hire an experienced attorney when that might otherwise be out of financial reach.
Incentive for Efficiency: When payment is based on the resolution of a case, attorneys have an added incentive to work as efficiently as possible and secure the best settlement for their client, rather than dragging out billable hours.
How to Evaluate a Contingency Fee Agreement
When reviewing a contingency agreement presented by an attorney, it is important to pay attention to several key elements that may significantly impact your case outcome. First, make sure you understand the exact fee percentage and if it changes should the case go to trial or appeal. It is not uncommon for an attorney to charge a higher percentage for cases that require litigation. You should also clearly understand the expenses that you are responsible for, no matter the outcome of your case, and when they need to be paid. Case costs can add up quickly in complex personal injury matters.
Also, make sure you are aware of the fee calculation method since some agreements calculate the fee before deducting expenses while others calculate it after – and the difference between the two can significantly impact your final recovery amount. Your agreement should also include information on what happens in various recovery scenarios, including settlement, trial victory, appeal, or partial recovery situations. Termination clauses that explain what happens if you decide to change attorneys or if the attorney-client relationship ends for any reason should be understood prior to signing as well.
Most importantly, the agreement should be written in plain English that you can understand, not legal jargon that may be confusing. If you have any questions at all, don’t hesitate to ask them – a reputable attorney will happily explain every aspect of the fee arrangement and ensure you are comfortable with what is included before moving forward.
Questions to Ask Your Attorney About Their Contingency Fee
Before signing any agreement related to a contingence fee, consider asking the following questions:
- What is your standard contingency fee percentage?
- Does the percentage change if the case goes to trial?
- Do you calculate the fee before or after expenses are deducted?
- What expenses am I responsible for outside of this fee and when are they paid?
- What happens if we need to recover money from multiple sources?
- What happens to the fee if I am not satisfied and want to switch attorneys?
- How do you communicate about expenses I will be responsible for?
Getting a clear answer to those questions, and any others that you may have upfront can prevent misunderstandings in the future as well as ensure your comfort with the arrangement.
Other Payment Methods
When it comes to understanding why a contingency fee agreement is so popular in personal injury cases, it can help to compare them to other fee structures attorneys use.
- Hourly Billing: If you’ve watched any type of legal drama on television, you’ve probably heard them talking about hourly rates as it is a very traditional way attorneys bill for their services. This type of payment method can quickly become expensive when it comes to personal injury cases, especially those that are more complex in nature and may take months, or even years, to resolve. Hourly rates for experienced personal injury attorneys often range from $300-$600 per hour.
- Flat Fee: In some instances an attorney may charge a flat fee for their services. This is uncommon in personal injury cases due to their unpredictable nature and how much they may vary in complexity.
- Retainer Plus Hourly: Some attorneys require an upfront retainer plus an ongoing hourly charge. This may be financially challenging for injury victims already facing medical bills and lost wages.
For personal injury cases, contingency fees remain the most accessible and practical option for most clients.
North Carolina Rules on Contingency Fees
North Carolina has specific rules governing contingency fee arrangements to protect legal clients and ensure fair treatment for all. First, all contingency fee arrangements must be in writing and must be signed by the client. The fee must also be reasonable and while there are no statutory maximums for personal injury cases, fees are subject to review for reasonableness.
The agreement must also state how the fee is calculated and include how expenses affect the calculation. The client must also be given a copy of the signed agreement for their records. If your case reaches a settlement, your attorney must provide, in writing, a detailed statement showing exactly how that money was distributed among attorney fees, expenses, and your final recovery.
These comprehensive rules ensure that North Carolina clients are protected and that contingency fee arrangements are fair and transparent.
Choose Flexner Houser Injury Law for Your Personal Injury Case: We Don’t Get Paid Until You Do!
Understanding how contingency fees work is just the first step in protecting your rights after an injury. The most important decision you’ll make is choosing the right attorney to represent your interests.
At Flexner Houser Injury Law, we’ve been helping North Carolina injury victims for over 25 years, typically working on a contingency fee basis. We believe that everyone deserves access to experienced, dedicated legal representation, regardless of their financial situation.
It’s our goal for you to recover as much as possible so our fee is justified. A discussion of lawyer’s fees should always be a part of your initial FREE consultation.
Read More:
