Some situations in life require the help of a lawyer. Divorce, personal injury, and bankruptcy all require legal services. You even need a lawyer to write a will or make legal documents for a business.
Unfortunately, stereotypes from entertainment and disreputable lawyers make all attorneys look like they charge you a fortune upfront. Because of this, payment is the biggest source of apprehension people have when looking for legal counsel. Fear of payment keeps too many people from fighting for their compensation.
So, how do lawyers get paid for a personal injury case? Some lawyers charge consultation fees before they even look at your claim. Other lawyers charge an hourly rate to work for you, and you pay as you go. Some lawyers in Florida even charge you a flat fee based on the expected number of hours worked. Still, others don’t require payment upfront at all.
Contingent Fee Arrangements
How do lawyers get paid if they don’t require upfront payment?
Some lawyers use contingent fee arrangements to get paid for their work. No matter their legal focus, most lawyers know how to work with a fee agreement. Lawyers who work on criminal trials will not use a contingent fee arrangement because criminal trials work differently than civil litigations.
A contingent fee arrangement is an agreement between you and your lawyer on their percentage of the settlement. Before they work on your case, you and your lawyer will decide on the portion of the compensation they receive. Usually, you agree upon this percentage—about 30% to 40%—after consultation and before the lawyer works on your case.
Benefits of Contingent Fee Arrangements
It’s common for some lawyers to use a fee agreement to get paid. There are many different advantages to fee agreements that some may not know. A contingent fee arrangement is how most personal injury lawyers receive payment
You Are Not Responsible for Payment up Front
When you agree to the price at the beginning of a settlement, you aren’t responsible for paying the lawyer until you win the case. Your lawyer takes their percentage when they finish all the work and when you win your settlement. However, you are still responsible for other litigation costs, such as filing, printing, and processing fees.
Your Lawyer Will Work Harder for Your Case
Your lawyer will only get paid if your claim wins. This agreement is an excellent incentive for them to not only put in good work but to work quickly and not waste time.
It’s like the difference between employees paid by the hour and those paid by the job. One will take as much time as possible, while the latter will do their best work faster.
Additionally, they’ll do better work because, with your claim, their pay check is at stake. If the lawyers lose, they don’t get paid.
The Attorney Believes in Your Claim
If your attorney accepts your case without upfront payment, they believe you have a good claim. They aren’t going to put in work without a charge up front if they don’t think you have a chance of winning. Since they want to get paid, they will also be rooting for you as much as you rely on them.
It Evens the Odds Between Wealthy and Poor Clients
Legal battles become wars of attrition when you pay your legal counsel hourly. All you are doing is waiting out the resources of your opponent. More prominent companies or wealthy opponents have much more resources than most, so they win most of those cases.
In a personal injury case, you most likely won’t have the resources to pay hourly since you probably can’t work full-time or even at all. Since you pay at the end of litigation, your wealthy opponent won’t have the financial strength in your case, and you get your compensation.
Disadvantages of Contingent Fee Arrangements
Even though fee agreements are how most personal injury lawyers do get paid, they have some drawbacks. They aren’t severe, particularly compared to the benefits, but it’s crucial to have all the information before deciding.
Your Case Must Have a Good Chance of Success
A lawyer may not take a case with a contingent fee arrangement if there is too much risk without a chance of an equivalent reward. You must have a case that is far more likely to win than lose. If the possibility of loss is too great, your lawyers may charge you upfront or refuse the case.
You Will Lose a Portion of Your Settlement
Eventually, you will have to pay your attorney. Since their fee is a portion of your winnings, you lose that portion, no matter the dollar amount. Your lawyer will get the agreed-upon percentage of your settlement, which is usually 30 to 40%.
It Doesn’t Cover All of Your Costs
A contingency fee doesn’t cover any upfront costs. Some lawyers may still charge a consultation fee in addition to their contingency fee. In addition, you have various costs to pursuing a personal injury claim that not everyone knows.
There are filing costs, printing fees, processing fees, and other costs that will pop up. They aren’t too expensive, but they still cost money. Ask your attorney for an estimate and make sure you can pay those before you begin.
The IRS Taxes You on the Full Settlement Amount
When you get paid, the government always gets its cut. Unfortunately, they don’t consider your payment to be after your legal counsel takes their cut. You pay taxes on the total settlement amount: the amount you earned before you pay your lawyers.
Pam Olsen Law Firm | Ocala’s Personal Injury Lawyer
At Pam Olsen Law, we don’t believe in making you pay before you get a settlement.
Attorney Olsen happily represents the people of Ocala and nearby areas for personal injury claims. She offers free initial consultations and doesn’t charge you a dime until the case is won. Call today at (352) 671-9777 to schedule your free consultation and start your personal injury suit. Or if you prefer, you can complete this simple contact form and she will be in touch right away.