“You pay nothing unless you win your case!”
You may have heard this before in advertisements for personal injury or accident lawyers. But how is that possible?
The answer is contingency, which helps answer the question of, “How much do accident lawyers charge?” This is especially the case if they don’t ask for any money upfront.
In this blog post, we’ll go over what contingency means, and how you’ll pay your lawyer if you were in an accident.
Read on for more information all about the way contingency works.
What is Contingency?
According to the Cambridge Dictionary, contingency is defined as something that may happen in the future. Often times, this also means something that could cause a problem or mean you’ll need to make arrangements. A disaster plan, for example, could be referred to a contingency plan.
But that’s not what it means in the realm of law. Instead, it means how much of your settlement the lawyer will take if you win.
Contingency is a fancier term for “no-win, no-fee,” meaning that if you win your case, your lawyer will take a cut. If you don’t, they don’t get paid. It’s pretty simple, but it often leaves some clients scratching their heads after a case.
After all, they may think, if they were given $100,000 in a settlement, doesn’t that mean they get $100,000 in their pockets? Well, not exactly.
Let’s discuss how no-win, no-fee or contingency, works so that you’ll understand how your lawyer is getting paid for his or her time.
Contingency: Billable Hours
If you hire a lawyer who is not working on contingency, you’ll likely give him or her a hefty down payment. This is known as a retainer. Your lawyer will then bill their hours against that retainer money.
For example, your lawyer may state that they work for $420 an hour. If they spend 15 minutes on your case, they’ll divide their hourly fee by four, so $105. They’ll bill this against the retainer, and once your retainer has run low, they’ll ask you to replenish it.
Some lawyers who work on contingency will also work on billable hours. But instead of billing against your retainer, they’ll bill against the settlement.
For this example, let’s again say the lawyer works for $420 an hour. For each hour he or she has worked, they’ll bill $420 from your settlement.
If they’ve done $13,000 worth of work on your case and you receive a settlement of $50,000, they’ll take this out of your settlement. They’ll receive the money first and pay themselves $13,000. You’ll then receive $37,000, even though the settlement was $50,000.
It doesn’t mean your lawyer negotiated less or badly, it just means they are billing against the settlement.
How Much Do Accident Lawyers Charge If They’re Charging a Flat Fee on Contingency?
Some lawyers will negotiate a flat fee. This flat fee can be whatever the lawyer likes, but what he or she feels is reasonable compensation for their time on your case.
For instance, a car accident lawyer may be working with you to secure a settlement of $100,000 for your accident. They may state that they’ll represent you for a flat fee of $25,000. If you don’t win, they do not receive anything. But if they do, they’ll subtract $25,000 from your settlement, passing the $75,000 onto you.
Another form of contingency is percentage-based. This means that the lawyer will receive more money the bigger your settlement is. This also means they won’t be charging against your settlement but instead will receive a pre-arranged portion of it. For some lawyers, this may be an incentive to ensure that they negotiate the best settlement for you.
For example, your lawyer may sign an agreement with you for a 15% fee. If you win $80,000, they’ll receive $12,000 for their time. But, that may motivate them to seek more compensation for you.
So if the insurance offers $80,000, they may turn around and ask for $150,000. If you win $150,000, not only do you get more money to take home, but this means they’ll get $22,500 for the same amount of work.
As such, percentage-based contingencies can seem like a win-win.
The only drawback is that some lawyers will increase the percentage if the case is becoming more involved. For example, some lawyers may up their rate from 15% to 30% if your case goes to trial.
As such, they’ll have more work to do, and they may feel they’re entitled to more compensation than originally agreed upon.
Make sure you’re comfortable with the percentage the lawyer will be receiving. And, be sure you understand if and when your lawyer will raise his or her percentage fee so that you’re not left with a nasty surprise.
Lawyers and Contingency Fees
You’ve had the question, “How much do accident lawyers charge?” answered. But how do they decide on cases if they’re always taking a big risk of not getting paid for their work?
It’s pretty simple. Most lawyers will vet their potential clients’ case for merit and validity. If they don’t feel there is a chance of winning, they most likely won’t accept the case.
Or, they may accept it but will ask you to pay upfront for their time. In this case, they’ll likely bill for their hours and ask you to pay a retainer to cover initial costs. Less common in upfront fees are lawyers who ask for you to pay a flat-fee.
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