Legally reviewed by:
Daniel Smith August 9, 2024
Car Accidents can be painful, chaotic, and stressful. If you have been injured or suffered from property damage, consider filing a lawsuit and seeking compensation.
The big question arises about engaging a lawyer, which might lead you to wonder how much a car accident lawyer gets from a car accident settlement. Understanding how attorneys get their compensation from car accident settlements is essential.
Generally, whenever you go to a lawyer to engage them for their services for any legal matter you want to pursue, you have to pay your lawyer on an hourly basis.
However, one of the most convenient alternatives to this arrangement is to engage a lawyer on a contingency fee, which would relieve you from paying your lawyer their fee upfront.
The contingency fee arrangement aligns with the client's and the lawyer's interests, providing access to justice and transparency.
How Does the Contingency Fee Work?
When agreeing to a contingency fee arrangement, your lawyer agrees that no professional fee will be paid to him for his services until a final judgment is pronounced by the court or a settlement is reached.
You must mutually agree to a certain percentage of the final award, which would be paid to your lawyer. It is not that your lawyer does not get paid; they are simply paid differently than the usual course of action.
In a contingency fee arrangement, your lawyer assumes a risk. If you don’t receive any monetary award from your claim, your lawyer is not entitled to any legal fee whatsoever. You may have heard attorney ads about this payment arrangement touting the “We don’t get paid unless you win” approach.
Average Contingency Fee for Lawyers in Car Accident Settlements
Lawyers typically agree to 30 to 40 percent of the total reward awarded to a litigant in a car accident matter. This is decided beforehand, and the lawyer will take this percentage out of the settlement if you win the case.
However, this is not an absolute figure and can vary from case to case based on several factors.
The number one factor is the complexity of the case. The contingency fee percentage may be in the lower bracket in less complicated case types that the attorney has previously handled.
However, more complicated cases may warrant a higher contingency fee amount. The reason is that the more complicated a case is, the more time and resources an attorney will dedicate to it.
It makes sense that an attorney would want a higher percentage of the winnings if the case involves substantially more labor than a run-of-the-mill personal injury case.
Different states have varying laws regarding the reasonableness of attorney fees, particularly in contingency fee arrangements.
In Florida, the contingency fee is capped depending on the overall settlement amount. Similarly, Georgia has specific regulations under Rule 1.5 of the Georgia Rules of Professional Conduct, which require that contingency fees be reasonable and clearly communicated to the client.
In North Carolina, the Rules of Professional Conduct also mandate that fees be reasonable and that factors like the time and labor required and the results obtained be considered. Clients and attorneys must understand these state-specific laws to ensure the agreed-upon fees are fair and comply with local regulations.
Factors That Affect How Much a Lawyer Earns From A Car Accident Settlement
Complexity
Increased complexity can mean an increase in the contingency percentage. So, what makes an accident or personal injury case complex?
Class Action or Mass Tort Suits
If multiple parties are involved, cases, such as class action suits or mass tort cases, become more complex. In class action suits, one of the parties is a group of people represented collectively by a member or members of that court.
In mass tort cases, multiple lawsuits are filed against the same defendant or defendants alleging the same issues. This significantly increases the complexity of the lawsuit, often making it a multi-district litigation.
Disputed Liability
Determining liability becomes difficult in multiparty car accidents. Joint or severed liability is involved, leading to disputed liability, making the case very complex.
Severity of injuries
When any car accident renders someone with injuries so complex that it is not easy to diagnose the extent of damage that has been done or where the injuries are of a very complex nature.
Duration of the Legal Process
Settlement pre-trial or pre-suit cases often involve lower contingency fees because they primarily require negotiating with insurance companies.
These cases generally avoid the complexities and expenses of a full trial, such as extensive evidence gathering, deposition taking, and substantial trial fees.
However, if a case proceeds to trial, the contingency fee may increase due to the additional costs associated with litigation. These include court fees, depositions, and the discovery process, significantly raising overall costs.
Settlements are often reached within 3 to 6 months for more straightforward cases without complex issues. More complicated matters may take 6 to 12 months, while cases involving highly complex controversies could extend negotiations up to 2 years.
Litigation is an extensive process that will increase the time it takes to receive compensation for your damages.
Ordinary Expenses Incurred During Litigation
Expert Witness Fees
An expert witness reviews your entire case, analyses all angles, and then prepares a report based on their expert advice. This is one of the most significant expenses in an accident or personal injury case and significantly affects how much a lawyer will earn from the settlement.
Experts charge a significant amount by the hour to prepare their reports. Expert witnesses are usually required in cases with severe or complex medical injuries or cases with disputed liability. They affect the overall settlement amount because their testimony can distinguish between large verdicts and walking away with nothing.
Court Costs
Court costs are another everyday fee associated with litigation. Many firms pay these costs upfront on behalf of the client during a contingency fee arrangement. The court costs include filing fees, deposition costs, daily juror fees, etc.
While firms usually cover these costs upfront, it will usually be up to the client to pay them apart from the amount the attorney receives from the contingency.
Discovery Costs
Discovery is obtaining and exchanging information about the case between the involved parties. Sometimes, only straightforward documents like medical records and police reports are required.
In many cases, a special investigation is prudent, which requires hiring private investigators who charge by the hour. Discovery can take significant time and effort on the attorney’s part.
Other Factors that Impact Costs
The Lawyer's Experience and Reputation
An attorney's track record of success and experience in the field play a pivotal role in ensuring that the lawyer secures a larger settlement.
However, regardless of the final settlement amount, be prepared to pay your lawyer a more significant percentage of the final settlement amount if he/she has a stellar reputation in the legal profession for securing successful outcomes for their clients.
Specialization in Car Accident Cases
Undoubtedly, your lawyer's experience in representing clients involved in car accidents will significantly affect the percentage of the contingent fee that they agree to when you engage them.
Suppose your lawyer’s niche of practice includes car accident cases. In that case, they will likely agree to a higher contingent fee than a lawyer who is not well-known for handling cases involving car accidents.
Size of the Settlement or Award
The size of the settlement or award can be a factor in how much your lawyer earns from a car accident settlement. This also depends on the state. In Florida, if the settlement amount reaches up to 1 million dollars, then the contingency percentage is automatically reduced to one-third, which is 33.3%.
Remember, contingency fees are flexible. You can also negotiate the contingency fee to reduce it to a certain amount depending on the total amount received. For example, if you receive less than $20,000, the percentage will be 25%; anything above that, they can charge 33.3%.
State Laws and Regulations
Many states in the USA have a sliding scale or a cap on the contingency fee. In New Jersey, there are specific limits on the amount an attorney can charge in contingency fees for damages due to another party's wrongful actions, such as personal injury or product liability claims.
These caps are designed to protect clients from excessively high legal fees. The contingency fee structure in New Jersey is as follows: an attorney can charge up to 33.33% on the first $750,000 recovered, 30% on the next $750,000, 25% on the next $750,000, and 20% on the next $750,000.
The attorney must apply to the court for a reasonable fee for any amount recovered beyond these thresholds.
Additionally, if the recovery is for a client who was a minor or mentally incapacitated at the time of the agreement, the attorney's fee cannot exceed 25% if the settlement is reached before certain trial stages.
This structure ensures that clients are reasonably charged for attorney services and are not taken advantage of.
Competition Among Law Firms
Competition amongst law firms can also ensure they charge a competent contingency fee. Some firms trying to build a name in car accident and personal injury cases might offer you a reduced contingency fee.
However, most of them will keep their terms highly competitive and according to the generally accepted practice, for example, charging 33.3% for pre-trial/settlement cases.
The Risk Level of the Case
The contingency fee will also depend on the risk level of the case. For example, if a case is highly complex, the fee will be higher. This is fair because the firm and the lawyer are willing to take the risk on behalf of the client and bear all costs upfront.
Client Fee Negotiation
Many firms and lawyers will negotiate the contingency fee on the client's demand. However, it is usually left to the client to haggle for advantageous terms. You should keep this in mind while drawing up an agreement with your lawyer. Being transparent with your lawyer during fee discussions is the best way to ensure you can reach an agreement.
Type of Damages Available
The type of damages available will also affect how much your lawyer earns from an accident settlement. The more damages available, the more willing an attorney may be to take your case for a lower percentage.
Damages can be economic, such as property damage, medical bills, legal fees, vehicle rental fees, and loss of wages. Non-economic damages are caused mainly by pain, suffering, emotional distress, trauma, and anguish.
Then, punitive damages are awarded in cases where intentional misconduct and negligence are proven. These act as a deterrent and sometimes exceed the economic damages as well.
For example, if it is proven that the defendant drove 60 miles over the speed limit, and that led to the car accident, he will most likely have to pay double in punitive damages as well as economic damages to ensure that he won't repeat his negligent behavior in the future.
Knowing how and why your attorney gets paid is crucial. Although clients understandably look for the best bargain, ensuring your lawyer is excited about taking your case is vital. Knowing whether your case is valuable for an attorney can give you leverage in fee negotiations.
The Fee Deduction Process
Since the general rule is that lawyers will get paid through a contingent fee, this is how the fee is deducted from the settlement:
- The plaintiff has been awarded a reward/settlement during pre-trial negotiations or after a trial. In most cases, the check is sent to the lawyer's office.
- The expenses are deducted. This includes court fees and any other expenses the lawyer/firm incurred during the case.
- After this, the lawyers take their agreed-upon percentage from the settlement amount, and the rest is returned to the client.
For example, if a 100,000-dollar settlement were awarded, the lawyer would deduct the expenses first (e.g., 5000 dollars) and then take their percentage (e.g., 33.3% of $95,000), which would be 31,635$. 63,365$ would be returned to the client.
How are Case Expenses Handled?
Case expenses are handled in various ways, depending on your agreement. This should tell you how crucial it is to have a crystal-clear agreement.
In some cases, the expenses are reimbursed before fee collection, a standard procedure that most lawyers follow. So, for example, if the total settlement is $50,000 and case expenses are $15,000, those are deducted from the total first. Then, the lawyer fee is calculated based on the agreed percentage.
In the alternate scenario, expenses are deducted after the fee calculation. Whether the costs should be deducted before or after fee calculation is entirely up to you and your attorney; however, the standard procedure is to do it before fee collection.
The Importance of a Clear Agreement
It is vital to have a transparent fee agreement with all clauses drawn up to be crystal clear. This avoids any confusion between you and the lawyer and avoids misunderstandings in the future. If there is something you wish to add to the agreement or something that you want to omit, then you should be able to speak with your lawyer comfortably about it.
You must also be comfortable asking your lawyer to explain clauses you do not understand in an agreement. A good lawyer will always have your best interest at heart and won’t draw up ambiguous agreements.
Your lawyer should be transparent about all the expenses incurred during the case and keep you updated about them. They should also be transparent about the fee structure and how much you will realistically get after a settlement. This will ensure you make an informed decision.
Recap of Contingency Fees
How Contingency Fees Work
It is extremely important to understand how contingency fees work in car accidents. This is because they are the generally accepted way of paying a lawyer in personal injury and accident cases.
Since the fee is contingent on the lawyer winning the case and getting a settlement, there needs to be a percentage decided between the attorney and client that will go to the lawyer after the settlement has been awarded.
This percentage will depend on which step the case is at (settlement, trial, or appeal), with the former having the lowest percentage. Other factors will include the complexity of the case, like disputed liability, multiple parties being involved, and the severity of the injuries. The duration of the legal process, expenses incurred, the lawyer's experience, state laws and regulations, the risk level of the case, and the client’s negotiation skills will all play a vital role.
Before hiring a lawyer for a personal injury or accident case, it is extremely important to understand the fee structure.
How much will go to a lawyer if a certain amount is awarded, and whether the percentage will increase or decrease if the amount is more considerable (sliding scale)? Whether the expenses will be deducted before or after the lawyer’s share is calculated, etc.
Aligning Interests
A contingency fee aligns the lawyer's interest with clients as it ensures access to justice. It provides legal representation to those who might be highly vulnerable but don’t have the financial means to pay for legal fees.
There are so many challenges after an accident, like medical fees, lost wages, mental stress, etc. A contingency fee means clients can pursue their legal rights and seek compensation without worrying about expenses.
The risk is equally shared between the attorney and client because the attorney won’t receive any fee if they lose.
This means that lawyers will be even more careful in evaluating and analyzing these cases. They will guide you in the best way possible, which in turn will benefit them, and a settlement will mean they will get their fee as well.
With a contingency fee, there is a strong incentive for the lawyer to achieve a successful outcome in your case. This will motivate them to get the maximum amount, especially in cases where a reduced contingency fee is awarded if less than a certain amount is awarded, for example, 20% on amounts less than $30,000 and 25% on amounts more than $30,000.
Get Connected to a Skilled Car Accident Attorney
It is imperative to have the right lawyer in personal injury and accident cases who will have your best interest at heart. This is why you should seek the assistance of The Accident Helpers, who will help you find the right lawyer with a fair fee arrangement.
Post-accident situations can be highly stressful and traumatizing; contacting The Accident Helpers will ensure you get in touch with the right lawyer. You will not have to worry about finding the proper legal representation while going through emotional and physical turmoil.
The Accident helpers will do the job for you and help you find the right lawyer to assist you with your car accident case. Contact The Accident Helpers today to make an informed decision when seeking legal representation.
