How do personal injury attorneys get paid
Most personal injury attorneys get paid through a contingency fee. The attorney receives an agreed percentage of the money recovered through a settlement or court judgment. In many agreements, that percentage is about one-third to 40% of the recovery.
If the case produces no recovery, the attorney usually does not collect a legal fee. You may still owe certain case expenses, depending on the written agreement.
Personal Injury Attorney Fees at a Glance
| Payment issue | How it usually works |
|---|---|
| Attorney's fee | A percentage of the settlement or judgment |
| Common percentage | Often about one-third to 40%, but the agreement and state law control |
| When payment occurs | Usually after the case settles or money is collected |
| If you lose | Usually no attorney fee, but case costs may still be owed |
| Case expenses | Filing fees, medical records, expert witnesses, depositions and investigations may be deducted separately |
| Written agreement | Should explain the percentage, expenses and how the final payment is calculated |
What Is a Contingency Fee?
A contingency fee means the attorney is paid only if the client recovers money. Instead of paying by the hour, the client agrees to pay the attorney a percentage of the recovery.
A fee agreement might provide for:
- 33⅓% if the case settles before a lawsuit is filed
- 40% if a lawsuit is filed
- A higher percentage if the case goes to trial or appeal
The percentage depends on the attorney, the case and state law. The American Bar Association states that personal injury attorneys commonly charge a fixed percentage, often between one-third and 40% of the amount recovered.
The agreement should explain whether different percentages apply to a settlement, trial judgment or appeal. It should also state which expenses are deducted and whether those expenses come out before or after the attorney calculates the fee.
Who Pays the Attorney's Fee?
The attorney's fee normally comes from the settlement or judgment. You usually do not make a separate upfront payment for the contingency fee.
Suppose a case settles for $100,000 and the agreement calls for a one-third contingency fee:
- Settlement: $100,000
- Attorney fee: approximately $33,333
- Case expenses: $10,000
- Amount remaining for the client: approximately $56,667
That example calculates the fee from the gross settlement. If the agreement deducts expenses first, the calculation would look like this:
- Settlement: $100,000
- Expenses deducted first: $10,000
- Adjusted amount: $90,000
- One-third attorney fee: $30,000
- Amount remaining for the client: $60,000
The written agreement controls the calculation. The phrase "one-third fee" does not produce the same final amount under every law firm's contract.
What Expenses Are Separate From the Attorney's Fee?
A contingency fee generally covers the attorney's legal work. Other case expenses may come out of the recovery separately.
Common expenses include:
- Court filing fees
- Medical records and billing records
- Police reports
- Expert witness fees
- Accident reconstruction
- Deposition costs
- Private investigators
- Court reporters
- Service of process
- Medical or employment evidence
- Trial exhibits and litigation technology
Some attorneys advance these expenses and recover them from the settlement. Other agreements make the client responsible for the expenses even if the case produces no recovery.
The American Bar Association advises clients to review the cost provisions in the fee agreement. Losing a case does not always eliminate responsibility for litigation expenses.
Do You Pay a Personal Injury Lawyer if You Lose?
Usually, you do not pay the attorney's contingency fee if there is no recovery. You may still owe case expenses if the written contract makes you responsible for them.
Before signing, ask:
- Do I owe anything if the case is unsuccessful?
- Does the attorney advance filing fees, expert fees and investigation costs?
- Are expenses deducted before or after the attorney's percentage is calculated?
- Does the percentage increase if a lawsuit or trial becomes necessary?
- Will I owe fees if I end the representation before the case concludes?
The answers should appear in the written fee agreement.
What Happens to Medical Bills and Insurance Liens?
Attorney fees are only one part of the final settlement calculation. A personal injury claim may also involve:
- Outstanding medical bills
- Health insurance reimbursement claims
- Medicare or Medicaid repayment claims
- Workers' compensation liens
- Medical provider liens
- Property damage payments
- Litigation expenses
These obligations can reduce the amount you receive. They are not automatically included in the attorney's percentage.
For example, a $100,000 settlement may have attorney fees, case expenses and medical reimbursement claims deducted before the remaining funds are distributed. The attorney should provide a written settlement statement showing:
- The total recovery
- The attorney's fee
- Case expenses
- Liens and reimbursement claims
- The amount paid to the client
Are Personal Injury Attorneys Ever Paid Hourly?
Yes, but hourly billing is less common for ordinary personal injury claims. With hourly billing, the client pays for the attorney's time whether or not the case succeeds.
Personal injury attorneys may use:
- A contingency fee
- An hourly fee
- A flat fee for a limited service
- A hybrid arrangement that combines an hourly fee with a contingency fee
The American Bar Association recognizes contingency, hourly, flat and hybrid fee arrangements. The fee structure depends on the type of legal matter and the agreement between the attorney and client.
Can a State Limit Personal Injury Attorney Fees?
Yes. Fee rules differ by state, and some states impose limits or calculation requirements for certain personal injury claims.
For example, New York rules provide contingency-fee schedules for many personal injury and wrongful death claims. The rules also address whether the percentage is calculated from the gross recovery or the net recovery after certain expenses.
ABA Model Rule of Professional Conduct 1.5 states that a contingency-fee agreement should be in writing, signed by the client and explain:
- The percentage or percentages charged
- How the fee changes for settlement, trial or appeal
- Which litigation expenses will be deducted
- Whether expenses are deducted before or after the fee is calculated
- Expenses the client may owe even without a recovery
State ethics rules may differ because the ABA Model Rules are not automatically binding in every state.
What Should You Review Before Hiring a Personal Injury Attorney?
Before signing a representation agreement, confirm the following in writing:
- The exact contingency percentage
- Whether the percentage changes after filing a lawsuit
- Whether trial or appeal creates a higher fee
- Whether the fee is calculated from the gross or net recovery
- Which costs the attorney will advance
- Whether you owe expenses if you lose
- How medical liens and insurance claims will be handled
- What happens if you change attorneys
- How settlement funds will be distributed
The percentage is only part of the calculation. Ask the attorney for a sample settlement statement showing what would remain after attorney fees, case expenses and reimbursement claims are paid.