The Cost of Hiring a Lawyer

Rather than receiving an hourly fee, as many attorneys do, most personal injury attorneys are paid on a contingency fee.  A contingency fee is a fee that is not paid until there is a monetary recovery for the injured person’s damages.  The amount of the fee is usually a percentage of the award.  Some states have placed limits on how high the percentage can be and other states have a sliding scaled depending on the amount of the award.  In New York, the flat fee rate for personal injury attorneys is 33 1/3 % of the award.  The sliding scale fee is 50% of the first $1,000 recovered, 40% on the next $2,000, 35% on the next $22,000 and 25% on any amount over $25,000.

Lawyers Fee May Differ Based on Case Resolution

To further complicate the fee schedule, some attorneys will charge a lower percentage if the case is settled or mediated and a higher fee is the case has to be tried in court.  It is very important for a client to fully understand the fees and how they will vary depending on the amount of the award and depending on how the case is brought to a resolution.

Advantage of Contingency Fee

The primary advantage of the contingency fee is that it makes legal representation available to everyone, even people who otherwise could not afford an attorney.  A person can file a lawsuit without providing any money up front to an attorney.  It is important to remember though that the attorney will end up taking a percentage of the award for which as person is compensated.

Financial Risk for the Attorney

Obviously the risk involved for the attorney is that if the injured person does not recover any money, the attorney does not get paid for the work he put into the preparing the lawsuit and negotiating or going to trial.

Generally Used Calculation Details

The percentage fee should be calculated on the net sum recovered which means the expenses and disbursements the lawyer advanced for preparing the case are taken off the top and repaid back to the lawyer.  The expenses are deducted from the settlement total and the percentage fee is applied to the net amount after that deduction.  A person looking for an attorney should study the retainer agreement carefully and know that if an attorney is going to place a percentage on the total award, including the amount for expenses, it will cost much more than an attorney who bases the percentage on the net amount after deducting taxes.  Anyone who has hired an attorney should be extremely cautious after the award is determined to make sure the attorney does not take more than that which was determined by the initial agreement.

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