How Do Lawyers Get Paid if They Lose a Case?
If you have spent time researching personal injury lawyers, you have probably seen many of them telling you that “you only pay if you win.” To understand why you do not have financial risk in hiring a personal injury attorney, it is crucial to understand how these lawyers get paid. You should also understand the financial considerations that your lawyer is facing when they are handling your case.
The legal system encourages accident victims to hire a lawyer. There is no hard-and-fast requirement to get legal representation, but it is undoubtedly in your best interest to hire a personal injury lawyer. You can rest assured that the insurance company has every advantage and resource at its disposal. Without an attorney, you will be in a compromised position, subject to the whims and conflicts of interest that permeate insurance companies.
Are You Worried About If You Can Afford a Personal Injury Attorney? 
As a personal injury victim, money is likely something that will be a concern for you. Not only are you dealing with your share of the medical bills, but you may also be missing time from work because of your physical condition.
You will certainly not have enough money to hire an expensive lawyer who may charge you hundreds of dollars per hour. Some law firms and lawyers charge a retainer at the outset of your case to ensure they get paid. For families in dire need of legal counsel, coming up with this money can be a challenge and burden. “Flat fees” lawyers may opt for a one-time payment arrangement for their legal services, which is likely to be substantial.
However, this is not how it works in a personal injury case. Your attorney asks you for nothing upfront. They do not send you hourly bills as they work on your case. Even if they did, this will not be something that you can afford.
If a personal injury lawyer asks you for money upfront, you should not hire them or pay them. This payment method is not how things get done in the personal injury field.
Personal Injury Lawyers Work on a Contingency Fee Basis
Personal injury attorneys work for you on a contingency basis. Contingency means something liable to happen as a result of something else. In this case, that something else is you winning your case. In a personal injury matter, winning means that you have either received a settlement check or have had a jury decide the case in your favor. When that happens, you will be obligated to pay your attorney.
Personal injury lawyers get fees out of the proceeds of your case when you win. The insurance company or the defendant will write the check initially for deposit in your lawyer’s escrow account. Your lawyer will be entitled to some proceeds, as will any health insurance company already paying for your medical expenses.
Contingency fees mean that the lawyer is paid directly from that check or their separate check. You are not responsible for taking part of the money and physically paying your attorney. Your lawyer will handle the distribution of the money, and you will just need to receive your check when sent. When you provide payment instructions, the money will hit your account.
Once your lawyer and any lien holders get paid, then you will get your portion of the settlement or award. This process happens in a matter of days or weeks once you have signed a settlement agreement. Learn what the process of hiring an attorney entails and how your case can benefit.
You Do Not Pay a Lawyer if You Do Not Win
If you do not receive a settlement check or jury award, you will have no legal obligation to pay your lawyer anything for their services. You will not receive an unexpected bill at the end of your case for all your lawyer’s time. This structure is exactly what a lawyer means when they say, “We don’t get paid unless you get paid. ”
With contingent fee arrangements, it does not matter how much time your lawyer has spent on your case. Even if your case went to trial and you lost, your lawyer will still not get anything for their time. Your case may have lasted for months or years. The result will still be the same for your attorney.
How Do Lawyers Get Paid If They Lose a Case?
When a lawyer agrees to represent you under a contingency fee arrangement, they essentially bet on the success of your case. In these scenarios, the lawyer’s payment is contingent upon securing a favorable outcome for you, either through a settlement or a court judgment.
If the lawyer is unsuccessful in winning your case, they typically do not receive any payment for their services.
This is a significant risk for the attorney, as they invest time, effort, and sometimes their own funds into preparing and pursuing your case without any guarantee of compensation. The stakes are high for them, just as they are for you.
What Costs are Covered Under a Contingency Fee Agreement?
A contingency fee agreement typically covers the legal services provided by the attorney. However, it’s important to differentiate between the attorney’s fees and the other case-related expenses, such as court fees.
Some attorneys may agree to cover these expenses initially and then deduct them from the final settlement or award, but the attorney must define these at the very beginning and cannot charge you anything not clearly addressed in the representation agreement.
While the lawyer may not receive their contingency fee in the event of a loss, there might still be costs associated with the case that does not include attorney’s fees. These can include court filing fees, expenses for obtaining medical records, costs for expert testimony, and other miscellaneous expenses. In some agreements, you might be responsible for these costs regardless of the case’s outcome. In other scenarios, the attorney might absorb these costs if the case is lost. According to the rules governing the legal profession, these must be spelled out in advance and be reasonable. The lawyer will not send you any bills while the case is pending. If you win your case, these fees will come out of the proceeds of your settlement, and you will get paid the net settlement.
Can the Contingency Fee Percentage Change During the Case?
Typically, the contingency fee percentage is agreed upon at the start of the representation and remains constant throughout the case. However, it’s important for clients to understand that certain circumstances might lead to changes in this percentage. For example, some agreements stipulate a higher fee if the case goes to trial, reflecting the additional work and resources required in court proceedings. It’s essential that any such conditions be clearly outlined in the agreement so that there are no surprises down the road. Clients should carefully review their contracts and discuss any potential changes in fees with their attorney at the outset of their case.
Can I Negotiate the Contingency Fee with My Lawyer?
Yes, clients can and should feel empowered to discuss and negotiate the contingency fee with their lawyer. While most personal injury attorneys have standard rates, there is often room for negotiation based on the specifics of the case. Factors like the complexity of the case, the estimated time commitment, and the potential size of the settlement or award can influence these negotiations. It’s important for clients to remember that the goal is to reach a fair agreement that aligns with the risk and effort involved for the attorney while also respecting the client’s financial interests. Open and honest communication about fees at the beginning of the attorney-client relationship can help set a positive tone for the rest of the case.
By understanding these aspects of contingency fee agreements, clients can enter into these arrangements with a clearer view of what to expect and how to work effectively with their attorney. This knowledge empowers clients to make informed decisions and fosters a transparent and trustful relationship with their legal representatives.
Discuss These Matters With Your Personal Injury Lawyer Before Signing Anything
It’s important to discuss these aspects of your payment arrangement prior to agreeing to work with a lawyer. During a free consultation with your prospective lawyer, they will assess your case’s merits and explain in detail what, if any, costs you may be responsible for, irrespective of your case’s outcome.
You should carefully review this agreement before signing it to understand whether you may be required to pay something. You should not hire a lawyer if the attorney fees and expenses do not look right to you. How lawyers handle expenses can be a differentiating factor when choosing between them.
This potential for non-payment is precisely why personal injury lawyers are highly selective in the cases they choose to take on. They must be reasonably confident in the merits and potential value of a case before agreeing to represent a client on a contingency basis. Their professional judgment, experience, and understanding of the law guide them in this decision-making process. This selectivity ensures that they dedicate their resources to cases with a reasonable chance of success, which is not only in their financial interest but also in the best interest of their clients.
Ultimately, the contingency fee arrangement aligns with the interests of the client and the attorney. It motivates the lawyer to work diligently to achieve the best possible outcome, knowing that their payment depends on it. This setup also provides access to legal representation for individuals who might not be able to afford an attorney otherwise.
Lawyers Take on Risks in Personal Injury Cases
Attorneys take on great risks in representing personal injury victims. They take on this risk at the very outset of your case when they sign the representation agreement and agree to represent you.
Your lawyer has their financial considerations at play, namely whether they can earn a living. They take on many cases like yours that become their body of work. Once they agree to represent you, they must put your interests ahead of their own, as their fiduciary duty and the rules of professional conduct require.
They cannot easily drop you as a client if your case turns for the worse and your chances of success look more remote. Therefore, you can expect them to give you a good deal of scrutiny before they agree to take you on as a client. The lawyer will ask you as many questions at the initial consultation as you ask them.
Most personal injury lawyers will want to know that you have a strong case because they must continue to represent you once they have started your case, subject to a very narrow handful of exceptions. Your lawyer has no financial incentive to blow the proverbial smoke. If they did, they might be hurting themselves simultaneously because they will take on a weak case with little chance of success. They may have their own families and bills to pay and want cases they can win.
A Prospective Lawyer May Not Always Take Your Case
An excellent personal injury lawyer (or any lawyer) may carefully select the cases they accept. They do not want to take on a case they are not confident they can win. Further, your lawyer does not want to take on more cases than they can handle because it keeps them from devoting the proper attention to each client. The more cases an attorney takes, the more they may spread themselves too thin.
At your initial consultation, you can expect the lawyer to ask you many questions about your case. They are making their own judgment about whether it is worth it for them to represent you. They do not want to devote months or years of their time and leave it empty-handed.
There are other cases that they can take that can result in them earning money. If one lawyer turns you down, you should not let that discourage you from trying to contact another law firm. Some attorneys may feel differently about your case. However, if every attorney you speak to does not want to represent you, it should tell you something about the strength of your case.
Attorneys May End Up Empty Handed After a Case
While you want to have an attorney with a strong track record handling personal injury lawsuits, every attorney has a story of a case they devoted a lot of time to that they did not win. There is practically no attorney who can guarantee that they have a 100 percent successful track record.
If you come across an attorney that makes this claim, you should be very skeptical. Lawyers who do not have a strong track record will not be in practice for a long time, both because they cannot find clients and because they cannot earn a living.
Although an attorney does not expect to lose your case, they are entirely prepared to lose in the event they do. It happens from time to time. These are the rules of the road for personal injury lawyers and the risks they knowingly take when they take on the job.
The cases that an attorney wins should balance the time they spend on cases they do not win. You should focus your worry on yourself and your own financial situation, namely how you will get financial compensation when someone else has injured you in an accident.
How an Attorney Gets Paid Is Outlined at the Beginning of Your Case
In your personal injury case, the attorney puts everything in writing at the very start of the matter. You and the lawyer will sign a representation agreement. This document is a legal contract between you and the attorney, and it will set out all the financial terms of the representation.
The representation agreement will set out every provision related to fees. You and the attorney agree on everything at the outset, which you cannot change once it is signed. An attorney cannot change the rules on you once everything has begun. What they say in the representation agreement is unchangeable.
Percentages in a Contingency Fee Arrangement
The representation agreement will usually set out two different percentages. The attorney will get one percentage if your case reaches a settlement agreement without needing a trial. If your case goes to trial, your attorney will be entitled to a slightly higher percentage to compensate them for the risk that they may spend additional time on your case without any assurances of success.
The provisions of this agreement that deal with payment to the attorney only discuss how they get paid when you win your case. There are no clauses in the agreement that require you to pay anything to the attorney if you lose.
You Should Be Certain About the Costs When You Work With a Lawyer
Robert W. Boatman, Personal Injury Attorney
This payment system should give you peace of mind when reaching out to a prospective lawyer for your personal injury claim. There should be no unexpected bills. If you intend to try to save money by handling your matter, it might not end well for you. You will likely have more money in your pocket even after paying a lawyer than you will if you attempt to represent yourself.
Consider that a lawyer can often get a much higher settlement offer than a claimant on their own. For example, a claimant might receive a settlement offer they disagree with from an insurer. Once they hire a personal injury attorney to represent them, the lawyer might present stronger evidence and arguments to prove liability or damages. Then, the insurance company comes back with an offer much higher.
Do I Need an Attorney to Settle a Personal Injury Claim?
Many people think that legal fees will eat away at most of their settlement, but this is not the case. Your attorney’s goal is, above all, to obtain compensation for you that truly reflects the damages you suffered, accounting for the agreed-upon fee that goes to your lawyer. After paying a percentage of your settlement to your lawyer, the rest of the proceeds are likely much higher than your initial settlement offer when you did not have representation.
On your own, you cannot easily prove your case. You may present a weak claim that the insurance company will easily deny. Even if they make you a settlement offer, it can be for much less than you deserve. You do not have the leverage to force the insurance company to raise their offer when you deal with them alone. If you threaten them with litigation, they will simply not believe you.
If you have suffered injuries due to someone else’s negligence, a lawyer’s experience is invaluable. These professionals are trained to help you navigate the legal process and steer your case to the best possible outcome.
When your financial future may be on the line, you should put your case in the hands of an experienced personal injury lawyer ready to fight for you. Contact us to receive your consultation for your case today.