What is the Standard Contingency Fee for a Car Accident Lawyer?

A car accident lawyer's "contingency fee" is usually 33 percent of any settlement or court award the client receives. A contingency fee covers the lawyer's legal services, but only if the client gets compensation. If the client gets nothing in the way of settlement or verdict, the lawyer doesn't get paid.

Let's look at the ins and outs of contingency fee agreements in car accident cases.

What Is a Contingency Fee?

Many people hesitate to reach out to a lawyer after an accident because they think they can't afford to pay a lawyer's high hourly fee or come up with a retainer to secure the lawyer's services. But most car accident lawyers don't require clients to pay any fees upfront. Instead, they take these cases on a contingency fee basis, which means they'll only collect a fee for their work on your case if you win:

• a car accident settlement, or
• a court judgment in your favor after a car accident lawsuit.

So, a contingency fee is "contingent" (dependent) on a successful outcome in your case. But it's important to remember that, win or lose, you may be on the hook for costs like filing fees (more on this later).

Contingency Fee Agreements Are for Plaintiffs Only

A contingency fee agreement is only an option when an attorney is representing a plaintiff—the person filing the car accident lawsuit.

Attorneys typically charge the person or entity that is getting sued (the "defendant") an hourly fee, which varies among lawyers.

Most liability car insurance policies include a "duty to defend" term. If the policyholder is sued in connection with an event that triggers coverage, the insurance company has to pay for the policyholder's defense attorney.

But drivers who don't have insurance, or who exceed the limits of their coverage, have to hire an attorney on their own and pay a hefty hourly fee (typically around $150 to $500 per hour, depending on where they live and the attorney's experience and reputation).

Learn more about how much car accident lawyers cost.

How Are Costs Handled in Car Accident Cases?

With contingency fee agreements, the idea (as you've no doubt read or heard in lawyer ads) is that "You don't pay if you don't win." That's not always technically true, though. You need to read the fine print of your contingency fee agreement to see whether you will have to repay your lawyer for "costs" if you lose your case.

Costs in a car accident case are expenses paid by the lawyer's office in investigating and pursuing your claim, including:

• filing fees
• photocopying fees
• the cost of getting medical records and car accident police reports
• court reporter fees for depositions, and
• expert witness fees.

Costs can add up quickly, easily reaching thousands or tens of thousands of dollars. Be sure to spell out in advance in a written contingency fee agreement how costs will be handled. Some personal injury lawyers will cover costs up front and only expect to be reimbursed if you win a settlement or court judgment. But most lawyers will want you to agree to pay some or all costs if you lose your case.

The timing of when costs are to be deducted from your final compensation matters. Your agreement should clearly say whether costs will be deducted before the lawyer's fee is calculated or after. If the lawyer's fee is taken first and then costs are deducted, the lawyer's fee is larger than if the costs are deducted before the lawyer's fee.

For example, let's say you agree to pay your lawyer a standard 33% contingency fee in a case with $3,000 in costs and a settlement of $20,000. If costs are deducted before fees are calculated, your lawyer gets $5,610 (33% of $17,000). If costs are deducted after fees are calculated, your lawyer gets $6,600 (33% of $20,000).

"Sliding Scales" and Negotiating a Contingency Fee

You can negotiate a reduced contingency fee percentage. Some attorneys are willing to set contingency fee percentages on a "sliding scale," depending on when the case is resolved. For example, an attorney may charge:

• 25% if the lawyer settles the case solely by negotiating with an insurance adjuster and no lawsuit needs to be filed
• 33% if a lawsuit is filed but the case settles before trial, and
• 40% if the case goes to trial.

Of course, most lawyers won't suggest a reduced fee arrangement. You'll have to bring it up. Here are some options for how to negotiate reduced personal injury lawyer fees.

Other Types of Car Accident Lawyer Fee Arrangements

Most lawyers handle car accident lawsuits on a contingency fee basis. The arrangement works well for clients and lawyers because it offers clients low-risk access to the court system (no upfront costs and no fees for a loss) and attorneys get a piece of the pie instead of an hourly rate or fixed fee.

Some car accident attorneys are willing to provide a specific legal service for a fixed fee. For example, you might be able to pay a lawyer a fixed fee (say $300 to $1,000) to write a demand letter for you to send to the at-fault driver's insurance company.

Is a Car Accident Lawyer Worth the Cost?

You might not need a lawyer to handle your car accident claim, especially if your injuries are minor and it might be easy to prove the other driver was at fault for the accident. But you might benefit from the skills of a car accident lawyer if your injuries are serious, your case involves complex legal issues, or the insurance company is giving you the runaround.

Learn more about when to represent yourself in a car accident claim and how an attorney can help with your car accident claim.