Woodland Hills personal injury attorney Barry P. Goldberg is regularly questioned about how personal injury attorneys are paid and then challenged to justify, in advance, whether it is a good deal. Over the years Mr. Goldberg has heard just about every analogy and financial analysis that lawyers use to convince an injured client to “sign up.” While people should definitely question a lawyer’s fee agreement and financial arrangements, in the end, a Personal Injury Contingency Fee contract is one of the best deals in the legal industry. The bigger question is whether you need a lawyer to handle the case.
Personal injury attorneys are paid on a “contingency” basis. This means that the fee is paid on the future “contingent” event of the lawyer actually obtaining a settlement or verdict in your case. You have heard it a million times: “No recovery, No fee!” While the topic is outside this article, actually getting paid on a case is not always the easiest thing!
In Southern California, the “going rate” for a personal injury case is one third of the total bodily injury recovery. This amount includes the amount obtained for medical bills, loss of earnings and general damages, such as pain, suffering and inconvenience. While contracts may vary, most lawyers charge that amount if a settlement can be obtained prior to filing of a lawsuit or going to trial. The amount goes up to 40%, or even 45%, depending on the lawyer’s experience and track record.
Since most people are unwilling or unable to pay commensurate hourly rates of $400-$500, or plop down a retainer of $2,500, to $5,000, the contingency is the only game in town. Although the percentage of the fee is negotiable, prospective clients have to ask themselves whether they want to be the file in the attorney’s office that is paying the least. Further, since the attorney’s recovery is based on the total amount of the recovery, in theory, the hirer the fee, the harder he works! In addition, paying a 25% fee on a small recovery rarely equates to paying 33 1/3% on a large recovery.
An important aspect of the Contingency Fee contract is that personal injury attorneys usually advance all costs on the case. Most clients are not in a position to advance these costs. While the advanced costs are recoverable from the client’s ultimate net share, it is basically free investment money to increase the value of the case. Where else can you get a non-recourse loan at 0% interest?
In the end, the contingency fee contract allows an accident victim to stand toe to toe with a well-funded insurance company —- and actually win! Barry P. Goldberg encourages prospective clients to read a Contingency Fee contract before signing and to ask as many questions you need in order to feel comfortable with the fee arrangement.