Are you suffering a personal injury and contemplating a settlement offer? You may wonder whether you need legal help and how much it will cost to hire one. Although not required, working with a lawyer is beneficial in your settlement case.
Navigating the complex legal rules surrounding your claim and the severity of your injuries can be challenging. Additionally, insurance companies may not be fair since their ultimate goal is to maximize their profits and pay out as little as possible.
The legal knowledge and negotiating skills of an experienced lawyer will be valuable in such situations. Retaining an attorney will be wise if you want to ensure a maximum settlement offer.
However, lawyers charge significantly for their services, which is a common cause of tension between attorneys and their clients. Part of seeking legal help for your settlement case relates to fees and costs.
To avoid unnecessary conflicts, The Personal Injury Center walks you through the basics of attorney fees and what percentage a lawyer gets in a settlement case.
Why do lawyers charge high fees?
Access to basic legal services is becoming more of a luxury in the US. In New York alone, the average hourly rate of a lawyer can range between $76 and $506, depending on their area of practice. That’s far more than the average American employee earns, which is $10.99.
Unsurprisingly, many claimants and plaintiffs forgo hiring a lawyer due to the high cost of legal representation. Although attorney fees seem excessive, they are justifiable in most cases. So before settling your case without a lawyer, understand why legal fees are often expensive.
Extensive and expensive education
After completing high school, aspiring attorneys must take at least seven years of full-time education before obtaining a license to practice. This process involves earning a four-year undergraduate degree, completing three years of law school, and passing the state’s bar examination.
All of that incur high financial costs. Additionally, practicing lawyers must regularly complete continuing legal education (CLE) courses. They need them to stay updated with the latest legal developments impacting their respective practice areas.
CLEs are particularly costly for sole practitioners who have to shoulder the cost of private third-party providers and can’t generate income while completing their ongoing professional obligations.
The fees that lawyers charge will compensate for their education and specialization costs.
The work of an attorney involves long hours, careful research, and intense pressure. Besides the administrative work, they have to deal with complex cases and strict deadlines.
Add to that the never-ending disputes from opposing counsel. Because of the nature of their job, most lawyers work beyond the typical 40-hour work week. They may work even longer in more complicated civil cases.
Given the time and effort an attorney needs to put into a claimant’s settlement case, it’s only fair that lawyer fees are typically high.
Subject to strict regulations
The legal profession is strictly regulated, resulting in a relatively small number of attorneys in the US. The American Bar Association (ABA) states there are four lawyers for every 1,000 residents nationwide.
It may seem like a considerable number. But 1,300 US counties have less than one attorney per 1,000 residents, while 52 others have no lawyers.
Due to the limited supply of lawyers, particularly in rural areas, there is less competition for legal services. For this reason, attorneys can charge higher lawyer fees.
High overhead costs
The fees you pay your attorney don’t all go into their pockets. Like other businesses, running a law practice requires various expenditures. For instance, attorneys also have to pay overhead costs every month.
Law firms must incur these ongoing expenses to maintain their business operations. Depending on the firm’s size, overhead expenses can take a significant portion of the attorney fees. The following are some of the main drivers of a law firm’s overhead costs:
- Office lease
Factors Affecting Lawyer Fees in Settlement Cases
Lawyers carefully evaluate the case’s specifics before agreeing to represent a client. They may decline representation in certain jurisdictions and circumstances, especially when faced with an ethical dilemma.
Similarly, claimants and plaintiffs must understand the payment terms and how much personal injury attorneys charge before engaging their legal services. It can help you avoid unexpected costs when the bill arrives.
The attorney fees charged to you must be reasonable. Understanding how lawyers set the cost of their legal service is an excellent first step in assessing the fairness of a particular fee. Here are a few factors that can impact lawyer fees in your settlement case.
Complexity of the case
A tort claim is filed if your injuries result from someone else’s wrongdoing. Negotiation between the parties involved is vital in reaching a settlement in a tort claim. The process can be more complicated if you seek damages from multiple culpable parties.
In cases involving multiple parties, a thorough review of the accident specifics is crucial to determine the degree of liability of each party. Preparing and getting a fair settlement offer will likely require more time and resources.
The same applies to class actions, where one or more plaintiffs bring a claim on behalf of a large group of individuals. This legal proceeding is lengthy and resource-intensive. Some companies may be willing to spend years fighting a class action lawsuit.
However, most may prefer to settle than go through the uncertainty of going to trial. Suppose both parties agree to the terms of the settlement. They need to file a motion to the court for preliminary approval. A settlement claim form from each participating class member must be submitted along with the settlement agreement.
The appellate court will assess the proposed settlement to determine if it offers fair and adequate compensation to the class members. Once the court grants preliminary approval, the settlement administrator gives notifications to class members.
They can start filing the claims process if necessary, but the class action settlement agreement only takes effect once the judge grants final approval.
Complex cases like class actions can significantly affect the cost of a lawyer’s services. Attorneys must conduct extensive legal research, examine large volumes of paperwork, and interview numerous witnesses. The process can be time consuming and require specialized service.
Experience and reputation
When seeking legal help to handle your settlement case, you’ll likely want to turn to an experienced and reputable attorney.
A lawyer’s experience is typically tied to their area of specialization in law. Depending on the complexity and specialized nature of the attorney’s practice areas, the cost of legal representation is likely higher. For instance, attorneys specializing in intellectual property or personal injury often charge higher lawyer fees than those practicing real estate or family law.
The reputation of attorneys also plays an essential role in setting their fees. An excellent track record of successful settlements indicates a good reputation for providing high-quality legal services. Clients will pay more for their experience and expertise, so reputable lawyers can charge higher fees.
Location can also influence the cost of an attorney’s legal services. The primary reason is that living costs and operating a law practice are more expensive in larger cities than in smaller towns. For instance, you can expect lawyers in New York City to charge higher fees than those practicing in Upstate or Western New York State.
Due to lower overhead costs, it’s typically reasonable for attorneys in rural areas to charge lower fees for their clients. But it’s worth noting that location is only one factor. The lawyer’s experience and the complex nature of your case still play a significant role in determining attorney fees.
What are lawyer fees in settlement cases?
Lawyer fees exist as payment for the legal expertise and knowledge of an attorney and the entire team working on your settlement case. They enable attorneys to cover the overhead costs of running a law practice and provide clients with quality legal services.
The fee arrangements you negotiate with your lawyer can substantially impact how much and often you have to pay for their services. Typically, attorneys use a mix of the following arrangements:
Fixed or flat fees
Attorneys may use fixed or flat fee arrangements for specific, easily defined legal services. The amount you must pay in this arrangement stays the same regardless of how much time lawyers and staff spend on the case.
Typically, a lawyer may charge fixed fees for routine legal services, such as drafting a simple will or filing a trademark application. A fixed fee arrangement is also commonly used in cases that involve a simple breach of contract, tenant evictions, or uncontested divorces.
Although similar to fixed fees, flat fees are used for ongoing legal services. For example, a small business may need legal advice monthly or quarterly. A flat fee arrangement works better if lawyers need considerable monthly time to work on a case.
A fixed or flat fee billing can provide certainty and an upfront review of your case. But most legal matters involve a certain degree of uncertainty. Before agreeing to a fixed or flat fee arrangement, ask what services it covers and if there are any additional charges to the bill.
Hourly rate is the most common type of fee arrangement. It charges clients a specific amount for every hour the attorney spends on their particular case. The lawyer’s hourly fees often depend on their experience and expertise. A senior member of a law firm will likely have a higher hourly rate than a younger associate.
Before committing to an hourly fee agreement, understand your total costs. Ask the lawyer to give you the estimated time it will take them to resolve your case. But note that unexpected situations may arise, and your case may need more hours than your attorney initially anticipated.
Some attorneys require you to pay a retainer fee. It refers to advance payment to secure a lawyer’s legal services for a predetermined period.
Typically, the retainer fee is deposited into a trust account, and the lawyer draws from the retainer for every service rendered. The amount is often based on the attorney’s hourly rate multiplied by the hours they work on your case.
Retainer fees ensure the lawyer can be available on-call and handle legal problems during a specified period. But it could also mean several things. Thus, understand the type of agreement you have with your attorney before entering it.
Attorneys may also offer a contingency fee arrangement. It means that the lawyer fees you must pay depend on the percentage of the money recovered or awarded in your case. Conversely, the attorney gets no payment if you lose the case. However, you must still pay for court costs and other expenses.
Lawyers often use this fee arrangement in personal injuries, property damage, back pay, or debt recovery cases. It’s ideal for claimants or plaintiffs who cannot afford to pay an attorney. However, it’s worth noting that contingency fee arrangements may only be available if there’s a significant amount of money involved.
Legal aid and pro bono services are options if you cannot afford attorney fees. However, these options may come with specific eligibility requirements and limitations.
What percentage do lawyers get in settlement cases?
In a contingency arrangement, you must pay a percentage of the award you received in the settlement or court case. Attorney fees on this arrangement rely on the success of your claim or lawsuit. Hence, if you don’t win, you don’t pay. But how much should they get?
A lawyer’s percentage in a settlement case depends on state laws and the specifics of your contingency fee agreement. In most cases, the lawyer’s contingency fee ranges between 33 percent to 40 percent of the cash payment you recover in your settlement case.
However, the percentage can be on a sliding scale. It means that the portion of lawyer fees changes based on the amount recovered or awarded. Note that most jurisdictions in the US require that the contingency fee be reasonable. They may also prohibit lawyers from working on a contingency fee basis in criminal or family law cases.
Did you know?
Settlement agreements need to be compliant with certain legal requirements to become binding. Depending on the state, conditions for validity may involve the settlement contract’s form and wording.
Understand the Legal Costs of a Settlement Case
Obtaining a fair settlement offer can be difficult without the professional help of an experienced lawyer. However, knowing the legal charges involved in a settlement case is essential.
Even if settling costs less than going to trial, lawyers require fees to give you the service you deserve. Most often, the expenses associated with hiring a lawyer are a valuable investment, particularly for more complex cases.
When looking for a lawyer, you want someone with sufficient skills and experience to handle your case. But you must also consider your budget or financial situation.
It’s important to note that someone who charges a low rate isn’t necessarily the most suitable for your case. Similarly, a lawyer with the most expensive fees doesn’t mean they’re the best choice.
The Personal Injury Center can provide the best lawyer with reasonable rates to work on your settlement case. Get a free consultation today so we can help you find a qualified lawyer that matches your financial and legal needs.
Get the settlement you deserve with the help of The Personal Injury Center. Connect with an experienced lawyer who can protect your rights at a reasonable fee.
FAQs on Lawyer Fees
The billing frequency depends on the type of fee arrangement you agreed on. If the attorney works on a flat fee or contingency basis, they may only bill you after you settle or win the case. With hourly fee arrangements, you can expect the lawyer to bill you every month. But to be sure, discuss it with your attorney.
A written fee arrangement is required by law in some jurisdictions. For example, Section 6148 of the California Business and Professions Code requires that fee arrangements with an attorney be in writing if the fees are reasonably foreseeable to be more than $1,000.
Although not always required, it's good practice to have a written agreement. It will help prevent any unauthorized charges and misunderstandings in the attorney-client relationship.
Being open about your financial situation with your lawyer is essential. If you cannot pay your lawyer's bill, try to negotiate a payment plan or different arrangement. For example, you can offer to pay in installments or over an extended period.
Moreover, don't wait until the charges have accumulated substantially. It may make it more challenging to negotiate a reasonable agreement. Hence, address the situation as soon as possible.