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How Much Does a Personal Injury Attorney Cost?

How Much Does a Personal Injury Attorney Cost?

Just about everyone has seen the ads from personal injury attorneys promising that there will be “no fee unless there’s a recovery”.  But what does this mean, and what is the real cost of a PI attorney?

Most PI attorneys work on contingency.  That means they will get a percentage of the recovery once it settles or goes to trial.  Before that, they will not receive any payment.  It really is that simple. In fact, most attorneys will also cover the cost of the lawsuit as it is ongoing, meaning that if they lose the law suit, they will bear the costs, not the client.  This is a good arrangement since most people do not want to or are not able to start spending money on things like court costs, expert fees, service e of process, etc., right after they have been injured.  An attorney can cover these costs, but then the client eventually pays them – assuming there is a recovery later.

OK, so now you’ve won a recovery.  How much is the fee?

Once recovery is made, the attorney’s fee will typically range from 33-40% of the total recovery.  The number is typically on the higher end if a lawsuit had to be filed, and lower if it settled out of court.  Keep in mind that the contingency fee is based on the total recovery.  The client will still need to cover costs, and medical bills if there are any.

A good way to think about this is to look at an example.  Assume there was a settlement of $100,000 after an auto accident, with a contingency fee of 35%.  The Insurance company writes a $100,000 check to the attorney, who withdraws $35,000 for his own fees.  He also withdraws $3,000 for court costs and other fees paid out as he was working on the case.  Assume there are $15,000 in medical bills as well.  These all come out of the total, leaving $47,000 for the client.  This recovery is typically tax-free.

Contingency Fees

The nature of contingency fees change how the attorney has to bill.  Since he is covering the costs in the case of a loss, he will want to make sure he is taking on cases that will eventually win.  Sometimes, facts can come out later that negate liability.  The attorney is taking on that risk.  A loss can be devastating for a firm.  I know of one small firm that went bankrupt after two big losses in a row.

Of course, wins are significant, but they typically come after a long delay and after a significant outlay of expenses.  Although a contingency fee can sometimes seem high, it is taking into account the risk of complete loss.  Also consider that an attorney will often be able to increase your recovery significantly in excess of the contingency fee, or even flip a denial of liability, so you can recovery anything at all.

Another factor that makes contingency fees a positive for both attorney and client is that it aligns their interests.  If the client wins, the attorney also wins.  Contrast this with a highly contested divorce.  In that case, the attorney might win big in terms of billable hours, while both parties of the divorce come out with less than if they had settled amicably.  There can be a perverse incentive there for the attorney to create more strife.  A contingency PI case, on the other hand, tends to mean that attorney and client work as “teammates”.

This blog post is not intended as legal advice.  If you would like advice on your specific situation, visit atx.legal/contact or call 512-677-5003 to schedule a no-cost consultation.
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