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Attorney's Contingency Fee
Most
personal injury attorneys charge at least a 33.33% contingency
fee to handle automobile and other personal injury type cases.
Depending on the complexity of the area of law, the fees can
go to 40 -45% in product liability and medical malpractice cases.
A contingency fee means that the lawyer does not get paid
unless a recovery is made. In other words, the lawyer's fee
is contingent upon getting a recovery.
The lawyer charges his fee on the total amount recovered.
Thus, in a case where the lawyer recovers $100,000 for his
client, the lawyer's fee would be $33,333 or 33.33% of $100,000.
This is the lawyer's fee for his time and effort. In addition
to the lawyer's fee, the client is also obligated to reimburse
the lawyer for any out of pocket expenses incurred in prosecuting
the successful case.
In the above example, a client would pay the lawyer a $33,333
fee plus his out of pocket expenses. The expenses are paid
out of the remaining $66,667 the client recovers. Many people
ask the question why do the expenses come out of the client's
portion of recovery instead of the lawyer's portion of the
recovery?
The answer is simple. If the lawyer was reimbursed his expenses
out of his portion of the recovery, and the case expenses
were high, he would have taken all of the risk, performed
all of the work and received little or nothing in return.
He would have effectively acted as a bank to finance the case
without compensation for his time. The only service a lawyer
offers is his time and he must be compensated fairly for it.
This explanation raises the question that if the lawyer
takes 33.33% of the recovery and the costs of litigation must
be paid large sums from the client’s recovery, the client’s
will then recover almost nothing. A reputable lawyer will
work hard to keep costs down to increase a client’s
net recovery.
In short, contingency fees must reflect the degree of risk
and the time and expense involved in handling your case. Remember,
generally when a lawyer spends his own money on the case and
you lose, you owe the lawyer nothing. On the other hand, lawyers
who defend cases get paid whether you win or lose. By working
on a contingency fee basis your personal injury attorney has
incentive to move the case as efficiently as possible since
he is not paid until the case resolved.
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