A lawyer can get paid in a variety of different ways. The “billable hours” method is the most famous–or, perhaps, the most notorious. There are also flat fee, contingency fee, and hybrid fee arrangements. Among these, the contingency fee arrangement is most advantageous to low- and middle-income clients. Personal injury lawyers almost always bill by contingency fee.

Billable hours

The billable hours method is simple. Just take the number of hours and multiply it by the hourly rate. Since lawyers bill hundreds of dollars per hour, you could end up with a very large bill for legal services that way. In a small personal injury case, your legal bill could add up to more than your recovery, even if you win. If you have a personal injury claim and you run into a lawyer who seeks to charge you by the billable hour, you’ll need to really think about whether this fee structure is in your best interests.

Flat fee

A flat fee is a certain amount of money for a certain legal product. A trusts and estates lawyer might agree to write you a last will and testament, for example, for this type of fee. Or, an immigration attorney may complete an application for US citizenship for a flat fee. Lawyers offer flat fees when the amount of work in question is highly predictable. Very few personal injury lawyers offer flat fee rates.

Contingency fee

A contingency fee is simply a certain percentage of the amount you recover, either in court or at the settlement table. Most lawyers charge between 30% and 40% of your total recovery. If you win a million-dollar settlement with a 30% contingency fee, for example, your legal fee will be $300,000. If you win $20,000 in court with a 40% contingency fee, your fee will be $8,000.

If you lose

In personal injury law, “losing” means a recovery of $0.00. Even if you win even only $10 with a contingency fee of 30%, $3 will go to your lawyer. So how much do you pay if you lose? Well, how much is 30% of zero? It’s still zero, so the rule is you pay nothing if you lose (you may still be responsible for some case-related expenses, depending on your agreement).

Hybrid arrangements

Some lawyers offer hybrid arrangements—a lower contingency fee plus billable hours if your case goes to trial, for example. Carefully scrutinize any such offer. Your lawyer might also offer a hybrid contingency fee—30% of the first $100,000 and $20,000 of anything over $100,000. Many other combinations are possible, some of which are confusing.

Wild card: Case expenses

Any personal injury case is going to require a certain amount of out-of-pocket expenses, potentially including:

• Court reporter fees (for depositions and trial)
• Courier and postage expenses
• Deposition costs
• Expert witness fees
• Fees for accessing legal databases
• Filing fees
• Investigation costs
• Medical records fees
• Travel expenses
• Trial exhibits

Lawyers may approach such fees in different ways. They may cover upfront costs, and you may or may not owe something if your claim is unsuccessful. Be sure you understand any agreement you sign.

Disbursement

When the opposing party (likely an insurance company) pays your settlement, it goes to your lawyer’s client escrow account first. Your lawyer will deduct their contingency fee, case expenses and any other deductions (a medical lien, for example, if one applies). After deducting these expenses, they will send you whatever remains.

Factors that influence the amount of your contingency fee

Your lawyer will probably take into account the following factors when determining the amount of the contingency fee to ask for:

• The strength of your claim. The stronger your claim, the less your lawyer is likely to be willing to settle for.
• Whether your lawyer expects your case to go to trial. Your lawyer might charge you more if they expect your case to go to trial.
• The size of your probable recovery. The more compensation your lawyer expects you to win, the lower the contingency fee percentage your lawyer will be likely to agree to.
• Limits imposed by Oklahoma state law: Your lawyer cannot demand more than 50% of your net recovery (after deducting case expenses).

Other factors might also influence the fee decision.

Why the contingency fee works

The contingency fee system offers you three major advantages.

First, you can hire a lawyer without a dime in your bank account. Imagine how difficult it is for many people to pay a lawyer hundreds of dollars an hour. Under the contingency fee system, most lawyers will charge you nothing up front. Nevertheless, some may ask for a retainer to cover case expenses.

Second, the contingency fee system aligns the lawyer’s interests with yours. The more money you make, the more money your lawyer makes. The less money you make, the less money your lawyer makes. This means you and your lawyer are in the same boat.

Now contrast your interests with the interests of an insurance company. The more money you make, the less money the insurance company gets to keep. The less money you make, the more money the insurance company gets to keep.

Third, you only pay attorneys fees if you win. With many personal injury lawyers, you don’t even pay case expenses unless you win, but this varies—always review your agreement carefully. Ultimately, as long as you win, it is essentially the defendant who pays your compensation.

Sometimes a lawyer is a necessity, not a luxury

You might choose to represent yourself for a minor car accident or for a slip and fall accident that did not result in serious injury. The more serious your injury, however, the more you’re going to need an attorney.

Cunningham & Mears is an Oklahoma City personal injury law firm. We enjoy a track record that has attracted the admiration of our peers as well as the praise of our clients. That’s not surprising, since our lawyers have accumulated over a century of combined experience. All told, we have collected over $250 million for our clients. As ethical attorneys, we cannot promise specific results. We can, however, promise to work with you to obtain the best possible results.