Many personal injury attorneys handle cases for a percentage of the settlement. This is called a contingency fee. The attorney’s fee is contingent upon recovering damages for their injured client’s case.
Often, the contingency fee depends on the status of a case when the attorney secures compensation for the client. Fees are greater in some circumstances than they are in others. That’s because the traditional contingency fee structure acknowledges situations where an attorney relied on his or her expertise and needed to invest more time in a case.
How Does a Contingency Fee Work?
When a person is injured, that person may have a legal right to collect damages from whomever was at fault. This process involves concepts and principles about which the average person knows very little, and generally requires legal expertise to navigate. An injured person might not even know if they have a right to recover damages.
Fortunately, injury victims can consult with a personal injury attorney who will determine if they have a viable case. If the attorney agrees to take the case, the injured person gains a legal representative and in many cases agrees to give the attorney a percentage of any settlement the attorney recovers on their behalf.
A contingency fee arrangement benefits injured clients who need access to legal expertise but don’t have the funds to pay an attorney up front. This critical legal assistance often comes during a post-injury financial crunch. Those who need help recovering damages are often financially strapped because of their injuries. Their insurance pays for their treatment but co-pays and uninsured medical expenses often eat away any savings they have Sometimes an injured person can’t work because of accident-related disabilities, making it even harder to cover the financial gap.
During a time when every service provider demands to be paid, a personal injury attorney does the work knowing it will take months or years to receive payment for their services.
What are the Personal Injury Contingency Fee Guidelines for Florida Attorneys?
Contingency fee agreements made in Florida must comply with The Florida Bar Rules of Professional Conduct. The rules require that clients sign written contingency contracts that spell out the specific fee percentages involved. The agreement must also confirm that the injured client reviewed and signed an acknowledgment of their Client’s Rights, which explain that a client may “bargain about the rate or percentage” of the fee, just like they could in any contract for services.
Contingency fee contracts must contain a cancellation clause. This means that the contract must say that if a client cancels the contingency agreement within three business days they won’t owe the attorney any fees. However, they still must reimburse the attorney for any expenses that the attorney advanced on their behalf.
The rules also establish a standard structure for Florida personal injury contingency fees, and require that an agreement containing higher fees be approved by a court: The guidelines suggest the following fee structure:
For a case where the other side’s attorney hasn’t yet filed an answer to their client’s lawsuit, the personal injury attorney may charge:
- 33 1/3 percent for settlements up to one million dollars, and
- 30 percent of the settlement amount between one and two million dollars, and
- 20 percent of the settlement portion that exceeds two million dollars.
A personal injury attorney may charge a higher contingency fee once the other side files an answer to their client’s lawsuit, responds with an arbitration or settlement request, or the deadline to answer their client’s complaint expires. At this point the attorney may charge:
- 40 percent of damages up to one million dollars, and
- 30 percent for the damage amount between one and two million dollars, and
- 20 percent of the portion of the damages that exceeds two million dollars
The contingency fee structure also changes if the other side admits liability and the court holds a trial only to determine the amount of damages. If this happens, the attorney may charge:
- 33 1/3 percent fee on damages up to one million dollars, and
- 20 percent fees for the damages between one and two million dollars, and
- 15 percent of damages in excess of two million dollars
An injured person’s attorneys also may receive an additional 5 percent in fees for recoveries received after an appeal or following some other post-judgment action.
Contingency Fees for Medical Liability Claims
Article 1 §26 of the Florida Constitution sets contingency fee guidelines for medical injury cases. It outlines legal fees that are based on the injured person’s “right to fair compensation.” Any “reasonable and customary” costs an attorney expends on a client’s behalf are recoverable over and above the amounts described in the constitution. For a medical liability claim, an attorney may charge:
- 30 percent of any damages up to 250,000 dollars (plus expenses) and
- 10 percent of all damages over 250,000 dollars (plus expenses)
If they choose, an injured client may permit their attorney to collect a larger percentage of their recovered medical liability damages. Clients must sign any fee increase agreement for it to be valid.
Some Attorneys Pay Expenses up Front
Attorneys may incur a number of expenses while preparing a case for negotiation, mediation, or trial. The client is ultimately responsible for these costs but some attorneys will agree to pay for them up front. Here are just a few of the typical expenses necessary to investigate, negotiate, or try a case:
- Court costs and fees
- Trial exhibit preparation
- Industry expert costs to analyze product defects
- Vehicle accident reconstruction experts
- Independent medical examinations
- Expert reports and testimony
- Physician’s narrative reports
- Economic experts to calculate future expenses
- Court reporter costs for depositions
- Video deposition costs
In keeping with traditional contingency arrangements, attorneys must explain the potential costs to their clients. Some law firms pay costs and fees up front and deduct them from the final settlement amount. Other firms won’t proceed with a case until the plaintiff pays the necessary costs and expenses.
A Contingency Fee Schedule Reflects the Attorney’s Professional Service
The Florida Bar didn’t set contingency fees based on arbitrary standards. The fee structure recognizes that personal injury attorneys do a lot of work for their injured clients. No two personal injury cases are alike. A simple two-car auto accident is less complicated than a product liability case. Still, all cases require substantial attention before they are settlement- or trial-ready. The contingency fee schedule reflects the knowledge, experience, and expertise it takes to prepare a case for its ultimate outcome.
When an attorney presents a case on an injured person’s behalf, they can’t afford to do a half-hearted job. Even if the attorney hopes to negotiate a settlement, they must prepare the case as though they might have to present it in a courtroom some day. An attorney must know the evidence and understand all of the issues. They must recognize each defendant’s role in causing an injury-producing incident and be ready to prove how and why all of the other parties are legally liable for their client’s damages.
A good deal of the work to develop a case happens during the initial period after a client’s injuries occur. That’s when a personal injury attorney needs to determine if an injured person has a valid case and whether they have recovery options. During the life of an active case, it’s not usually just the attorney doing the work. Often the attorney relies on paralegals, secretaries, law clerks, investigators, or other paid support staff. The contingency fee must cover all of these costs.
What Does an Attorney Do to Earn a Contingency Fee?
When a client signs a contingency agreement, they get access to a personal injury attorney and all of their law firm’s resources and expertise. Personal injury attorneys understand complex liability and statutory issues. They use their knowledge to evaluate each case and they work diligently with the intent of getting their client the best settlement possible.
Personal injury attorneys handle auto accidents, premises liability incidents, product liability injuries, workers compensation claims, and other injury cases. Before they receive a single dollar of a contingency fee payment, they perform a long list of professional services, often including:
- Investigating the accident. An attorney or a professional investigator obtains witness statements, site photographs and diagrams, police reports, and more. They find available information and evidence to determine what happened, why it happened and who is at fault.
- Evaluating the other parties’ liability. The attorney reviews statutes, legal standards, case law, and more so that they can make a realistic evaluation of the liability and comparative fault of everyone involved. The attorney’s legal research helps them determine each party’s negligence and present a solid case for successful damage recovery.
- Evaluating the damages, An attorney reviews medical bills and expenses, hospital records, doctor’s reports, rehabilitation reports, narrative medical reports, and expert evaluations. The attorney talks to their injured client about the client’s pain, healing process, and personal limitations. The attorney studies prior cases, judgments, settlements, and economic projections about potential future costs and uses what they learn to determine a case’s true value.
- Negotiating settlements. When a client is ready to settle, an attorney presents the client’s demands to the other parties in the case. The attorney usually works directly with a liability insurance carrier and tries to resolve the case without going to court, if possible. Negotiation may last weeks or months, but does not always end in an agreement.
- Filing a lawsuit.: The litigation process can be exhausting and frustrating for an injured client. That’s why a personal injury attorney makes a good faith effort to settle a case before the statute of limitations runs. When defendants won’t settle for a reasonable amount, an attorney must draft a lawsuit and file it with the local court to protect the injured client’s legal right to recover damages. A lawsuit shows the defendants that the injured person and their attorney are serious about pursuing a liability claim.
- Taking the case to mediation. Florida courts require that parties first attempt to resolve a case through Mediation. Mediation is a reasonable alternative to an expensive trial. The process requires that all parties, their insurance carriers, and their attorneys meet at a neutral location to discuss the case. A neutral mediator facilitates negotiation. The parties share information and attempt to reach an agreement.
- Resolving the case. If the parties can’t negotiate or mediate a settlement, they eventually resolve the issues at trial. In a bench trial, a judge hears the evidence and makes a decision. In a jury trial, the judge oversees the trial and the jury decides the outcome.
- Executing documents. After a settlement or court judgment, the attorneys exchange releases, dismissal orders, and other closing documents. The personal injury attorney receives the settlement check and distributes the funds to the plaintiff.
Why Contingency Fees?
Lawyers who bill by the hour charge fees that vary from a low of 100 dollars per hour to a high that can exceed 500 dollars per hour or more. If injured clients had to pay for personal injury attorneys by the hour, many wouldn’t have the resources to recover damages for their injuries. Negligent people and entities could walk away without paying for the damages they caused.
According to an excerpt from The History of Contingency and the Contingency of History, attorneys began to accept contingency fees a few centuries ago. Apparently, the “highly placed” people of 18th century England didn’t like the idea that poorer people could have access to the court system through contingency fee arrangements. They viewed the practice as a plague. In Colonial America, on the other hand, many saw contingency fee legal representation as a positive. They believed that ordinary citizens deserve legal representation. Oddly enough, the earliest contingency fee opponents from a few centuries ago rationalized their position the same way some critics do today: they believed that access to counsel on a contingency basis would lead to a flood of lawsuits.
Sibley Dolman Gipe Accident Injury Lawyers, PA
800 North Belcher Road
Clearwater, FL 33765