May 21, 2015
Everyone knows that attorneys do not work for free, but how do they get paid? Typically attorneys charge by the hour, a flat fee, or by a contingency fee. What does this mean to someone who has been severely injured and has no money?
Most attorneys would be happy to be paid each month for every hour they work. Most clients, unless they are a big business or an insurance company, do not have money to pay on an hourly rate. This is particularly true for clients who are severely injured, out of work, and have bills piling up. So, how does the client with those problems afford an attorney one might ask.
Personal injury cases: These are bodily injury cases, which do not arise out of a person’s work. Most personal injury cases are handled on a contingency fee basis. The attorney agrees to take a percentage of whatever he/she can recover on behalf of the injured client. Payment of attorney’s fees is “contingent” on actual recovery of money for the client. The attorney is entitled to receive nothing for his/her time if they do not make a recovery for the client. The percentage charged for attorney’s fees typically is 33.3% to 40% of the total of the settlement money.
In addition to the attorney fees, the attorney will charge for cost of litigation. These are out-of-pocket expenses paid by the attorney which are necessary to move the case forward, i.e. court costs.
A contingency fee arrangement is beneficial to the client for a number of reasons.
- They are not paying for an attorney’s time which does not “benefit” them.
- They are not having to come up with money to pay the attorney while they are struggling to pay their own bills.
Cases handled on a contingency fee can create a real incentive for the attorney to recover as much money as possible on behalf of the client. This will only increase the attorney’s portion in the end. Also, a client can rest assured that if an experienced attorney is willing to handle the case on a “contingency fee” basis, they are probably going to receive something out of the case.
Workers Compensation Cases: These are bodily injury cases arising out of a workplace injury and the claim is being asserted by the injured employee against the employer. The attorney fee arrangement in workers compensation cases is very different than in personal injury cases.
Payment of attorney fees is “contingent” on performing some service to the injured worker, which results in a benefit being paid by the workers compensation insurance company to or on behalf of the worker. Unless the attorney is able to point to a benefit resulting from his/her efforts, no attorney fees are due. Thus, the attorney fees are “contingent” on success.
The employer’s insurance company which pays benefits to the injured worker is also required to pay attorney fees to the injured workers attorney. Attorney fees are considered to be one of several categories of “benefits” under the workers compensation system. The amount of attorney’s fees payable to a claimant attorney is generally based upon the hours expended by the attorney which results in a benefit to the client. However, sometimes the attorney fees are computed based upon a percentage of the total benefits obtained for the injured worker.
In workers compensation cases, unlike personal injury cases, the attorney fee award has to be approved by the Worker’s Compensation board. In fact, if an attorney charges an injured worker more than $300 without it being approved by the Worker’s Compensation board he/she is guilty of a misdemeanor.
In conclusion, attorneys representing people in personal injury cases and in workers compensation cases have to jump through different hoops to obtain payment for their services. Though these 2 different kinds of cases are very different, one similarity is that if the attorney does not produce a recovery for the injured person, he/she does not get paid. Payment of attorney’s fees is “contingent” on success for the injured client.