First, there are the "costs" of representation on the one hand -- how much your attorney will get paid for his or her services, and in what manner. Second, and in the language of the law, there are the ancillary "costs" associated with filing a personal injury claim, which means filing fees, document preparation fees, expert witness retainers, and other expenses. These can quickly add up in any type of lawsuit. Let's take a closer look at both types of "costs" in the context of a personal injury case.
What is a Contingency Fee?
Most personal injury attorneys are paid under a "contingency fee agreement." This means that the attorney doesn't require the client (the injured person) to pay any upfront fee. Instead, the attorney will be paid an agreed-upon percentage of any funds the client receives via settlement or trial verdict.
The terms of your lawyer's contingency fee should be clearly explained to you at one of your first meetings, and the specifics will be set out in the paperwork you will sign when officially hiring the attorney to represent you.
Now, how much of a percentage will the attorney receive? Some states have laws that cap the percentage that an attorney can take. In Michigan, for example, a lawyer in a personal injury case cannot take more than one-third of the amount recovered as a contingency fee. And a number of states have specific caps for contingency fees in medical malpractice cases, including California, Florida, and Illinois.
Most contingency fee agreements in personal injury cases authorize the attorney to receive somewhere around 33% of any settlement or court award. This means that your lawyer would receive a third of your final payment (whether it be via settlement or trial verdict). So, if you received a $100,000 settlement, your attorney would receive $33,333.
Your agreement with your attorney may also authorize a "sliding scale" contingency fee, where the percentage varies depending on what stage of litigation your claim is in when it is resolved. For example, the agreement may authorize the attorney to receive 28 percent of any settlement if no lawsuit is filed, 33 percent if the case is settled after the filing of a lawsuit but before trial, and 40 percent of any court award after trial.
Learn more: What is a Contingency Fee?
"Costs" in a Personal Injury Lawsuit
Most lawyers refer to "costs" as the ancillary expenses incurred by handling your case. This could include fees for things like:
filings with the court
obtaining police reports
obtaining and preparing medical records
hiring expert witnesses, and
copies of deposition transcripts
Some personal injury lawyers will pay "costs" upfront and take reimbursement when you receive your settlement or court award. Others will require that you pay for these expenses as they come up. Again, this should be clearly spelled out for you in the paperwork you will sign when hiring your attorney. The agreement should also specify how these expenses will be handled in the event that you do not receive any settlement or award.
Learn more: Your Contract With a Personal Injury Attorney.
How Is My Attorney Paid?
Most of the time, final settlement checks are sent to the plaintiff’s attorney in a personal injury case. In part, this is to ensure that the attorney is fairly paid out of the funds the plaintiff receives. When your lawyer receives the check, he or she will deduct the amount set forth by their contingency fee, plus any expenses (if applicable), and the rest will be passed on to you.