After an accident, you may face several obstacles as you fight to get back on your feet. Medical bills can add up quickly. The cost of replacing or repairing damaged property isn’t cheap. If your injuries are severe, you may even be forced to take time off from work as you recover. This can put you in a very difficult and stressful financial position.
Is someone else is responsible for your injuries? You may have the right to obtain compensation. You know that hiring an attorney will help you maximize your financial award. However, you’re worried that you won’t be able to afford the help you need. Attorneys are just too expensive, right?
Not necessarily. Most personal injury attorneys will handle cases on a contingency fee basis. Rather than paying your lawyer up front, you simply agree to give them a percentage of your financial settlement or award. You pay nothing until you recover something.
What Is a Contingency Fee Basis?
Personal injury lawyers understand that you’re in an impossible situation after your accident. We know that it’s tough enough taking care of your day-to-day expenses, let alone the costs generated by your accident. Money is tight, and it’s easy to understand why you might try to cut costs by pursuing a personal injury claim on your own.
However, you risk missing out on valuable compensation. There is a solution: contingency fees. You can hire an attorney without any up-front costs and get the legal help you need. Your attorney’s fee is contingent – or dependent upon – the success of your case. Your lawyer will only be paid if they successfully recover compensation on your behalf.
How Much Of My Award Will My Attorney Take?
Contingency fees are structured so that your lawyer receives a percentage of your financial recovery. There is no cut and dry answer for how big that percentage will be. However, most Los Angeles personal injury attorneys will represent you in exchange for between 30 and 40 percent of the compensation you receive.
Many factors can impact your attorney’s fee.
- How complex or difficult is your case?
- Does the attorney believe that your case will be successful?
- Does the attorney have experience and success in handling similar cases?
- How many cases does the attorney handle at one time?
- How many years has the attorney been practicing law?
- Where is the attorney located?
The answers to these questions will guide your attorney as they determine their fee.
Will Compensation Be Calculated Using the Gross or Net Award?
There are two ways to calculate your attorney’s fee. The first involves using the gross award, while the second involves using the net award.
Gross Award: The gross award refers to the full amount of compensation you receive. For example, if you receive a settlement for $100,000, your gross award is $100,000.
Net Award: The net award refers to the compensation you receive after costs and expenses are deducted. For example, let’s say your case has generated $20,000 in expenses. You receive a settlement for $100,000. Your net award is $80,000 ($100,000 reduced by $20,000 in expenses).
Why does it matter if your attorney’s fee is calculated using the gross award vs. the net award? The option that’s chosen will impact how much money you’ll walk away with when your case is complete.
Example: You’re injured in a Los Angeles car accident. Your attorney agrees to represent you in exchange for 30 percent of the compensation you receive. Costs and expenses related to your case (e.g., filing fees, investigation costs, expert witness fees) total $10,000. You ultimately agree to accept a settlement offer for $90,000.
Here’s how the calculations work out when the fee is calculated using the gross and net awards:
- Gross Award: Your attorney receives $30,000. (30% of $90,000). This leaves $70,000 left over.
- Net Award: Your attorney receives $24,000. ($30% of $80,000). This leaves $56,000 left over.
With a gross award calculation, you will still need to figure out how costs and expenses related to your case will be paid. In most situations, those costs will be deducted from the remainder of your award. In the example above, the $10,000 in costs would be taken from the $70,000 that remained after your attorney took his or her fee. That would leave you with $60,000 for yourself.
With a net award calculation, costs and fees are taken care of at the beginning. Those expenses are deducted from your award before your attorney’s fee is calculated. In the example above, the $10,000 in costs is taken right of the top. Then your attorney’s fee is calculated using the net award. That leaves $56,000 for you.
Ask About Expenses and Fees
Always ask your attorney how expenses and fees will be handled during your case. Will you be responsible for covering any case-related costs? Will your attorney cover those costs and then reimburse themselves after securing an award on your behalf? Who is responsible for costs if your case isn’t a success?
The answers to these questions will help you to understand your attorney’s compensation scheme. You’ll be in a better position to identify how much of your award you’ll actually walk away with when your case is resolved. Hidden fees or responsibilities for costs can cut into your financial recovery. Make sure that your attorney is transparent and answers your questions to your satisfaction.