Personal injury attorneys often advertise about their fees. These advertisements frequently state “no fee unless we win” or something similar. But what exactly does this mean? What do personal injury attorneys charge for their services?
A personal injury attorney charges what is called a “contingency fee.” A contingency fee is simply the percentage a personal injury attorney receives from a personal injury settlement.
To illustrate, let’s use a simple example.
Let’s say your personal injury attorney recovers a $10,000 settlement. If the personal injury attorney’s contingency fee is 33.3%, the personal injury attorney’s fee is $3,330 (or 33.3% of $10,000). So $3,330 would be subtracted from the $10,000 settlement and would go to the personal injury attorney. Your recovery would be $6,670.
The Florida Bar regulates the contingency fee a personal injury attorney may charge a client. In fact, Rule 4-1.5(f)(4)(B) of the Rules Regulating the Florida Bar discusses the allowable percentages in detail. The Rule, in part, states:
a. Before the filing of an answer or the demand for appointment of arbitrators or, if no answer is filed or no demand for appointment of arbitrators is made, the expiration of the time period provided for such action:
1. 33 1/3% of any recovery up to $1 million; plus
2. 30% of any portion of the recovery between $1 million and $2 million; plus
3. 20% of any portion of the recovery exceeding $2 million.
b. After the filing of an answer or the demand for appointment of arbitrators or, if no answer is filed or no demand for appointment of arbitrators is made, the expiration of the time period provided for such action, through the entry of judgment:
1. 40% of any recovery up to $1 million; plus
2. 30% of any portion of the recovery between $1 million and $2 million; plus
3. 20% of any portion of the recovery exceeding $2 million.
c. If all defendants admit liability at the time of filing their answers and request a trial only on damages:
1. 33 1/3% of any recovery up to $1 million; plus
2. 20% of any portion of the recovery between $1 million and $2 million; plus
3. 15% of any portion of the recovery exceeding $2 million.
d. An additional 5% of any recovery after institution of any appellate proceeding is filed or post-judgment relief or action is required for recovery on the judgment.
If you are reading Rule 4-1.5 for the first time, it may seem confusing. But for purposes of understanding contingency fees generally, there are two important takeaways.
First, the personal injury attorney’s contingency fee increases after a lawsuit is filed. This makes sense; the more time a personal injury attorney puts in a case, the more the personal injury attorney should be entitled to charge. Second, a personal injury attorney’s contingency fee generally gets smaller if the settlement exceeds $2 million. As I have written about before, these types of cases are somewhat rare (https://barthelettelaw.com/you-dont-want-a-million-dollar-personal-injury-case/).
How do personal injury attorney charge for their costs?
Personal injury attorneys’ advertisements also discuss personal injury attorneys’ costs, and generally mention that all costs are advanced or fronted by the personal injury attorney.
Under the typical personal injury attorney contingency fee agreement, the personal injury attorney will pay for all costs and expenses incurred in handling the personal injury case. These costs include costs for obtaining medical records, costs to file your case, and costs to retain experts. When your case is over, the personal injury attorney will deduct these costs from the settlement.
Let’s use the same example from above to show how this works.
Let’s say the personal injury attorney spent $1,000 in costs. In addition to charging the $3,330 fee, the personal injury attorney will also deduct $1,000 in costs from the $10,000 settlement. You would keep the rest, or $5,670 ($10,000 – $3,330 – $1,000 = $5,670).
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