How Personal Injury Lawyers Are Paid

Written by on November 22, 2018.

People are sometimes reluctant to seek legal advice after being injured. They believe they cannot afford legal fees and expenses, particularly if their injuries have caused them to be off work.

Contingency Fees

In most cases, however, an injured person who files a lawsuit against a negligent party (a “plaintiff”) does not pay anything up front or out-of-pocket. This is because most personal injury lawyers handle cases on a contingency fee basis. The goal of contingency fees is to provide the public with access to a lawyer without the worry of up front legal fees and costs.[1]

A contingency fee is a fee that is applied only if the lawyer wins the case. In other words, a lawyer’s fees are contingent or dependent on the lawyer getting compensation for the client. If the case is won, the lawyer usually collects a percentage of the client’s award as payment. If the lawyer is not successful, then the client does not have to pay any fees.

How Legal Fees are Determined

The amount a lawyer collects for legal fees may vary and is usually on a percentage basis. This should be established at the beginning of a case through what is called a contingency fee retainer agreement.

The lawyer’s proposed fee may vary depending on a number of factors, including:

  • The likelihood of success;
  • The nature and complexity of the claim;
  • The expense and risk of pursuing the claim;
  • The amount of the expected recovery;
  • Who is to receive an award of costs; and,
  • The amount of costs awarded.[2]

Given that most personal injury lawyers only get paid if they are successful, they are usually very careful about the cases they accept. In other words, if a personal injury lawyer takes a case, it usually means that he or she believes there is a chance of success.

Option to Pay on an Hourly Basis

It is important to note that a contingency fee arrangement is not the only option. A lawyer must offer clients the option to pay an hourly rate instead of a contingency fee.

Changing Lawyers

If a client decides to change lawyers in the middle of a case, most lawyers will charge for the time they put into the case. In most cases, the former lawyer and new lawyer will make an arrangement so that these fees will not be charged until the end of the case. This information should be described in the contingency fee retainer agreement.

Legal Expenses or Disbursements

Most personal injury lawyers will also advance legal expenses or disbursements, rather than asking clients to pay up front. Some examples of legal expenses include the following:

  • Court filing fees;
  • The cost of hiring expert witnesses;
  • The cost of developing courtroom presentations;
  • Investigators’ fees;
  • Photocopying and faxing;
  • Phone and mail charges; and,
  • Research costs.

In other words, disbursements are expenses paid on an ongoing basis in order to advance a client’s case. When the matter is over and if the case is successful, the lawyer will usually add these expenses on top of their fees. The contingency fee retainer agreement should describe in detail when and how disbursements are to be paid by a client.

Contribution from the Defendant

If the case is successful, the unsuccessful party will usually be required to contribute to the plaintiff’s legal fees and disbursements. This will lessen what a client will be required to pay to the lawyer out of the funds received from a lawsuit.

Reviewing the Contingency Fee Retainer Agreement

It is very important that clients understand how their lawyer is being paid from the beginning of the lawyer-client relationship. Lawyers should meet with new clients to review the contingency fee retainer agreement in detail and to answer any questions.

Anna Stoll practices with the Siskinds Personal Injury Law department. If you have questions about the information contained within this article or any other insurance questions, please write to anna.stoll@siskinds.com or call 519-660-7832.

[1] https://lso.ca/news-events/latest-news/latest-news-2017/law-society-publishes-recommendations-on-contingency-fees

[2] https://lso.ca/paralegals/practice-supports-and-resources/topics/managing-money/fees-and-disbursements/contingency-fees

Posted in Personal Injury & Motor Vehicle Claims