In order to clearly understand what an attorney in a personal injury case gets out of a settlement, you need to understand the difference between attorney fees and attorney costs.
Attorney Fees are the charges an attorney generates for the work performed for a client. Think of the attorney fees as the attorney’s pay check for working on your case.
Attorney Costs are monetary advances that an attorney makes for the client to advance the client’s cause. Think of attorney costs as an interest free loan that the attorney makes so that the appropriate work can be performed on case.
For example, in order to file a lawsuit, the courts charge a fee of several hundred dollars, which must be paid at the time the lawsuit is filed. Also, attorneys may need to retain investigators, experts, and photographers and these services must all be paid at the time they are performed. Of course, there are the more familiar costs for postage, photo-copies, facsimile transmissions, etc. Attorney Costs can range anywhere from several hundred dollars, to several hundred thousand dollars depending on the complexity of the case, and whether the case proceeds to trial. In a typical case, the attorney costs are paid for by the attorney, but these costs are then later reimbursed to the attorney from the client’s settlement at the time the client’s case settles.
Personal injury attorneys in California typically work on what is known as a contingency fee basis. This means that the attorney will only get paid an attorney fee if compensation is obtained for the client. If no compensation is obtained for the client, the attorney is not entitled to an attorney fee even though the attorney performed work on the client’s case. Contingency fee agreements allow victims of accidents to hire a lawyer without paying the lawyer any money up front.
In contingency fee agreements, attorneys charge an attorney fee that is equal to a specific percentage of the client’s settlement. Typically, an attorney fee of 33 and 1/3 percent of the client’s settlement is charged if the matter is settled out of court, and 40 percent of the client’s settlement is charged if a lawsuit needs to be filed in order to settle the client’s case. Some attorneys may charge a little lower, and others a little higher. The attorney fee for minors are typically 25% of the minor’s settlement, whether or not a lawsuit needs to be filed to settle the case. Your lawyer will work hard for you because he or she will not get paid unless you do — and it is in their best interest to maximize your recovery.
