How to read a contingency fee agreement from a personal injury attorney

Here’s what you should look for in a fee agreement with a personal injury attorney. Keep in mind, this is general information and may not apply in your case. You should discuss the fee agreement with any attorneys you contact.

Identify the parties

The contingency fee agreement is a contract between you and the lawyer. In legal contracts, people are usually identified by their role: for example, client and attorney.

In some personal injury cases, another person will stand in for the injured person. For example, a parent would have to sign for a minor child who was hurt in a car crash. Or, a personal representative would sign on behalf of the estate of a person who was killed in a crash.

Understand the “contingency fee”

Contingency fee means that a personal injury attorney only gets paid attorney fees if they can successfully resolve your case.

Because they work on a contingency fee, your lawyer has a financial incentive to help you get the case resolved as quickly and successfully as possible. Then, they are paid a percentage of the total amount of money awarded to you.

The contingency is that if your case isn’t successful, your lawyer doesn’t get paid a fee. When a personal injury attorney signs a fee agreement, they are taking a financial risk for you.

A fee agreement should clearly state the percentage the law firm is paid out of any case settlement, and out of any trial verdict. Look for language like:

The contingent fee shall be 331/3  percent of any amounts received on the client’s behalf.

Confirm costs and expenses

Some of the common costs in personal injury lawsuits include:

  • Fees for obtaining medical bills and records;
  • The cost of preparing materials for a complete settlement demand;
  • Court filing fees;
  • Investigator fees;
  • The cost of hiring expert witnesses to review records and testify on your behalf.

These costs are all part of your case, but most injured people have already had a lot of expenses. The law firm will usually advance the costs and expenses, and you pay them back out of any settlement or verdict money at the end of the case.

Not all personal injury attorneys are able—or willing—to pay all of these costs up front. In reviewing a contingency fee agreement, look for language like:

The attorney will advance all of the reasonable and necessary costs and expenses associated with the client’s case.

Look for medical bills and subrogation

It is common situation:  your own car insurance company pays at least some of your bills and expenses after a crash. But if you pursue a personal injury claim against the person who caused the crash, then your insurance company can try to recover their costs from the other person’s insurance company.

That process is called subrogation.

This means if you get a settlement from the other person’s insurance company or you obtain a trial verdict, then you are responsible for paying back your own insurance company for the payments they made on your behalf.

Your attorney’s office should keep track of subrogation, as well as any medical bills you still owe, and pay these out of any money you receive in your lawsuit.

When you are reading a contingency fee agreement, pay careful attention to the sections about subrogation, liens, and paying back medical bills. You are still legally responsible for these bills if your lawyer’s office does not keep track and pay them.

In the fee agreement, look for language like:

The attorney is authorized to retain money owed to the client’s insurance company or medical providers from any settlement or verdict.

Other things to look for in the contingency fee agreement

After you check the contingency fee, confirm who pays costs, and make sure your personal injury attorney is holding money for subrogation and medical bills, here are a couple more things to look for when you’re reading a fee agreement.

Power of attorney. The firm should include a limited Power of Attorney, either in the contingency fee agreement or a separate form. Injury cases may involve getting a number of physical checks for payment and reimbursement from different insurance companies. A limited Power of Attorney means the firm can sign and deposit these on your behalf.

Using co-counsel. Sometimes, in more complex cases—for example, a commercial truck accident—your lawyer may need help from another attorney. In these situations, a co-counsel relationship is usually in everyone’s best interest. It should not change the amount you pay; it simply means your attorney is dividing their fee with the other attorney.

Consent for settlement. Your lawyer can’t agree to a settlement with an insurance company without your consent.

Questions? Contact us for a free consultation

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