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How Much Do Lawyers Take Away From Settlements?

Posted in California Law,Personal Injury on April 19, 2019

The assumed high cost of legal fees very often deters some people from seeking legal counsel when they need it the most. Legal representation can be very expensive, especially for difficult cases requiring lots of time and attention. When attorneys use traditional billing methods and charge clients for time spent working on their cases, those clients may discover their legal fees outweigh their claim values or break even, effectively resulting in no recovery despite a favorable settlement or verdict.

Potential personal injury claimants should take time to carefully research possible personal injury lawyers before committing to legal representation. An attorney’s billing practices can be more substantial than a client realizes at first, so understanding client financial obligations are essential before signing any contract for legal counsel.

Billable Hours

When an attorney bills by the hour, the client should expect the attorney to track all time spent working on his or her case in increments of 10 or 15 minutes. This may sound reasonable, but when an attorney charges several hundred dollars per hour, legal fees add up very quickly. Most attorneys who bill by the hour work for large companies and wealthy clients who can afford their services on a consistent basis.

Many attorneys understand that billable hours are not realistic for average Americans. Most families cannot spare more than a few hundred let alone a few thousand dollars for legal representation. If you are concerned about how much you will need to pay in legal fees after winning your case, finding an attorney who offers contingency fee billing is a wiser choice.

What Is a Contingency Fee?

As the name suggests, a contingency fee agreement means the attorney’s fee is dependent upon him or her winning the client’s case. Most contingency fee agreements stipulate that clients are not billed up-front for any time spent working on their cases or attorneys’ expenses. However, the attorneys will track time and expenses and the results may influence the final contingency fee amount.

For example, if an attorney claims to charge a 30% contingency fee, logically this means the attorney takes 30% of the case award or settlement amount for a successful case. However, some contingency fee agreements count expenses separately or tier their contingency fees based on settlement amounts. Carefully review any contingency fee offer before agreeing to representation so you know exactly what you will owe your attorney.

A contingency fee may seem exorbitant, but potential clients should remember that attorneys are taking substantial risks by offering contingency fee billing. If the attorney loses the case, he or she collects nothing, and the client faces no financial obligation. The attorney’s success is effectively contingent upon clients’ successes.

State Laws and Attorneys’ Fees

Some states set limits on how much an attorney can charge a client. For example, a state may allow an attorney to charge no more than a specific percentage of a settlement or cash award up to a certain dollar value. If the settlement value exceeds this limit, the state places a different percentage limit on the next tier. For example, state law may allow an attorney to charge a 30% contingency fee on the first $250,000 of a claim, 40% of the next $200,000 of the same claim, and 50% of the next $200,000 of the same claim. Generally, the higher the overall value of the case, the more expensive the contingency fee becomes.

If you have a personal injury claim and are concerned about attorneys’ fees, consider taking advantage of free consultation offers from local attorneys. Ask about their billing structures and estimates of your claim’s value. Compare their answers, follow your instinct, and choose the attorney that makes you feel most confident about your legal position.

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