You have no doubt heard the horror stories about lawyers and ‘billable hours.’ The good news is that if you have a personal injury claim, your lawyer will almost certainly not be using the billable hour system to calculate your legal fees. Instead, they will use a contingency fee system, which offers far better terms.
Types of Payment Arrangements
Lawyers use different payment arrangements for different purposes. The most commonly used are billable hours, flat fees, and contingency fees.
Sometimes, people get creative and use alternative payment arrangements such as hybrid contingency fee/billable hour arrangements, but this is relatively uncommon. Be sure to put any fee agreement you agree on into writing.
Billable Hours
The billable hour system is almost self-explanatory. Your lawyer will charge you a certain amount per hour they spend working on your case. Most lawyers who use this system charge several hundred dollars per hour.
This system makes the most sense for lawyers when they are not sure how much time they will spend on a case. It also makes sense when the case does not generate any income from which the lawyer can deduct their fees. One good example is criminal defense law.
Flat Fee
A flat fee is a certain amount of money to perform a particular task. An example might be $4,000 to prepare an application for US citizenship, for example. Typically, the fee is the same regardless of whether the application is successful.
Lawyers typically use flat fees for cases that are highly standardized, meaning they are confident that they know how much work they will have to put into the case. They also frequently use the flat fee system when the case will generate no income from which to pay their fee. Common examples of ‘flat fee’ cases are immigration applications and estate documents such as a last will and testament.
Contingency Fee
A contingency fee works like a business deal between you and your lawyer. Essentially, your lawyer ‘invests’ their labor in your claim, and in return, they are entitled to a pre-agreed percentage of whatever amount you win. This pre-agreed percentage is typically 30% to 40% of the total value of your claim. The exact amount depends on many factors, including how time-consuming the case will likely be.
Your claims ‘total value’ equals whatever amount your lawyer manages to win for you. If you agree to a 35% contingency fee and your lawyer wins $100 for you, your contingency fee is $35. If your lawyer wins $100,000, your contingency fee is $35,000. It doesn’t matter where the money comes from—a jury verdict, for example, or a private settlement agreement. Either way, your lawyer gets the pre-agreed percentage.
So what happens if your lawyer loses the case? Well, 35% of zero is zero, so your legal bill for attorney’s fees will be zero. In addition, the fee for your initial consultation is zero, and your upfront fees are zero.
Why You’re Probably Better Off With a Lawyer Than Without One, Even After You Pay Your Contingency Fee
Contingency fees sound expensive. Still, in many cases you can end up way ahead for hiring a lawyer even if you do pay a contingency fee. Imagine, for example, that without a lawyer, you would have won $50,000 for a given claim.
Now imagine that the lawyer you hired quadruples the value of your claim to $200,000 and then deducts a 35% contingency fee ($70,000). That will leave you with $130,000, which is far more than the $50,000 you would otherwise be walking away with.
Following are some of the reasons why hiring a lawyer might make sense:
- Non-economic damages are nebulous. How much is your pain and suffering worth, for example? $1,000? $100,000? The answer might depend on the skill of your lawyer.
- What if you’re injured by a drunk driver? In addition to economic and non-economic damages, you might qualify for punitive damages. But can you convince the court to award them? A lawyer can greatly increase your odds of success.
- What if the opposing party accuses you of contributory fault (by saying the accident was partly your fault)? If they are successful, you could lose some or all of the value of your claim. A lawyer can help you defend against a contributory fault claim.
- Hiring a lawyer with trial experience can greatly enhance your bargaining power in settlement negotiations.
There are dozens of other ways that a lawyer can help you.
Do You Need an Oklahoma City Personal Injury Lawyer?
Not all cases require the assistance of an Oklahoma City personal injury lawyer. You might not need one for a minor car accident, for example. If you do need one, however, it’s best to hire one early so that they have time to become knowledgeable about your case before any critical deadlines approach. At Laird Hammons Laird Personal Injury Lawyers, we can help you. You can schedule a free consultation with an Oklahoma City attorney or call (405) 497-0480.