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Room For Negotiation Of Attorney Fees With Contingency Cases



There are prudent steps injury claimants should take in preparation for meeting with counsel to discuss prosecuting their personal injury claims. These preparation steps should be taken before ever stepping foot in an attorney's office. Key amongst these steps is understanding the different manners that counsel are compensated (contingency fee, flat fee, and hourly fee). Then, a personal injury claimant must determine his or her preferred manner for paying the counsel he or she retains. Of course, it is always best to meet with at least more than one attorney to have:

  • a sense of comparison
  • room for negotiation
  • a buffer in case of personality, scheduling, or other conflicts
  • the ability to make a selection from an applicant pool

Contingency Fees

The majority of personal injury attorneys prefer to take a client's case based upon the compensation model called contingency fee. This model entails counsel retaining a set percentage of the total amount of court judgment or settlement award and the claimant keeping the remainder. In many cases, personal injury counsel retains one-third or 33 percent of the recovery amount if the case settles prior to trial and up to 40 percent if the case must go through trial stage. If the trial is appealed and the same counsel is used, some attorneys charge a slighter higher premium, and the contingency fee is set at 50 percent. A contingency fee structure generally motivates a personal injury attorney to earn the highest amount possible because when the client wins, the attorney wins. The higher the settlement, the more money that both the client and the attorney recover.

Negotiation Room

The percentage in a contingency fee structure is generally subject to negotiation. There are probably at least a few percentage points that are subject to compromise, particularly if the case is a large one that appears to be lucrative to the attorney. In most instances, each party's willingness to negotiate and maintain flexibility will depend on the strengths of the case and the specific facts and circumstances. It is best to negotiate up front and before the case begins and money and time are spent and invested by client or counsel.

Written Fee Agreements

The fee structure and compensation model with the agreed-upon percentages will be incorporated into a written fee agreement. The fee agreement or engagement agreement is a written contract signed by the client and attorney at the onset of representation that defines the scope, terms, and compensation for the representation. Clients should never avoid raising or talking about money and compensation, even if counsel does not mention it. The alternative could be costly and disappointing if the attorney's default compensation is put into place unbeknownst to the unwitting client.

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