How Do Lawyers Get Paid?
Most people are afraid to hire a lawyer because lawyers can be expensive. In some cases, that’s true. But not as often as some think.
Lawyers who handle divorces, draft wills, or handle in real estate may charge by the hour or a flat fee. In most cases, they can deliver affordable services because they have systems in place that allow them to use their time efficiently. Still, some people who would benefit from a lawyer might not retain one because they can’t afford it.
In a few kinds of cases, such as protecting employees and consumers, the company that is sued must pay the legal fees of the victim if the victim wins the case. Most states follow the “American rule” that requires the parties in a legal dispute to pay their own lawyers.
Car wreck victims often don’t need to worry about paying their attorney themselves. Nearly all personal injury lawyers accept cases on a contingency fee basis. In that fee arrangement, clients do not pay a fee unless the lawyer wins the case. The fee is a percentage of the recovery at the end of the case. The settlement proceeds are also used to reimburse the attorney’s expenses for the case.
Criticism of Contingency Fees
Every state regulates the fees that attorneys can charge. The ethics code in each state prohibit attorneys from charging an unreasonable fee. Contingency fees are not allowed in criminal defense cases and divorce matters. In many other kinds of cases, contingency fees are prohibited.
Yet every state permits contingency fees in certain kinds of cases, including personal injury cases. States allow contingency fees because they allow injury victims to obtain access to a lawyer regardless of their financial condition.
Without contingency fees, many injury victims and grieving families would be unable to hire a lawyer. Insurance companies would have an incentive to fight every case, knowing that injury victims will not hire a lawyer if the fee is likely to be larger than the recovery.
Contingency fees ensure that injury victims never pay more to their attorneys than they recover. They also ensure that a lawyer will try to obtain the best possible result for a client, because the more a client receives in a settlement or verdict, the more money the lawyer will earn as a fee.
Contingency fees also ensure that personal injury lawsuits have merit. No lawyer wants to invest time in a case for which the lawyer will not be paid. Insurance companies that complain about frivolous litigation ignore the fact that lawyers who charge contingency fees believe in the cases they bring. If they don’t think the case has merit, they won’t take the case.
Value of Hiring a Lawyer
Contingency fees vary, depending on the place where the lawyer practices and the nature of the case. Fees typically range from 33% to 40% of the recovery, although smaller percentages are common in workers’ compensation cases, and a higher percentage might be charged in cases that involve a complex medical malpractice death case for example.
Is it worth paying a third of the recovery to hire a lawyer? According to a study by the Insurance Research Council, a research organization that is funded by insurance companies and heavily biased in favor of insurance companies, admits that victims who hire a lawyer receive 3.5 times more compensation that comparable victims who do not.
That statistic tells us that an unrepresented injury victim might settle a case for $10,000, while the same victim would receive $35,000 if the victim is represented by a lawyer. Let’s say the lawyer charges a contingency fee of one-third of the recovery. The injury victim who didn’t hire a lawyer keeps the entire $10,000 settlement. The injury victim who hired a lawyer takes home more than twice that.
Consult with a Georgia Attorney
If you have a legal question and are not sure what kind of lawyer you need, we’ll be happy to advise you of your options. If we’re not the right lawyers for you, we’ll help direct you to a lawyer who may be able to help.