Most of the time you hire a law firm or a single attorney, you will be asked to pay what is called a retainer. A retainer is payment up front. The law firm or attorney takes the retainer and places it into his or her lawyer trust account. As the attorney works on your case, the hours are added up weekly and the lawyer pays himself or herself from your retainer. Once your retainer is depleted or close to it, you will be asked to pay an additional retainer. This prevents lawyers and law firms from becoming bill collectors. Generally speaking, attorneys do not work on your case and then bill you later.

With a contingency payment arrangement, however, this is exactly what happens. In fact, if the attorney does not recover for you, you will never pay anything at all. This sort of fee structure is almost exclusively used by attorneys, when handling personal injury (tort) cases. The attorney has the client sign a contingency agreement, which will specify a specific percentage that the attorney will get, if and when a settlement or judgment is attained.

For example, say you were injured in a slip and fall accident, at a grocery store. You hire an attorney on a contingency fee structure, and agree that the attorney will get 40% of the settlement, after court costs and other costs. If the attorney or law firm spends $2,000.00 on filing fees, subpoenas, summons, copies, and printing costs, and if the attorney is able to recover a settlement of $100,000.00, the money is divided as follows. First, the attorney or law firm takes the $2,000.00 off the top, to cover the out-of-pocket costs. This leaves $98,000.00. The attorney or law firm will then take 40% of this amount, or $39,200.00 and will cut you a check for the remaining amount, $58,800.00.

Understanding this, some people try to negotiate their own settlement with insurance companies or the liable party, thinking they will save 40%, but – in reality – it does not work out this way. In fact, personal injury victims who hire attorneys statistically recover more money, even after paying the attorney’s contingency fee. This occurs for a number of reasons. First, attorneys that handle personal injury cases have experience doing this, and know when an offer is unacceptable or not. Second, the liable party or insurance company knows that a layperson, without representation, is – generally – not in a position to file a claim in court. Third, they know that even if the lay person did figure out how to file a claim, he or she is almost certainly going to be unable to successfully litigate the case and win.

For all of these reasons, if you’ve been injured, you are better off hiring counsel. When you add on top of this the fact that you have been injured and should focus on your recovery, it makes all the sense in the world to hire counsel.

While hot hiring counsel to try to save money does not generally work, there is another approach one could take that might save money. If you’ve been seriously injured and expect a large settlement, you could always hire an attorney or law firm on a retainer. This way, you pay the firm or attorney hourly. By bearing the cost yourself, up front, you will only be out the cost of the firms hourly fees and general costs, rather than a large percentage. However, calculating when it would pay off to proceed in this fashion is very difficult. Also, some attorney and law firms will not take personal injury cases on an hourly basis, but will insist on a contingency fee arrangement. Hoffman Law does take these cases hourly, for those who prefer to do so.

If you’ve been injured or know someone close to you who has been injured, call us today. As always, your initial consultation is absolutely free and one-hundred percent confidential! With personal injury cases, if we don’t recover, you don’t pay!