What Is the Average Contingency Fee of a Personal Injury Lawyer?

Written by James Hirby | Fact checked by The Law Dictionary staff |  

Few personal injury lawyers charge by the hour. Instead, they charge "contingency fees" that represent substantial proportions of any settlements or judgments awarded in the cases that they accept. When they lose a case for their client, they usually receive nothing.

Most personal injury attorneys spin this arrangement as a public service and fill the airwaves with advertisements touting the fact that they aren't compensated unless they're successful in court. In reality, the typical contingency fee works out to a far greater per-hour rate than any personal injury lawyer would dare to charge. From a business perspective, this is essential: Since many personal injury cases end in failure, legal professionals who specialize in this type of law may go weeks or months without seeing any big payouts. Large contingency fees help to mitigate these "dry spells."

For centuries, tort lawyers have charged a standard contingency fee of one-third of a case's winnings. In other words, a typical personal injury lawyer takes $10,000 off the top of a $30,000 award and leaves $20,000 for their client. However, many lawyers charge small extra fees and may request certain additional reimbursements.

Personal injury law is increasingly competitive. This is especially true in larger metropolitan areas: In a typical big-city phone book, there may be hundreds of glossy advertisements and full-page pullouts touting the successes of various slick-looking attorneys. Unfortunately, this new reality hasn't done much to drive down legal costs.

There may be two reasons for this. First, many personal injury judgments include substantial punitive damage awards. These windfalls aren't necessary to cover the costs of property damage, medical bills, and other injury-related issues. Instead, they go straight into plaintiffs' pockets. Personal injury attorneys may feel fewer qualms about dipping into these "extra" pools of money to take their cuts. Likewise, their clients may not feel the loss as acutely as they would have had they needed the money to cover pressing debts.

Secondly, personal injury lawyers recognize the need to maintain their lucrative business model. Although some rogue attorneys occasionally levy contingency fees at a significant discount to the standard 33 percent rate, this practice is considered taboo. As legal services become easier to obtain and a growing number of injured parties try their luck at self-representation, personal injury attorneys fear a "race to the bottom" that could devastate their profit margins. As such, contingency fees remain stubbornly high.

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