Losing a case is never fun and most litigation lawyers will lose a case at some point in their careers. For lawyers who work in personal injury law, a lost case is not only demoralizing, it can also be a significant blow to their finances. Unlike many other types of lawyers, personal injury lawyers work almost entirely on a contingency fee basis, meaning they charge their clients a fee only if they win their case. While such a system may sound like lawyers are stuck paying for the costs of a case if they lose, the good news is that even when a case is lost, personal injury lawyers can recover the costs associated with that case from their clients in most instances.
Fees and Costs
It is important to understand that there is a big difference between fees and costs. Personal injury lawyers who operate purely on a contingency fee basis only charge clients for their time if they win the case in question. If the case is lost, then the lawyer cannot charge the client for the time he or she put into the case. At the same time, however, clients will be expected to pay for costs associated with the case. Costs are expenses that must be paid to help further a plaintiff’s case. Some examples of costs can include, but are not limited to, filing fees, expert fees, travel costs, jury fees, postage, copying, phone charges, and research costs. Because every case is unique, the types of costs a client will be expected to pay will depend on the unique circumstances of their particular case. It is useful to think of fees as the income a lawyer makes, whereas costs are the expenses associated with pursuing a case.
For lawyers, it is extremely important that they be completely upfront with clients about the differences between costs and fees. While such differences may appear routine for those who work in the legal profession, for many non-lawyers fees and costs will be treated as synonymous terms. Clients need to know that even if they hire a lawyer on a contingency fee basis that they will still be responsible for paying the costs associated with their case regardless of the final verdict.
Another way lawyers can recover case fees even if they lose a case is by charging an hourly fee. A lawyer that charges an hourly fee will usually expect a client to pay a retainer upfront. The retainer will help cover the costs of the case. The most obvious advantage of charging an hourly rate is that it removes much of the risk an attorney takes on when he or she agrees to handle a particular case. However, since such a payment structure requires clients to put up large sums of money early on, it is very rare in personal injury cases. Typically, hourly rates would only be charged in cases that involve a high element of risk or when clients can afford the extra expense.
Personal injury law can sometimes feel like a financially risky profession, especially for those working purely on a contingency fee basis. However, even when a case is lost personal injury lawyers have avenues for recovering the costs of the case. A payment structure should carefully outline how costs are to be covered and this structure should be clearly explained to clients early on.