Why a 25% Fee May Not Be What It Seems in Personal Injury Cases

If you’ve been looking for a personal injury lawyer, you’ve probably seen ads promising a 25% contingency fee. It sounds simple and appealing. You assume you keep more of your settlement. Sometimes that is true, but not always. When you hire an attorney, you are  paying for their experience and reputation as well as access to that attorney while they are working on your case.  The percentage you see in an ad is often only small part of the picture.  And the amount of the fee has the least impact on the results and outcome that you are going to get.

When It Comes to Attorney Services, You Get What You Pay For!

I get calls every month from people who hired an attorney on a discounted fee. They are unhappy because the attorney obtained a lowball settlement offer and recommended that they accept it.  They have either fired the attorney and are looking for new representation; or the attorney is telling them they aren’t willing to file suit and are going to withdraw if the offer is refused.

Having to change lawyers in the middle of a case may not improve the lowball offer. The reason this is true is because there are usually issues in the case that lead to the low offer.  And, those issues could have been addressed early on but were not.  It’s hard to unbake a cake that has been put in the oven!  Oftentimes, in my consultations with people looking for a new lawyer, they are learning about these issues for the first time as I explain them.

The Fine Print Matters More Than the Percentage

Under the Georgia’s Rules of Professional Conduct, lawyers are required to explain how their fees actually work. That includes when the percentage applies and whether it changes. In many cases, a 25% fee only applies before a lawsuit is filed. If your case becomes more complicated or requires litigation, the fee may increase. That means the advertised number may not reflect what you ultimately pay.

Costs Can Change What You Take Home

Case expenses are another important factor. These can include medical records, expert witnesses, depositions, and court filing fees. The client is usually responsible for paying the expenses related to their case.  Most lawyers advance these costs to the client at no charge, to be reimbursed by the client when the case is resolved. Some lawyers use a funding company to pay expenses, but the interest and fees charged by the funding company are passed on to the client.  That difference can significantly impact your net recovery.  Even with a lower percentage, you could end up with less money than you expected.

Lower Fee Does Not Always Mean Better Outcome

It is easy to focus on the percentage, but the more important question is how much you recover in total. An experienced trial lawyer who charges a higher fee but is willing to fully develop your case pre-suit and take it to trial may achieve a much better result. If the attorney has proven results trying cases like yours, they are more likely to obtain a higher recovery.  In that situation, a higher percentage can still leave you with more money in your pocket.

Incentives Still Matter

Contingency fees are supposed to align your lawyer’s interests with yours, but the structure still matters. A lower fee can sometimes mean the attorney has a higher volume practice, with less time spent on each case, and little or no access to the attorney handling your case.  That can create pressure to resolve cases quickly rather than pursue their full value. The best way to get any case settled is to prepare it as if it is going to be tried.

Cutting corners on investigations, or not hiring experts when necessary, may not bring full value to your case pre-suit.  Insurance companies understand which lawyers prepare cases for trial and which lawyers prepare cases for settlement.  Which lawyer do you think gets better results pre-suit?  This may not be true in every case, but it is something you should consider.

Lower Fee Could Mean Limited Scope of Representation

There are many complex issues that can arise in a personal injury case.  For instance, most health insurance plans, and Medicare and Medicaid, have lien and subrogation provisions in their agreements requiring them to be repaid if they provide treatment due to injuries caused by a third-party. Your own auto insurer may seek reimbursement from your settlement if you have medical payments coverage. Most attorneys handle these issues in-house.  Attorneys with discounted fees often use outside vendors to resolve insurer lien claims. The fees they charge are usually a percentage of the amount of the reduction they negotiate.  And those fees are taken out of the client’s portion of the settlement proceeds.

What You Should Ask Before You Sign

Before agreeing to any fee, ask whether the 25% applies through trial or only before suit is filed. Find out if the fee increases if litigation becomes necessary. Ask how expenses are handled and whether the attorney is advancing expenses at no charge or using a funding company that will charge interest  that you have to pay out of your settlement.  Ask if the lawyer will be handling any subrogation or lien claims,  or using an outside vendor, and the fees you will have to pay.  You should also ask about the lawyer’s experience trying cases like yours. Will they be willing to try your case if a lowball offer is made?  Ultimately, trial lawyers obtain better results because the insurance companies know they will try the case if they don’t make a fair offer.

The Bottom Line

A 25% fee can be a good deal in the right situation, but it is not automatically the better choice. The real goal is to maximize your recovery and make sure your case is handled properly.  And you should be able to speak to your attorney personally when you have questions about your case.  Understanding how the fee actually works is far more important than the number in the advertisement.

Visit Our Georgia Personal Injury Law Offices