- Dec 3, 2022
Updated: Dec 26, 2022
Contingency Fee Agreements in Car Accident Cases
A personal injury attorney will generally get paid a percentage of the recovery from either a settlement or a court judgement. This arrangement is commonly referred to as a contingency fee agreement and it is used in most types of personal injury cases, such as a car accident, dog bite, slip and fall, or any other injury claim. You will see many attorneys advertise this as “No Fees Unless We Win” or “No Win – No Fee”.
In a contingency fee agreement, the attorney only gets paid if she is successful in obtaining a monetary recovery for the client. So if there is no recovery, the attorney won’t be paid and will not attempt to bill the client for their fees or expenses.
The contingency fee can come from the total sum of money recovered from either general damages or special damages. Additionally, the attorney can also recover a contingency fee from an underinsured or uninsured motorist coverage which the client carries.
How Is A Contingency Fee Percentage Determined
Contingency fees vary between 25% to 50%, depending on the type of case, the complexity of the case, and the stage in which the case is resolved. Generally, in a routine car accident, a contingency fee agreement will be divided in two tiers:
- 33% of gross recovery if the recovery is obtained before the filing of a lawsuit, mediation, arbitration, or any other formal initiation of proceedings – usually referred to as the pre-litigation phase. For example, investigating a case, preparing demands letters, negotiating with the insurance companies, assisting with treatment and car repairs, or doing any other type of work before or in anticipation of a lawsuit is considered pre-litigation. Typically, a lawyer in a personal injury case will charge 33% if the case settles during this stage.
- 40% of gross recovery if recovery is obtained after filing of a lawsuit, mediation, arbitration, or any other formal initiation of proceedings. If the attorney ends up filing a lawsuit in court because the other party does not want to settle, then the contingency fee is 40%. This is because litigating a case in court is more complex and involves additional steps, such as conducting discovery, filing motions, taking and defending depositions, making court appearances and eventually conducting a jury trial. It is important to remember that many attorneys consider an arbitration or mediation in a personal injury case akin to filing a court action and thus will take 40% from the recovery.
- Medical malpractice cases. In California, the law caps the amount of contingency fee an attorney can charge in medical malpractice cases. Under Business and Professions Code, Section 6146, contingency fees in a medical malpractice case are as follows:
- 40% of the first $50,000 recovered.
- 33.3% of the next $50,000 recovered.
- 25% of the next $500,000 recovered.
- 15% of any amount on which the recovery exceeds $600,000.
It is important to remember that these contingency fee rates, except for medical malpractice cases, are not set by law and may be negotiated between the client and the attorney, So when you’re speaking with an attorney regarding your potential case always ask what the pre-litigation and litigation contingency fee rates are.
