Selecting Your Lawyer Based on Contingency Fees

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[Below is a transcription of the podcast]

Hi, this is Ann Margaret Perkins with Perkins Law Firm. Today I’m going to be talking about selecting your lawyer based on the contingency fee that they charge. Lots of people now are shopping around for what they pay their personal injury lawyer. And that’s not a bad thing to do. Everybody likes a bargain. But the important thing to remember is, it’s not a bargain unless you’re getting the same quality at a lower price.

It may help to understand a little bit about contingency fees. Contingency fees have historically been one-third of the settlement or verdict. And I’m not really sure how that developed. But I can tell you that my dad had a fee schedule that used to be published by the Carroll County Bar Association back when he first started practicing law in the 1950’s. And even back then the contingency fees in personal injury cases were one-third.

If you see a contingency fee for 25%, which some people are advertising now, you might think that you really need to jump on that because you’re going to save 8% off the fee. If you could get the same quality of services for 25%, then you’d be right to take the lower fee. I can’t absolutely tell you that some people who offer that fee may not be able to provide quality legal services, but I can tell you I would not take a case on a 25% contingency fee. Why? I don’t think I could put the effort necessary to handling your case well and break even at 25%.

Now one question you might have is: if it’s a bigger recovery, then you could reduce your fee and still make money. Rarely is there going to be a big recovery without a big investment of time and money on the part of the attorney. Is there the very exceptional case where that may be true? I don’t doubt those happen. But I will tell you in my 25 years of doing this, I have not seen that. And for me personally, if I did not see that my efforts or my experience or my counsel made a difference in a person’s recovery, if they were going to get paid a million dollars whether I did anything or not, then I would adjust my fee without even having to be asked.

There’s almost always going to be a better recovery if the attorney can afford to put necessary time and effort into your case, and you never want your attorney trying to cut corners in terms of time. Since you’re not paying them by the hour, you want them to be incentivized to do as much work as necessary to increase the recovery. If they benefit from that extra work, you don’t care so long as it increases your recovery, and it will.

You probably know that in Georgia the minimum required liability insurance on a vehicle is $25,000. And there are a large number of people who carry the minimum amount of coverage. A one-third contingency fee on a $25,000 dollar recovery is $8,300 dollars. The hourly rate for most experienced attorneys is three hundred dollars an hour and up. If you assume the recovery is $8,300 dollars, then an attorney is only being paid for 26 hours worth of work in a case. And it’s not just the attorney who is working on your case, you’ve got to remember it’s also their staff’s time as well as the cost of keeping an office open with computers and phones, research materials, and the many other things we use while working on cases. I have never had a case that I did not have considerably more than 26 hours of time in. So at 33% on a $25,000 case, an attorney is really not even being paid the hourly rate that most attorneys get for divorces, criminal cases, wills, etc.

Another reason that you don’t need to just look at the contingency fee is because an attorney that you want to be handling your case is going to be an attorney who will advance whatever costs are necessary to handle your case. Sometimes those costs can be considerable. If the case requires expert testimony, a good attorney will typically advance those costs. The cost associated with trying your case can get into the 5, 10, 15 or 20 thousand dollar range, and it’s worth it to you to have an attorney who can and will front whatever those costs are.

One additional thing that people may not think about in terms of what they’re really paying for is the number of post-settlement issues that come up. If you were hurt at work and worker’s compensation paid your bills, or you have health insurance or Medicare or Medicaid, they may have a right or at least claim to have a right to get reimbursed out of your recovery. You benefit from having an attorney who knows how to and will challenge those claims. Frequently I’m able to totally dispense with those reimbursement claims. And even where I’m not, I know the things to do to reduce them to the minimum repayment required for my client. I don’t get paid any additional money for that reduction even though it puts more money in my clients’ pockets.   

When I take a case, I’m never guaranteed that the case is going to settle. That case may require that I file a lawsuit. It may require a file a lawsuit and take depositions. It may require I file a lawsuit, take depositions and try the case to a jury. There might be motions I have to deal with. I don’t know when I sign that contract with a client what work is going to be required of me. When you hire someone you need to know that whatever work is ultimately required on that case, that attorney is being paid enough that they’re going to work as hard as they possibly can to get you the best recovery.

I know this podcast has been longer than many and the reason for that is to give you a peek into how things work and to let you see why what may appear to be a bargain may not, in fact, be a bargain. So if you’re going to shop a contingency fee, please make sure and ask whoever you’re interviewing about all the issues that I’ve mentioned to make sure that you do in fact get the quality of legal representation that you deserve and that you are going to need to get the best recovery.

I hope this is helpful. Again with everything that I talk about on these podcasts, I’m always happy to answer any further questions or have any discussion with you that you’d like. So if you need more information, give me a call 770-834-2083.