In this article, we will try to define the difference between Attorney Fees and Case Costs; and how they are allocated.
Sometimes the most competent lawyers miscalculate their chances and end up losing a case. This is always a possibility in dealing with legal matters. That is why, no lawyer is allowed by law to guarantee success. They can only predict an outcome considering the attendant circumstances based on their professional opinions.
When it comes to personal injury law, losing a case may not only affect the lawyer emotionally, it could make a huge dent in their pocket books. That is because most personal injury lawyers work on contingency fee basis. This simply means that you the client are not required to pay the Attorney Fee upfront. Instead, the attorney will be paid a negotiated percentage of any amount you receive from a settlement or a court verdict or none at all, if the case is lost.
It is, however, important that you negotiate the fee arrangement and costs allocations in your first meeting. Any lawyer who brushes you off or is not clear on these issues is not competent and credible to handle your case.
The amount of contingency fee is negotiable but some states put a limit to it. Generally, this fee is about 33% of the recovered amount. In California, the lawyer must tell you that his or her fees are negotiable. Moreover, all contingency fee arrangements must be in writing.
Sometimes, your Lawyer may propose a “sliding scale” contingency fee agreement. This means that the attorney fee will depend on the stage of litigation. For instance, it is common amongst lawyers to agree on receiving 28 percent, if the case settles without filing a law suit; 33 percent if the case is settled after the filing of a lawsuit; 40 percent of the court awarded amount.
It is very 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 that he or she put into the case. At the same time, however, clients may be expected to pay for costs associated with the case.
Costs are expenses such as court filings fees, obtaining police reports, obtaining and preparing medical records, hiring expert witnesses, copies of deposition transcripts and so on.
The allocation of these costs depends on the terms of your agreement with your personal injury lawyer. Some of them will advance such costs and deduct them from your settlement or court awarded amount. Some lawyers require that you the client pay these expenses, when needed.
It is very important again that you clearly know and understand the terms of your agreement with your lawyer in advance. Your agreement should also clearly specify who is responsible for such costs, which could mount up to thousands of dollars.
Who receives the award or settlement check?
Generally, the settlement or court awarded checks are sent to the attorney in a personal injury cases. This is to insure that all contingency costs such a doctors' fees and so on are taken care of first. After paying all the outstanding bills, your lawyer will deduct the amount you agreed to pay him or her in your contingency fee agreement, plus any costs (if applicable), and the rest will be paid to you.
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