Most lawyers are paid by the hour whether they are drafting up a will, writing a contract, defending a criminal, or providing business advice. These types of lawyers will be retained with a down payment and then continue their services at an hourly rate. However, a personal injury lawyer receives a different type of compensation. A personal injury lawyer does not require any down payment and they do not charge their client by the hour.
A personal injury lawyer will finance their client’s case with money out of their own pocket. In a sense, they are making a calculated bet that they will win the case. Their hope is that they will receive a payoff down the road and in most cases, they do but there are a few cases where they do not.
Most people have a knowledge about this type of lawyer/client relationship. Whether they have heard it through an advertisement or from a friend, they are often familiar with the concept of paying no money up front but rather paying approximately 1/3 of any monies received. If a personal injury lawyer loses the case then the client will owe him nothing. The terminology for this type of arrangement is called a contingency fee basis.
A law firm will provide the client with a contract regarding this type of compensation. The client will sign the contract if he agrees with all the details including the percentage paid to the lawyer. Some clients have the belief that if they agree to a one third �” two thirds split, then the final settlement will show this ratio. However, it is not that simple because there may be other costs and fees that can substantially lower a client’s final payout.
A lawyer is under legal obligation to provide you with the information about how his fee is calculated. You as the client have the responsibility of making sure that you understand exactly what the fee arrangement means before you sign it. You will be signing a legal contract and once it is signed then you will be governed by its terms.
There are different types of personal injury lawyers and some will provide you with a simple, clear understanding about their contingency fee agreement. However, there are other lawyers who will only provide you with an agreement that their secretary has typed up. The later lawyer will not sit down with you and carefully go over the agreement.
It is therefore important that you thoroughly read your contingency fee contract and take whatever time is necessary to do so. If you need to take the agreement home and sleep on it then your lawyer should have no issue with you doing this. As you read the contract make sure that you write down any important questions regarding legal terms or information that you are unable to understand. Never be embarrassed about asking a question that you do not understand because after all, you probably do not have any legal training to assist you.