How Do Lawyers Get Paid if They Lose a Case?

Posted on October 18, 2022 in Personal Injury

If you have spent time researching personal injury lawyers, you have probably seen many of them telling you that “you only pay if you win.” To understand why you do not have financial risk in hiring a personal injury attorney, it is crucial to understand how these lawyers get paid. You should also understand the financial considerations that your lawyer is facing when they are handling your case.

The legal system encourages accident victims to hire a lawyer. There is no hard-and-fast requirement to get legal representation, but it is undoubtedly in your best interest to hire a personal injury lawyer. You can rest assured that the insurance company has every advantage and resource at its disposal. Without an attorney, you will be in a compromised position, subject to the whims and conflicts of interest that permeate insurance companies.

You May Have Difficulty Coming up With Money to Pay a LawyerHow Do Lawyers Get Paid if They Lose a Case?

However, money is not necessarily something you have a lot of after a personal injury. Not only are you dealing with your share of the medical bills, but you may also be missing time from work because of your physical condition.

You will certainly not have enough money to hire an expensive lawyer who may charge you hundreds of dollars per hour. Many attorneys ask you for a retainer at the outset of your case to ensure they get paid. For families needing legal help, coming up with this money can be a challenge and burden.

However, this is not how it works in a personal injury case. Your attorney asks you for nothing upfront. They do not send you hourly bills as they work on your case. Even if they did, this will not be something that you can afford. If a personal injury lawyer asks you for money upfront, you should not hire them or pay them. This payment method is not how things get done in the personal injury field.

You Hire a Personal Injury Lawyer on a Contingency Basis

Personal injury attorneys work for you on a contingency basis. Contingency means something liable to happen as a result of something else. In this case, that something else is you winning your case. In a personal injury matter, winning means that you have either received a settlement check or have had a jury decide the case in your favor. When that happens, you will be obligated to pay your attorney.

Personal injury lawyers get fees out of the proceeds of your case when you win. The insurance company or the defendant will write the check initially for deposit in your lawyer’s escrow account. Your lawyer will be entitled to some proceeds, as will any health insurance company already paying for your medical expenses.

The lawyer is paid directly from that check or their separate check. You are not responsible for taking part of the money and physically paying your attorney. Your lawyer will handle the distribution of the money, and you will just need to receive your check when sent. When you provide payment instructions, the money will hit your account.

Once your lawyer and any lien holders get paid, then you will get your portion of the settlement or award. This process happens in a matter of days or weeks once you have signed a settlement agreement. Learn what the process of hiring an attorney entails and how you case can benefit.

You Do Not Pay a Lawyer if You Do Not Win

If you do not receive a settlement check or jury award, you will have no legal obligation to pay your lawyer anything for their services. You will not receive an unexpected bill at the end of your case for all your lawyer’s time. This structure is exactly what a lawyer means when they say, “we don’t get paid unless you get paid. ”

It does not matter how much time your lawyer has spent on your case. Even if your case went to trial and you lost, your lawyer will still not get anything for their time. Your case may have lasted for months or years. The result will still be the same for your attorney.

Your Attorney Also Has Risk in Your Case

In that sense, your attorney takes on significant risk when they agree to represent you in a personal injury matter. They take on this risk at the very outset of your case when they sign the representation agreement and agree to represent you.

Your lawyer has their financial considerations at play, namely whether they can earn a living. They take on many cases like yours that become their body of work. Once they agree to represent you, they must put your interests ahead of their own, as their fiduciary duty and the rules of professional conduct require.

They cannot easily drop you as a client if your case turns for the worse and your chances of success look more remote. Therefore, you can expect them to give you a good deal of scrutiny before they agree to take you on as a client. The lawyer will ask you as many questions at the initial consultation as you ask them.

Your lawyer will want to know that you have a strong case because they must continue to represent you once they have started your case, subject to a very narrow handful of exceptions. Your lawyer has no financial incentive to blow the proverbial smoke. If they did, they might be hurting themselves simultaneously because they will take on a weak case with little chance of success. They may have their own families and bills to pay and want cases they can win.

A Prospective Lawyer May Not Always Take Your Case

An excellent personal injury lawyer (or any lawyer) may carefully select the cases they accept. They do not want to take on a case they are not confident they can win. Further, your lawyer does not want to take on more cases than they can handle because it keeps them from devoting the proper attention to each client. The more cases an attorney takes, the more they may spread themselves too thin.

At your initial consultation, you can expect the lawyer to ask you many questions about your case. They are making their own judgment about whether it is worth it for them to represent you. They do not want to devote months or years of their time and leave it empty-handed.

There are other cases that they can take that can result in them earning money. If one lawyer turns you down, you should not let that discourage you from trying to contact another attorney. Some attorneys may feel differently about your case. However, if every attorney you speak to does not want to represent you, it should tell you something about the strength of your case.

Attorneys May End up Empty Handed After a Case

While you want to have an attorney with a strong track record representing you, every personal injury attorney has a story of a case they devoted a lot of time to that they did not win. There is practically no attorney who can guarantee that they have a 100 percent successful track record.

If you come across an attorney that makes this claim, you should be very skeptical. Lawyers who do not have a strong track record will not be in practice for a long time, both because they cannot find clients and because they cannot earn a living.

Although an attorney does not expect to lose your case, they entirely prepare to lose in the event they do. It happens from time to time. These are the rules of the road for personal injury lawyers and the risks they knowingly take when they take on the job.

The cases that an attorney wins should balance the time they spend on cases they do not win. You should focus your worry on yourself and your own financial situation, namely how you will get financial compensation when someone else has injured you in an accident.

How an Attorney Gets Paid Is Outlined at the Beginning of Your CaseHow Do Lawyers Get Paid if They Lose a Case?

In your personal injury case, the attorney puts everything in writing at the very start of the matter. You and the lawyer will sign a representation agreement. This document is a legal contract between you and the attorney, and it will set out all the financial terms of the representation.

The representation agreement will set out every provision related to fees. You and the attorney agree on everything at the outset, which you cannot change once it is signed. An attorney cannot change the rules on you once everything has begun. What they say in the representation agreement is unchangeable.

The representation agreement will usually set out two different percentages. The attorney will get one percentage if your case reaches a settlement agreement without needing a trial. If your case goes to trial, your attorney will be entitled to a slightly higher percentage to compensate them for the risk that they may spend additional time on your case without any assurances of success.

The provisions of the representation agreement that deal with payment to the attorney only discuss how they get paid when you win your case. There are no clauses in the agreement that require you to pay anything to the attorney if you lose.

You May Need to Pay Other Fees in Your Case

Some representation agreements cover things such as court fees. Again, the attorney must define these at the very beginning and cannot charge you anything not clearly addressed in the representation agreement.

Some attorneys may charge you for other expenses they incur while handling your case. According to the rules governing the legal profession, these must be spelled out in advance and be reasonable. The lawyer will not send you any bills while the case is pending. If you win your case, these fees will come out of the proceeds of your settlement, and you will get paid the net settlement.

You should carefully review the representation agreement before signing it to understand whether you may be required to pay something. You should not hire an attorney if the fees and expenses do not look right to you. How lawyers handle expenses can be a differentiating factor when choosing between them.

You Should Have Cost Certainty When You Work With a Lawyer

Bob Boatman Personal Injury Attorney

Robert W. Boatman, Personal Injury Attorney

This payment system should give you peace of mind when reaching out to a prospective lawyer for your case. There should be no unexpected bills. If you intend to try to save money by handling your matter, it might not end well for you. You will likely have more money in your pocket even after paying a lawyer than you will if you attempt to represent yourself.

Consider that a lawyer can often get a much higher settlement offer than a claimant on their own. For example, a claimant might receive a settlement offer they disagree with from an insurer. Once they hire a personal injury attorney to represent them, the lawyer might present stronger evidence and arguments to prove liability or damages. Then, the insurance company comes back with an offer much higher.

Many people think that legal fees will eat away at most of their settlement, but this is not the case. After paying a percentage of your settlement to your lawyer, the rest of the proceeds are likely much higher than your initial settlement offer when you did not have representation.

On your own, you cannot easily prove your case. You may present a weak claim that the insurance company will easily deny. Even if they make you a settlement offer, it can be for much less than you deserve. You do not have the leverage to force the insurance company to raise their offer when you deal with them alone. If you threaten them with litigation, they will simply not believe you.

When your financial future may be on the line, you should put your case in the hands of an experienced personal injury lawyer ready to fight for you. Contact us to receive your consultation for your case today.