Calculating attorney fees can be complicated, depending on the type of case and the type of fee agreement the attorney has with their client. It is important to understand how attorney fees are calculated before you hire an attorney. You should know how your attorney will be compensated, and how your award will be distributed at the end of your case.
There are a number of fee agreements you can make when hiring an attorney. A flat-fee agreement can apply to transactional legal services, like making a trust or creating an LLC. Other cases involve an hourly rate for legal services, sometimes with a retainer fee paid up front. Hourly fees may vary greatly, depending on the type of legal work, experience of the attorney, and the relationship between the attorney and client.
For most personal injury cases, the attorney and client may enter into a contingent fee agreement. With a contingency fee agreement, the client may have to pay the lawyer nothing upfront. The attorney may only receive compensation for their work if they successfully win the case for their client, through a trial award or through a settlement. The attorney will then receive a percentage of the award to their client.
There are a number of benefits for a client in a contingent fee agreement. Many potential personal injury plaintiffs do not have a lot of money to spend fighting big insurance companies and corporations. Hiring an attorney on a contingency basis allows them to get an experienced lawyer who can successfully battle the insurance companies to get their client the compensation they deserve. Contingent fee agreements allow anyone to have access to excellent legal professionals, no matter their income level.
Pennsylvania Attorney Fee Agreements
According to the Pennsylvania Rules of Professional Conduct, “a lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee.” This applies to fixed and contingent fees. The reasonableness of a fee is based on the time and labor required, skill required, customary fee percentage, the amount involved, experience of the attorney, and other factors.
The rules also provide that “a contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal.” The agreement should also state whether expenses are to be deducted before or after the contingent fee is calculated.
“Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.”
Calculating Fees and Costs
With a contingency fee agreement, there are still a number of costs and fees that the attorney has to pay out of pocket. They will then subtract these costs and fees from the award. If the case reaches a settlement before a lawsuit is even filed, those costs and fees may be relatively minimal. However, depending on the time requirements, number of parties, complexity of the case, number of experts, and whether the case goes to trial, the costs and fees can be quite high.
If you are unsure how fees and costs will be calculated, talk to your attorney. They should clearly explain to you how they will calculate costs and fees, and what kinds of costs are included. They should also make sure you understand if they will calculate the contingency percentage before or after accounting for those costs.
Philadelphia Personal Injury Attorneys
At Gilman & Bedigian we often use contingency fee agreements for our clients pursuing a personal injury claim. This allows our clients to gain the experience of legal professionals, without costing them anything out of pocket. We will explain the contingent fee agreement, so you fully understand how we are working to get you the compensation you deserve. We don't charge you anything until your case is resolved. If you believe you may have a personal injury case, please contact our office today for a free consultation.