Attorney Fee Types in California
Personal injuries can happen to just about anyone, and that means they can happen to someone who lives paycheck to paycheck or someone who has a sizable savings account. That matters if the personal injury was the fault of another person or entity, and it matters because:
1. To recover just and fair compensation, your odds are increased if you have an attorney, but
2. People get scared away when they think of attorneys because they assume the attorney fees will be outrageous.
Fortunately, in personal injury cases in California, you don’t have to worry about upfront attorney fees or, in the least, you don’t have to worry about paying the fees out of your pocket. Here’s an overview of the types of attorney fees allowed in California and what you can expect specifically in personal injury cases.
Types of Attorney Fees in California
There are several different types of attorney fee arrangements that the State Bar of California permits. These include the following:
- Contingency rates
- Hourly rates
- Flat fees
- True Retainer
- Other fee types (e.g., hybrid arrangements)
Contingency Rate
Contingency is a rate type that is primarily used in personal injury and wrongful death cases. A contingency rate is where the client does not pay anything upfront, but the attorney takes a certain percentage of either:
1. the settlement with the at fault party(ies) and/or their insurance company, offered and agreed by the client; or
2. the monetary award rendered by a jury or ordered by a judge, if the case goes to litigation.
This percentage covers the fees and, typically, the costs of representation and any litigation, among other things. The attorney does not get anything if the lawsuit is dismissed or the disposition is not in the client’s favor. The benefit to the attorney is a significant award that results in a significant payout. The benefit to the client is no out-of-pocket payments to the attorney for getting the lawsuit started. There’s also a high incentive that the attorney will persist in the case because his or her payment for legal services depends on a win.
Hourly Rate
Hourly rates are probably the most common type of attorney fee arrangement (but not for personal injury cases). Hourly fees for average and above level attorneys can range widely from $300 an hour to $1000 an hour or more. The hourly rate provided by an attorney is dependent on things like:
- Experience
- Reputation
- Legal area
- Type of legal service
- Competition in the same jurisdiction
- Participation of non-attorney staff on your legal case (e.g., office clerks, paralegals, etc.)
For example, a newly graduated law student who just passed the California bar and wants to open a practice in the area of vehicular accidents won’t have the same experience, knowledge, and insight as an attorney who has dedicated his or her practice to vehicle accidents for the last ten years and has taken on high-profile clients.
Hourly rates can be capped, too. This means that the client and attorney can establish a specific number of hours to work on a legal matter, and once that cap has been reached, no more hours can be worked on it. The benefit of the hourly rate is the attorney gets paid mainly for experience and time while the client benefits from that experience as well as having an option––if agreed upon––to cap the number of hours at the hourly rate.
Flat Fee
Flat fees, also referred to as fixed rates, are fees that are pre-arranged between the attorney and client and paid upfront prior to the performance of legal services. This type of fee arrangement is common among attorneys who, for example, plan estates or help clients file for bankruptcy. The benefit for the attorney is he or she can perform the legal service as quickly or as slowly as desired. In the meantime, the client benefits from not paying unexpected legal fees.
True Retainer
Retainers are not necessarily a “type” of attorney fee but refer to a lump sum the client pays upfront. The lump sum is placed in a special account, and the attorney deducts hourly fees from it. A retainer can be used for fixed or flat fee rates.
As defined by the State Bar of California, a true retainer is “a fee that a client pays to a lawyer to ensure the lawyer’s availability to the client during a specified period or on a specified matter, but not to any extent as compensation for legal services performed or to be performed.“
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Most Common Attorney Fee Type in California Personal Injury Cases
As mentioned, the most common attorney fee type in personal injury cases is the contingency fee. This fee type means that the attorneys’ fees are contingent on winning the case either via settlement, whether before or after filing a lawsuit, or during trial. The purpose of this fee type is to provide an opportunity for all victims of a personal injury to seek just and fair compensation. It’s well-documented that a personal injury victim recovers more in damages with an attorney as opposed to without legal representation.
Most contingency fee percentages are generally between 30 and 40% in California. So, for example, if your attorney fees are 33% and your attorney wins $100,000 in damages, your attorney may take $33,000, in average, and you’ll get $67,000 then. But again, keep in mind that without an attorney you could get only a couple of thousands of dollars, and those attorney fees can be paid from the settlement funds – after the attorney obtains those $100,000 from the at-fault party or insurance company(ies).
Legal Costs & Contingency Fees
You should keep in mind though, that the percentage may not include the costs to handle and represent the case and prepare for arbitration or trial, if any. If that’s the case, then the attorney may take the agreed-upon fees from the settlement amounts and additional funds to cover the costs of things like:
- Filing fees
- Expert witness fees, if needed
- Depositions
- Investigation costs
- Other reasonable expenses actually spent for your case.
Options to Avoid Legal Cost Deductions from Settlement/Award
If you don’t want the attorney to advance these legal costs and deduct it from the settlement or award, then you may have two options:
1. You can agree with the attorney on providing a small deposit at the start of representation, and these costs can be taken out of this deposit; or
2. The attorney may want you to pay the costs as they occur––so when the expert witness sends the bill, you can pay the bill directly to the expert witness or the attorney may cover and then send you a bill for the same, or some similar arrangement.
Requirements of a Contingency Contract
According to Business and Professions Code § 6147, the attorney must provide a fully executed copy of the contingency fee agreement to the client. This agreement must include in the writing the following statements:
1. The agreed-upon contingency fee rate;
2. The method of paying the costs and expenses, if any;
3. The method and extent of compensation to the attorney for any services provided outside the contingency fee agreement, if any;
The contingency fee is negotiable and not set by law (unless it qualifies under § 6146 where limits on contingency fees are set for attorneys representing some clients taking action against a health care provider).
Retain an Experienced Personal Injury Attorney in Los Angeles
If you have suffered an injury due to the fault of another, then you deserve just and fair compensation. Unfortunately, many deserving people in Los Angeles don’t get a fair settlement or award because they don’t retain an experienced, dedicated personal injury attorney. And they usually don’t retain a lawyer because they don’t believe in attorneys or they are scared of the costs.
Well, now you know you don’t necessarily have to worry about unreasonable or upfront attorney fees. You can find a skilled personal injury attorney who works on a contingency fee basis––which most of them in Los Angeles do. There are attorneys who can also offer different arrangements depending on your unique circumstances. Contact us if you want to know more about our fees, professionalism, and work ethics.
