THE HOURLY RATE VS. THE CONTINGENCY FEE
There are generally two different ways attorneys are paid for their services in the personal injury field. Those who are hired by the insurance companies to represent clients in personal injury cases usually charge by the hour. This is called an hourly rate. It is a number that the law firm and the insurance company agree to for payment based on the hours the attorney logs in preparation for trying the personal injury case.
Incredibly, there are several firms that reported top partner hourly billing rates of $1,000 or more throughout the United States. This is not for the basic auto accident type of personal injury case, but the charge rate is staggering. This could mean, for example, that reviewing a legal document and making a few phone calls to the client could justify them charging over $1,000 for their hour of time. Imagine what it would cost to file a detailed brief and legal argument!
Most people who need legal services cannot afford that type of hourly fee.
The other type of fee is called a contingency fee. Contingency fees are used mostly in personal injury cases such as auto accidents, slip & falls or product liability cases.
In a contingency fee case, the attorney agrees to represent the injured party throughout the case. Only if the attorney is successful in getting a settlement or award will he be paid at the conclusion of the case. He usually is paid a fee based on the total settlement of the case or the total jury award.
The biggest question becomes the costs involved in a contingency fee case. Most people understand and accept that there are many costs associated with pursuing a personal injury case. Records must be obtained for review, depositions must be taken, court reporter fees must be paid, and costs do accrue in personal injury cases.
Some firms that handle a case, on a contingency fee basis, require the client to fund or pay for the costs associated with the case as the costs occur. In other words, if a doctor’s deposition is required and he charges $3,500 for his time in testifying, someone has to pay that fee. At our law office, we pay that fee up-front for the client so that the client is not charged for expenses as they occur. Only if we get a recovery, is the client required to pay those costs back at the conclusion of the case.
Which method is better? The contingency fee agreement is the most practical way for an injured person to pursue a case. If the injured person had to pay the attorney on an hourly basis for his time, not many individuals would be able to afford a sustained lengthy lawsuit. The National Law Journal’s annual survey of hourly billing rates found that the average billable attorney fee rate increased in 2010 by 2.7%. During the years 2004 thru 2008, the standard hourly billable rate rose between 6 and 8%.
Our law office charges only on a contingency fee basis for any personal injury case.We also fund or advance the costs up-front for the client. If for whatever reason we are not able to get a recovery for the client, the client does not owe us any money for either our time or the expenses that we incurred in pursuing the personal injury case.
Finally, there is one variation of the hourly billing rate that is used by some law firms. It is called the flat rate fee. In that situation, the insurance company pays a certain fixed amount to the law firm at the beginning of the case. That fee covers all the work that the law firm does in pursuing the case. If they put in more time than the amount the flat fee justifies, they are stuck with that flat fee amount. If they are able to resolve the case quickly with a minimal amount of work involved, then they have received a windfall using the flat fee method.
In criminal cases we do charge a flat fee for legal representation. We charge a flat fee for the Preliminary Hearing. If the case goes to trial, we charge a flat fee for representation beyond the Preliminary Hearing up to and thru sentencing, if necessary.
No attorney is allowed to represent a criminal defendant based on a contingency fee. It is forbidden by the Courts.
Which way do you think is more fair to the client? Do you have any opinion on this issue? We would love to hear from you!!