Category: General Blog

When Contingency Fees Are Not Really What They Seem

When it comes to car wrecks, the attorney fees of most firms are contingency based. This means that the injury firm charges a percentage of the total amount recovered as their attorney fee instead of an hourly rate. However, you should be aware of the following concerns and where I think an attorney’s fee can be too much.

• You need to understand that attorney fees are negotiable and are not set by law. So yes, you can negotiate a lower attorney’s fee.
• For a car wreck case, I would never pay a 40% attorney’s fee for a case that is not in litigation. The big TV advertisers have started this and I am sorry but, there is no good reason to pay a 40% attorney’s fee for a car wreck case that is not in litigation. On this issue, think ahead to what your net settlement will be, i.e. the amount you put in your pocket from your personal injury claim. If you agree to a higher attorney’s fee from day one, from your net settlement, you will be paying that 40% attorney’s fee, reimbursing that law firm for their litigation costs and paying the health insurance for the amount they have paid on your behalf, known as a subrogation, claim or lien. In other words, before your injury case ever begins, you might be agreeing to pay out 50% or more of the amount you recover. I can tell you when it comes to a car wreck claim, that’s a bad idea and you can do better.
• Does your personal injury lawyer understand that a crucial part of his job is to negotiate down your medical expenses and thereby increase your net recovery from the personal injury claim; even if that chiropractor or doctor gave out that attorney’s information to you? I have been doing motor vehicle law in Kentucky for over 20 years. As a result, there are several medical doctors that I work with regularly that do recommend my law firm often. However, while I appreciate their support, my ethical duties as a lawyer are to my client and part of those duties is to maximize the total recovery from my client’s personal injury claim. After all, if I recover $100,000 for my client but pay out $98,000 of that $100,000 to everyone but my client, I have not done my job as an injury lawyer. Again, my job, as your injury lawyer, is to both maximize the recovery on your personal injury claim AND minimize any deductions from that personal injury. And yes, this may mean calling a doctor that has referred you to me and negotiating down the balance on your account so that you can put more dollars, from your personal injury settlement, in your pocket. If your injury attorney is not willing to do this, walk away and find a new lawyer.
• What about charging attorney fees off of your medical expenses? Typically, attorney fees are charged off the total personal injury settlement which will include your paid and unpaid medical expenses. However, a good injury lawyer will minimize the medical bills that are inclusive and need to be paid out of your injury settlement. As discussed above, your injury lawyer should be willing to negotiate directly with the medical provider to lessen their balance. More importantly, and one of those procedures I use regularly, is to use my client’s health insurance to reduce my client’s medical bills. For example, if my client has a $30,000 emergency room bill, I submit the total amount of my client’s medical bill, the billed amount, to the insurance carrier for the at-fault driver. But if I can get those medical bills paid by my client’s health insurance, the health insurance plan may pay the hospital $5,000 to satisfy that $30,000 medical bill. While I have to address the subrogation lien of the health plan from my client’s personal injury settlement, I just reduced the amount that comes out of client’s settlement by $25,000. That’s just one way, a good personal injury lawyer, will earn their attorney’s fee.
• Part of this depends upon you, the injured person, acting quickly after a car accident and reaching out to a personal injury lawyer so we can preserve this kind of insurance benefits. Essentially, your own automobile insurance might have no-fault insurance, PIP insurance or med-pay coverage that can pay part of your medical bills. If you can preserve this coverage on your own automobile insurance policy, you can use it to cover part of your medical expenses. The key is this. In Kentucky, the no-fault coverage tends to be $10,000. In my above example, the client had a $30,000 emergency room bill but the health plan satisfied that emergency room bill by paying the hospital only $5,000. If the hospital was paid by the PIP carrier, the $10,000 of PIP coverage would be gone and the hospital would still have a $20,000 balance. However, if the health plan pays that emergency room bill, the health insurance would have a subrogation claim for the $5,000 they paid, which can be paid by the no-fault coverage, and there would still be about $5,000 to cover the client’s co-pays and deductibles.

So, while contingent attorney fees are charged off the total injury settlement, there are a lot of things a good injury lawyer can do to minimize those medical bills, thereby increasing a client’s net recovery. If your attorney is not doing these things, why you are not demanding the same.

1) Get rid of any deductible you have against your no-fault or PIP coverage. You CAN NOT recover that deductible from the at-fault’s insurance company, and you might have saved $30 a year for a deductible that just cost you $1,000.
2) You can use either your own car insurance, i.e. your collision coverage, or the at-fault’s drivers’ insurance to get your car fixed.
3) The declarations page for the other driver represents the maximum amount of insurance on that driver.
4) The value of a personal injury claim depends upon several factors including: the length of your medical treatment; the amount of the medical bills; the type of treatment received; the amount of damage to your vehicle; whether you have a pre-existing condition; whether you have ever had a prior personal injury claim and; the insurance carrier that we are dealing with.
5) When your car is a total loss, the insurance company owes you the fair market value of the vehicle. This means you could owe more on your vehicle than it is worth.
6) If you lose your left arm and are hit by a semi-tractor trailer, there is more than enough insurance coverage. If you suffered that same injury when hit by a 1980 Ford Pinto, hopefully, you will have uninsured and underinsured motorist coverage on your automobile policy as the at-fault driver is probably not adequately insured.
7) If you are injured while driving a motorcycle in Kentucky, you cannot recover the first $10,000 of your medical bills or lost wages even though your motorcycle was properly insured; unless you bought option no-fault coverage.
8) If you were injured as a passenger on a motorcycle, you can recover your medical bills and lost wages from the at-fault driver. However, you are not entitled to no-fault insurance.
9) If you were severely injured while operating a motorcycle, we will probably look to your automobile insurance to see if that insurance policy might apply.
10) If you were turning left in front of a car when the wreck occurred, you will most likely be considered at fault for the wreck, no matter how fast the other guy was going, for failing to yield the right of way.
11) If you hit someone in the rear-end, you will most likely be considered at fault for following too close to the vehicle in front of you.
12) Kentucky is what is called a pure comparative fault state. This means you can recover your damages for whatever percentage, as little as 1%, you are not at fault for causing the car wreck.
13) The whole idea behind Kentucky being a no-fault state is that you should be able to get your medical bills, from a car wreck, paid for without having to show the other guy is at-fault.
14) Before purchasing a vehicle, I always suggest people look at the websites for the National Highway Safety Administration or the Insurance Institute for Highway Safety to see how well a vehicle does in a crash test.
15) A good personal injury lawyer has two jobs: 1) To maximize the amount he can recover for you with his right hand and; 2) to minimize the amount of deductions (i.e. costs, subrogation claims, medical bills, etc.) that have to be deducted from your personal injury settlement