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.
