This post will provide a comprehensive explanation of everything you need to know about lawyers’ fees and expenses in auto accident and personal injury lawsuits. We will explain: exactly how much money your lawyer will take out of your accident or personal injury settlement. To help you understand how this works we will provide examples of lawyer fees and expenses deducted from actual injury cases. Finally, we will go over what lawyers are NOT allowed to charge you for.
What will your lawyer take out of your settlement?
If you hire a personal injury lawyer on a contingency fee and they succeed in getting a settlement in your case, the lawyer will take 2 things out of that settlement money before giving the rest to you: (1) the contingency fee; and (2) all necessary costs and expenses they incurred in bringing your case.
The contingency fee is the percentage of your settlement that you agreed to pay to the lawyer in exchange for their work on your case. The percentage fee is based on the total settlement amount (or verdict amount if the case goes to trial) that you get in your case. If you agreed to a 30% contingency fee and your case settles for $100,000, then your lawyer’s contingency fee will be $30,000. The contingency fee percentage is taken from the total settlement BEFORE the deduction of any costs and expenses.
In addition to the contingent fee percentage, your lawyer will also get to reimburse themselves for all of the costs and expenses that they had to incur to bring your case. This includes things such as the court filing fees, costs for scanning and copying documents, court reporter fees for depositions, and hourly fees to expert witnesses. We will discuss fees and expenses in more detail below.
What is the average lawyer contingency fee percentage?
In Maryland, the average attorney contingency fee percentage in a personal injury case is 33% or 1/3 when the case settles before trial and 40% when the case goes to trial and results in a verdict or settlement after the trial begins. The reason the fee percentage increases to 40% if a case goes to trial is that a trial involves much more time and effort by the attorney.
Average contingency fee percentages can vary depending on what state your case is in because some states have imposed caps or maximum limits on contingent fee percentages. Many of these states have a complex sliding scale system in which the applicable cap on the contingency fee varies depending on the amount of the settlement or judgment. For example, some states allow a 33% fee for the first $1,000,000 and then 25% for the next $1,000,000, and only 20% for anything above that.
Reimbursement for Costs and Expenses
In addition to taking a percentage of the settlement as a contingency fee, personal injury lawyers also take money out of your settlement to reimburse themselves for the expenses they incurred on your case. It costs lawyers money to bring a personal injury lawsuit. Common expense items in a personal injury case include:
- Collection and copying of medical records
- Court filing fees
- Court reporter fees for deposition transcripts
- Hourly fees for expert witness opinions and testimony
- Accident reconstruction and investigations
Your lawyer pays for these expenses out of their own pocket as the case moves forward. If and when the case settles, they will be entitled to get reimbursed for all of these expenses. Reimbursement for expenses typically gets taken out of any settlement proceeds AFTER the lawyer takes his contingency fee percentage. Here is a simple example of how this works:
Your case settles for $100,000 before going to trial. Your lawyer is entitled to a 33% contingency fee and he has incurred $10,000 in expenses. The 33% fee would be taken out first. Then the $10,000 in expenses would be taken out from the remaining settlement proceeds.
Settlement = $100,000
33% contingency fee = ($33,000)
Expenses = ($10,000)
CLIENT TOTAL = $57,000
What are Average Expenses in a Personal Injury Case?
The average amount of costs and expenses in bringing a personal injury case varies significantly depending on several factors. The most significant factor is what type of personal injury case you are bringing. A simple slip and fall or auto accident case is going to be much less expensive than a complex medical malpractice case.
In a typical auto accident case, your lawyer’s biggest expense items will be medical treatment records and maybe 1 or 2 short expert medical opinions. By contrast, even in a simple medical malpractice case, your lawyer will have to pay for numerous expert witnesses, thousands of pages of medical records, and several deposition transcripts. Deposition transcripts can be very expensive, with an average cost of about $5 per page.
The other big factor that will impact the expenses in a case is the severity of your physical injuries. The more serious your physical injuries are the more expensive it will be for your lawyer to bring your case. Serious injuries involve more medical records and often require opinions from multiple experts in various medical specialties. At $200 or $300 per hour, medical expert fees can quickly drive up the price tag on a case.
How much will your lawyer take from your settlement?
If you get a personal injury settlement your lawyer will take out their contingency fee (usually around 33%) plus reimbursement for any expenses they incurred in brining the case. They may also have to pay medical liens.
What is the average contingency fee percentage in Maryland?
The standard contingency fee for a personal injury lawyer in Maryland is 33% (one third) if the case settles and 40% if the case goes to trial.
Does my lawyer's contingency fee come out before or after medical bills and expenses?
Your lawyer’s contingency fee percentage will be taken from the total settlement amount BEFORE any expenses or medical liens are deducted.
Do I have to pay taxes on my personal injury settlement?
Proceeds from a personal injury settlement are generally not taxable as income as long as they are compensation for lost wages, medical expenses and pain & suffering.