How Do Lawyers Get Paid if They Lose a Case?

Lawyer FeesNo matter how experienced a lawyer is in litigation, there’s always a possibility of losing a case. Only 5 percent of personal injury cases go to trial, meaning 95 percent of claims settle. However, at trial, the opposite happens. Only a small fraction of the lawsuits succeed, while the majority fail.

It’s no wonder personal injury lawyers only take cases that have merit, perhaps to avoid embarking on a fruitless lawsuit. But even when a claim is strong and the lawyer employs their best litigation skills, they may still lose regardless of their experience. In other words, losing a case is always a possibility.

So, how do lawyers get paid if they lose a case?

Lawyers may or may not recover their fees after losing a case, depending on the payment arrangement. Essentially, some agreements require you to pay the attorney regardless of the case outcome, while others do not.

Litigating Is Risky but Necessary

When you take a personal injury claim to trial, in most cases, you are in dire need of receiving the compensation to pay hospital bills, clear accruing debts, and also provide for yourself or your family. Nothing can dash your hopes dashed like losing the lawsuit and getting slapped with an attorney’s bill that you didn’t expect.

For this reason, reading the agreement thoroughly before signing is crucial as it can help you prepare to handle the different costs and fees that may apply should you lose the case.

Generally, your financial obligations in a lawsuit may include:

  • Consultation Fees – This is what lawyers charge for your consultation. Generally, this allows the law firm to evaluate your case and see whether it merits action. The discussion also serves as an interview whereby you can learn more about the firm to decide whether they are the right legal team for your case. The fees vary from one firm/attorney to another and are fixed or hourly. But for most personal injury firms, case evaluation is free.
  • Administrative Costs – Are the legal expenses for preparing the case. These include all process expenses such as the cost of hiring private investigators and expert witnesses, phone calls, photocopying documents, depositions, travel expenses, etc. No matter the type of representation agreement, you are responsible for meeting these costs whether you win or lose the case.
  • Attorney Fees – This is the major expense in the litigation process. Attorneys have different fee arrangements, and you can find the specific details in the representation agreement.

Types of Attorney Fees

Generally, legal fees depend on factors such as time spent on the case, attorney’s experience, case difficulty, etc. However, the amount you end up paying may vary greatly depending on the fee arrangement.

Examples of fee arrangements include:

#1. Contingency Fees

This is the most common payment arrangement among personal injury lawyers. It’s a more inclusive fee arrangement that favors clients who have limited resources. That is, you only pay the lawyer if you receive a settlement or award. If they don’t win the case, then they don’t earn.

Generally, this is a win-win arrangement for both lawyers and clients. Clients can access justice despite limited resources, as paying the attorney depends on winning the case. On the other hand, the pressure of losing a case motivates the lawyers to work even harder to build a strong case.

Contingency fees are a percentage of the settlement, which is 33 1/3 percent in most cases. However, if the case proceeds to trial, the rate could increase due to the additional work.

#2. Hourly Fees

Hourly fee is another popular payment arrangement that lawyers use to recover their fees. However, it’s not common among personal injury attorneys as it is pretty expensive. With this arrangement, the attorney bills the client from time to time, maybe weekly.

#3. Flat Fees

Lawyers may also charge flat fees for specific cases. This is mainly on simple cases such as mortgage foreclosures, will preparations, etc.

#4. Retainer Fees

Retaining a lawyer avails them to attend to your legal matters on call. Paying a retainer fee establishes this relationship. Then, every time the lawyer offers a service, they deduct payment from the account.

How Do Lawyers Recover Their Fees Under Different Arrangements After Losing a Case?

  • Contingency Fees – If they lose a case, you do not owe them any money unless the agreement requires some retainer. You only take care of the administrative costs.
  • Hourly Fees – If they lose a case, you still pay them for hours worked as per the agreement
  • Flat Fees – You pay them as agreed
  • Retainer Fees – They deduct their payment from the retainer account

Losing a case is an unfortunate eventuality that worsens an already bad situation. Not only does it increase your financial burden, but also it means you cannot recover your damages. Even with the more manageable contingency fees arrangement, the court may require you to pay the other party’s legal fees in addition to footing your court and case preparation expenses.

As we mentioned earlier, no attorney is immune from losing a case, no matter how experienced. However, that doesn’t mean a lawyer’s experience is immaterial. As you cannot guarantee a case outcome, the best you can do is increase your chances of winning as much as you can. You can achieve this by hiring an attorney experienced in litigating similar claims to develop strong evidence and provide the best legal representation possible.

In other words, you owe it to yourself to source for the right lawyer, at least to raise your chances of winning at trial.

How to Choose the Right Lawyer

Most personal injury claims settle before trial. Insurance companies understand the implication of an unfavorable trial judgment on their bottom line. In addition to footing their attorney’s fees, they risk paying a multiple times settlement amount if the jury so decides.

For this reason, insurers are always eager to settle a case before the jury makes the decision. Although sometimes they may fail to honor your settlement demand if they believe your evidence is not strong enough to win a favorable judgment, necessitating you to go to trial.

Having the right lawyer representing you can be beneficial as they can advise you on whether going to trial is feasible or not. And even if you sue and end up losing the case, it helps to know you gave it your all by employing the best resources you could find.

That said, here are tips on how to choose the right lawyer.

Tips for Choosing the Right Lawyer

Fortunately, most personal injury attorneys offer free consultation, so you have a chance to interview them and learn more about them even as they look into your case to see whether they can take it. Whether you interview them one-on-one or research them online, some of the essential elements you need to look out for include:

#1. Experience

The lawyer should have extensive experience representing clients with similar cases as yours. For instance, if you have suffered injuries from motor vehicle accidents (car, truck, motorcycle, or pedestrian accidents), the lawyer should have demonstrated evidence of litigating and winning such cases.

During your conversation, you may ask them if they have and when they handled similar cases lastly. You may also comb through their website for testimonials and case results (if they have them published). Generally, finding information on how long the lawyer has been practicing in a specific area and scrutinizing their track record are all positive aspects that can shed light on their expertise.

On the same note, you should find out about their practice areas. It’s okay for a large law firm with many lawyers to handle different practice areas. But if a small firm with a handful of attorneys covers a range of unrelated practice areas, that could indicate less focus in the field you need help with.

#2. Qualifications and Recognitions

Though qualifications and professional recognition may not guarantee a lawyer’s ability to litigate your case successfully, they hint at their competence. Ensure you review their profile, noting their specific qualifications and any recognitions and industry awards they may have received. Picking a lawyer based on their listed credentials may be a little superficial, but it’s safer than one who does not have impressive highlights on their profile.

#3. Payment Arrangement

Most personal injury lawyers offer free consultations and contingency fees payment options. Some attorneys might charge you a consultation fee, or if they don’t, they may request a retainer even while on a contingency payment arrangement.

It’s crucial to know how much the case will cost you and the payment modalities before committing to work with a particular attorney. Essentially, if the attorney’s pricing model does not favor you, you should look for one that has a more manageable payment option.

#4. Communication

Generally, attorneys are great communicators. However, you need to have a rapport with the lawyer you work with for a thriving relationship. The lawyer should keep you updated on the case development and be open to answering any questions you may have.

#5. Ethics

Working with an attorney who has an excellent ethical record is a plus. Adhering to professional ethics and integrity requires discipline and commitment. A lawyer with these qualities won’t compromise the case by cutting corners.

One way of evaluating the attorney’s ethical records is to search bar associations for disciplinary actions against them.

#6. Attorney’s Location

While an attorney from another region may represent you as much as a local attorney can, working with one from your locality takes care of possible logistical inconveniences. Even if you can communicate remotely, a physical meeting with the attorney may be essential at some point, especially with complex cases. The lawyer may also need to meet physically with your doctor or witnesses, which is more convenient if they work nearby.

In addition, an attorney with experience litigating cases in your region may know the local practices better than someone from out of town.

Where to Find a Lawyer

For most people, getting a lawyer to represent them in a personal injury case can be quite a hassle. However, it need not be the case.

The much easier ways of finding the right lawyer to represent you include:

  • Referrals – If your friends or relatives have worked with a personal injury lawyer before, you could inquire about their experience with the particular lawyer. It’s not automatic that you hire a lawyer your friend or family has worked with, but the referral starts you off. On the same note, if you have a lawyer in a different field, you may request them to recommend a good personal injury colleague.
  • Lawyer Directories – There are different lawyer directories in the country. FindLaw, Justia, Nolo, etc., are just a few examples of platforms where you can find listings of lawyers in your location and practice area of interest.
  • State Bar Associations – The state bar association also has a listing of relevant attorneys in your area of interest.
  • Online Search – Alternatively, you may decide to do an internet search of the lawyers in your area. For instance, if you enter a search query like ‘personal injury lawyers in Pennsylvania’, you could get relevant suggestions of law firms practicing personal injury in the city. While the ranking does not signify a firm’s expertise, online search provides an excellent basis to commence your research.

In Conclusion

A lawyer on contingency fees arrangement with no retainer does not expect you to pay them after losing a case. However, you may still need to foot administrative costs and the other party’s attorney’s fees. This major blow can compound the losses from your damages.

While an experienced attorney cannot guarantee a favorable judgment, it provides the best legal representation you deserve. That makes choosing the right lawyer essential.