There are three types of lawyers as far as how they make money.

First, there is the hourly lawyer who charges by the hour for his legal services. Hourly lawyers include corporate lawyers, business lawyers and divorce lawyers. Hourly lawyers are paid regardless of whether they win or lose. For significant cases the hourly lawyer   may ask the client to pay a retainer. Bills are sent on a monthly basis and payment is expected on a monthly basis. Any cost for the case is paid  by the client at the the time the cost is incurred. The hourly lawyer is paid win or lose. 

Second, there is the flat fee lawyer. This lawyer charges an agreed upon advance fee for his services. The criminal lawyer is usually a flat fee lawyer-at least for the initial fee. This is because the criminal lawyer  is better able to predict in advance how much lawyer time will be involved in the case. Also, one charged with a crime is often going to be more difficult to collect fees from, and a flat advance fee eliminates this problem. Flat fee lawyers are paid regardless or whether they win or lose. Costs are paid by the client as they are incurred.

Third there is the contingent fee lawyer. The contingent fee lawyer charges no fees unless he wins the case.  His fee is contingent on getting the client a recovery. If he collects nothing for the client he is paid nothing by the client. Personal injury lawyers are usually contingent fee lawyers. The amount of the contingent fee varies. Typically it is one third lawyer / two thirds client. In difficult cases such as medical malpractice cases the contingent fee is often forty per cent lawyer / sixty per cent client. Unlike the hourly and the flat fee lawyers the personal injury contingent fee lawyer may advance the cost of the case.  The client gets the lawyer without paying any money until the case is over.

Why Personal Injury Cases are Generally Contingent Fee Cases

Business clients use lawyers as a cost of doing business thus payment of the lawyer is a business expense. Also cases that an hourly lawyer handles often do not involve a monetary recovery so there is no basis for a contingent fee. Nor is there a recovery in a criminal case.

A personal injury client has an injury that he or she did not expect to have to deal with. They usually do not have money set aside to pay a lawyer. Rather they have a personal injury case that has value if the personal injury lawyer is able to negotiate a settlement with the insurance  company or demonstrate the case’s value to a jury, a judge, or an arbitrator.

In a personal injury case the injured client and the personal injury lawyer form a team. They work together to demonstrate case value. The injured client does what he must do to address his injuries- seek medical treatment to dig out of his injuries. The lawyer deals with the insurance companies on behalf of his client thus earning his ultimate contingent fee and freeing the client to concentrate on his injuries rather then insurance hassles.

To demonstrate case value the personal injury lawyer must be able to take the client’s case to trial. The lawyer must be able to tell his client’s story in a compelling way so a jury sees the significance of the injury. The insurance company will not pay fair value for the case unless the injured plaintiff is honest, impacted from his injury, and can demonstrate his story with and through his lawyer. Even then then fair value may only be able to be obtained from a jury.

 

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