The Short Answer:
When you’re dealing with the aftermath of a car accident, the last thing you should have to worry about is how to pay for a lawyer. That’s why most car accident lawyers work on a contingency basis. This means that you don’t pay anything upfront. Legal fees can be deducted from the settlement before or after case costs. The average lawyer fee for a car accident case is between 33.3% and 40% of the total settlement or verdict. Attorneys must provide all terms in writing.
Key Takeaways
- Most car accident lawyers handle cases on a contingency basis, which means that you only pay for their services if your case is successful.
- Attorney fees start at 33.3% for cases that settle out of court. If litigation is necessary, this rate typically rises to 40%.
- Clients may still be responsible for case costs and administrative fees even if the claim isn’t successful.
- Lawyers must follow billing guidelines set by the Alabama State Bar and American Bar Association.
- Billing agreements must be provided in writing and must explain all terms in plain language.
- The attorney must provide a detailed closing statement showing all expenses and fees.
Understanding Car Accident Lawyer Fees in Alabama
In the civil legal system, most car accident cases are handled on a contingency basis. This means that the client doesn’t pay anything upfront for their attorney’s services. Their lawyer only gets paid if they recover compensation at trial or through an out-of-court settlement. That’s why law firms that handle personal injury cases often advertise themselves as no-win, no-fee attorneys.
Contingency billing dates back to the 19th century. During the Industrial Revolution, it emerged as a solution to help workers protect their rights against wealthier and more powerful defendants. Even today, contingency billing ensures that people have access to quality legal representation even if they’re saddled with bills that limit their ability to pay.
How Contingency Fees Work in Alabama
- Definition: Your lawyer only gets paid if you recover money (settlement/verdict).
- What It Isn’t: Contingency billing doesn’t mean that your lawyer’s services are free. You may still have to pay certain case costs even if your case isn’t successful.
- Percentages: Common fee structures range from 33.3% to 40% depending on the complexity of the case and when it is settled.
Attorney Fees vs. Case Costs
One of the most common misunderstandings in car accident cases is the belief that an attorney’s contingency fee automatically covers all expenses related to the case. In reality, attorney fees and case costs are 2 separate things, and understanding the difference is essential to avoiding surprises and knowing what your net recovery may look like.
- Legal Fees: Attorney fees are based on a pre-agreed percentage of the settlement. These fees cover their work preparing your case, negotiating with the defendant, and taking your case to court if needed.
- Case Costs: Other out-of-pocket expenses may be required to investigate your case and gather evidence. These include medical record retrieval, filing fees, court reporter costs, and consultations with expert witnesses.
Who Pays Case Costs and When?
Many car accident lawyers will advance case costs so that clients don’t have to pay these expenses out of pocket while the case is pending. If there is a recovery, the firm is typically reimbursed from the settlement or verdict. Policies can vary by firm, so it’s important to review how costs are handled in your written fee agreement.
Another key issue that can significantly affect the value of your final payout is when costs and fees are deducted. Some firms deduct case costs before calculating the contingency fee, while others deduct costs after the attorney’s fee is calculated. A reputable firm like Floyd Hunter Injury Law will explain:
- Whether costs are advanced
- Whether you are responsible for costs if there is no recovery
- Whether costs are deducted before or after the attorney’s fee
- How medical bills and insurance liens will be handled
Sample Car Accident Settlements
Here are a few examples of how fees and case costs may be calculated after a car insurance settlement. These examples are for informational purposes only. Every case is different, and fee structures, costs, and lien issues can vary. Always ask your attorney to explain how fees and expenses apply to your specific case.
Example 1: Pre-Suit Settlement
Scenario: Your car accident claim settles before a lawsuit is filed.
- Settlement: $30,000
- Attorney Fee (33.3%): -$10,000
- Case Costs: -$1,200
- Medical Bills/Liens: -$8,800
- Client Net Recovery: $10,000
Example 2: Litigation
Scenario: Settlement negotiations are unsuccessful, so your lawyer files a lawsuit.
- Settlement: $100,000
- Attorney Fees (40%): -$40,000
- Case Costs: -$6,500
- Medical Bills/Liens: -$28,500
- Client Net Recovery: $25,000
Example 3: Fee Calculated on the Gross Settlement
Scenario: The attorney fee is calculated before deducting case costs.
- Settlement: $50,000
- Attorney’s Fee (33⅓%): -$16,667
- Case Costs: -$3,000
- Medical Bills: -$12,000
- Client Net Recovery: $18,333
Example 4: Fee Calculated on the Net Recovery
Scenario: The attorney fee is calculated after deducting case costs.
- Settlement: $50,000
- Case Costs: -$3,000
- Attorney’s Fee (33⅓% of Net): -$15,667
- Medical Bills: -$12,000
- Client net recovery: $19,333
How Contingency Billing Benefits Car Accident Claimants
Contingency billing is one of the main reasons why injured drivers and passengers are able to pursue car accident claims without additional financial risk. Contingency fee arrangements offer several key benefits to car accident claimants:
- Access to Legal Representation: Contingency billing lets you pursue a car accident claim without paying hourly legal fees or large upfront retainers.
- Reduced Financial Risk: With a no-win, no-fee billing agreement, attorney fees are only owed if there is a recovery through a settlement or verdict.
- Incentive: Because legal fees depend on the outcome of the case, lawyers are motivated to pursue the strongest possible recovery within ethical and legal limits.
- Recovery: By advancing case costs and negotiating the payment of medical liens, no-win, no-fee attorneys allow you to focus on healing instead of worrying about legal fees.
- Leveling the Playing Field: Contingency billing can make it possible to bring claims against powerful insurance companies that have large legal teams and vast financial resources.
State Rules for Attorney Fees
Attorneys must follow billing guidelines established by the American Bar Association and the Alabama State Bar. These guidelines are found in section 1.5 of the Model Rules of Professional Conduct.
- Alabama does not have a fixed statutory limit, but all fees must be considered reasonable.
- Contingency billing agreements must be provided in writing and signed by the client.
- The agreement must state the percentage the lawyer will receive.
- It must explain whether fees differ for settlement, trial, or appeal.
- It must state which expenses can be deducted from the recovery.
- Finally, it must explain if expenses will be deducted before or after fee calculation.
- Clients must receive a written closing statement detailing the total recovery and all fees and expenses.
- Contingency fees are typically limited to 33.3% or 40%. Attorneys may only charge more than 40% in extraordinary circumstances.
- Clients must receive reasonable notice and approve any changes to the billing agreement after representation begins.
Working With a Car Accident Lawyer
Scheduling an initial consultation with a car accident lawyer at Floyd Hunter Injury Law is free and 100% confidential. We believe that legal fees should never be a mystery, which is why we take a hands-on approach to transparency from day 1.
Transparent Fees
During your free consultation, Those Thumbs Up Guys® will provide a clear, written contingency fee agreement. We explain everything in plain language, including the exact percentage you’ll pay and if that changes for a settlement or a lawsuit. Our goal is to ensure you know exactly what to expect before you ever sign a contract.
Accurate Case Valuation
One of the first things we do is help you understand what your claim is actually worth. We don’t just look at your current hospital bills. As former insurance industry insiders, we calculate future medical needs, lost earning capacity, and pain and suffering based on the severity of your injuries. We’ll also analyze policy limits and the strength of the evidence to give you a realistic range for your potential recovery.
Medical Liens and Insurance Subrogation
At Floyd Hunter Injury Law, our attorneys don’t just get you a check and walk away. We actively negotiate with healthcare providers and health insurance companies to reduce medical liens and subrogation claims. This is often the most technical and stressful part of the settlement process for clients. By lowering what you owe for medical care, we can help you keep more money in your pocket.
Questions to Ask Your Car Accident Lawyer
Before signing a contract, make sure you have these answers in writing:
- What is the fee percentage if we settle versus if we file suit?
- Will the lawyer’s percentage change if the case goes to court?
- What’s the average lawyer fee for a case like mine?
- Will you negotiate medical bills/liens, and is that included in the fee?
- If we don’t win, will I be responsible for any case costs?
- Are costs deducted before or after the contingency fee is calculated?
Those Thumbs Up Guys® Are Ready to Help
Worrying about legal fees shouldn’t be as stressful as the accident itself. At Floyd Hunter Injury Law, we pride ourselves on honesty and results. If you’ve been hurt in Montgomery, Millbrook, or anywhere in Alabama’s River Region, our experienced car accident attorneys can protect your rights and help you pursue justice. Contact us today.
