How Much Does a Lawyer Cost?
Before Hiring an Attorney, Consider the Expense
The fact that a lawyer negotiated your settlement doesn't mean it's better than what you could have gotten yourself. Often, it means less money in your pocket.
Most personal injury claims are based on liability. In these cases, there is usually a final settlement that includes such elements as pain and suffering, inconvenience, loss of consortium and even punitive damages. The attorney gets paid a percentage of the final settlement. In cases that settle directly with an insurer, it is one third, or 33%, of the total, though some lawyers will charge more.
Commonly, consumers will hire a lawyer after what they feel is a low first offer. After months (or years) of wrangling, the attorney may get a higher overall settlement, but once the fees are paid, there is less money left for the person who actually suffered the injury.
Keeping this in mind, consider whether or not getting an attorney will actually put more money in your pocket. For example, say you made a liability claim without a lawyer and the insurance company has offered to pay you $10,000. You're not sure this is a fair settlement and suspect you are entitled to more.
Remember that if you hire an attorney at this point, he or she will have to negotiate a settlement of at least $15,000 (50% more than what you were offered) for you just to break even. In order for you to take home more, the settlement will have to be even higher.
And believe it or not, an insurance company's first offer is usually fair, though probably less than what you can ultimately get. There is generally a "settlement range" within which the insurer feels the claim should settle, and the first offer tends to be near the bottom of that range.
But if you've done your homework and understand the basics of how claims are valued (or know someone who does), it's not hard to get more than the first offer.
If you do get a lawyer and the case ends up in suit (this is rare, but possible), the attorney's payment usually increases to 50%. Here, you need to be confident that the final verdict will be at least twice the company's offer. You may feel the insurer is "lowballing" you, but, especially if you're willing to do some negotiating, you can almost always get more than 67% of what a lawyer would get.
And this doesn't even take into account the extra time a lawsuit takes. You need to know whether you are going to get enough benefit to justify the considerable time delays, headaches and expense. Lawsuits take a long time to settle because they are subject to the delays of the court system and proceedings such as mediations, examinations and depositions.
So when a law firm claims that “We don’t get paid until you win,” it's technically true; but it doesn't mean they will get you more money than you could on your own.
