What is a Free Consultation? LONG Answer!
Most personal injury attorneys advertise a “Free Consultation.” What does that really mean?
SHORT ANSWER: We only get paid if we win your case. We want you to call us about your case. If we think we can win your case, we will offer to represent you. If we don’t think we can win your case, we will decline your case. We do a risk benefit analysis. If we think the amount of time, money and energy to represent you is too high based on the potential recovery, we will decline your case.
LONG ANSWER:
Hourly vs. Contingent Fees
We don’t charge you to tell you we can’t help you. In most other areas of the law attorneys charge by the hour. If you need help with a problem, they charge you their hourly rate to listen to your problem and tell you if they can help you. For example, if you want a divorce. You hire a lawyer who does family law. Family law attorneys handle divorces among other areas of conflict involving families. A family law attorney charges anywhere from $225 an hour to $475 an hour and up depending on their experience and skill set. You pay for their services regardless of the outcome. Family law attorneys are not allowed to charge on a contingency fee basis.
Attorneys who do personal injury work charge on a contingency fee basis. This means, they take a percentage of the gross recovery. Most personal injury attorneys charge 1/3 to 40% of the gross recovery. The law has made an exception to the hourly rate most attorneys charge as a consumer protection measure. People who have been injured in a motor vehicle accident often times can’t work while they are recovering from their injury. If they can’t work, they can’t earn money and can’t pay for an attorney.
Insurance companies are very profitable. The insurance company that represents the person who hit you has a duty to protect their insured. This means, they CAN legally deny a claim or refuse to pay for your medical bills even if their insured was clearly at fault. Your only recourse is to hire an attorney to sue the driver of the vehicle that injured you to force their insurance company to pay.
When you hire an attorney, the insurance company knows that an attorney knows how to sue the driver in court. If the attorney has a good reputation and is experienced, the insurance company knows the attorney will win. Often, cases settle without the need of filing a lawsuit because a good attorney can assess and evaluate what a jury will award. However, this is not true for all cases. Some insurance companies know they will lose and don’t care. It’s a policy decision designed to increase their profits. It would rather pay attorneys to fight legitimate claims rather than paying the the injured person the value of their case. The insurance companies know, it’s not cost effective for Plaintiff attorneys to file every case in court. This is injustice! Ocassionally, I take cases even when it doesn’t make financial sense. I take cases because JUSTICE makes a difference.
Cost Benefit Analysis
On average I spend approximately 100 hours working on a small case before it settles out of court. This includes time gathering medical records, ensuring medical bills are paid, reviewing medical records (often times hundreds of pages), speaking to experts, organizing those records, writing a demand letter, negotiating the case and handling subrogation issues. A “demand letter” is a demand for money that provides a detailed summary (often 5-10 pages long) of your injuries and how those injuries affected your life. We send the demand letter to the insurance company with a complete copy of all your medical records. If the records don’t contain a causation statement (medical doctor believes the injuries were caused by the collision on a more probable than not basis), then we need to hire an expert to provide one. The stronger the demand letter, the higher the value the insurance company places on the claim. My hourly rate is $375 an hour. 100 hours x $375 an hour is $37,500. Most of my clients don’t have $37,500 to pay me to pursue their case. Hypothetically: If I recovered $25,000 (from the insurance company or a jury) my client would owe me more than they recovered. Out of this $25,000, my client still needs to reimburse their insurance company for the medical bills they paid or medical bills not covered by insurance. This is why the law allows attorneys to work on a contingency fee basis.
In this same scenario, because I charge on a contingency fee basis. I charge 1/3 of the recovery or $8,333.33. The client is ahead in this scenario. If I spent 100 hours on the matter, I am being paid $83 an hour. The fee does not cover the cost of running the law firm; that includes business tax, employee tax, business insurance, equipment, internet, staff salaries, health insurance, sick leave and vacation pay. This is why attorneys rely on staff to help with these cases.
If I need to file a lawsuit for a simple non-complex case, I spend on average 150-200 additional hours or more if a case is actually heard before a jury. Jury trial time in court is normally 4-5 days for a simple case with 2-3 witnesses. Countless hours before a trial date includes a process called “discovery” in which depositions (formal verbal interviews) are taken, interrogatories (written questions and answers) are served and countless motions to include trial briefs and jury instructions.
300 hours x $375 an hour = $112,500. On a contingency fee basis, many attorneys charge 40% of the gross recovery for cases in litigation. If I recover $25,000, my fee is $10,000. In this scenario, my hourly rate is $33 an hour. After paying office overhead, the firm loses money.
If I recover $100,000, my fee is 1/3 or $33,333. If I spent 100 hours and charged hourly my fee would be $37,500. If I recover $100,000 from a jury or arbitrator my fee is $40,000. However if I spent a total of 300 hours and charged $375 an hour, my fee would be $112,500. The client would not be ahead.
The Bottom Line, “contingency fee work” benefits the consumer for smaller cases. Defense attorneys get paid their hourly rate regardless if they win or lose. Not every case is a million dollar case. In most cases involving auto collisions, the policies are not high enough. The average driver has less than a 100,000 policy limit. Washington law only requires that drivers are insured for $25,000 per person or $50,000 per accident. This is why is paramount that drivers’ have under-insured motorist coverage.
Case Costs
Attorney fees do NOT include the hard case costs. Many attorneys will advance this cost. Filing a lawsuit cost $240; the average process server costs $200; medical records cost on average of $500 - $2,000. An expert can cost $5,000 for an opinion report or $15,000 to testify at trial. The average cost to prepare a case, prior to filing suit is about $1,000. The average cost of taking a case to trial is in excess of $20,000. Most of my clients cannot afford or do not have the money to pay for these hard case costs. Most firms front these costs and ask to be reimbursed at the end of the case.
For medical malpractice cases or other complex litigation cases, the costs can exceed $200,000 and thousands of hours of time. Most of these attorneys work in teams, sometimes 5 to 10 attorneys assist on a case. Friends who only take these complex litigation matters when millions of dollars are at stake, the risk is higher and so is the cost to pursue these cases.
Liability (Who is at fault?)
If you were rear-ended, the person who struck the rear of your vehicle is at fault. The person who hit you is financially responsible for the harm they caused. This includes property damage, medical bills, wage loss and pain and suffering. The law requires that we have insurance because most people don’t have cash to pay for the harm they cause. The at-fault person’s insurance company pays for the harm their insured caused. If the person who hit you does NOT have insurance, they are still financially responsible for the harm. However, most people don’t have money to pay for the harm. You can’t force a person to pay without getting a judgment from a court.
In Washington, the law ONLY requires that you carry the minimum policy limits of $25,000. This is simply NOT enough!
Disputed Liability
Most auto collisions are caused by inattentive driving. If you were not rear-ended, there is a good chance liability could be disputed. The officer will make an initial determination at the scene of the collision. However, the officers’ opinion is not binding. The officers’ opinion will influence an insurance company, but it can be disputed. Who was at-fault for the collision will always factor into an attorney’s decision to take a case.
What if the other party does NOT have insurance?
If the person who struck your vehicle does NOT have insurance, you can bring an uninsured motorist claim against your own insurance policy. The uninsured portion of your insurance policy will pay what the at-fault party should have paid, if they had insurance. However, your recovery is limited to your uninsured motorist policy limits. Ask us for a policy review. Most people are under-insured.
Your insurance company will ask the at-fault party to reimburse them for the amount of money they paid you. They will pursue them at their own expense for the monies they paid. This could include filing a lawsuit and garnishing their wages. In addition, if a person drives without insurance and causes an injury, that person will likely lose their drivers’ license.
We take cases and represent you against your own insurance company. The laws are a little different, but your own insurance company can’t REFUSE to pay legitimate claims. However, their idea of legitimate claims are often very different than what most people would think is fair.
If you don’t have uninsured motorist coverage and the other person doesn’t have insurance, this is a case an attorney usually won’t take.
This is not a substitute for legal advice from an experienced attorney.
Please call us for additional information.