Jeffrey Wade
Auto insurance companies usually have a duty to defend their clients in court when they are accused of causing a car accident. This means that the insurance company will hire a lawyer to defend the case in court. However, there are exceptions to this rule, and sometimes the client may be responsible for hiring and paying for their own attorney.
Most auto insurance companies pay their attorneys on a contingency fee basis, which means that the attorney only gets paid if they win the case. The attorney's fee is typically a percentage of the total settlement amount obtained for the client, ranging from 25% to 40%. If the case is unsuccessful, the attorney does not collect a fee.
| Characteristics | Values |
|---|---|
| Payment method | Contingency fee |
| --- | --- |
| Contingency fee percentage | 25% to 40% |
| --- | --- |
| Flat fee | $300 to $1,000 |
What You'll Learn
Contingency fees
In most car accident cases, a lawyer's contingency fee is 33% to 40% of the amount the lawyer gets for you. If the lawyer doesn't get you anything, you won't owe the lawyer fees. You'll probably be on the hook for costs like filing fees whether you win or lose your case.
You can try to negotiate for a reduced contingency fee. Some attorneys are willing to set contingency fee percentages on a "sliding scale," depending on when the case is resolved. For example, an attorney may charge 25% if the lawyer settles the case solely by negotiating with an insurance adjuster and no lawsuit needs to be filed, 33% if a lawsuit is filed but the case settles before trial, and 40% if the case goes to trial.
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Hourly rates
Most car accident lawyers charge their clients on an hourly basis. The hourly rate varies depending on the nature and severity of the injuries, the novelty and complexity of the case, the probability of success, and the lawyer's experience. The hourly rate for car accident lawyers typically ranges from $300 to $1,000. The more serious the injuries, the greater the value of hiring a lawyer. If you were in a minor fender bender with little or no injuries, you could probably negotiate a personal injury settlement without a lawyer.
On the other hand, if you were injured and needed any significant medical treatment, the value of your case rises quickly. This means the insurance adjuster will work to minimize your damages and try to get you to accept a very low settlement offer—they are in the business of making money, not spending it, after all. In that situation, having an experienced lawyer on your side becomes essential.
The contingency fee is set as a percentage of your recovery. For example, if the contingency fee agreement with your attorney entitles them to 40% of your recovery and you receive $100,000 in damages, your attorney’s fee will amount to $40,000.
In a contingency fee arrangement, you do not pay hourly fees or have to worry about making payments while your case is in litigation. Payment for legal services issues as a percentage of the money awarded after the case closes. If the parties settle the case out of court, they will pay the contingency fees and other expenses out of the settlement. If the case goes to trial and the jury awards you money, the legal fees will come out of the jury award. Either way, you do not have to pay any money out-of-pocket.
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Flat fees
When an insurance company provides a lawyer for a policyholder, the lawyer is usually paid a flat fee. This means that the lawyer is paid a set amount for their work, regardless of the outcome of the case. Flat fees are typically used for less complex cases, such as drafting and responding to a demand letter. The fee for this type of work can range from $300 to $1,000.
In contrast, contingency fee arrangements are more common in personal injury cases. With a contingency fee, the lawyer's payment is contingent on the outcome of the case. The lawyer receives a percentage of the money awarded to the client, typically ranging from 25% to 40%. If the case is unsuccessful, the lawyer does not receive a fee. This type of arrangement allows individuals who may not be able to afford legal representation to obtain the services of an attorney.
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Insurance companies pay directly
When you are sued after a car accident, your car insurance company will usually hire a lawyer to defend your case in court. This is part of the insurance company's contractual "duty to defend" you. This duty arises as part of all different types of liability insurance policies.
However, there are exceptions to the "duty to defend". Almost all automobile insurance policies spell out circumstances that will effectively void the insurer's duty to defend the policyholder, including the obligation to provide a lawyer to defend the insured against a civil lawsuit filed by the other driver.
In the case of an insurance company paying directly, the insurance company will pay for the lawyer directly, either because they are an in-house attorney or a retained outside litigation firm.
In the United States, almost all insurance policies include a "duty to defend" clause, which means that if someone takes legal action against a policyholder, they are essentially taking action against the company too, and the company has the duty to defend the insured (either settle the claim or provide for legal defence). The insurance company pays for the lawyer directly, either because they are an in-house attorney or a retained outside litigation firm.
In some instances, the insurance company might not provide a lawyer. For example, if the insured policyholder fails to give the insurer notice of the accident, at least within the time limits specified in the insurance policy, the duty to defend might be voided. This is especially true if the delay has jeopardised the insurance company's ability to properly investigate the accident and/or minimise its losses in connection with the other driver's claim.
In most cases, insurance companies advocate for their own interests. This can sometimes put you at odds with your insurance carrier.
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Insurance companies pay indirectly
However, there are key exceptions, and it's important to know when you might be responsible for hiring (and paying for) your own attorney. For example, if the insured policyholder fails to give the insurer notice of the accident, or if the policyholder is accused of having acted intentionally to cause the car accident, the insurance company might refuse coverage and not provide a lawyer.
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Frequently asked questions
Auto insurance companies usually pay attorney fees directly. Most car insurance policies include a "duty to defend" clause, which means that if someone takes legal action against a policyholder, the insurance company has the duty to defend the insured. The insurance company pays for the lawyer directly either because they are an in-house attorney or a retained outside litigation firm.
Lawyers can have several types of fee arrangements. In general, the most common fee arrangements are a flat fee for services, an hourly rate, or a contingency fee. One of the more common ways that car accident lawyers in particular charge is through a contingency fee arrangement.
A car accident lawyer typically charges on a contingency fee basis, ranging from 33% to 40% of the total settlement amount obtained for the client. This means the lawyer’s fee is contingent upon winning the case and securing a settlement for the victim. If your case is unsuccessful, your attorney will not collect a fee.
Some factors that can affect an accident attorney’s fees include the nature and severity of your injuries, the novelty and complexity of your particular case, whether you settle out of court or go to trial, how much experience your attorney has, the probability of success, whether you are filing a lawsuit in your case, and your unique needs as a client.
In addition to the attorney fee for their services, some additional expenses may deduct from your recovery amount. Your attorney will be able to provide you with an estimate of costs, and upon conclusion of your case, you will receive a detailed statement of expenses. You may incur some of the following expenses: fees charged by medical facilities for medical records, administrative expenses, and investigative costs.
