It’s never been easier to compare products and services side-by-side to find the best overall value for your money, which includes finding the right attorney for your personal injury case.
You want the best attorney you can afford. But some lawyers give consumers a distorted view on what “value” really means in the field of personal injury law.
Most personal injury attorneys work on a contingency fee basis, which essentially means you only pay attorney’s fees if the attorney is able to successfully recover compensation either by settling the case or obtaining a verdict in your favor through a jury trial. Once the attorney recovers compensation for you, the amount of money you pay that attorney will typically be a percentage of the gross recovery. For a more detailed explanation of how contingency fees work, check out this blog post.
Though attorneys and cases vary, personal injury lawyers will typically charge a contingency fee somewhere in the range of one-third (33.33 percent) of the total recovery amount. But from time to time, we see attorneys who attempt to attract clients by advertising that their contingency fee comes at a significantly lower percentage.
The pre-conditioned consumer in you might see that advertisement and think, “That’s a deal!” That’s what makes this an effective advertising strategy. But we want to educate you on the various reasons that these offers should be taken as a warning sign and explain how hiring a “discount attorney”you’re your personal injury case can actually end up hurting you and your family.
Reason #1: Contingency Fee Structure is an Incentive
The structure of a contingency fee agreement for personal injury cases is designed to work in the favor of both the attorney and the client at the same time. Since a contingency fee is contingent upon a successful resolution to the case, the client does not owe the attorney any fees unless the attorney recovers compensation for the client.
As we say: Win or Go Home
This protects the client by ensuring that they do not lose money if the attorney fails to recover compensation. At the same time, the contingency fee structure also incentivizes the attorney to recover the highest possible level of compensation for the client because the attorney’s fee is a percentage of that number.
But when an attorney charges a lower percentage, they are less incentivized to focus on achieving the best possible result and more motivated to resolve the case as quickly as possible, regardless of the outcome. There is also a higher level of temptation to cut corners, and we hear these complaints all too often when a client calls us wanting to switch attorneys because they are dissatisfied with the other attorney’s strategy.
Reason #2: It’s a Sign of a ‘Settlement Mill’
One of the more concerning potential reasons that an attorney or law firm might be offering a discounted contingency fee is that the firm is what we call a “settlement mill.” We published a pretty detailed explanation of settlement mills not long ago, which you can read here. But the general idea is that these firms simply look to sign up as many clients as possible and turn the cases over as quickly as possible, without much regard to obtaining the best possible settlement for the client or making decisions based on the client’s best interests.
Settlement mills make profit over the volume of their clients, not by obtaining the highest possible level of compensation even if it means waiting out the insurance company or taking the case to trial. In fact, settlement mills will typically do anything they can to avoid a trial at all costs because the attorney(s) do not have much, if any, experience in court. Advertising a discounted fee is one way to attract a high number of clients without their understanding of the reasoning behind that advertisement.
Reason #3: It’s a (Possible) Sign of a Struggling Business
An attempt to lure potential clients by offering a lower fee can be taken in the same context as a furniture store advertising one of those “everything must go” sales promotions.
I’m not saying that you should make any assumptions about a law firm’s overall financial health just because of a business advertisement, but “sales promotions” are quite rare in the services industry and even more so when it comes to attorneys. If you do happen to find yourself speaking with an attorney who is offering a discounted contingency fee, it may be in your best interest to ask them why they are doing so.