Understanding Attorney Contracts

A Guide from Wells Call Law Firm

When you’re injured and seeking legal help, understanding attorney fee agreements shouldn’t add to your stress. At Wells Call, we believe in complete transparency about how legal fees work. This guide explains contingency fee agreements in plain language to help you make informed decisions.

What is a “Contingency Fee Agreement”?

A contingency fee agreement means you don’t pay your attorney unless they recover money for you. If your case is successful, your attorney receives a percentage of the recovery as payment. If there’s no recovery, you owe nothing for their time and work.

This arrangement allows anyone to access quality legal representation regardless of their financial situation.

How Contingency Fees Typically Work

Most personal injury attorneys use different fee percentages based on when a case resolves:

• If a case settles before filing a lawsuit: the percentage is typically lower
• If a lawsuit must be filed: the percentage is higher

This structure reflects the substantial difference in work, time, and resources required for cases that proceed to litigation.

Typical Fee Ranges

At Wells Call, our contingency fees for most personal injury cases typically range between 33-40%, depending on the complexity and stage of your case. Different fees may apply to different types of cases. 

It’s important to understand that fee percentages can vary based on:

• The type of case (some cases may have fees limited by law)
• The complexity of the matter
• The anticipated resources required
• The stage at which your case resolves

Always discuss the specific fee structure for your individual situation during your initial consultation.

What Are “Costs” and Who Pays Them?

Costs are expenses incurred while working on your case, such as:

• Medical record fees 
• Filing fees for court documents 
• Paying a process server to serve documents on the other parties
• Expert witness fees when needed
• Case presentation costs (animations, illustrations, exhibits)
• Litigation expenses (depositions, mediations, court reporters, jury fees)
• Investigation costs when necessary

Most attorneys pay these costs upfront and get reimbursed from your settlement or verdict. These costs are separate from the percentage fee. Good attorneys work to keep expenses reasonable, but sometimes things like expert witnesses or detailed illustrations can make a significant difference in your case outcome.

How Medical Bills and Liens Are Handled

A significant part of an attorney’s job is ensuring all medical bills related to your injury are properly addressed. Here’s how it typically works:

• Your attorney identifies all medical bills related to your injury
• They work to negotiate with medical providers and insurance companies to reduce these bills when possible
• Attorney fees are usually calculated on the total amount recovered, not on what’s left after paying medical bills
• The attorney handles the paperwork to ensure all liens are satisfied so you don’t face surprise bills later

Example: If an attorney recovers $100,000 total, with $30,000 in medical bills, and their fee is 33%:

• The attorney fee would be $33,000 (33% of the full $100,000)
• $30,000 would go to pay medical bills
• You would receive $37,000 (minus any other costs)

About Referral Fees

Sometimes clients are referred to attorneys by other lawyers. If that happens in your case, your attorney may pay a referral fee to the referring attorney. Here’s what you should know:

• The referral fee comes from the attorney’s portion, not yours
• It doesn’t increase your fee percentage at all
• You still pay exactly the same amount whether you were referred or came directly to the attorney
• California law requires that attorneys disclose referral fee arrangements to clients

Red Flags in Attorney Fee Agreements

When reviewing attorney fee agreements, watch out for these concerning practices:

1. Excessive Contingency Percentages: Some attorneys charge 50% or more. This is generally excessive for most personal injury cases.
2. Administrative Fees: Be wary of agreements that include additional “administrative fees,” “file opening fees,” or similar charges on top of the contingency percentage.
3. Rapidly Escalating Fees: Some agreements increase the fee percentage dramatically after very short timeframes (like 60 days), regardless of how much work has actually been done.
4. Unreasonable Cancellation Fees: Watch for excessive penalties if you terminate the relationship, such as charging for all hours worked at an inflated hourly rate, even though you signed a contingency agreement.
5. Ownership Claims on Your Documents: Some agreements state the attorney owns all documents related to your case, making it difficult to retrieve your records if you change attorneys.
6. Hidden Interest Charges: Some attorneys charge interest on costs they advance, which can significantly reduce your recovery if your case takes years to resolve.
7. Pre-determined Settlement Authority: Be cautious of language that gives the attorney authority to accept settlements on your behalf without your explicit approval for each offer.
8. Unclear Cost Structures: Any agreement should clearly explain what costs you might be responsible for and how they’ll be handled.
9. No Transparency About Referrals: Your attorney should be upfront about any referral arrangements and how they affect (or don’t affect) your fees.

Be Cautious About Attorneys Who Quickly Discount Their Fees

While it might seem appealing when an attorney quickly offers to reduce their fee to get your business, this can sometimes be a warning sign:

1. An attorney who is too eager to cut their fee may be desperate for clients, which could indicate problems with their practice or experience level.
2. Attorneys who readily devalue their own services might approach your case with the same mindset—accepting less than your case is worth from insurance companies just to resolve it quickly.
3. The most effective attorneys know their value and charge appropriate fees that allow them to invest the proper resources into your case.
4. A slightly higher fee from a highly qualified attorney who can maximize your recovery is usually better than a lower fee from an attorney who might settle for less.

The Truth About “Discount” Lawyers

Some firms advertise dramatically reduced rates, like 25% instead of the standard 33-40%. Before being swayed by these apparent bargains, consider what’s really happening:

When Price Is the Focus, Quality Rarely Is

• Law firms competing primarily on price are often not competing on quality, experience, or results
• Insurance companies know which firms work hard for their clients and which ones settle quickly for less
• You get less money because the discount lawyer doesn’t get a great result on your case. 

The Hidden Costs of Discount Representation

• Many “discount” firms make up for lower contingency percentages by adding numerous administrative costs
• These can include charges for routine copies, phone calls, administrative work, and “file management fees”
• When added up, these expenses can sometimes exceed what you would have paid with a standard fee percentage
• Always ask for a complete breakdown of all potential costs beyond the contingency percentage

Quality Representation Pays for Itself

• Experienced attorneys invest in the resources needed to build strong cases
• They have the reputation and track record to demand fair settlements
• They’re prepared to take cases to trial when necessary, which often results in better settlement offers
• Their expertise typically results in higher recoveries that more than offset standard fee percentages

A Simple Math Example

If Attorney A charges 25% but settles your case for $80,000, you receive $60,000 (minus costs). If Attorney B charges 33% but settles your identical case for $120,000, you receive $80,400 (minus costs).

The quality representation from Attorney B resulted in $20,400 more in your pocket, despite the higher percentage.

Fee Adjustments When Circumstances Warrant

While we caution against attorneys who are too quick to discount their fees upfront, there’s another important consideration: how attorneys handle fees when unexpected circumstances affect your case outcome.

Putting Clients First

Good attorneys recognize that despite everyone’s best efforts, some cases don’t resolve as well as hoped. When this happens, ethical attorneys consider their clients’ best interests, which may include fee adjustments.

When Fee Reductions May Be Appropriate

Situations where quality attorneys might consider adjusting their fee include:

• When medical complications or new evidence changes case value
• When a client faces extraordinary medical bills that would leave them with little recovery
• When policy limits or other factors beyond anyone’s control limit recovery
• When the final settlement doesn’t fairly compensate for the client’s injuries

Questions to Ask

While this shouldn’t be part of your initial fee negotiation, it’s reasonable to ask potential attorneys:

• “Have you ever reduced your fee to help a client in difficult circumstances?”
• “How do you handle situations where the recovery isn’t what we hoped?”
• “What’s your philosophy about ensuring clients receive fair compensation after fees?”

An attorney’s willingness to discuss these scenarios honestly can tell you a lot about their commitment to client well-being.

Client Responsibilities

For attorneys to do their best work, they typically need clients to:

• Be completely honest about injuries and medical history
• Keep them updated on treatment
• Consider their professional advice
• Provide information about medical bills or insurance payments
• Provide all documentation related to the case, including photographs, insurance information, and employer details

Questions to Ask

When discussing fee agreements with potential attorneys, consider asking:

• What percentage do you charge, and does it change if a lawsuit is filed?
• What typical costs might I expect in a case like mine?
• How are medical bills and liens handled?
• What happens if we part ways before my case concludes?
• Are there any circumstances where your fee would be different than what’s stated in the agreement?