How To Negotiate Personal Injury Lawyer Fees Down As The Value of Your Case Goes Up
August 5, 2022
There’s an old (and disgusting) saying amongst many billboard lawyers: “small cases pay the rent, big cases buy the yacht.”
In a perfect world, a lawyer's fee would grow as the amount of work they do grows. But, in personal injury, that’s not how it works. Large cases may actually take fewer hours for a lawyer to work on than small cases. And rarely (if ever) does a case that earns a lawyer an $800,000 fee take anywhere close to 100x the work of a case that earns the law firm an $8,000 fee.
Take a firm that charges 40% on the total settlement. On a case that settles for $20,000, the firm would make $8,000. On a case that settles for $200,000, the firm would make $80,000. In a case that settles for $2,000,000, the firm would make $800,000.
Yet, the work a law firm needs to do to make its $800,000 fee is usually not even close to 100x the work required to make an $8,000 fee.
Said differently, it’s not fair that the law firm doesn’t decrease the rate they charge as the settlement value goes up. This is especially true on cases that may not even go to trial, or in some instances, where a lawsuit isn’t even filed.
Understanding this reality, some states, like Connecticut, require by law that personal injury lawyers have a sliding scale for the fees they charge clients as the settlement value increases. But, Connecticut is the exception - most states have no sliding scale requirement.
There are some firms, like Mighty Law, that voluntarily offer sliding scales to all of their clients in all states, even when not required by law. But that’s also the exception and not the rule. And it’s hard to know what firms do have that sliding scale since most firms don’t even list their prices on their website. If you're looking to hire a personal injury law firm that doesn't offer a sliding scale, you can and should negotiate it yourself before signing any agreement.
People who have been injured in an accident, especially those who have been left with serious injuries, are well positioned to negotiate with personal injury law firms. That’s because law firms will bend over backwards to sign up their case. If, for example, a client is able to negotiate a law firm’s fees down to 40% on the first $1,000,000 and 30% on the second $1,000,000, the lawyer’s fee would be reduced from $800,000 to $700,000. That’s still a windfall for the PI lawyer but puts an extra $100,000 in the pocket of the person severely injured. And, this example is conservative. Most injured people could negotiate much more than this - and should!
Important point to remember: Any time your personal injury lawyer tells you they will do something, get it in writing, preferably in the engagement agreement you sign at the beginning of your case. Not getting it in writing can lead to misunderstandings at the end of the case, and, less money in your pocket.
The video above walks injured people through how to negotiate their lawyers fees down as the settlement value of their case goes up.
Here’s the transcript from the video above:
I'm Josh, a lawyer and the CEO of Mighty. Billboard lawyers make most of their money on the biggest cases. I'm gonna teach you how to negotiate so they don't get rich off of yours.
If you have a bad injury in a big case, it probably means you have more leverage to negotiate. Most billboard lawyers charge the same rate. No matter if your case settles for $20,000, $200,000, or $2,000,000.
But that doesn't make sense.
A lawyer's rate should go down and down as a case value goes up and up. That's because a $2,000,000 case doesn't take 10x more work than a $200,000 case, so the lawyer shouldn't be paid 10x as much. Knowing that is your key to negotiating.
Let's take the example of a $2,000,000 settlement. If a lawyer charges 40% on the entire $2,000,000, that means they're gonna make an $800,000 fee on your case alone. But if they only take a 40% fee on the first million and reduce their fee to 30% on the 2nd million, that means they only make $700,000, saving you $100,000.
Negotiating your fee down as your settlement value goes up is a key way to negotiating with a personal injury lawyer. Why would a billboard lawyer agree to it? Because they want your case.
But trust me, they're not gonna offer it unless you ask.
If you have a bad injury in a big case, it probably means you have more leverage to negotiate. Negotiating your fee down as your settlement value goes up is a key way to negotiating with a personal injury lawyer.
Mighty Law is the first law firm we know that has such a model of giving clients back a percentage of costs from the settlement. There are good reasons for this unique fee structure: it incentivizes getting clients the most cost-effective care, working with plaintiff financing companies that have the lowest fees and rates, and keeping case costs low. While Mighty Law’s unique fee structure might at first glance look unusual, it is completely consistent with ethics rules, and structured specifically to rewire incentives to be unequivocally pro-client.