A victory for average working folks seriously injured in accidents was rendered by the Fourth Circuit Federal Court (the federal appeals court over Virginia (VA), North Carolina (NC) and several other states). They issued an opinion supporting the contingency-fee system after the District Court of the Eastern District of North Carolina (NC) tried to slash a lawyer’s contingency fee from 33 percent to 3 percent.
The majority of personal injury attorneys in this country work on a “contingency-fee” basis. Basically, this means a lawyer is only paid if they obtain a settlement or jury award for their client. This system was developed for people who could not afford to pay anything up front or pay an hourly billing rate, but still need legal counsel. In return, many lawyers working on a contingency-fee basis are paid 1/3 of any settlement or award, though this percentage can vary upwards or downwards, depending on the type of case, as each lawyer may request a contingency fee based on the particulars of the type claim.
Federal District Courts have the right to approve or deny contingency fee awards on certain types of cases in federal courts, but there is a “reasonableness standard” that must be applied and a fee award can only be altered if the fee is “clearly excessive.” Considering a 33 percent (roughly one third) contingency fee is used by numerous personal injury attorneys, the Federal Circuit Court determined that the NC District Court erred in their decision to cut the lawyer’s fee so drastically.
This was a good decision by the Fourth Circuit Court. The contingency-fee system is critical in our society. As the Honorable Judge Wilkinson wrote:
“Contingency fees provide access to counsel for individuals who would otherwise have difficulty obtaining representation. Sadly, a plaintiff sometimes has little to offer a lawyer other than his personal plight.”
So true. As personal injury lawyers licensed in NC, VA, and a number of other states, we routinely represent clients who have very little financial means–like the mother working two jobs to support her family who got seriously injured in a truck wreck, the 23-year-old just out of college who was hit by a car while crossing the street and suffered a traumatic brain injury, and the teenage girl who suffered a blood clot from a dangerous birth control pill. Our firm accepts these cases and takes care of any case costs and litigation expenses during the claims process–which the client repays from any recovery. Our clients pay no attorney fees up front. That’s how this system has worked for decades and thousands of people, who would not have access to legal counsel otherwise, received compensation that helped take care of large medical bills, lost wages, and pain and suffering. It’s a good system and when courts arbitrarily cut attorney’s contingency fees, it only hurts salt-of-the-Earth injured victims who desperately need legal counsel.
As Judge Wilkinson also wrote:
“The point remains that contingency fees are an acknowledged feature of our legal landscape, approved by legislative and judicial bodies alike, that help secure for the impecunious access both to counsel and to court.”