A personal injury lawyer in California is paid a contingency fee, meaning a percentage of what is recovered and nothing if nothing is recovered. The common arrangement is 33 1/3 percent of the gross recovery if the case settles before a lawsuit is filed and 40 percent if a lawsuit has to be filed. Case costs, such as filing fees, records charges, and deposition costs, are separate from the fee and are deducted from the recovery. Medical bills and liens owed to providers or health plans are also paid from the settlement. What you take home is the settlement minus the fee, minus costs, minus the medical liens.
The point that decides how much you actually keep is not the fee percentage. It is what the lawyer does with the medical liens. Health insurance, Medi-Cal and Medicare all have reimbursement rights against your settlement, and providers who treated you on a lien expect to be paid in full. A lawyer who negotiates those balances down can change the net far more than a few points on the fee. On a $90,000 settlement with $35,000 in medical liens, a fee of one third leaves $30,000 for the client if the liens are paid in full. If the lawyer reduces those liens to $18,000, the client’s net rises to $47,000 on the same settlement and the same fee.
How much does a personal injury lawyer take from a settlement in California?
Commonly one third of the gross recovery when the case settles without a lawsuit and 40 percent once a lawsuit is filed, under a written contingency agreement. California requires the fee agreement to be in writing. Costs the lawyer advances during the case, such as filing fees and medical reports, are paid back from the settlement separately. Medical liens are also paid from the settlement, and the lawyer’s work negotiating those liens down often matters more to your net than the fee percentage itself.
How a settlement is actually divided
Picture a settlement check for $60,000 after a rear-end crash on the 118 in Chatsworth, with no lawsuit filed. This is an example only.
The attorney’s fee at one third is $20,000. Case costs for the police report, medical records, and a postage and copying charge come to $400. Medical bills total $22,000, of which $14,000 was paid by the client’s health plan, which now asserts a lien, and $8,000 is owed to a physical therapy clinic that treated on a lien. Without any negotiation, the client nets $60,000 minus $20,000 minus $400 minus $22,000, which is $17,600. With the health plan lien reduced to $9,000 and the clinic reduced to $5,500, the client nets $25,100.
The settlement statement the lawyer gives you at the end should show each of those lines. If it does not, ask for it.
Why the percentage goes up when a lawsuit is filed
A filed case takes far more work. The complaint, written discovery, depositions, motions, retained doctor reports and mediation all happen between filing and resolution, and Los Angeles Superior Court civil cases typically reach trial 18 to 24 months after filing. The higher percentage reflects that work. It also means the decision to file should be a real decision. A lawyer should be able to explain why filing is expected to increase the recovery by more than the additional fee and costs. In a disputed liability case or a disc case where the insurer will not pay fair value without a surgeon’s deposition, filing is usually worth it. In a clear case with a policy-limit offer on the table, it often is not.
What costs are and why they are separate
Costs are the money spent on the case itself. Typical items are the court filing fee, which runs several hundred dollars in Los Angeles Superior Court, service of process, medical records and billing copies, deposition court reporter and transcript fees, which can run $1,000 or more per deposition, mediator fees, and fees paid to retained doctors for reports and testimony. In a case that settles before filing, costs are usually small. In a filed case with retained doctors, they can reach several thousand dollars or more. Your fee agreement should state how costs are handled and whether they are deducted before or after the fee percentage is calculated. Read it.
What to ask before signing
Ask what the percentage is at each stage and whether it changes if the case goes to trial. Ask whether the percentage is calculated on the gross settlement or after costs. Ask who pays costs if the case is lost. Ask how medical liens are handled and whether lien negotiation is part of the service. Ask who will actually be working on your file and whether you will be able to speak to the attorney. These are ordinary questions and an attorney who handles injury cases will answer them without hesitation.
Also read the agreement for anything about fees if you change lawyers. In California, a discharged attorney may claim a fee for the reasonable value of work done, which is paid from the final recovery, not in addition to it. Switching lawyers does not mean paying two full fees.
Common mistakes
The first is choosing a lawyer by the fee percentage alone. A 30 percent fee from an office that pays liens in full and settles fast for whatever is offered will leave you with less than a one-third fee from an attorney who builds the medical file and negotiates the liens. The second is not reading the cost provision. The third is treating a medical lien as the lawyer’s problem rather than yours. The lien comes out of your money, so ask how it is being handled and what the balance is before you approve a settlement.
Questions people ask next
Do I pay anything if the case is lost?
Under a standard contingency agreement, no fee is owed if there is no recovery. Whether you owe the costs that were spent depends on the agreement, so read that provision before signing.
Is the fee taken from the medical bills too?
In the common arrangement, the fee is a percentage of the gross settlement, and the medical bills and liens are then paid from what remains. The fee is not taken a second time from the lien reductions.
Is my settlement taxable?
Under federal law, damages for physical injuries are not taxable income, and that includes the portion that went to the lawyer. Punitive damages and interest are the exception and are taxable.
Manoukian Law Firm handles personal injury cases on a contingency basis, and the attorney, Vaheh Manoukian, explains the fee agreement, the costs and the lien process personally before a client signs anything. If you want to understand what a lawyer would actually cost on your case, call (818) 818-5031 for a free consultation.
