Monday, February 10, 2014

Contingency Fees in New Jersey Personal Injury Cases

A Consumer’s Guide to Contingency Fees in New Jersey Personal Injury Cases

  1. What are contingency fees and how are they calculated in New Jersey Personal Injury cases? 
When a New Jersey Personal Injury Attorney takes your case for a contingency fee, he gets paid from the money he recovers for your personal injury.  In other words, his fee is contingent upon obtaining a recovery.  No recovery, no fee.  Unlike some states, where the customary contingency fee may be as high as 40-45% of the total recovery, New Jersey caps its contingency fees at 33 1/3% of the net recovery for injured adults, and at 25% of the net recovery for injured minors.  This means, for example, that if an attorney spends $5,000 on case expenses to recover $50,000 for an injured adult, the net recovery is $45,000, and his 33 1/3% fee is $15,000, which in effect is 30% of the total $50,000 recovery.  Likewise, if that case involved injury to a minor, the attorney’s fee would be 25% of the $45,000, or $11,250, which in effect is 22.5 % of the total $50,000 recovery.  To read New Jersey’s rule, click on the NJ Contingency Fees link below.

  1. Does a lower contingency fee mean that the client will collect more money? 
When you see a circular which says that the big box of Cheerios, normally $4.00, will be on sale next Tuesday for $2.00, you can be certain that by waiting until next Tuesday, you’ll get the same amount of Cheerios for less money.  But when it comes to contingency fee cases, the outcome is less certain.  This is because there are two factors affecting the equation – the contingency fee, which is certain, and the amount of the recovery, which is uncertain.  For example, if an attorney were to charge you 33 1/3% to handle your case, and the net recovery he obtained for you was $45,000, he’d collect $15,000, and you’d collect $30,000.  On the other hand, if an attorney charged you a lower contingency fee of 28%, but the net recovery he obtained for you was only $40,000, he’d collect $11,200, and you’d collect $28,800.  So the answer is no, a lower contingency fee does not necessarily mean that the client will collect more money, because the outcome also depends on how much money the attorney is able to recover.

  1. How does an attorney recover the right amount of money for the client?
The amount of money recovered in a case is typically decided in one of two ways – by how much the other guy’s insurance company is willing to pay, or by how much a jury is willing to award.  In either case, getting the right number requires an attorney with the right experience and reputation. Does the attorney practice law in the region where your case is located (North Jersey, Central Jersey, South Jersey) ?  Has he or she been Certified by the Supreme Court of New Jersey as a Civil Trial Attorney, a reliable measure of real trial experience and continuing legal education?  Does he or she have access to the inside information and expertise of hundreds of other New Jersey trial attorneys as a fellow member of the New Jersey Association for Justice?What kind of cases has your attorney handled, and has he or she done what’s necessary to let the insurance company know that you mean business, and aren’t willing to bargain away your rights for the sake of a quick settlement?  It’s important that you get the answers to these questions, especially if your injuries are serious, and the other side is trying to avoid responsibility.  If so, your case could take a lot of time and money to prepare properly, and having the right attorney by your side will make all the difference in the world when it’s time to make tough decisions about waging war or making peace.

  1. An Important Decision Requiring Careful Thought 
To quote from the New Jersey Supreme Court Committee on Attorney Advertising –
“Before making your choice of attorney, you should give this matter careful thought.  The selection of an attorney is an important decision.”  Hopefully, this article has helped you to recognize that your choice of an attorney should involve careful thought about a variety of important factors.  Best of luck in your search for qualified counsel.

New Jersey Courts Homepage
NJ Court Rules - Practice of Law/Contingency Fees
NJ Rules of Professional Conduct - Communications Concerning a Lawyer's Services
NJ Rules of Professional Conduct - Personal Contact with Prospective Clients


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