Insurance lawyers are paid in different ways. For a long time, the model was the standard “bill by the hour” model – the lawyer would be an independent contractor, and bill the insurance company by the hour. He might have this arrangement with several different insurance companies, each of which would refer different cases to him.
Then insurance companies started to try to save money. In the 1980’s, several insurance companies started hiring lawyers as full time employees, with a salary.
A couple years later, insurance companies began “bidding” their cases out to attorneys they trusted – when the lawsuit comes in, they send a description of the case to three different lawyers, and ask them to “bid” on the price each will charge to defend it up to a certain point – say, a month before trial. (The attorney submitting the lowest bid gets the case). If the case goes to trial, the attorney is additionally paid a certain amount per day of trial.
These days, lawyers will work for insurance companies under all three arrangements. And it depends on the case.
In Cincinnati, Allstate, Nationwide, Cincinnati Insurance, American Family Insurance, Safeco, State Auto Insurance and some other companies all have attorneys on salary. (Yes, we know who they are.) This arrangement means that the insurance company does not have to pay anything extra – at least on the short term basis – for taking the case to trial, or not settling the case and extending the lawsuit. But all of these companies also still hire lawyers for some cases on an hourly basis.
Allstate still bids out a lot of its cases that it does not refer to salaried counsel. And, on occasion, it may pay lawyers on a “pure” hourly rate.
A lot of other companies still hire attorneys on a “pure” hourly basis. The hourly rate is below what the attorneys might charge for other work – mainly because they are happy to get the volume of cases the insurer provides.
So if you are injured, and you are making a claim against an insurance company, what does this mean for you? If the insurer is hiring its lawyers on a “salary” or “bid” basis, the prospect of additional attorney fees is not going to provide it with much disincentive to settle the case before trial.
Sometimes, with some companies, this makes a difference – the company may want to “wait you out”, because trying the case, or delaying settlement, won’t cost it any more, or much more, in attorney fees.
On the other hand, if you hired your attorney on a contingency – or “percentage” – fee, your attorney fees are not going to increase with going to trial, unless the jury award winds up being higher than the insurer’s last offer.( And that would be a good thing!). All of my personal injury cases are on a percentage, or a contingency fee.
But there are usually two types of cost for an injured person in going to trial. First, most additional expenses – copying fees, expert fees for doctors and other experts, exhibit preparation, and court reporter fees for transcribing depositions – are incurred in the month or two months before trial. Second, there can be a significant delay between the time that both parties are able to evaluate the case and the trial itself.
So if you want your trial, or think that you will get a better offer right before trial, you may have to wait an additional 8 or 9 months for trial if you turn down a settlement offer. The insurance company knows this.
If you want to talk about your lawsuit, speak with an experienced Cincinnati personal injury lawyer – call me, William Strubbe, at 513-621-4775 in Cincinnati.
Because all situations are different, and because there may be other facts pertaining to your case that I don’t know about, you should not rely on this answer for legal advice. I am not your attorney, and no lawyer client relationship has been formed.