What to Expect: Legal Expenses

How much could I expect to spend if I file a lawsuit?

Lawyers in Nevada can charge anywhere from $100 to $500 an hour, however, you don’t have to pay them upfront when they take on your case. Instead, you will sign a contingency fee agreement. The contingency fee is a percentage deducted from whatever settlement or award you receive when winning a lawsuit, and it can range from 33% to 50% of the total settlement.

That might sound like a lot, but much is at stake for your benefit. Your award could be in the hundreds of thousands of dollars to recoup everything lost due to your auto accident. Your personal injury lawyer will let you know upfront how their contingency fees are calculated.

Are legal expenses tax deductible?

The good news about the legal expenses associated with filing a claim is that a settlement or award is not taxed because it’s a form of compensation you receive for losses sustained in an accident. It applies to both economic and non-economic losses.

• Economic losses include medical bills, lost wages, and vehicle repairs
• Non-economic losses cover your pain and suffering

These two types of losses can be related to personal injury lawsuits involving car accidents, slip- and-fall accidents, medical malpractice incidents, or any situation in which another person is legally liable for physically harming you. 

Is a legal expense an asset or liability?

Let’s define the difference between assets and liabilities:

• Asset is the monetary value of something you own or are owed. Its value accrues over time. For example, a legal settlement or award is an asset.

• Liability is an expense, meaning something that you have to pay or owe. For example, attorney fees are not tax deductible and, therefore, an expense.

It would be best to consult a tax professional for your situation. You can also check online with IRS publications that outline the tax implications of settlements and judgments.

Costs and expenses in a personal injury case

There are other legal expenses and costs that are necessary to prepare a personal injury case. The law firm will cover these expenses upfront, but they will be deducted from your settlement award at the end. You’ll want to make sure that your contingency fee agreement spells out when those expenses will be deducted. It will be to your advantage to have the miscellaneous expenses deducted before your lawyer’s fee is calculated.

Some types of miscellaneous expenses you can expect to incur include the following:

• Court filing fees
• Expert witness fees
• Copying fees for police and medical reports
• Postage
• Transcripts
• Trial exhibits
• Investigator fees

Not all of these fees will necessarily apply to your case, but you can expect that some of them will. There could also be fees associated with a deposition of the defendant.

Do I have to pay court reporter fees in a deposition?

Depending on how many witnesses are involved in your case, the cost of paying for depositions could run up into thousands of dollars. Three elements of legal expenses in a deposition include:

1. The cost of renting a room. This could be a separate conference room.
2. The cost of the transcriptionist who records all the testimonies given. You could hire an independent transcriptionist and ask for a fee schedule up front.
3. The cost of your attorney who presides over the deposition and asks questions

A deposition is necessary in a case to prove who was at fault. Taking a deposition of the defendant can give the judge and jury a good idea of what happened to cause the accident. It might not be necessary to depose all the witnesses due to the costs and time constraints involved. This is where an experienced attorney can advise you on how much is needed to prove the case.

How a personal injury attorney evaluates your life care plan

A life care plan is a document that is assembled after evaluating a person’s injuries from an auto accident. It will determine the extent of the injuries and how badly they have disrupted the person’s normal daily life requiring long-term medical and mental care. 

The financial expenses for such care will be tallied up to demonstrate to the court how much a person will have to pay for the rest of their life if the injuries are permanent. A life care plan is not needed where only minor injuries have been suffered. 

If your injuries warrant the services of a medical professional specializing in creating life care plans, expect an expense in the hundreds of dollars. The careful documentation will greatly help your case going forward.

Legal expenses explained

You shouldn’t have to worry about legal expenses after going through a car accident that left you debilitated. It’s enough to be focused on your health and healing. We can help you pave a smoother road ahead by partnering with you to recover your financial and life losses. Let the experienced attorneys at Adam S. Kutner guide you through the legal process of filing a personal injury lawsuit.