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The ABCs of Personal Injury Attorney Fees

Attorney fees for personal injury is a very interesting topic.  Personal injury is one of the few areas of law where the client doesn't foot the bill.  In that sense, personal injury is similar to its close cousins, medical malpractice and worker's compensation.  But from an economic perspective, personal injury is also similar to its distant cousin - medicine.

In the modern American medical industry, the consumer almost never foots the bill.  The bill is almost always paid by medicare, medicaid, or insurance.  The result is that the consumer does not have an incentive to scrimp on procedures.  And of course, the doctor has a strong incentive to perform every procedure under the sun.  The result is a runaway train of procedures and bills, all paid for out of the commonwealth of society.  We pay through higher insurance premiums, higher taxes, etc.  So in that sense, nobody pays, but at the same time, everyone pays.

The same is basically true of personal injury attorney fees.  The case is almost always an individual suing a business because businesses have deep pockets.  If the individual wins, the business has to pay a huge sum of money to the individual.  But the buck doesn't stop there.  To recover its costs, the business will raise its prices.  So then everyone who does commerce with the business essentially has to pay a price.  The alternative is that the business may have liability insurance, in which case it can pass the bill along to the insurance company.  But the insurance company, too, has to recover its costs, and it does so by charging higher premiums to all of the businesses that subscribe to its insurance plans.  They, in turn, pass the cost along to their customers, and we're back to square one: nobody pays, and everyone pays.

From this perspective, personal injury is a lot like medicine.

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