Why Car Accident Lawyers Make So Much Money (Not!)

Why Car Accident Lawyers Make So Much Money (Not!).

You see them on the billboards as you are driving down the highway.

They have clever tag lines like “Injured?  Call Me” or “Ed Got Me $100K.”  

They pollute the highways with these signs and it costs them a lot of money to do it. 

So, naturally you must be thinking that Car Accident Lawyers make a lot of money. 

And, while some of them do, it is more akin to thinking all actors get paid the same as your favorite Friends cast member (who by the way make over $20 million dollars each year still!  Guess Smelly Cat was a hit for Lisa Kudrow after all!). 

The reality is, like most actors, personal injury lawyers on average are not raking in the big bucks.  In fact, most solo or small firm lawyers, which many personal injury lawyers are, barely squeak over $40k – $50k per year.  

Imagine all the law school debt for that kind of payout.  

It’s unfortunately true that many are not getting paid what they had hoped they would and, like them, you may be wondering why. 

Well here is why the top lawyers are making a ton of money and most the rest of folks are not. 

In the first place, to make money as a personal injury lawyer you have to put up lots of money. That is a big L for lots, because it costs a heckuva lot of money to compete in the accident business game. And, that is just to get business.

Once you have business, you start to take big risks in order to get paid. Everyone of your cases gives you the privilege to pay money up front.  As we all know the cost of healthcare is tremendous (just look at your insurance premiums) so can you imagine having to outlay thousands upon thousands of dollars in cash for almost every client’s treatment in the hopes that all those clients listen to your advice, treat accordingly, and don’t create problems for you to collect the money?  

So, one big piece of it is the risk involved that results in losses.  Personal injury lawyers take a lot of risk on each case.  If the case doesn’t settle or a judgment is not reached on the bigger dollar cases that cost more to bring, then guess what, not only is all the time of the lawyer not paid for, she may not even get paid back the upfront costs that she paid to get her client treated.  

The second, major, major piece of it is the Tom Cruise effect (or the Dwayne Johnson effect for you younger readers).  Major movies require big movie stars to score big box office numbers.  There are only so many big movie stars out there and they command a very high price to get them to be in your movie.  

In the world of marketing for car accident cases the competition is very fierce.  There can only be a few “movie stars” if you will.  Those stars are people (much like Tom Cruise) that have generally been in the car accident game for a long time.  They have already established themselves as the stars of the accident movie and make the costs of marketing for cases on TV, over the radio, on the internet extremely expensive. 

Did you know the highest cost per click for the ads on google that searchers click are routinely commanded by key words such as “Car Accident Attorney.”  

Lawyers can spend up to $400 per click in some cities!  

That’s just for someone to click to get to your website (no wonder Google’s parent company Alphabet is one of the most valuable companies in the world right!).  They don’t have to stay.  They don’t have to call you.

So the competition is fierce and the barrier to entry is super duper high because between marketing and managing a case load, you need a lot of money up front to even compete.  

Finally, you can have some great years and have some lousy years in business.  Some years cases settle fast, other years they may take 3 years and litigation to settle.  There is no predictability at all.  So, on average, even if you get one good case a year, it might take a while before that case pays out. 

All in all, being a personal injury lawyer, is not as lucrative as it may seem on the smiles of the billboard lawyers that you drive by each day.  Well – those guys might be the ones smiling all the way to the bank after all.