What Is a Contingency Fee?

What Is a Contingency Fee?

Suffering serious injuries in an accident can leave you with a lot of questions about your legal options and rights to compensation. In particular, many people worry that hiring a lawyer to represent them will end up costing more than they can afford. Those worries, however, are usually misplaced. Most personal injury lawyers work on a contingent fee basis, which makes their services affordable to anyone who needs them.

Contingency Fees: Defined

A contingency fee is a fee that a lawyer receives only if the lawyer achieves a certain outcome on behalf of a client in a legal matter. For example, in a personal injury case, the lawyer and client’s goal is to secure payment of compensation for the client’s injuries and losses. A lawyer working for a contingency fee in a personal injury case collects the fee if the lawyer succeeds in obtaining money for the injured client through a settlement, judgment, or jury verdict. The fee, in other words, is contingent on the results the lawyer delivers. In the typical personal injury case, the contingency fee consists of a percentage of the money the lawyer secures for the client’s injuries and losses. The lawyer and client agree on that percentage in advance, in writing, at the beginning of the representation. Upon obtaining money for the client, the lawyer deducts that agreed percentage as the lawyer’s fee.

What happens if you do not win?

Personal injury attorneys aim to take cases on a contingency fee basis that they feel they have a reasonably strong chance of winning. Why? Because if they do not win, they do not get paid, and if their share of a financial award does not cover the cost of their efforts, they face a risk of financial loss, just as their clients do. In other words, lawyers make an investment of their time and effort in a case that puts them in the same boat as their clients, who entrust them with their valuable legal rights. If lawyers succeed, they get a percentage of the money recovered, and the client gets the rest.

What percentage do lawyers get?

The percentage a lawyer receives as a contingency fee tends to vary, based on numerous factors, such as:
  • The amount of money potentially at stake.
  • The case’s chances of success.
  • The amount of time and effort the case may require.
  • The stage of the case at which the lawyer succeeds in getting it resolved.
  • Laws and regulations that limit or fix the percentage the lawyer can keep.
Clients can, and should, discuss these percentages carefully before starting an attorney-client relationship. As we mentioned above, lawyers and clients agree on these percentages in a written agreement at the beginning of a case, so that everyone understands how much money the lawyer might earn.

What about case costs?

The expense of a lawsuit commonly involves more than just the lawyer’s fee. Pursuing legal action also entails spending money on supplies, services, and administrative needs. The parties in a personal injury lawsuit must pay court reporters to prepare transcripts of proceedings. They may need to hire experts to evaluate the evidence and prepare authoritative opinions. The lawyers may need to travel, purchase specialty supplies, or prepare trial exhibits and other presentation materials. The agreement between a lawyer and a client also spells out the handling of these expenses. Either the lawyer or client can agree to pay them in full, or they can agree to split them. The lawyer and client can also negotiate whether those expenses get paid “off the top” (before calculating the lawyer’s contingency fee), or out of either party’s share of any financial recovery.

Why do attorneys work for contingency fees?

To some clients, it may seem odd that an attorney would take financial risks on a case. After all, the public (mis)perception of lawyers is that they always charge high hourly rates to their clients. A contingency fee is the opposite of that. So why do lawyers agree to it? Lawyers work on contingency because many of their clients can't otherwise afford legal representation. Few individuals can afford to pay lawyers hundreds of dollars per hour. Fewer still can afford that sort of financial burden after having suffered injuries in an accident that was someone else’s fault. Lawyers represent clients in personal injury cases for contingency fees because that is what their clients need them to do. Without contingency fees, injured people could find the doors to the courthouse closed to them, with nowhere to turn for justice.
Walter H. Emroch (retired) Attorney
Walter H. Emroch (retired), Personal Injury Attorney
Another reason lawyers work on contingency is that it makes for a strong attorney-client relationship. By working for a contingent fee, an attorney and client have the same goal: securing as much money as possible for the client’s injuries and losses, as efficiently and quickly as possible. This alignment of interests between lawyer and client helps them make smart decisions about how to proceed, and often helps to form a bond between them that facilitates clear, effective communication. Finally, personal injury lawyers work on contingency because it gives them a chance to earn a living while doing the right thing for clients. Victims of personal injuries need lawyers to help them secure the compensation they deserve. Contingency fees make it possible for lawyers to make a career out of helping them. If you suffered injuries because of someone else’s careless or wrongful actions, you may receive significant financial compensation. Contact an experienced personal injury lawyer today and ask whether the lawyer will take your case on a contingency fee basis.

William B. Kilduff


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