Understanding Contingency Fees in Personal Injury Cases

Contingency fee arrangements are extremely common with plaintiffs’ attorneys, especially in personal injury cases. Most people have at least heard the term “contingency fee” and understand that it generally means you only pay your lawyer if you win, but they may be a little fuzzy on the details and can be caught off guard later when it comes to payment.

Here, we’ll cover the essentials of contingency fee arrangements in personal injury cases to help you make a more informed decision regarding your own case.

What Are Contingency Fees?

A contingency fee agreement is an agreement with your attorney where they will only get paid if you receive some monetary compensation in your case, whether it be a jury award or a settlement. In this way, the lawyer’s fee is “contingent” on your compensation.

A contingency fee is typically paid as a percentage of your total recovery. The percentage may range from 20 to 50 percent, but 30 to 40 percent is more common.

Pros

Contingency fees greatly expand access to legal services. An attorney’s going rate will be at least $150 per hour but is likely to be considerably more. Most people cannot afford this for a case that may take months or even years to resolve.

Contingency fees allow plaintiffs to pursue their claims with virtually no financial risk. The lawyer assumes that risk in anticipation of getting paid later. This incentivizes them to work hard to get you compensation.

Cons

There are some drawbacks associated with the contingency fee system. First, the attorney will likely get paid more through contingency fees (if successful) than they would have through hourly rates. This is especially true if the case settles after a few phone calls and letters rather than proceeding to trial. On the other hand, cases tend to settle for significantly more money if the plaintiff has an attorney.

Also, lawyers working for contingency fees can become more risk-averse, turning down cases that aren’t easy wins or may take a long time to resolve.

Things to Keep in Mind

For most plaintiffs, contingency fees are a beneficial arrangement that allows them to pursue their legal rights, but they should go into it with their eyes open. Here are a few points to consider.

1. Litigation Costs

Besides your attorney’s fees, there will be other litigation costs, such as filing fees, expert witness fees, transcription fees, etc. that must be paid immediately. Most plaintiff’s attorneys are willing to pay these costs as they arise, but they will be subtracted later from your financial recovery. This is separate from the contingency percentage.

One important thing to consider in the fee agreement is whether the contingency fee is calculated before or after the litigation costs have been subtracted. If the fee is calculated before costs are taken out, the overall fee will be larger.

2. Attorneys May be Willing to Negotiate

Some attorneys offer their fee agreement on a take-it-or-leave-it basis, but others may be willing to discuss the terms. For example, they may agree to a sliding-scale arrangement where they take a lower percentage if the case settles early on but get a greater percentage if it goes to trial.

3. Ask the Attorney to Explain the Fees

You’ll likely be happier with the outcome if you know in advance what to expect. It’s okay to ask a lawyer to explain their fee agreement in detail and provide some examples of how it may work out in real life.

Talk to an Experienced Personal Injury Attorney

If you’ve been injured and think you may have a legal claim, your first step should be to discuss your case with an attorney who can advise you on the best course of action. Our legal team has decades of experience in a wide variety of personal injury cases, and we’re always happy to discuss our fees with you so you know exactly what to expect.

Contact our office to schedule your initial consultation.