Contingency Fees: A Comprehensive Guide

Most attorneys charge an hourly rate, where you are required to pay a retainer fee that they will work against. You will then get an invoice at the end of the case, outlining the number of hours the attorney worked, and the total amount withdrawn from the retainer fee.

If you do not have the money to pay an attorney upfront, you can opt for a contingency fee lawyer. Contingency fee lawyers are a more affordable legal option since they only charge you after you’ve been fully compensated.

Read on to learn more about the contingency fee arrangement and how it works. 

What is a contingency fee?

A contingency fee is a payment method for an attorney’s services based on the percentage of compensation you get after a settlement. This means you can hire an attorney even if you don’t have the funds to pay them upfront.

Unlike the fixed hourly rate many attorneys charge, you only pay contingency fees if your attorney wins the case.  This motivates them to work harder since they will also benefit from a favorable outcome.

Is there a standard contingency fee amount?

There is no standard contingency fee. The amount varies depending on the nature and complexity of the case. Other factors that could influence the cost of hiring a contingency fee lawyer include the following: 

• The attorney’s level of experience
• Nature and extent of injuries you sustained
• Whether or not a lawsuit has been filed

Most of the time, the fee ranges anywhere between 33.3% and 50% of the settlement. That said, personal injury cases usually attract some of the lowest contingency fees, usually between 33.3 % and 35%, before a lawsuit is filed. The fees could however increase to between 40% to 45% if the case goes into litigation. Some attorneys could also charge a higher percentage when you choose to appeal the case.

Fees may go up to 50% in more complex or risky cases such as mass torts or class action. Therefore, it’s important for you to clearly understand the percentages before hiring a contingency fee lawyer.

Will I incur other fees and expenses on top of a contingency fee?

Yes. Besides the contingency fee, you are also responsible for all the expenses that your attorney incurs as they work on your case. These may include the following:

• Consultation fees
• Medical records costs
• Printing fees
• Expert witness fees
• Deposition fees
• Court fees
• Videographer fees

These expenses can add up quickly, increasing the total cost of legal representation. Before signing a contingency fee agreement, you should discuss with your attorney whether these costs will be paid out of your settlement.

Cases Where Contingency Fee Is an Option

Contingency fees don’t apply to every legal matter. They can only be used in cases where there’s a form of financial recovery. These include the following:

• Personal injury
• Breach of contract
• Insurance claims
• Condemnation cases
• Medical malpractice

Personal injury cases are the most common cases where lawyers use contingency fees because there’s usually a high chance of winning the case.

Cases Where Contingency Fees Cannot Be Used

You cannot use a contingency fee agreement for the following legal matters:

• Criminal cases: There’s usually no financial recovery in criminal cases unless you’re a crime victim. Therefore, using a contingency agreement would be useless.
• Divorce and family cases: A contingency fee agreement doesn’t usually apply to divorce and family cases because the main objective is to ensure fairness, resolution, and reconciliation. This means that these cases might not always end with a financial settlement.
• Domestic relations cases: Just like divorce cases, attorneys working on domestic-related cases should focus on ensuring fairness and resolution instead of the financial outcome of the case.

Advantages of Contingency Fees

No Upfront Cost

You don’t have to pay out of pocket to hire a contingency fee attorney. This makes it a great option for injury victims who have to deal with other expenses, including follow-up medical appointments, surgeries, and rehabilitation.

You Only Pay the Attorney If They Win the Case

With a contingency fee agreement, you can only pay your attorney if they win the case. This makes it a better alternative to the fixed hourly payment method where you could still lose the case even after paying your attorney.

Disadvantages of Contingency Fees

You End Up Paying More in the Long Run

On average, a contingency lawyer charges between 20% and 50% of the settlement. This might be significantly higher than the cost of hiring an hourly rate attorney. While it’s normal for the contingency fees to be higher, some unscrupulous and unethical attorneys might inflate their bill by using the following tricks:

• Bait and switch tactics: Some attorneys might offer you attractive contingency fees if your case is settled within a given timeframe, which is usually unrealistically short. If the case isn’t settled within this timeframe, they charge a much higher fee than what you had previously agreed on.
• Hidden costs: Some attorneys might not initially disclose all the costs associated with the case, which might catch you by surprise when it’s time to pay. These hidden costs may include miscellaneous expenses or charges for in-house employees.
• Interests and advanced costs: Some attorneys might advance the cost of the litigation process, which might include court fees and expert witness fees. They also might charge interest on these costs, significantly increasing the overall expense.

Hire a Lawyer to Work on a Contingency Fee Basis

Hiring an attorney on a contingency fee basis has two main advantages. First, you get to hire a good lawyer even if you don’t have the money to pay them upfront. Second, you only pay the attorney only if they win the case. This means you won’t lose any money if they lose the case.

That said, contingency fees only apply to cases where you’re seeking compensation because you suffered in some way. These may include personal injury cases, insurance claims, and medical malpractice, among others. Whatever you’re seeking compensation for, always talk to your attorney so you can both agree on a contingency fee that’s fair and reasonable.