Contingency Lawyers

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What is a Contingency Lawyer?

Contingency lawyers work on a contingency “fee structure.”  This means that the lawyer retains a percentage of net recovery, i.e., 30% of $300,000. The percentage retained is generally 5-50%. If the plaintiff loses, then she pays nothing.

How Much Do Contingency Lawyers Typically Charge?

Contingency lawyers may also create different layers for their fees. For example, a lawyer can charge 20-25% if the case settles, meaning that the lawyer did not have to work so hard. Then they might charge 30-35% if the case is won at trial, because the lawyer had to put in more hours. Finally, fees can be as high as 40-45% if the case is appealed, in which case, the lawyer will have to work hard to see the case through to a final decision.

What Factors Determine the Exact Percentage Charged?

Several factors go into determining what the exact contingency fee will be. These factors are:

Which Types of Lawyers Are Most Likely to Work On a Contingency Fee?

Contingency lawyers are well-known for practicing personal injury law. This is because the plaintiffs are just average people who have been injured, unable to afford an attorney. In addition, the result of the case is usually unknown.

Employment law, such as employment discrimination or wage issues, is sometimes represented by contingency lawyers. Debt collection can also be handled on a contingency fee. Just like in personal injury law, plaintiffs involved in employment law or debt collection are often unable to afford legal services if contingency fees were not used.

The personal injury law, employment law, and debt collection attorneys who work on a contingency fee are more likely to take on a case if they feel there is a good chance of a large settlement or litigation (trial) victory. Parties represented by a contingency lawyer can be confidant that they will see some kind of return at the end of the case.

When Are Lawyers Not Allowed to Work on a Contingency Fee?

If the case is an obvious victory, however, a contingency lawyer should estimate how many hours it will take to prepare for, and then assign a reasonable hourly rate. In addition, the Code of Professional Ethics does not allow a lawyer to accept a contingency fee when practicing family law or criminal law, because doing so would tend to condone divorce and crime.

Defendants, parties being sued, cannot be represented by a contingency lawyer. Since there is no money award for a successful defense attorney at the end of the case, defendants cannot ask for contingency fees. 

Finally, contingency fee structures have not been accepted traditionally in Great Britain and Canada. This is because lawyers in their system should be disinterested in the outcome of the case. In America, our adversarial system supports lawyers being motivated to fight for the client’s interests.

Will I Get Monthly Invoices?

One of the worst things about hourly billing is the monthly invoices. Although the invoices exist to notify the client how much is owed, it can be a shock to see how expensive legal services can be.

For contingency fees, this depends on the agreement between the client and the lawyer. Although the client typically does not have to pay for anything in a contingency fee setup, it might still be helpful to see a monthly invoice to see how large the eventual payoff for the lawyer will be and how much time/resources the lawyer is devoting to your case.

Can I Change Lawyers If My Current Lawyer is Working on a Contingency Fee?

Yes, although most of the time the first lawyer will still be owed compensation for what the first lawyer has already done for the case. The only time the first lawyer will not be owed compensation is if the first lawyer has done absolutely nothing to help or advance the case. Thus, the longer a lawyer has spent on a case, the more money the lawyer will be entitled to. 

There are a couple of ways to handle this. First, read over the contract you had with the first lawyer. If there is a “termination” provision, i.e. in the event the first lawyer is “fired,” that lawyer will still take his or her portion of the eventual settlement or award. If no such provision or contract exists, ask your new lawyer to negotiate with the previous lawyer or to simply pay the old one. 

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Last Modified: 10-15-2013 10:15 AM PDT

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