What is a Contingency Lawyer?
Lawyers and law firms may choose to bill their clients in a few different ways. For example, they can charge a flat fee for a specific legal matter, impose a fixed hourly rate, or bill on a contingency fee basis.
In general, a contingency lawyer is a lawyer who agrees to work on a client’s case in exchange for some portion of the damages awarded to the client at the end of the case. The portion of damages that a contingency lawyer subtracts as pay can vary by lawyer and by case. However, most contingency lawyers take a cut that falls somewhere in-between five and fifty percent.
This billing practice is often more affordable for clients, as opposed to having them pay a continuous hourly rate. Many clients also prefer contingency fee arrangements because they do not have to pay a contingency lawyer until the end of a case. Even then, a client will only have to pay a contingency lawyer if they win their case.
On the other hand, if a contingency lawyer loses a client’s case, then they typically do not get paid. The exception to this rule is if the lawyer and their client drafted an agreement that specified otherwise. It should be noted, however, that a client may still need to pay for standard court costs, such as filing fees. Again, this can and should be discussed at the beginning of the attorney-client relationship.
Another important detail to know about lawyers who charge on a contingency fee basis is that they are normally hired to represent plaintiffs in complex civil cases. Such cases also tend to have opposing parties who are clearly at fault as well as involve damages that can be easily calculated.
Some common examples of lawsuits that lawyers frequently accept on a contingency fee basis include the following:
- Bankruptcy cases;
- Personal injury lawsuits;
- Various types of class action lawsuits; and
- Professional malpractice issues (e.g., plaintiff lawsuits filed against doctors, lawyers, surgeons, and so forth).
Finally, if you need to file a lawsuit involving a civil dispute, but cannot afford to pay for costly legal fees, then it may be in your best interest to ask your prospective lawyer if they would be willing to take on your case using a contingency fee arrangement.
How Do Contingency Fees Work?
The way a contingency fee works will depend on the arrangement agreed upon between the client and their lawyer. A contingency fee may also be affected by the types of legal issues in a case as well.
For instance, a lawyer cannot use a contingency fee structure if the case involves a family or criminal law matter. A lawyer may also not demand to receive a portion of the client’s damages award that would be deemed to be unreasonable or is against state statutory laws.
On the other hand, if a lawyer agrees to work on a case and is permitted to accept the type of case it is on a contingency fee basis under the relevant laws, then the next step for them is to assess the percentage of damages they can collect. A lawyer can do this by evaluating certain factors, such as:
- The complexity of the legal issues in a case;
- The experience, reputation, and/or skills of that particular lawyer; and
- The average amount of time and labor it takes to resolve the same or similar matters.
In some scenarios, a law firm or an individual lawyer may also assign different percentages based on the stages of a lawsuit. For example, if a lawyer manages to settle the client’s case before it goes to trial, then the lawyer may only charge the client twenty or twenty-five percent of the client’s settlement award. The reason for this is because the lawyer did not have to put in the additional effort and time that is required to win a case at trial.
On the other hand, a law firm or an individual lawyer may collect a higher portion of a client’s damages award if the case goes to trial or it is appealed. In this instance, the lawyer did have to go to court and put in the extra effort to win the client’s case. Accordingly, the lawyer would be justified in requesting a reasonably higher portion of the client’s damages award.
Thus, it is very important to discuss the details of a contingency fee arrangement before hiring a lawyer. A client who asks the right questions will often have a clearer picture of their chances of winning a case. During the consultation meeting, a client should also ask about:
- Costs that are not covered by the fee arrangement;
- The portion of damages the lawyer intends to take as payment; and
- The amount of damages the lawyer expects the client to recover if the case is successful.
What Advantages Are There to Working with a Contingency Fee Attorney?
There are several advantages to working with a contingency fee attorney. The most commonly cited advantage that clients enjoy when working with a contingency fee attorney is that they are not required to pay the attorney if they lose the case. As previously mentioned, however, the client may be responsible for some administrative and court costs (e.g., filing fees).
Another advantage of having a contingency fee arrangement is that it motivates the attorney to achieve a successful outcome in the lawsuit. Again, this is because a contingency fee attorney will not get paid unless they win the client’s case.
Although all lawyers have a professional legal obligation to assist their clients to the best of their ability, this can serve as an extra incentive that will sometimes bolster case results. The lawyer may go above and beyond their standard practices in attempting to prevail in the case and secure their payment.
One final important advantage that a client can benefit from when working with a contingency fee attorney is that they usually will not have to pay any up-front legal costs. For instance, the client likely will not need to pay for ongoing legal expenses during the case or for an initial retainer fee. Additionally, the client will also not suffer the expense of paying a legal bill at the end of each month like they might with an attorney who bills by the hour.
Do You Need to Hire a Lawyer on a Contingency Fee Basis?
There are certain circumstances wherein hiring a lawyer will be unavoidable. This means that you will need to retain legal counsel, regardless of whether you can afford the high costs of legal fees or not. However, this does not mean that you cannot ask a lawyer if they would be willing to take your case on a contingency fee basis. Go ahead and ask, but prepare yourself in case the lawyer says no.
If a lawyer declines to work on a contingency fee basis, but you are involved in a dispute that requires legal expertise, then you should continue searching until you find a lawyer who offers flexible billing policies. This way you can still get the legal assistance that you need without having to worry about paying an expensive hourly rate or costly flat fee.
In addition, while all lawyers have a legal as well as an ethical obligation to do what is best for their clients, a contingency fee can sometimes serve as an extra motivator. As previously discussed, this is because a lawyer who works on a contingency fee basis will not get paid unless and until they prevail on your case.
Finally, if you need assistance with finding a lawyer who bills on a contingency fee basis, there are a number of methods you can use to help ensure you hire a lawyer that meets your financial needs. Some ways you can kickstart your quest for a contingency lawyer include:
- Conducting a quick online search by typing in the phrase, “contingency lawyer”, plus your zip code;
- Using an attorney referral service;
- Visiting the website for your local or state bar association;
- Asking family or friends for a referral; and
- Using LegalMatch’s proprietary software and submission portal.