What is a Contingency Lawyer?
Law firms and lawyers may opt to bill their clients in a variety of ways. For instance, they can charge a flat rate for a specific matter, bill at a set hourly rate, or use a contingency fee arrangement.
A contingency lawyer is a lawyer who agrees to work on a client’s case for a certain percentage (usually somewhere between five and fifty percent) of the amount of damages they collect, as opposed to having to pay them an ongoing hourly rate. The key to such arrangements is that a client will not have to pay a contingency lawyer until the end of their case. Even then, they will only have to pay if the lawyer wins their case.
If the lawyer loses the case, however, then they will generally not receive a payment. The only exception is if the client and lawyer entered into a contract that specified otherwise.
Contingency fee lawyers are typically hired for complex civil cases where there is clear liability and the damages can be easily calculated. This usually includes personal injury lawsuits, bankruptcy cases, professional malpractice issues, and various class action lawsuits.
Thus, if you are involved in a civil law matter and need help paying for legal fees, you should consider asking your lawyer if they would be willing to work on a contingency fee basis.
How Do Contingency Fees Work?
The way a contingency fee works will depend on the arrangement that the client and lawyer both agreed to and also on the type of case. For example, a lawyer is not allowed to use a contingency fee structure when the case involves a criminal or family law matter. A lawyer also can not collect a percentage of damages that would be unreasonable or against state statutory laws.
Once it is decided that the lawyer will work on a contingency fee basis, the lawyer may assess certain factors to estimate the percentage they will collect. These include the complexity of the legal issues involved in a matter, the average time and labor it takes to resolve similar issues, and the skill or reputation of a particular lawyer.
Some lawyers and law firms may also assign separate tiers based on the stages of a case. For instance, if a case is settled before trial, they may only charge a client twenty percent of their damages award. In contrast, the law firm or lawyer may collect a higher portion of the damages award if the case goes to trial or is appealed.
Thus, it is very important to discuss the details of a contingency fee arrangement before signing. Oftentimes, a client who asks the right questions can get a better picture of their chances of winning, how much they may recover, what portion of that recovery will be given to the lawyer as payment, and potential costs that will not be covered by the arrangement like fees to hire an expert witness or court filing fees.
What Advantages are There to Working with a Contingency Fee Attorney?
There are several advantages to working with a contingency attorney. The most commonly cited benefit that clients enjoy when working with a contingency fee attorney is that they are not required to pay the attorney if they lose their case. It should be noted, however, that the client may be responsible for some administrative costs (e.g., filing fees).
Another advantage to a contingency fee arrangement is that it motivates the attorney to obtain a successful outcome. Similar to the reasoning provided for the most common benefit, the attorney will not get paid unless they win the case. While all attorneys have a legal duty to assist their clients to the best of their ability, this extra motivating factor can sometimes bolster case results. An attorney may go above and beyond in attempting to secure a win.
One other important advantage that may stem from working with a contingency fee attorney is that there will be no up-front legal costs, such as retainer fees or ongoing legal expenses. For instance, an attorney who bills by the hour may require a client to pay them for the hours worked each month. If the client fails to pay them, they may cease working on their case until the client demonstrates that they can afford to hire them.
Do You Need to Hire a Lawyer on a Contingency Fee Basis?
If you are involved in a matter that requires legal assistance, but cannot afford the costs associated with high legal fees, you may want to contact a local lawyer regardless to ask if they would be willing to bill on a contingency fee basis. This way you can get the legal help you need for your case without worrying about having to pay an expensive hourly rate.
Additionally, although all lawyers have an ethical and legal obligation to do what is best for their client, a contingency fee can sometimes serve as extra motivation since a lawyer who works on a contingency fee will not get paid unless and until they win your case.