Lawyers and law firms may opt to bill their clients in a number of different ways. For instance, they can charge a flat rate for a specific matter or bill at a set hourly rate for work completed on a case. They may also use a fee structure known as a “contingency fee arrangement.”
A contingency lawyer, or a lawyer who works on a contingency fee basis, is a lawyer who agrees to work on their client’s case in exchange for a percentage of the monetary damages they are awarded if they win the case. In general, this percentage typically falls somewhere in-between five and fifty percent of the damages that a client may recover.
Contingency fee arrangements can be very beneficial for clients in need of legal representation. The main reason that a client may want to inquire about these fee structures is because the client will not be required to pay a lawyer who works on a contingency fee basis until the case is over and only if the contingency lawyer can win their case.
In other words, if a contingency lawyer loses the lawsuit, the client will not have to pay them for their work. There are some exceptions, however, such as if a client and lawyer choose to enter into an agreement that specifies otherwise or when a client has to pay some court costs like filing fees. A client and lawyer will usually work out these details during the client’s initial consultation meeting with their lawyer.
In addition, lawyers who charge on a contingency fee basis are normally hired to represent plaintiffs in complex civil cases. These can involve damages which can be easily calculated and where the opposing party is clearly at fault. Some examples of the kinds of lawsuits that contingency fee lawyers are known to work on include the following:
- Bankruptcy cases;
- Personal injury lawsuits;
- Professional malpractice disputes (e.g., lawsuits filed against surgeons, doctors, lawyers, etc.); and
- Various types of class action lawsuits.
Therefore, if you wish to file a lawsuit that involves a civil law matter, but need financial assistance to cover your legal fees, then you may want to ask a prospective lawyer if they would be willing to take your case on a contingency fee basis.
How Much do Contingency Lawyers Charge?
The way that a contingency fee structure works will depend on the arrangement that a lawyer and their client both agreed to as well as on the type of case. For instance, a lawyer is not permitted to use a contingency fee arrangement if the case involves a criminal or family law matter. A lawyer is also not allowed to collect a portion of the damages award if it would be unreasonable or against the statutory laws in a particular state.
However, if the lawyer agrees to work on a case under a contingency fee arrangement, there are certain factors that a lawyer will need to evaluate in order to estimate the percentage of the damages award they can collect.
This may include factors, such as the average amount of time and labor it takes to fully resolve a matter, the complexity of the legal issues involved in a lawsuit, and the reputation, experience, and/or skills of a particular lawyer.
In some situations, a lawyer or law firm may also assign different percentages based on the stages of a lawsuit. For example, if a matter is settled before it gets to trial, then a lawyer may only take twenty or twenty-five percent of a client’s settlement award since they did not have to put in the additional legal work that is required in most trials.
On the other hand, if a lawsuit does go to trial and the lawyer wins, then the lawyer may take a higher cut of the client’s damages award because they did have to put in the extra work on the case (i.e., going to trial). Additionally, if the opposing party appeals the trial court’s decision, then the lawyer’s cut may be even higher since they will need to perform more work on the case, which can last until the court issues a final decision.
Accordingly, the average charges for lawyers that work on a contingency basis will truly depend on the circumstances and the individual or firm hired to take on the case. Thus, it is very important that clients remember to discuss the details of a contingency fee arrangement before they officially hire a lawyer. Oftentimes, a client who knows how to ask the right questions can get a better gauge of what percentage of damages a lawyer may be able to take.
How is the Percentage Determined?
As discussed above, the percentage that a contingency lawyer charges will depend on a number of factors. In order to determine what percentage a contingency lawyer may take, both the lawyer and client should consider the following factors:
- The amount of time and work that the lawyer will need to put in to officially resolve the matter;
- The complexity of the legal issues involved in the lawsuit and the number of legal issues there are in a case (e.g., one vs. three separate claims);
- The skill, reputation, and/or experience of the lawyer being hired;
- The professional relationship that exists between the lawyer and the client (e.g., 20-year business relationship vs. brand new clients);
- The client’s chances of winning the case; and
- The portion of costs that will not be covered by the contingency fee arrangement (e.g., the cost of hiring an expert witness, filing fees, and various other court-related expenses).
In addition to evaluating such factors, the lawyer will need to make an educated guess on how complicated a matter might become and how long it may potentially take to resolve a matter. For instance, the lawyer will have to make a prediction on whether they think the case will settle before it gets to trial or if the legal issues involved are of the kind that require a trial court to intervene and issue a final decision.
Basically, determining the percentage will be a balancing act. Generally speaking, lawyers are more inclined to work on a contingency fee basis when they believe there is a good chance that their client will win the case and if they think that the amount of damages that might be awarded will be substantial enough to make it worth their time.
What Types of Lawyers Work on Contingency Fees?
There are many types of lawyers who may work on a contingency fee basis. The most common example of a type of lawyer who works on a contingency fee basis is a personal injury attorney.
Personal injury attorneys have a reputation for charging clients using a contingency fee-based model. This is primarily because their clients are usually people who have been injured and would not be able to afford legal services without a contingency fee arrangement.
Another type of lawyer who may take a case on a contingency fee basis are employment lawyers; specifically, those who handle cases involving employment discrimination. Similar to personal injury lawsuits, employment discrimination cases are usually brought by persons who may be entitled to damages, but cannot afford the cost of a lawyer without a contingency fee arrangement.
In addition, some other types of cases where a lawyer may agree to work for a contingency fee may include:
- Sexual harassment lawsuits;
- Professional malpractice cases; and/or
- Debt collection disputes.
When are Contingency Fees not Allowed?
As previously mentioned, contingency fees are legally and ethically not permitted for cases that involve family or criminal law matters. This is because such matters could potentially encourage lawyers to promote divorce or criminal activity.
Although it is not necessarily illegal to use a contingency fee arrangement for cases with obvious outcomes, a lawyer would be wise to assign and bill at a reasonable hourly rate if the issue in a case would clearly lead to a win.
A lawyer can determine their hourly billing rate by using some of the factors discussed in the above sections. However, a billing rate should primarily be based on an estimate of how much work the lawyer thinks they will need to do on the case.
Will I Get Monthly Bills from a Lawyer Paid on Contingency?
Whether or not a client receives monthly bills from their contingency lawyer will depend on the parties’ arrangement. For example, some attorneys prefer to send clients a monthly breakdown of their work, so that a client can see what the attorney has been doing on their case. Some clients may also request that a lawyer send them monthly bills, so they can account for how much time and resources the lawyer is spending on their case.
A client may also receive a monthly bill for a different reason. For instance, even though contingency lawyers do not get paid until the end of a case and only if they win, a client may still be held responsible for paying for certain costs that are incurred throughout the course of a case. As mentioned, this could include court filing fees or the costs of hiring an expert witness.
Although a lawyer has an ethical duty to discuss client billing arrangements, the client should ask questions about any billing practices that they do not understand. This can help to prevent disputes over billing matters in the future. Some examples of questions that a client should ask a contingency lawyer include:
- Their chances of winning a case (note that this will be a prediction and cannot be guaranteed);
- The amount of damages that the lawyer anticipates the client will receive if they are successful in the case;
- The portion of damages that the lawyer expects to collect at the end of the case; and
- Whether the lawyer thinks they will need to hire expert witnesses or how much it will cost the client in total to pay for all of the filing fees associated with the case.
Should I Hire a Lawyer on a Contingency Fee Basis?
If you are involved in a matter that requires legal assistance, but cannot afford the costs of legal fees, then it may be in your best interest to contact a local lawyer regardless, so that you can ask them whether they would be willing to bill on a contingency fee basis. This way you can get the legal assistance you need without having to worry about paying an expensive hourly or flat rate.
There are a number of methods that you can use to help you find a contingency lawyer. For instance, you can perform a quick online search for contingency lawyers in your area who practice in the legal field required to work on your case.
Another way you can find a contingency lawyer is by submitting a quick description of your case to LegalMatch. LegalMatch will not only be able to match you with a lawyer who practices in your area and in the right legal field, but can also make sure that the lawyers who contact you are willing to work on a contingency fee basis.