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.)
- Various types of class action lawsuits
Therefore, if you wish to file a lawsuit of the type listed above, but need financial assistance to cover your legal fees, you may ask a prospective lawyer if they would be willing to take your case on a contingency fee basis.
When to Call a Lawyer: In fact, If a person has suffered a significant personal injury due to the negligence of someone else, they should promptly consult a contingency lawyer. This is also true if a person has experienced employment discrimination or wrongful termination.
Seeking legal advice promptly can help protect your rights and ensures that you avoid missing critical deadlines. A lawyer can assess the viability of your claim, and determine the best way forward.
How Much Do Contingency Lawyers Charge?
The way that a contingency fee structure works depends on the arrangement that a lawyer and their client both agree 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.
State Variations: Some states restrict the percentage that an attorney may collect as a contingency fee. For instance, Texas does not cap contingency fees, but they must be “reasonable.” Other areas may have different requirements for written agreements, especially those having to do with fee splitting. Laws may vary by region, so be sure to contact an attorney if you have questions about your case and eligibility for contingency fees.
If the lawyer agrees to work on a case under a contingency fee arrangement, there are certain factors that a lawyer needs 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.
Often, a lawyer assigns different percentages based on the stage of a lawsuit at which it is resolved as is required in Florida.
Timelines: For example, if a case is settled before it goes to trial, then a lawyer may take a smaller percentage of the client’s settlement award. They would collect a smaller percentage, because they did not have to put in the additional legal work that is required for trials.
On the other hand, if a lawsuit does go to trial and the lawyer wins an award of money damages for their client, then the lawyer may take a higher cut of the client’s damages award. They would do this, because they put in the additional work of representing their client at the trial.
As noted above, some states require different percentages that depend on the stage of a lawsuit when it is settled or a trial comes to an end.
If the opposing party appeals the trial court’s decision, then the lawyer’s cut may be even higher, because they would be required to put in more work on the case.
Accordingly, the average charges for lawyers who work on a contingency basis truly depend on the law of the state in which the case is fought, and other circumstances. Thus, it is very important that clients discuss the details of a contingency fee arrangement before they officially hire a lawyer and sign a fee agreement.
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
- 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?
It is mostly personal injury attorneys who work on a contingency fee basis. This is primarily because their clients are people who have been injured and would not be able to afford legal services without a contingency fee arrangement. In addition, the goal is an award of money damages which can yield a percentage for the lawyer.
Employment lawyers may handle cases involving employment discrimination or wrongful termination on a contingency basis. Similar to personal injury lawsuits, employment discrimination and wrongful termination cases are usually brought by people who may be entitled to damages, but cannot afford the cost of a lawyer without a contingency fee arrangement.
Some people consider these types of employment cases as personal injury cases.
In addition, some other types of cases where a lawyer may agree to work for a contingency fee may include:
- Sexual harassment lawsuits
- Wrongful death cases
- Professional malpractice cases.
Process/Steps: The process of coming to a contingency fee agreement with a lawyer involves an initial consultation where the client informs the lawyer about the facts of their case. The lawyer assesses the case and explains the contingency fee arrangement. If both parties agree, a written agreement should be drafted outlining the percentages, covered costs, and other relevant terms, such as the scope of the work the lawyer is to perform.
It is important for the client to carefully review the agreement and seek clarification of any unclear points before signing. Clients should also compare offers from multiple attorneys to ensure they are getting a fair deal
The Importance of Hiring a Lawyer: A person can represent themselves in any kind of case, including a case in which a lawyer would charge a contingency fee. For example, if a person’s economic losses are not great, they might file in a small claims court and represent themselves.
However, if a person has suffered a serious personal injury due to someone else’s negligence, or has experienced employment discrimination or wrongful termination, they want an experienced professional to assess their case, represent them and give them the best chance of success.
How Do I Find a Lawyer Who Will Work on Contingency?
There are several different ways that an individual can find a lawyer who will work on a contingency basis. One of the best ways to find a lawyer is to use LegalMatch.
LegalMatch provides the ability to be matched to lawyers who charge contingency fees. By using LegalMatch, an individual can submit their question or issue for free on the website in just a short amount of time.
Once an individual has submitted their legal issue, in about 24 hours, they will get responses from lawyers in their area who are ready to help. These responses will include information on each lawyer’s education, background, and the fee arrangements they use.
It is important to remember that contingency fees are usually only used in certain types of cases, such as personal injury cases. In addition the lawyer will review the case and determine the probability of being successful, as they will only get paid if the case is successful.
There are also several other ways an individual can look for contingency fee lawyers, although it may take more time and be less reliable, such as:
- Asking for recommendations from friends and relatives
- Searching online for “contingency lawyers in my area”
- Reaching out to the local bar association
- Using an online lawyer referral service
In addition, if there is a lawyer in an individual’s area who they are familiar with or are considering for their case, they can call their office and ask if they handle cases on contingency fees. This is a totally normal question that they likely receive from potential clients often.
When considering contingency fee lawyers, it is important to be aware that different lawyers may charge different percentages based on their experience and the case itself. Because of this, an individual may want to reach out to several lawyers and find a contingency fee percentage that they are comfortable with.
Once an individual finds a contingency fee lawyer that meets their needs, it is important that they get the fee agreement in writing. It should clearly state the lawyer’s fee.
Evidence/Documents: Clients should be sure to keep copies of all documents related to their case, including the contingency fee agreement, correspondence with the attorney, documents filed in court and any evidence relevant to their case. A fee agreement is a legal document and the client wants to have it.
They also want to organize and preserve the agreement and other relevant documents. This helps the client track the progress of their case and ensure they have a record of everything. This could be especially important if there is a dispute of some kind.
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?
Risks/Penalties: Usually, a client does not receive a bill for their attorney’s fee monthly or with any other frequency. Again, their attorney is only paid if they win an award of money damages for the client.
An attorney might send their client a monthly breakdown of their work, so that a client can see how the attorney has been working 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
- 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.
