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Pros and Cons of Contingency Fees

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What Are Contingency Fees?

One method that lawyers can use to bill their clients is the contingency fee. A contingency fee is an agreement where the lawyer does not collect a fee unless the client wins the case – the lawyer then takes a percentage of the award. The contingency fee is typically one-third of the amount awarded. Contingency fees have some advantages and a couple of main disadvantages.

What Are The Advantages of Using Contingency Fees?

One main advantage of contingency fees is that you do not have to pay your lawyer up front. That way, you are not faced with large legal bills while you are waiting for the case to make its way through the courts. Contingency fees can also be negotiated, giving clients flexibility. Many feel that this “opens the courthouse doors” to lower-income people who otherwise would not have access to legal assistance.

Another advantage is that your lawyer does not collect a fee if you lose (although you still may be responsible for costs the lawyer incurs trying your case). This can provide some peace of mind for you as well – if your lawyer is willing to risk not collecting a fee based on your case, then you probably have a good shot at winning your lawsuit.

Even if your attorney believes the case is closer than your attorney would like, you can be assured that your attorney will be highly motivated to work hard to ensure that the case goes your way. The fact the lawyer doesn’t collect any fees if the client loses the case means that either the lawyer believes the case is an easy victory and/or the lawyer will work extremely hard to ensure the case will go the client’s way.

What Are The Disadvantages of Using Contingency Fees?

The main disadvantage of contingency fees is that it may end up costing you more than standard hourly billing. If you agree to a contingency fee of one third of your eventual award, you owe that amount regardless of whether it takes one year for the case to wind its way through the courts, or if your case is settled within one week. Some lawyers may offer a flexible contingency fee depending on the result of your case, and it is worthwhile to ask if that is available when hiring a lawyer. 

The other major disadvantage of contingency fees is that attorneys who use contingency fees can be very selective of the cases they take on. Attorneys who use contingency fees will try to avoid cases they believe are not easy victories. Attorneys who do take on “risky” cases will often negotiate higher fees as a result.

Should I Pay My Attorney With a Contingency Fee?

The type of legal fee charged will depend upon the attorney and the client. However, attorney fees are usually based on the field of law. Personal injury lawyers almost always work on contingency fees. Family law lawyers, on the other hand, are prohibited from taking contingency fees.

Photo of page author Ken LaMance

, LegalMatch Law Library Managing Editor and Attorney at Law

Last Modified: 07-12-2018 01:39 AM PDT

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