Contingency Fee

Contingency fee agreements are a popular choice for clients and attorneys in certain areas of the law, such as personal injury or medical malpractice cases. This payment arrangement allows clients to access legal representation without upfront costs. It is important to understand how it works and its advantages and disadvantages.

What Is a Contingency Fee? 

What Is a Contingency Fee? 

A contingency fee refers to an arrangement made between a lawyer and their client where the lawyer only receives payment if the case is successful and the client is awarded compensation. 

With this type of payment structure, the client doesn’t have to pay anything upfront or during the course of representation; instead, the lawyer receives a percentage of the settlement or jury verdict at the conclusion of the case. 

Comparison to Other Types of Fee Structures 

The most common alternative types of fee structures include: 

Flat Rate Fee Structure 

A flat rate fee structure is when a lawyer charges a single fee for a particular service or package of services. With this type of fee structure, the client knows exactly how much they will be paying upfront, and there are no hidden costs or surprises along the way. 

The advantage of a flat rate fee structure is that it provides certainty and predictability to both parties involved. 

The lawyer knows exactly how much they will be making from the case, and the client knows exactly how much they need to pay without worrying about any additional costs down the line. 

Hourly Fee Structure 

With this type of fee structure, clients are billed based on how many hours the lawyer worked on their case over time, rather than being charged one lump sum upfront like with a flat rate structure. 

This can lead to some uncertainty as clients will not know how much their total bill will be until all work has been completed on their case. 

Extra Costs in a Contingency Fee Agreement 

While you won’t have to pay any upfront fees for your lawyer’s services under a contingency fee agreement, there may still be some additional costs. 

For example, if your case requires expert witnesses or other specialized services like private investigators or copies of substantial medical records, those costs may come out of your share of any settlement or award.

There will also be filing fees and court costs associated with pursuing your case, which may also come out of your settlement or award. You may confirm with your attorney before your sign your agreement whether these costs will be taken out of your compensation.

Advantages of Contingency Fees  

There are several advantages to this type of payment structure, including: 

Lower Upfront Costs For Clients 

A contingency fee agreement eliminates financial barriers which could prevent people from accessing legal representation due to a lack of funds upfront. By removing this barrier, those who may not have been able to afford legal counsel otherwise can now pursue justice without worrying about how to afford it.

Aligns the Lawyer’s Interests With the Client’s Interests 

When working under an hourly or flat fee structure, lawyers may be less concerned with obtaining positive results for their clients since they will receive payment regardless of whether or not their cases succeed. 

However, under contingency agreements, lawyers only get paid when their clients win their cases, which means they become much more invested in ensuring positive outcomes. 

Potential for Higher Payouts in Successful Cases 

Because lawyers don’t get paid unless their clients win or settle their cases, they often push harder and use stronger arguments in favor of their clients than they would under other types of billing arrangements; this increases your chances of getting higher settlements.

Disadvantages of Contingency Fees  

Even though there are many advantages associated with using this type of fee structure over others, like hourly rates or flat fees, there are also some potential drawbacks, such as: 

Limited Availability 

Contingency fee arrangements are typically only available for specific types of cases; examples include personal injury cases like car accidents and product liability. This means that clients with other legal matters will not be able to use this payment structure. 

High Percentage Fees 

Contingency fees can be quite high, sometimes up to 40% of the recovered amount. This could lead to a client paying more legal fees than they would have under an hourly fee arrangement, especially if the case is settled or resolved quickly. 

Reduced Incentive for Quick Resolution 

Since the lawyer’s payment depends on the outcome of the case, they might be more inclined to pursue a lengthy trial in hopes of obtaining a higher settlement, even if a quicker resolution might be appropriate.

Ultimately, the decision to enter into a contingency fee agreement should be based on a thorough understanding of your circumstances and a candid discussion with a potential attorney about their experience, success rate, and fee structure. 

By doing this, you can make an informed choice that best serves your interests and ensures that you receive the most effective legal representation possible. The attorney with Jay Murray Personal Injury Lawyers in Dallas is ready to help you. Contact us online today or call (214) 855-1420 to set up your free consultation.