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What is a Contingency Fee?

A contingency fee is frequently used by many personal injury law firms, but what is it exactly? Do you really not pay anything out-of-pocket? What happens if you do not win your case? Read on for answers to these questions and more.

How Are Lawyers Paid for Their Services? Hourly, Flat Fee, and Contingency Explained:

There are different ways lawyers can be paid for their services. The first way is to pay an hourly rate and the client will be charged the total amount of time worked on a case. This type of fee agreement is often used by larger law firms. The lawyers and various support staff, like paralegals, bill for their hours worked on a case.

Lawyers can also work on a fixed fee. This is when the attorney charges a flat rate for specific legal services they will perform for you. This type of arrangement is common for estate planning attorneys who may be setting up a will or offering a package of estate planning services.

A contingency fee is structured differently from hourly or fixed fees. Clients do not pay any money upfront or out-of-pocket to the attorney. Instead, the lawyer only gets paid if there is a settlement, judgment, or verdict. When the case is completed and your attorney has successfully secured a recovery, they receive a percentage of that recovery as their attorney’s fees. However, if no recovery is made, then you do not owe anything to the law firm. So, the lawyer only gets paid if he or she gets you compensation.

The percentage of recovery paid to the lawyer can vary anywhere from 33% to 45%. The percentage and an explanation of the contingency fee must be clearly outlined in the agreement you receive at the outset of your case.

How Are Expenses in My Case Paid?

Throughout the course of your case, there will be various expenses incurred. Examples of expenses include:

  • Medical record retrieval
  • Expert witness fees
  • Court costs such as filing the lawsuit
  • Administrative costs such as copying, postage, and travel
  • Mediation costs
  • Deposition expenses

In a contingency fee agreement, the attorney will front the expense money necessary to pursue the case. The client does not pay any expenses out-of-pocket. The agreement will disclose  that these expenses paid for by the lawyer will be reimbursed to their firm when there is a recovery for the client (via settlement, judgment, or verdict). However, it is important to note that these case expenses are typically not owed to the law firm by the client in the event there is no successful recovery.

What Are the Advantages of a Contingency Fee Agreement?

The advantages of a contingency fee agreement are numerous. The first, and most obvious, advantage is that a client does not have to pay any fees upfront to hire their attorney. This takes financial stress off the client so they can focus on getting better and recovering from their injury.

Because a lawyer will not make any money if they do not win the case, it gives them a large incentive to do everything they can to secure the maximum amount of money possible for you. This can also make them selective in which cases they will accept. If your lawyer takes on your case, they likely think you have a reasonable chance at winning a recovery.

The last advantage is that if you do not win your case, then you do not owe any money to your attorney – either for fees or case expenses. It is important, however, to be sure to review your specific fee agreement, make sure it specifies these terms, and discuss it with your attorney at the beginning of your case so there are no surprises in the end.

Should I Hire a Lawyer on a Contingency Fee Basis?

Here at Scott Callahan & Associates, this is the only fee structure we offer and believe strongly in the advantages and flexibility it gives our clients. If you have been injured, give us a call today. Our Katy personal injury lawyers are here 24/7 to review your claim and answer all your questions.