What Is a Contingency Fee and How Does it Affect You and Your Case

What Is a Contingency Fee and How Does it Affect You and Your Case?

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A contingency fee is a charge for a service after the service provider fulfills certain predetermined conditions. For example, when you retain the services of a car accident lawyer on a contingency fee basis, you do not have to pay them an hourly rate for their services. Instead, if they win the case for you, the attorney or firm receives an agreed-upon percentage of the settlement or award.

How Does the Contingency Fee Arrangement Work?

When you agree to retain an attorney on a contingency fee basis, your attorney takes the risk of not charging you for their time upfront but instead collecting their fee only if they are able to recover compensation on your behalf. In case they lose the case, you need not pay any of the fees for their work. However, you may still be liable to reimburse certain fees, like the court filing fees.

The most common examples of cases where contingency fee arrangements are prevalent are personal injury and workers’ compensation claims. In both of these types of cases, the attorney typically accepts the case on a contingency fee basis.

How Does an Attorney Set Contingency Fees?

A contingency fee is usually calculated as a percentage of the net settlement or award recovered in a civil case. Your lawyer stands to collect the amount after a successful conclusion of your claim. An attorney may charge you a contingency fee of somewhere around one-third of the amount of the settlement or award, but it could be a little more or a little less depending on the specific circumstances of your case.

For example, a lawyer may decide to charge a percentage higher than usual if your case ends up in a court trial as it will then involve more work on their part as compared to a settlement negotiation with the insurance company. It is important to seek clarity on all these costs and fees before hiring the attorney or firm.

What Are the Different Methods of Structuring the Contingency Fee Percentage?

While some contingency fee arrangements may cover a portion of legal services availed by you, others may include the entire legal fees for every phase of a liability lawsuit. Some of the common ways the contingency fee arrangement can be set up are:

Fixed Percentage Contingency Fee

This arrangement is where your attorney’s fee percentage stays the same from the beginning to the conclusion of the proceedings.

Sliding Scale Contingency Fee

Your lawyer may receive a contingency fee based on a sliding scale, where the fee percentage goes up with any extra resources and time they might need to spend on your case and also depending on the stage of the case. Here is an example of how this might work:

  • 33 1/3rd percent with a settlement and no lawsuit filed
  • 38 percent in case of a settlement after a lawsuit filed but before the case goes to trial
  • 40 percent in case of a favorable jury award in a trial

Partial Contingency Fee

This is an arrangement where you make an upfront payment for a part of the legal services at the start of the case, and also agree to pay a contingency fee in case of a successful recovery. The contingency fee in this type of arrangement may be lower because an upfront fee is also being paid to the lawyer.

The Advantages and Disadvantages of a Contingency Fee Agreement

Advantages

  • The plaintiff does not have to pay an upfront fee or bear the legal expenses.
  • The plaintiff does not have to take on the financial risks involved with fighting a civil lawsuit.
  • The attorney’s interests are fully aligned with yours and they are motivated to recover the largest possible settlement or award.

Disadvantages

  • The contingency fee may seem high as compared to a fixed fee if the plaintiff settles or wins at an early stage of the case.

Are Contingency Fee Agreements Applicable to Any Type of Legal Matter?

Contingency fee arrangements are only for cases where the plaintiff might receive compensation, whether through a negotiated settlement or a jury award, or from a tribunal.

Contact Our Skilled Personal Injury Attorneys in Pittsburgh

Your case matters, and the attorneys at Caroselli, Beachler & Coleman are available to help you recover a fair and rightful claim for your injuries and other damages. We offer experienced legal representation, usually on a contingency fee basis. Call us today at 412-567-1232 or toll-free at 866-466-5789 or contact us online for a free consultation to discuss your case.