What is a Contingency Fee?

By Peter DePaolis

Contingency fees or the contingent fee is when a client pays fees to their attorney only if the attorney is successful with the case. Contingency fees are common with personal injury claims. In this instance, the plaintiff would not pay his or her attorney unless that attorney recovered compensation in the case.

How the Contingent Fee Arrangement Works

In these fee arrangements, the attorney agrees to a fixed percentage of the compensation, which is typically one-third of the compensation. The contingency fee reduces the amount paid to the client, then the remainder goes to the client as their settlement.

If the plaintiff wins, the fee is deducted before the client receives their money. This ensures the attorney is paid for his or her services.

Also, part of the agreement provides that the victim does not have to pay the attorney until the case is over. This prevents an already financially struggling victim from having to come up with thousands of dollars for a retainer and ongoing legal fees.

What Might Not be Included in the Arrangement

While the attorney’s fee is the flat percentage, other costs may not be included in the contingency agreement. For example, the plaintiff may still pay court costs, filing fees, deposition costs, and other charges that are unrelated to the attorney’s actual rates. Some lawyers will roll these costs into their contingency fee agreement, while others require that the amount is paid upfront as part of the service.

How Contingency Fees Affect Your Settlement

You and your attorney will agree to how the agreement is made in your case. Most lawyers will settle personal injury claims through negotiations with the defense attorneys or insurance companies. In some cases, you might go to trial. If your attorney settles before going to trial, less legal work and hours are required to finalize your case. Therefore, you and your attorney may be able to negotiate a cheaper contingency.

However, most attorneys do not negotiate. This is not to be unfair, but to cover the work hours, including staff members of the office, which work on your case up until the settlement.

Who Covers Expenses While the Case is Pending?

After you and your attorney agree on a contingent arrangement, your attorney will pay all costs of the lawsuit. Read the details of your agreement, however, because these details vary from attorney to attorney. In most cases, your attorney covers things like:

  • Filing fees
  • Payments for depositions
  • Copies of medical records
  • Copies of police reports
  • Private investigators

If your attorney receives a judgment on your behalf, the contract will tell you how your funds are distributed.

Other Parties Receiving Compensation

While you are the one seeking compensation, your attorney must satisfy all debts. That means not only receiving their payment but then paying medical costs and any pending liens from medical providers. The remainder is given to you.

Speak with an Attorney Regarding Your Injury Claim

After a serious injury, you need an advocate to help you receive compensation for your case. While you do have the fees to worry about, attorneys yield higher settlements than if you were to negotiate a settlement on your own.

Therefore, contact an advocate today from Koonz McKenney Johnson & DePaolis LLP to explore your options. Schedule a free case evaluation at one of our three locations, or contact us online with your questions.

About the Author
Peter DePaolis joined the firm in 1980 and has since represented a large number of individuals involved in automobile collisions, truck accidents, bus crashes, defective products, and medical malpractice cases. A significant portion of Mr. DePaolis’ practice is devoted to working on behalf of people suffering from asbestosis, mesothelioma, and other asbestos-related cancers. He has led his firm’s fight against the asbestos industry and has recovered over $30 million in damages for asbestos victims and their families.