What are Contingent Fees?
A client pays a contingent fee to a lawyer only if the lawyer handles a case successfully. In a contingent fee arrangement, the lawyer agrees to accept a fixed percentage (usually 1/3) of the amount finally paid to the client. This percentage must be a reasonable amount given the circumstances of the case. If you win the case, the lawyer’s fee comes out of the money awarded to you. If you lose, neither you nor the lawyer will get any money, but you will not be required to pay your lawyer for the work done on the case.
What are the Benefits of Contingent Fees?
In most cases, a client will not pay any upfront costs for legal representation in a contingency fee arrangement. Filing fees, copying costs, long distance charges, computerized legal research, deposition costs, and mediation expenses are also costs of a lawsuit and sometimes expert witness fees can cost anywhere from $1,000 to $30,000+. Most clients cannot afford to pay these expenses and would not be able to pursue their claims if attorneys could not advance the costs. Fortunately, in a contingent fee arrangement the lawyer will pay these expenses for the client and be reimbursed if the client’s case is successful. This allows many people access to justice who would not be able to afford it if the lawyer charged by the hour or demanded payment upfront. In addition, if the case is unsuccessful the lawyer gets no fee. Therefore, there is an absence of risk for the client, because they will owe the lawyer no attorney fees if they do not win their case.
Another advantage of a contingent fee arrangement is that it aligns the interests of the client and the lawyer. The lawyer is motivated in a contingent fee arrangement to maximize the amount of money the client will receive. In a common fee arrangement, where the lawyer is being paid by the hour, it makes little difference whether the client wins or loses her case. In a contingency fee arrangement, because a lawyer’s fee is tied to the success of a client’s case, the client can be assured that the lawyer is putting in the time and effort to get the best result possible for the client. Furthermore, the fact that a lawyer has taken a case on a contingency fee basis reflects her belief that the case is strong and has a likely chance of succeeding. A lawyer would not advance the costs of a case she was certain she would lose. She would be out of business quickly if she did.
Why do Lawyers Charge Contingent Fees?
Lawyers charge contingent fees because it allows many clients to bring lawsuits they would not have been able to afford otherwise. By taking fees and costs out of the money awarded to the client, the lawyer can pay the expenses of going to trial so the client doesn’t have to. If the client loses, she pays nothing for attorney fees (must usually reimburse the lawyer for the costs) and the lawyer gets nothing. These cases entail big risks for the lawyer, but little for the client. A contingency fee assures the lawyer that she will be compensated for the risk she has undertaken. As a client, it is beneficial to talk about the proposed fee arrangements with your lawyer from the very beginning. Make sure the arrangement is in writing and that you know why your lawyer is requesting the contingency fee she is requesting. You’ll find that your lawyer wants you to get the money you deserve just as much as you do.