It’s important to have a good understanding of lawyer contingency fees anytime you need to hire a lawyer. On the surface level, lawyer contingency fees seem like a great thing – you don’t have to pay the lawyer anything unless there is a positive financial outcome for you. Win-win right? Not always.
Even if you receive a lot of money in a judgment or settlement, it may be frustrating when you have to pay your lawyer half of whatever you get, especially if the case settled really quickly and the lawyer didn’t have to put much work into it. But if you know a lot about lawyer contingency fees upfront, you can negotiate to set yourself up for the best possible outcome.
Lawyer Contingency Fees – A Basic Definition
A “contingency” is when one particular thing must take place before another outcome can occur. In the case of lawyer contingency fees, this means that the lawyer must win your case (the contingency) before he or she can be paid for the work (the outcome). No win, no payment…simple as that.
It can be a great thing to get legal work done with no risk of spending any money out of pocket, but unfortunately lawyer contingency fees are only available in very specific types of law.
When Are Lawyer Contingency Fees Available?
In general, lawyer contingency fees are offered for people that have a legal claim but are unable to afford the high hourly rates normally charged by lawyers.
Contingency fees are common for:
- Traffic accidents
- Workplace injuries
- Medical malpractice
- Violations by creditors for harassing debtors
- Other personal injuries
Contingency fees are sometimes available for:
- Violations by employers against employees
- Collections of large debts
- Real estate issues
- Patent infringements
When Are Lawyer Contingency Fees Not Allowed?
Contingency fees are illegal in some instances because there is a concern that the lawyer will act unethically in order to win the case. Take a DUI case for instance – if the lawyer was only being paid on a contingency basis, he would be more likely to cover up evidence, lie, or do other unethical things in order to win and be paid.
Contingency fees are never allowed for:
- Criminal defense and DUIs
- Divorces or custody battles
- Contract drafting
- Starting a business
- Immigration issues
- Drafting a will or estate plan
- Filing for a trademark, copyright, or patent
What is a Fair Lawyer Contingency Fee?
There is no rule about what is a fair lawyer contingency fee. A contingency fee is fair when the lawyer feels adequately compensated for the time and effort spent working on the case and when the client recovers enough money to feel repaid for the injury or wrong that was committed against them.
If you think about it, lawyers have a lot of out-of-pocket expenses when working on your case – these can include filing fees, court reporter fees, transcript fees, and expert witness fees, as well as money spent paying the salaries of other lawyers in the firm that work on your case. If the lawyer doesn’t win your case, those expenses will never be recovered, which is why contingency fees are risky for lawyers.
Due to the high risk involved, lawyers are very selective about which cases they will accept on a contingency basis, and the fees are usually a pretty large percentage. The most typical lawyer contingency fee is about 33-40%, meaning that out of whatever money is recovered in the case, the lawyer will keep between 33 and 40%.
However, since the lawyers mainly assess your case in terms of riskiness, they may be able to charge you a lower contingency fee if you have a very strong case.
Look to the evidence to try to evaluate the strength of your case. Were there witnesses? A police report? Hospital records of the injury? Medical bills owed? Those types of factors are likely to make your case stronger, which means you may be able to negotiate a lower lawyer contingency fee.
The best thing to do when you are deciding whether to hire a lawyer on a contingency fee basis is to compare different offers from multiple lawyers and law firms in your area. The more alternatives you have, the greater your bargaining power.
Once you have a few different options to compare, evaluate which lawyer contingency fee is best based on both the percentage and the quality or reputation of the lawyer. It’s no good having a lower contingency fee if you lose the case anyway. Mention to each law firm that you are considering working with them, but that you have other offers on the table. This will help ensure that you get their lowest offer for the lawyer contingency fee, which can end up saving you thousands of dollars.
The first step in hiring the right lawyer for you is always to arm yourself with as much information as possible. Lawyer contingency fees are no exception, so as long as you know how they work, there is a much better chance that you will be able to hire a lawyer on the best terms possible and you won’t feel cheated at the end of your case.