How do contingency fees work in personal injury cases?

Unfortunately, many accident victims believe that the cost of hiring an attorney is going to be cost prohibitive, or will prevent them from recovering compensation for their injuries. In reality, the great majority of personal injury lawyers work on a contingency fee basis, which means you do not have to worry about covering your lawyer’s fees until he or she obtains compensation on your behalf. Below is more information about how contingency fees work, as well as an example computation.

Contingent Fee Arrangements

With a contingency fee arrangement, you will only pay attorney’s fees if your lawyer is able to resolve your case successfully through settlement or verdicts. And at that point, their payment comes out of the money awarded to you. (Some plaintiffs feel that this creates a risk-free situation for them.) The fee amount is generally a fixed percentage of the recovery, which you and your lawyer must agree upon in writing before he or she starts working on your case. If your lawyer does not obtain any compensation on your behalf, neither of you will get any money. However, it is common for the claimant to be responsible for paying court filing fees and other similar charges.

Contingency fee arrangements provide a means for people who cannot afford a lawyer to access the civil justice system and pursue fair compensation for injuries and damages. Your attorney will build your case and represent you based on the agreement you enter into for future payment based on the amount of your settlement or verdict. In many situations, a contingency fee arrangement works as motivation for attorneys to obtain the best possible outcome for their clients simply because their clients’ success is directly tied to their success.

Operating Under a Contingency Fee Arrangement

After you enter into a contingency fee agreement, your attorney will cover the costs of building your claim, such as court filing fees, expert witness depositions, and paying for copies of medical records or reports. When your lawyer is successful in obtaining a settlement or judgement for you, your written contract will determine how your award is dispersed between you and your attorney.

With some agreements, the attorney’s fee is based upon a graduated percentage dependent on factors such as how and when your case is resolved. For example, your attorney may receive a higher percentage of your award if your case goes to trial (requiring significant time and effort) than if your claim settles quickly.

Contingency Fee Example

Most contingency fee agreements require you, the client, to cover the cost of expenses associated with your case. Sometimes, these costs are deducted from your award before it is split between you and your lawyer. For example, if your attorney spent $5,000 to litigate your claim and won $100,000 on your behalf, he or she would collect the $5K first, then distribute the remaining $95,000. If the percentage agreed upon was for 30% to go to your lawyer, he would receive $28,500 with you receiving the remaining $66,500.

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