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What Is a Contingency Fee Agreement?

How someone will pay for a lawyer during an injury claim is a common concern. The average accident victim has thousands of dollars in medical expenses, along with being unable to work due to the injury. It may be impossible for the victim to afford attorney’s fees on top of accident-related expenses. Fortunately, most personal injury lawyers solve this problem by using contingency fee agreements.

What Does Contingency Fee Agreement Mean?

If you see on a law firm’s website or hear from the attorney that he or she accepts clients on a contingency fee basis, this means you will not have to pay any attorney’s fees upfront. You will not owe the attorney any money to begin working on your case. With a contingency fee lawyer, you will only pay at the very end of your case, and only if the lawyer wins. Paying legal fees will be contingent on the lawyer winning your case.

No monetary award won for your losses means you will not have to pay attorney’s fees for services already rendered. If your lawyer does succeed in obtaining you a settlement or verdict, they will deduct the attorney’s fees directly from the amount won rather than charging you directly. This ensures you are always able to afford the rates or a lawyer paid on contingency, regardless of your current financial state from the accident.

The amount the lawyer deducts from your award will depend on the law firm. The attorney should give you this percentage upfront, before starting work on your claim. The average amount charged is about 33.33%, or one-third, of the settlement or judgment award achieved. This percentage could be higher or lower, however, based on the law firm’s specific fee agreement. The amount also depends on the level of risk in your case, as well as how difficult it will be to litigate. Expect to pay more, for instance, if your case needs to go to trial to resolve.

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Pros and Cons of a Contingency Fee Agreement

One of the obvious reasons clients prefer contingency fee agreements to traditional flat fees or hourly rates is not having to pay anything to retain the attorney upfront. A contingency fee arrangement can save you a great deal of stress. You will never have to worry about how you will afford a lawyer on top of your medical expenses, lost wages, property repairs and other debts. It can also provide peace of mind by shielding you from any financial risk if your case does not succeed.

A contingency fee agreement has another benefit in terms of motivating the lawyer to do his or her best. Since the lawyer will not get paid unless you do, this motivates him or her to work hard to achieve a positive case outcome. Your lawyer will also have the inspiration to fight for the maximum possible compensation for your losses since the amount achieved will determine the amount earned in lawyer’s fees.

A potential drawback to a contingency fee agreement is that you may end up paying the lawyer more than you would have paid by the hour. This is often the case during simple claims that might not require a lot of work to resolve. Attorneys who work on a contingency fee basis also tend to be more selective in the cases they accept. This may reduce your chances of finding a lawyer if you have a less-promising case.

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Are There Any Out-of-Pocket Costs?

Before you retain a personal injury lawyer, ask about the law firm’s contingency fee payment system. Get details such as what percentage the lawyer charges if the case succeeds, as well as whether you will have to pay anything upfront to retain the attorney. You may also have to pay for additional costs such as hiring experts or court filing fees, even with a contingency fee agreement.

Some law firms use contingency fee variations, where they mix this type of agreement with hourly rates. These firms could come with more out-of-pocket costs than true contingency fee attorneys. Make sure you understand exactly what you will pay and when you will pay it before signing on the dotted line. You may be able to negotiate the terms of a contingency fee agreement depending on the attorney.


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