When seeking legal representation for a personal injury case, you might come across the term “contingency fee.” What is a contingency fee? How does it work, and what are the benefits?
A contingency fee is a payment arrangement between a client and his or her attorney, where the attorney’s fee is contingent upon the successful resolution of the case. In other words, the attorney’s compensation is determined as a percentage of the final settlement or recovery obtained for the client. If the case isn’t successfully resolved, the attorney does not receive payment. Contingency fees primarily are used in personal injury or workers’ compensation cases.
How Contingency Fees Work
- Agreement on a contingency-fee percentage: If the attorney agrees to handle your case on a contingency basis, youwill negotiate and agree upon a specific percentage of the final settlement or verdict that will serve as the attorney’s fee. In workers’ compensation cases, the fee is capped at 25%. In personal injury cases, the fee usually is higher and can range from 30% to 45%, depending on the complexities of your case.
- Payment only if successful: A primary advantage of a contingency-fee arrangement is you pay the attorney only if he or she successfully resolves your case. If the attorney fails to obtain a settlement or favorable verdict, you are not responsible for paying any fees. This arrangement aligns the attorney’s interests with yours, as he or she is motivated to secure the best resolution possible for your case.
- Fee calculation: Once your case is resolved successfully, the attorney’s fee is calculated based on the agreed-upon percentage of the final settlement or verdict. For example, if your case settles for $10,000, and the contingency fee is 30%, your attorney will be paid $3,000.
Benefits of Contingency Fees
Contingency-fee arrangements offer several advantages to clients, including:
- Access to legal representation. Contingency fees enable individuals who might not have the means to pay high hourly fees to have access to capable legal representation.
- Shared risk. The attorney shares the risks of the case with the client, as he or she is compensated only if the case is successful. This motivates the attorney to work diligently to achieve the best possible outcome.
Contingency fees provide an opportunity for individuals to seek fair compensation without the financial strain of upfront costs and should foster a partnership that strives for a successful resolution.
– Joel Williams is a partner at Williams|Elleby, a Kennesaw-based personal injury law firm. www.gatrialattorney.com.