What a Contingency Fee Arrangement Means for Clients

Worried about how you’ll ever afford a lawyer after an accident?

You are not alone. Most injured people are already facing mounting medical bills, lost income, and the pain and agony of recovery. They shouldn’t have to worry about a large legal bill on top of everything else. That’s where the contingency fee comes in.

Here’s the good news:

A contingency fee is when you pay your attorney nothing up front. If you win they get paid. Plain and simple.

This article explains what this agreement means, how this works and why it is important for injured individuals without financial resources to stand up against these corporations.

Let’s jump in!

Table of Contents

What’s covered in this guide:

What Is A Contingency Fee Arrangement?

How Contingency Fees Actually Work

The Real Benefits For Clients

What To Watch Out For Before You Sign

What Is A Contingency Fee Arrangement?

A contingency fee arrangement means your attorney’s payment is conditional on recovering.

Rather than charging an hourly rate or requiring a large retainer up front, the attorney agrees to accept a portion of the money recovered. If there is no recovery, the lawyer doesn’t get paid. Simple.

That’s why you see this model employed in so many injury cases. A premises liability lawyer handling a slip and fall accident, or a trusted car accident lawyer NY residents rely on after a crash, will use this arrangement to eradicate the single biggest obstacle to seeking help: finances. You don’t need thousands in your bank account to afford quality legal representation.

Think about it:

Attorney fees in America are costly. Retaining an attorney for hourly fees costs $200-$500+ per hour. For most everyday citizens, that is impossible. Contingency fees remove that obstacle completely.

Pretty cool, right?

The lawyer is bearing the risk. They are investing their time and money into your case and only get paid if they recover funds on your behalf.

How Contingency Fees Actually Work

Under a contingency fee agreement you and your attorney negotiate a percentage. Once your case settles or wins at trial, that percentage is deducted from your recovery. Whatever amount is left is yours.

Here’s the typical setup:

Industry average is about 33.3% of your recovery. The fee is uniformly 33 percent, by the way for most firms, although it can get higher based on circumstance.

Why does the percentage change? A few reasons:

Where is the case at: Some attorneys operate on a sliding scale. Less if it settles before filing suit. More if it goes to trial.

The complexity: A complicated case takes more work, more experts, and more risk.

The lawyer’s experience: Attorneys with strong track records may charge slightly more.

Limits are even imposed by law in some states. Contingency fees are typically between 33% and 45%.

Makes sense doesn’t it? The more you recover, the more there is for everyone. That’s what motivates your lawyer.

The Real Benefits For Clients

So why is this arrangement such a big deal for people who’ve been injured?

Why does the model exist? For one reason only – injured people don’t typically have thousands of dollars just lying around to hire a lawyer by the hour. This creates a level playing field.

No money up front. This is the most important one. You pay nothing, absolutely nothing to get started. Your attorney pays the expenses as your case progresses and gets paid back at the conclusion from your settlement.

There’s no risk if you lose. If your case is unsuccessful, you typically don’t have to pay your attorney. Even if they spend hundreds of hours on your case, you owe nothing.

Your lawyer has incentive. They only get paid if you do. So they have every reason to want the largest recovery for you. Their interests are aligned with yours.

It’s more important than you may think. The National Safety Council estimates that approximately 62 million individuals needed medical treatment due to a preventable injury in 2023 – and many of those injured didn’t have money to pay an attorney upfront.

Were it not for contingency fees, the poor would have no access to justice.

That’s a win-win.

Here’s another way to look at it. The insurance companies and large corporations have lots of money and armies of lawyers dedicated to paying you nothing or as little as possible. A contingency fee allows you to fight fire with fire without going bankrupt.

What To Watch Out For Before You Sign

Now here’s the part most people skip over — and it can cost you.

A contingency fee agreement is a legal document. Make sure you know what you’re getting into (and not getting into) before you sign one.

Here’s what to look for:

The percentage is what pays your attorney’s fees. However, it typically does NOT include the additional costs of pursuing your case. Typical costs include:

Court filing fees

Expert witness fees

Deposition and court reporter costs

Investigation expenses

Medical record fees

Typically your attorney advances these costs as they’re incurred and then recoups them from your settlement at the conclusion. However you should know who pays these if the case is lost.

Ask these questions before signing:

What’s the percentage, and does it change if the case goes to trial?

Are litigation costs deducted before or after the fee is calculated?

Am I on the hook for any expenses if we lose?

Are there any liens (like medical bills) coming out of my final check?

Keep that last part in mind. Liens, fees and expenses are deducted from your settlement before you get paid. Medical providers are one example. They often file liens on injury settlements in exchange for treatment.

If you don’t feel like you’re hearing something straight… seek counsel elsewhere. You are the victim and you deserve justice.

Bringing It All Together

Now you know what a contingency fee arrangement means for you as a client.

Truth is, it’s allowed millions of people access to the courthouse who otherwise couldn’t afford to pursue what’s rightfully theirs. It places the risk on the attorney and aligns their interests with yours.

Let’s quickly recap: